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?”
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!