Archive for June, 2015

TDG Research’s Joel Espelien on OTT and the Future of Media

This week we spoke with Joel Espelien, Senior Analyst at TDG Research, a boutique market research and strategy consulting firm focused exclusively on the future of TV. Joel covers corporate strategy and positioning for companies across the OTT landscape. TDG Research is known for being ahead of the curve, so we used this talk with Joel to learn 7 insights that will help you be ahead of the curve, too.

Here are 7 insights directly from Joel:

1. OTT is evolving to be a synonym for broadband video. Sometimes terms evolve and you can’t control them. OTT is one of those terms. It’s evolving to refer to video that is delivered over the public internet, regardless of screen or whether it’s authenticated.

2. Broadcasters, MVPDs and pay-TV channels must consider consumer’s changing behaviors around when consumption occurs. It may be hard to embrace the fact that consumer participation in appointment viewing is fading. Younger generations won’t have any tendency to gather in front of a screen with other people between 8 pm and 11 pm on a Thursday night. The whole idea of being in front of a screen on anyone’s timetable other than the viewer’s own timetable is becoming laughable.

Furthermore, industry efforts to assign a timeframe to when viewing counts will continue to be arbitrary. The industry has C3 ratings to measure commercials viewed live and on DVR for three days beyond the airdate. C7 ratings extend the window to seven days beyond the airdate. Some in the industry want even longer windows, like C14 or C21. Each definition will capture part of a curve, but there’s always going to be a long tail that’s simply not captured by an arbitrary window. It’s silly to transact around the idea that all the views that matter for a new show will happen in the first 72 hours it’s available. Viewership is far more scattered than many may care to admit, and will only become more scattered as OTT grows. As a result, things like C3 and C7 measurement will carry less weight in the future.

3. More people are watching TV alone. The TV industry is in the early phases of addressing the need to program for an audience of one. There’s a big cultural shift moving people away from doing things as a family or as a group and toward doing things as individuals. With all the screens to watch from and all the choices about what to watch, it’s far less necessary for viewers to compromise with others about what to watch than it’s ever been before.

Individual viewing will become the new normal. This is a big contrast to the picture of a family in the ’50s all huddled around the TV watching the same thing. And, it puts purely panel-based measurement into question because in panel households, there may be multiple people in a room, but probably only one person is really watching the show on TV. Everyone else could be doing their own thing.

This solo viewing trend suggests that content and advertising will become edgier, more particularized and even more incomprehensible to people outside the group consuming it.

4. Legacy pay-TV providers need to know more about the viewing behavior of those they serve. They need to have much more of a clue about what’s going on than they do today by studying engagement patterns across real people in real households. The majority of what they know about linear TV viewers is limited to what Nielsen provides. If a customer decides one day to stop watching linear TV entirely, but keeps paying his or her bill, the provider simply wouldn’t know. And that’s not a very good place to be in terms of making the right decisions on behalf of customers.

Compare the lack of data of a legacy pay-TV provider to a TV app like Netflix. Netflix knows everything its viewers watch down to the second, and they know which of their viewers hasn’t watched anything lately. This kind of customer feedback loop can be used to develop a re-engagement strategy, decide which programming to invest in, or to inform any number of other decisions. It’s the kind of feedback loop that legacy pay-TV providers should have.

5. The future of TV is an app. The genesis of this idea was inspired by the venture capitalist’s view, as expressed by Mark Andreessen, that software is eating the world. Software is eating transportation with Uber, and eating banking with mobile payments, and eating book sales with Amazon. But in TV, people were saying that people love it and that it’ll never change. And they’re wrong. Software eating TV looks like an app, and as the software component of TV, TV apps are going to grow substantially. Imagine offering 100 people a simple choice between HBO on a linear channel on a set top box or HBO GO on an iPad, Apple TV, or computer. Everyone that chooses HBO GO is proof that software will eat TV, too. It turns out that content is not king. Instead, the overall experience is king and people want a software-mediated experience because it’s fundamentally better.

6. Every meaningful TV brand will have its own app. Expect to see a lot more of the single-tenant app model where each TV brand has its own TV app. Ask any TV brand with its own app today if they are content or discontent with the model of having a dedicated app. The overwhelming answer would be, “I like my app just fine, thank you.”

One key benefit of the single-tenant app model is that the content provider gets to really understand the viewing behavior of the people it serves. It gets to look at every single button press, every single view of every screen. It can really look at usage and make the viewer experience even better. This is a huge incentive for every brand to have an app versus choosing to participate in one generic app that carries everything.

7. Broadcasters, pay-TV providers and pay-TV channels need a whole garden of viewer screens and viewers. There’s a healthy mix to be had across screens for broadcasters, providers and channels. It would be a big mistake to prioritize any one screen over all the others. Smartphones and tablets may have been the Trojan horse that allowed TV as an app to get started in the legacy world in the first place. Now, those permissions have to extend out further to allow TV apps to run on other devices too, whether it’s Apple TV, Roku, a smart TV or a gaming platform. People expect to see TV apps on every platform where apps can run and on every platform where Netflix is. TV brands with success on just one screen have to wonder, “Hey, why are we not able to engage people anywhere else in their lives?”

Where to find more from Joel

That’s a wrap on 7 insights that will help you get ahead of the curve. To explore these topics in more detail, check out Joel’s latest reports: “El Futuro de TV – OTT Video in Latin America 2015–2025,” “TV Gets Personal – Trends in Mobile Video Viewing 2015 – 2025,” and “Game On! The Future of Sports Video Viewing, 2015–2025. Joel is already working on some intriguing new topics including what the high-end of the pay-TV market is going to look like and the interplay between virtual reality and video. Thanks Joel for sharing your insights with us!

