The Big Picture
New platforms, New viewing patterns
Well over 2 billion video-on-demand programs will have been ordered in 2006. Among DVR users 18 to 49, two-fifths of all the viewing of primetime programming is now watched at a time other than when it was broadcast. Users now spend about 6.5 billion minutes each month on news Web sites. About half the population in urban markets has a high-speed Internet connection. The typical viewer who has 120 channels watches about 20 of them. More than one third of all young adults say TV does a very poor or terrible job of reflecting the values of their state of life, and older 40-plus viewers are even more disaffected.
Those numbers, culled from dozens of research reports and interviews with nearly 50 industry executives, are just some of the figures roiling the television industry. On one hand, these figures have raised worries among advertisers concerning the future of schedule-based TV. On the other hand, changing viewing patterns are opening up opportunities for cable operators who see on demand and interactive offerings as a major competitive advantage.
“There is a lot of momentum and growth [for on-demand content] both in terms of usage and in terms of the number of new products,” said Robert Benya, senior vice president of on demand and ITV product management at Time Warner Cable.
Some 20% to 30% of all Time Warner’s digital subscribers are already using voting, polling, weather, news and other interactive TV applications. Each day, over 60% of its digital customers are now using VOD and about 70% are using Start Over, an on-demand application that allows customers to jump to the beginning of a program in progress without any pre-planning or in-home recording devices.
And, this may be just the beginning of time-shifted viewing. “When it comes to VOD, we are still in the black and white TV era,” said Marie Rothschild, senior director of video product management and advanced services at Charter Communications. “We are only beginning to see what VOD will do and what it could mean to consumers.”
Even bigger changes could occur as operators deploy home networking and cross-platform products that allow users to shuffle their content between TVs, computers and mobile devices. While mass deployment is years away, Time Warner has already experimented with offering cable fare to subscribers via high-speed Internet connections in San Diego, and it is rolling out PhotoShow, an application that allows subscribers to move photos and videos from their PC to the TV via the on-demand platform, Benya said.
“There is clearly consumer interest in making their content available on a variety of screens,” Cox Communications vice president of video product development Steve Necessary said.
Bob Nocera, director of new video services at Cox, noted that VOD is available to about 65% of its digital subscribers and that 80% are aware of or using the services. Digital video recorders, which have been available in all systems since early 2005, are also proving popular. The majority of DVR subscribers use the device at least once a day.
All of these applications are playing a key role in an increasingly competitive multichannel landscape. “We are seeing customers coming back to cable from satellite in record numbers,” said David Pugliese, vice president of product marketing and management at Cox. “The numbers reflect the fact that HDTV, VOD and DVRs have strengthened our video product and made us more competitive.”
But how big of a shift in viewing patterns is actually taking place? A closer look reveals that video usage across various platforms has been overhyped and underestimated, according to various researchers and programmers.
Much attention in recent years has been focused on younger viewers that increasingly access video on the Internet, mobile phones, iPods and game consoles.
“There are now 80 million Americans between the ages of 10 to 29, more than the baby boomer generation,” said David Mumford, executive vice president, planning and operations at Sony Picture Television. “They are the first generation to grow up with the Internet and wireless. They are much more confident in accessing video on other platforms.”
By 2010, this group will form the plurality of the 18-to-49 demo that is the bedrock of all TV advertising, Mumford added.
In the meantime, some fundamental shifts in TV viewing are already underway. Pat McDonough, senior vice president of research at Nielsen Media Research, said DVR users aged 18 to 49 already time shift about 41% of their primetime viewing of broadcast networks.
Yet, the proliferation of devices doesn’t mean that television is entering an era of irreversible decline. In fact the opposite is occurring. TV viewing continues to rise among all age groups.
Kids, for example, watch nearly an hour more TV than they did five years ago, noted Tom Ascheim, executive vice president and general manager of Nickelodeon Television, even though kids in broadband homes now spend a whopping 16 hours and 48 minutes online each week.
And, kids aren’t the only ones watching more TV. “Each of our channels is having a record year,” said Mark Lazarus, president of Turner Entertainment. “The average 18- to 49-year-old person watches 31 hours of television a week, which is up from five years ago.”
A key reason for the increase in TV viewing in an era of proliferating video platforms is that “each platform complements each other,” Sony Pictures Television president Steve Mosko said. “The newer platforms are helping promote linear TV. If you are doing a 10 or 12 rating on a broadcast network, that still means that 90% of the audience isn’t seeing it. Putting the video on the Internet or a mobile phone is a great way to build awareness.”
Multiple platforms are also good news for content producers and other TV sectors, Mosko and others argue. Robert Clasen, chairman and CEO of Starz LLC said that the company has dramatically expanded its business over the last year, boosting content production, launching a motion picture studio and developing an online movie download service, Vongo.
“We’ve done this in response to the dramatic changes in the television business, mostly because of the rapid advance of digital technology,” he said.
Capitalizing on those opportunities, though, requires much better understanding of how consumers use various platforms and the habits of specific demographic groups.