Comcast’s kneejerk reaction to another painful bout of cord cutting in the second quarter was to reignite enthusiasm through the medium of a report claiming TV viewership is at a two-year high. It was a case of bad timing though, arriving in our inbox on the same day as a separate report highlighting sustained pay TV ARPU woes, to the tune of a devasting 10% decline over two years.
Viewership up, ARPU down – how can the industry withstand such a trend?
Publishing the first report of its kind, Comcast Spotlight, the ad sales segment of Comcast Cable, found that viewers spent an average of 6 hours and 25 minutes watching TV every day in Q1 2019, rising 6% (21 minutes) from Q1 2018 and reversing a trend of decline. That’s an astonishing figure which is certainly overinflated. That is no direct fault of Comcast Spotlight or indeed other audience measurement firms, because it is symptomatic of society to leave the big screen on in the background, or indeed – among the less environmentally conscious viewers – leave the TV blaring when the house is empty as a burglar deterrent.
These are just a handful of factors which will have pumped up this huge average viewing time approaching six and a half hours every day, yet the big winner here is VoD content, which Comcast Spotlight found increased by 36% year on year – doubling across Comcast households since 2016. Data found that 79% of Comcast households viewed VoD content in Q1 2019, totaling 105,000 VoD titles a month, doubling from 52,000 in 2016.
VoD was crowned the biggest grower but total viewing time was still dwarfed by live programming. Households spent on average 52 minutes a day watching VoD content, compared to 5 hours 32 minutes dedicated to live programming. Of these, the average Comcast household watched 34 separate networks during the quarter, declining from 35 in the same time last year.
Targeted at marketers, the report’s underlying message is one of a data-driven approach, describing how because two thirds of household TV viewing occurs outside of primetime, this makes it increasingly difficult for advertisers to build effective campaigns. Comcast Spotlight carried out an analysis of over 900 campaigns, using Comcast Spotlight’s proprietary local campaign building tool called Audience Intelligence, and found that data-driven campaigns achieved reach levels 15% higher than legacy campaigns. This was done, it claims, without sacrificing frequency, regardless of campaign size and investment level.
Comcast Spotlight also launched Instant Impact this week, a new product aimed at providing campaign performance feedback to advertisers – driven by attribution data from video measurement vendor TVSquared.
It’s all well and good drumming up the value of set top data to attract additional advertiser investment, but with pay TV ARPU on a slippery slope, the business remains fundamentally under threat. Data from Parks Associates puts the pay TV damage at a decline from $84 to $76 a month between 2016 and 2018.
Elsewhere in the entertainment ecosystem, average monthly household expenditure on non-pay TV home video entertainment services plunged across the board with the exception of – you guessed it – internet video services. Spending on internet video subscriptions held firm at around the $8 to $9 a month mark between late 2014 and late 2018, according to Parks, while VoD, PPV, Cinema, and Packaged Media (such as buying/renting DVDs) all saw steep ARPU declines.
Self-reported expenditures on non-pay TV video entertainment has declined 30% over the past seven years, with spending on DVD and Blu-ray packaged media has steadily declined since 2012, while spending on movie theaters declined by 50% from 2014 to 2018. Parks also reports that 20% of US broadband households do not have pay TV services, without providing any fluctuation figure, adding that an alarming 12% of US broadband households cut the cord in 2018.
So, two contradictory viewpoints on the state of the pay TV industry. Ultimately though, both reports emphasize the demand for OTT video content – each in their subtly different ways. Comcast from the viewpoint of VoD viewing rising as live programming continues to come out on top, while Parks warns that operators must embrace various OTT video mediums or suffer the consequences of sustained pay TV ARPU declines.