According to a report from Digitalsmiths, 31.6% of pay TV customers say they are overwhelmed by the number of channels provided. Compounding this over-supply of content is the fact that 78.7% of respondents only watch between 1 and 10 channels, and 85% said they “watched the same channels repeatedly.”
The respondents, just over 3,000 pay TV, VoD and OTT customers from the US and Canada, illustrate a continuing issue faced by pay TV providers; are customers going to continue to pay $80+ per month for effectively 10 channels?
The cord-cheating threat of pay TV customers jumping-ship to OTT subscription services is still very real. Adoption of OTT services increased 8% year-on-year, with customers reporting convenience, price, and series exclusivity being key motivations for the switch – a switch that is slowly hammering pay TV services.
Trying to ensure customers avoid the sense of being overwhelmed with content that they have no intention of watching and resent paying for has been a priority for operators. Refreshed and easier to navigate UIs appear to be making a small difference, with 49% saying it felt easier to navigate the library than it did last quarter.
And while that may sound like a trivial matter, 50% of respondents that said they were likely to switch from cable or satellite to SVoD reported that they would consider keeping their current plan if the provider were to make the content discovery process easier – helping them find something they actually want to watch among the endless pages of channels.
Currently, nearly two thirds of respondents (63.5%) spend 5 minutes or more channel surfing in order to find something to watch. If instead this time was spent using integrated content-discovery, customers should discover new channels and in turn feel more satisfied by their service – based solely on the feedback given to Digitalsmiths. But then it would say that, because it sells content discovery.
Now that TV Everywhere means that a user only needs an app to watch video content, instead of a set top and a full size TV as was the case ten years ago, any device with a screen and the ability to run the Netflix app is a direct threat to pay TV providers – and evidently a growing threat based on the fact that the number of households renting one or more payTV VoD services per month only rose 3.4% year-on-year, while non pay TV VoD outstripped it at 8% annual growth.
We’ve been saying it for years, but mobile devices will be the death of pay TV operators who don’t adapt. The industry has been slow to adapt, but appears to be getting somewhere at last. With HBO going OTT, Dish breaking out its Sling TV platform, and numerous other announcements in the past year, the content creators are fully embracing OTT delivery.
Ooyala’s Global Video Index, also out this week, traces the growth in mobile viewing, with headline figures showing that tablet and smartphone plays grew 2X in the past year, 5X since 2012, and 16X since 2011. While we may be on the straight and narrow of that hockey-stick graph’s trajectory, the figures paint a clear picture of non-TV device viewing’s impact on the TV industry.
December saw the highest percentage of total video plays occur on smartphones and tablets, at 38%. This is the highest figure since Ooyala started counting, and is up 15% in a month. What’s more, the viewing on these smaller screens is not the kind of throwaway content that the incumbents might dismissively expect.
Tablets are not exclusively for cat videos and compilations of people falling down stairs. Ooyala says that tablet users spent 70% of their viewing time consuming long-form content – more than any other device. They lead the market in time spent viewing content that runs between 30 and 60 minutes, and have the highest ad-completion rates, edging out PCs and smartphones.
Connected TV viewers had the longest video sessions, with 41% of viewing time spent on video longer than 60 minutes. But TV’s fans shouldn’t rejoice just yet, as this suggest that viewers are increasingly only using TV sets for movies and sports matches. In Ooyala’s words, “consumers are spending less time in the living room watching the biggest screen in the house, as content continues to flow online and to all devices.”
Brands and advertisers are increasingly shifting their spend toward mediums other than TV (see the Spring Upfront article in this issue), and will increasingly push the quantity of advertising that a viewer will tolerate – perhaps even up to the same level of advertising that is found on US TV.
Ooyala rounds off its findings by saying “broadcasters and publishers are leaving money on the table and need to make sure to have a strategy in place to fully monetize mobile and tablets. One such strategy employed by successful clients is to sell to a single audience across devices,” by means of a common identity, to push through more personalized advertising that should enjoy a higher completion and click-through rate.
Despite this need, Imagine Communications has released its 2015 Focus Forward report, which seems to show that industry respondents are not paying enough attention to the issue at hand.
When asked what their top priorities for 2015 were, 58% said improving and customizing workflows. In effect they are saying they want to adapt their services to the new environment, before they try to make more money – savings in cost rather than identifying new revenues.
The second most popular answer was to increase multiplatform delivery, with a 38% response rate, which means get more of the content to the right places, but still no improvement in monetization. What’s worse is that almost an equal amount of respondents felt that adding new channels was as important as simplifying advertising sales, traffic and billing processes – 26% and 28% respectively.
That won’t be good news for those overwhelmed consumer respondents in the Digitalsmiths survey, but it is emblematic of the industry as a whole. Instead of improving the new platforms that are stealing the audiences from TV, the majority of these respondents seem too conservative – and are focusing on finding ways to make TV better instead of ways of monetizing the new mobile medium.
So take heart that cloud migration, simplification of advertising and billing, and moving to all-IP infrastructure (with all the benefits of ABR delivery) is on the list of 2015 targets – but despair that none of those targets scored higher than 37%, and that they seem at least 3 years too late. The industry’s collective head still seems very much in the sand.