Today’s guest post on Discovery Blog is from David Ernst, Vice President of Cross Platform Media for the Market Resources at Discovery Communications.
There have been many reports in the popular and trade press over the past 10 years that have proclaimed “The Death of Television.” No doubt, recent innovations have spawned new methods of discovering, viewing and sharing video content which, in turn, are forever altering the way people watch television. Even the very definition of what we call “television” is likely to continue to be rewritten over the next five years. But, to paraphrase the famous words of Mark Twain, “Reports of TV’s demise have been greatly exaggerated.”
As proof, the amount of time audiences spend watching traditional TV is still 20 times greater than via video on the Internet (VOIP), mobile or gaming consoles. (Source: Nielsen Q4 ’13 Cross-Platform Report)
Nonetheless, TV viewership and the television business are going through an unprecedented period of rapid and disruptive change. Most expect these changes to continue to reshape the viewing landscape and create challenges, as well as a host of new opportunities, for programmers and advertisers alike. In the following, I will address some of the major audience shifts and changes in behavior and offer some perspectives for the future.
Television – The Definition is Changing
Very often when articles cite the demise of television, they also will point to the success of Netflix or the growth in mobile audiences as proof of the decline. Yet, just as HBO’s innovations invigorated the television landscape decades ago, so too does the development of a program like House of Cards help to sustain television’s vitality rather than detract from it. And, just as the VCR served to provide audiences with more control over their viewing options, mobile video is just one more way that television content can be delivered.
A television set is no longer just the box in a living room, family room or bedroom. Television also is not just the live, linear signal delivering a program in real time. Television is on-demand and time-shifted. Television also is in-home and on-the-go (mobile) as technology is extending the TV footprint to include nearly every type of device with a screen. As such, TV Everywhere and Nielsen’s ability to capture viewing on all screens will re-aggregate video audiences into television viewing, which will include linear, over-the-top, and digital/mobile permutations of video delivery.
Multiple Devices, Unlimited Television Programming Choices
The dramatic changes occurring in video delivery mean television audiences today and tomorrow will have more choices than ever. Not only will the number of program options rise exponentially, but so will the number of ways that a viewer can choose to watch content. The permutations are now becoming seemingly infinite (live or on-demand, download or stream, tablet or smartphone, with or without advertising) and an increasing number of people are taking advantage of those options (45% of Adults 18+ are very interested in the ability to watch anything, anytime, anywhere, up 55% from 2009 (Source: Leichtman Research Group Inc. Emerging Video Services VII)). As we consider the state of “television” in all of its forms, this will continue to provide a healthy momentum for the foreseeable future.
Cord-Cutting is Having an Impact But…
The LRG research firm and Nielsen have been monitoring the cord-cutting phenomenon for several years. Their findings show cord-cutting is real and is increasing but, to this point, is not rampant. As Nielsen points out, cord-shaving (a MSO customer reducing tiers or dropping some of the video packages, but maintaining the cable connection) also is present and is likely responsible for more changes than cord-cutting.
As LRG has stated:
“For the better part of the past five years, some have anxiously predicted that the multi-channel video business was on the verge of a dramatic decline. The belief was that millions of consumers were, or soon would be, ‘cutting the cord’ to their TV service and only watching video online or through other means. Yet, while ‘over-the-top’ viewing has rapidly increased in the past few years, this trend has not had a direct cause-and-effect relationship on the multi-channel video market, where changes have been more gradual.”
Nielsen has noted this phenomenon over the past five years. While nearly 90 percent of households do not change any of their viewing options each year, about one percent of the population decides to cut the cord and get their content via either over-the-air signals or broadband or both. Add to this the nearly four percent of viewers who are trading down/cord-shaving by cutting their roster of viewing options, and it is evident that each rating point and audience member is becoming ever harder to attract to a particular program.
One of the most important reasons people disconnect or cord-shave is to save money – rather than because a television signal is not desired. This trend also is accelerating, especially among younger people. To those who are trading down, options like Netfilx, Amazon and HBO Go, are erasing the need to subscribe to a broad array of channels in order to have a sufficient number of content choices. To the vast majority, however, options to view video in new ways simply expand their set of content options rather than creating an either/or choice of whether or not to cut the cord. Furthermore, most say that the traditional TV screen is the preferred screen. In a 2012 study that Discovery conducted among viewers, we have found that nearly six in 10 prefer a “television experience” over all other ways to watch programming. It is pretty clear, consumers like the experience of watching content on a TV set.
Television in the Future
While it is obvious that we are in the midst of a rapid transformation, whereby behavior is changing at unprecedented rate, it also seems clear that viewers have not completely abandoned what we call the TV set in search of new ways to feed their content cravings. The fact that viewers still enjoy the habitual nature of television would suggest that future changes in behavior will be more evolutionary than revolutionary.
As we go forward, undoubtedly more content will be competing for viewers’ attention – both live and on demand, from a set-top box and from the cloud. And, as such, the question still remains – how will greater access and options impact the time spent watching what we currently call network or cable TV?
These questions will likely be answered over the next few years or even sooner but what seems very clear right now is that the multiplying number of programming options will perpetually fragment the audience for video. In this near-future scenario, re-aggregating audiences will likely be a critical consideration for most advertisers. Audiences will continue to splinter between a growing number of choices, and also will accumulate over longer periods of time, stretching over days and weeks as they exert even more control over when they want to see content.
While this trend is often perceived as being negative, it is also filled with possibility. But to fully take advantage of these possibilities, advertisers and content providers will need to fully embrace and understand what audiences are interested in, and how, when and where they want to experience that content.
More creative ways to extend viewers’ love affair with their TV sets are needed as audiences utilize other ways of accessing content. In doing so, both programmers and advertisers can develop stronger and deeper connections with audiences as they migrate across the multitude of devices – allowing viewers to be engaged with programming and brand messaging virtually all of the time.