Online Video Viewing and Browsing Trends — Q1 2015

The Q1 Adobe Digital Index (ADI) report, which assesses OTT and TV Everywhere viewing behavior, shows that the streaming video space is still growing fast — and Apple is among the biggest beneficiaries. ADI’s analysis is published in the “Online Video Viewing and Browsing Trends — Q1 2015” report, which is the most comprehensive report of its kind in the industry. This report can help broadcasters, cable networks, and distributors plan how to respond to changes taking place in how consumers watch TV.

Highlights from the report include:

  1. Android falls behind in premium video viewing
    • iOS grew its share from 43% to 47% year-over-year (YoY), further widening its lead
    • Game consoles and over-the-top (OTT) devices saw the biggest jump in share from 6% to 24% YoY – surpassing Android, which remained flat at 15%
    • Browser viewing sank to a new low – now 14%

ADI - TVE Authentications by Device Type

  1. Apple TV sees strong gains
    • Connected devices like Apple TV and game consoles now represent 1 in 4 TV Everywhere (TVE) authentications – a 300% YoY share increase
    • Apple TV doubled its share of premium video viewing in just one quarter from 5% in Q4 2014 to 10% in Q1 2015 – overtaking Roku

ADI - Apple Share of Online Video Starts

  1. Consumers redefine primetime TV viewing
    • On-demand TVE viewing grew almost 300% YoY, increasing the importance of multiscreen delivery
    • The “Thursday night line-up” is shifting to Wednesday, making it the most popular night to watch TVE

See Adobe Digital Index’s full post on here, or get a copy of the report here.

Media Consumption Trends According to South Park

South Park’s season 18 series finale, “#HappyHolograms” paints a picture of the media consumption trends among America’s youngest generation, which we’ll call the post-millennials. In it, fourth-grader Kyle gets frustrated by the way his 5‑year old brother, Ike, consumes media. Instead of playing video games with the fourth-graders in the living room, Ike and his kindergarten buddies prefer to watch videos on YouTube from the online video game commentator PewDiePie. Each kindergartener watches PewDiePie from their own desktop, laptop or tablet. Ike calls Kyle “grandpa” for being out of touch with the way he and his friends consume media.

South Park kids use many screens

This episode of South Park calls attention to the following trends:

  1. Consumption is shifting away from the living room - Kids aren’t using big screens in their living rooms as much as past generations, even to play video games.
  2. Kids’ preferred programming isn’t available on a TV channel - Young kids want to watch stuff like other kids playing games more than they want to watch typical premium content they’d find on a TV channel.
  3. Every kid gets their own screen - There’s less screen sharing going on. Every kid wants to choose their own content on their own screen.

Possible implications of these trends

If accurate, these trends will have major implications on the media industry.

First, the shift in consumption away from the living room means that the big screen probably won’t be on as often. Viewers may limit consumption to what’s available on their preferred device, and cross-screen TV delivery will be essential to keeping up time spent metrics. Even still, time spent metrics could drop if the content on TV isn’t the content viewers want. This South Park episode points out that TV content has to compete for viewers with all other sources of streaming video entertainment, such as the PewDiePies of the world.

If kids want episodes of PewDiePie more than TV shows, TV channels become less desirable to them because it creates a situation where they can’t get what they want on any TV channel. Young viewers are good at content discovery and therefore less reliant on TV programmers to keep a constant stream of entertainment coming their way. Understanding this trend makes discussions around a‑la-carte channels almost mute. The youngest generation isn’t going to want to predict and pay for the channels they think they’ll watch. Instead, they’ll want on-demand access to everything. A lot of unbundling challenges, such as disagreements between programmers and MVPDs, could be avoided by recognizing that a‑la-carte channels are still a compromise for viewers who actually want on-demand access to everything.

Finally, the rise of the personal screen could be good for TV providers that succeed in the leap to cross-screen delivery. Shared screens only allow ad targeting at the household level. Personal screens allow ad targeting at the individual level. The latter makes it easier for advertisers to match the message to the recipient and can thus command a higher value. So, the rise of the personal screen is the silver lining around some otherwise challenging trends.

Are the trends according to South Park accurate?

Media consumption data confirms that young kids are spending less time with traditional TV and more time watching video on the Internet. According to Nielsen, 2–11 year olds have increased monthly time spent with video on the Internet by 2 hours 42 minutes and decreased monthly time spent with traditional TV by 4 hours 43 minutes. However, time spent in traditional TV still looms large over time spent watching video on the Internet. Also according to Nielsen, kids 2–11 spent 106 hours and 27 minutes per month watching traditional TV in Q4 2014 versus only 6 hours and 22 minutes per month watching video on Internet.


An article by nScreenMedia about the Nielsen data says, “The astute reader will note that the increase in Internet Video viewing does not come close to compensating for the loss of TV viewing time.” The article suggests that people are watching on platforms and in ways which are just not captured. This suggestion lends support to the idea that South Park has an early insight into the media consumption behaviors to expect from post-millennials.

It’s hard to guess how the post-millennial generation will consume media when they get older. Perhaps they’ll decide to sit on couches, watch big screens and reclaim a spot in the living room. Or, perhaps they’ll continue on with personal media consumption on personal devices throughout their lives. What do you think? Let us know in the comments.