There is no doubt that viewing habits are changing, but perhaps not as fundamentally as you think
Overall viewing is up, and it’s doing more good than harm to subscription revenue. But there are some fundamental shifts in our living-room habits…
THE NUMBERS LOOK GOOD
Ofcom in the UK said in a December 2015 report that subscriptions to the top three US operators grew on both a one-year and five-year basis (3.66% five-year Compound Annual Growth Rate or CAGR) to the end of 2014, with Sky and Virgin Media in the UK managing around 3% CAGR on the same basis. February figures this year also confirmed a good 2015 for US operators, some reporting net subscription growth for the first time in a decade.
Sky Brazil and Dish in India both grew more than 20% CAGR in five years, albeit from a low base.
Clearly OTT growth is significant – Ofcom said 'short and long form online TV and video revenues' grew more than threefold in the UK to £908M in the five years to 2014, and 520% in the US to £6.8B ( $1.3B and $9.9B respectively).
TRADITIONAL BROADCAST MAY SEEM ALIVE AND WELL - BUT OUR ATTENTION IS FRAGMENTING
The average person in the United States watches almost five hours of television a day, more than an hour greater than the average of people in the world's biggest economies, Ofcom says.
In comparison, the average Brit watches three hours and 40 minutes of broadcast TV - one minute below the average, and down by 3.9% year-on-year.
According to the US-based TV Guide app, 24 per cent of its users watch more than 40 hours of ‘TV’ (live broadcast, OTT and catch-up) per week in 2013, up from 17 per cent in 2012.
But are we really ‘watching’ with full attention? As all good researchers know, you have to ask the right questions, and any survey is affected by the sample set and the medium you use. Other recent UK research surveyed overall living-room behaviour using a range of tools, from diaries to in-device monitoring and biometric data. It appears to show that 50% of their 1000 online adults no longer regard the TV as the focal point of their living room, and 70% ‘ordinarily used a connected device’ while watching TV, rising to 87% for 16-34 year olds. This high degree of second-screen and other behaviours led them to conclude that ‘TV can no longer lay claim to being the centre of attention’ in the living room. Perhaps Ofcom’s sources take a liberal view of what constitutes ‘watching’ TV – the big screen is on, but what are we actually looking at?
The Ofcom figures include only live television and recorded programmes, not catch-up television or recorded media – in which Ofcom said the UK leads the world in. They found 81 per cent of Brits had used an online service to watch TV or films, such as Netflix or BBC iPlayer, in the last month, while 16 per cent had watched catch-up TV on a tablet. Both were ahead of any other country in the group of the world's biggest economies. 16 percent was smaller than I was expecting.
CATCH-UP AND BINGEING - IT'S AN 'AND' THING
Yes binge-viewing is up, (it’s even a fulltime job) and we are increasingly watching catch-up on both tablets and TVs. Interestingly some already feel binge-viewing’s affecting how creatives and producers structure their scripts – there’s less point in a mid-season cliff hanger if the gap between episodes is 13 seconds, not a week.
Subscription models are of course proliferating as the industry responds to the ‘cord-never’ groups. But it would seem fair to conclude that overall, people watch more shows in more ways than before, and ‘paid TV’ in various forms is in good health.
After all, TV advertising revenues have climbed at 3.8% CAGR to the end of 2014 (Ofcom again). Of course we’ve seen innovation here, including a few attempts (like ACR) for the smart TV to control the smaller screen and force content onto it during a show - so far with limited success.
GOODBYE TO THE 'HOME TV', HELLO 'ME TV'
In light of the fragmentation it may be time to drop the terms ‘main screen’ or ‘home TV’ and realise that in many homes, the ‘watch a show together’ idea – just sitting in a group around a large screen for an hour or more - is an endangered species, or even extinct.
In today’s time-shifted, place-shifted and screen-shifted viewing world perhaps we should simply think of them as ‘the big screen’ and ‘the small screens’, each used to suit the occasion, perhaps for only a few minutes. The 16-34 group heavily view long content on smaller screens, perhaps for practical reasons like portability and privacy in a shared home – and for this group it’s certainly overtaking the outdated notion of the ’TV in the bedroom’. ‘Me TV ’ is certainly on the rise.
It also appears that, for most people older than 34 at least, a small screen is used for additional and catch-up viewing, in and out of the home, with a clear preference for the big screen when available.
And whichever screen has the long content on it, as hyper connected consumers, expect activity on the small-screen at the same time – most likely to be social media, email or shopping online.