There is a lot of talk these days about pay-TV cord-cutters and cord-nevers and how OTT providers can leverage this group to build their businesses. But a data point from research firm Leichtman Research Group last week that caught my eye suggests this market may be smaller than many people think and also not growing very fast. LRG noted that just 9% of U.S. homes subscribe to a broadband Internet service, but not a pay-TV service, up just slightly from the 8% level in both 2011 and 2012 (see graph below).
Further, Bruce Leichtman of LRG told me that of the broadband/no pay-TV group, just 37% get their broadband from speedier and pricier cable or telco fiber deployments. That compares with 75% taking these services among other broadband subscribers (remember than cable and telco fiber are by far the most prevalent broadband services).
Topics: Leichtman Research Group
New industry data compiled by Leichtman Research Group shows that broadband ISPs that account for 93% of the U.S. market added over 1.1 million subscribers in Q1 '13, nearly 6 times the 194K pay-TV subscribers that were added in the period by pay-TV operators that account for 94% of the market.
Broadband subscriber additions have outstripped pay-TV's for years, but the 6x ratio is more than double the average of 2.8x from the prior 2 years. The 194K pay-TV additions in Q1 were down 56% vs. the 445K added in Q1 '12, while the 1.1M broadband additions were off 15% from the 1.3M in each of the prior 2 years.
On the surface the data suggests that cord-cutting - a shift from viewing video via pay-TV to via broadband - may finally be taking hold. But while LRG's Bruce Leichtman has indeed found an uptick in his calculations of cord-cutting (up from .2% of U.S. homes to .4%-.5%), he sees a far more nuanced picture of what accounted for Q1's swing, plus lots of uncertainty going forward.
Near the top of my personal list of confusing industry terms is "mobile video." Does it mean watching on a smartphone? A tablet? Both? Does it mean using a wireless carrier's network (e.g. Verizon, AT&T) or a WiFi network or both for access? Does it mean watching while out of home (and if so, where?) or at home? And what content is watched - live? on-demand? short-form? long-form? genre? The list goes on and on. Mobile video is truly one of the most confusing and misunderstood industry terms around.
And that's why recent data from Leichtman Research Group, a well-respected media research firm founded by a former colleague of mine, Bruce Leichtman, really caught my eye. In its 7th annual "Emerging Video Services" survey, of 1,240 adults age 18+, LRG found that of those who said they watched video on their mobile phone in the past month, 63% said they usually watch at home. More striking, of those who watched video on their iPad, tablet or eReader in the past month, 89% of them said they usually watch at home.
Categories: Mobile Video
Topics: Leichtman Research Group
Topics: Leichtman Research Group
Last Friday, Leichtman Research Group released is quarterly roundup of broadband subscription growth sorted by major cable operators and telcos. LRG, run by my former colleague and friend Bruce Leichtman, has long been the bible for many in the industry for tracking broadband subscriber growth. LRG's numbers continue to demonstrate why broadband video has become such an exciting new distribution medium while adding context to Comcast's and Time Warner's recent moves to begin making online access to cable programming available to their subs.
To highlight a few key numbers, at the end of '08 the top broadband ISPs had 67.7 million subscribers, with top cable operators accounting for about 54.5% and top telcos the remainder. Top cable operators continue to maintain their edge in subscriber acquisition as well, grabbing 59% of all new broadband subs in '08.
And no surprise to anyone, with the rising penetration levels, the annual increases in total new subs have continued to slow: in '06 top cable and telco ISPs added 10.4M subs, in '07, 8.5M subs and in '08, 5.4M subs. Still, in the teeth of harsh economic downturn in Q4 '08, these ISPs were still able to add over 1M subs, growth that contracting industries like autos, retail and home-building would no doubt have killed for.
Broadband has long since become a utility for many American homes, a service that is as much expected as essentials like electricity and plumbing. A key reason broadband video is enjoying the success it is owes to the fact that broadband subscriptions have been driven for other reasons (e.g. faster email access, music downloads, always-on connectivity) over the years. Video has only recently become an additional and highly-valued benefit, which broadband ISPs now expect will drive interest in faster (and more expensive) broadband service plans.
Broadband's importance to the cable industry is demonstrated by the chart below showing #1 cable operator Comcast's performance over the last 2 years, which I originally posted on last November ("Comcast: A Company Transformed).
Note the company has now lost basic cable subscribers for 7 straight quarters, even as it continues to add digital video subs and broadband subs (and voice subs) at a healthy clip. I expect these trend lines will continue in their current pattern. No doubt this is the kind of picture that has helped spur Comcast (and #2 operator Time Warner Cable) to begin planning online distribution of cable programming, a feature that I believe will provide highly popular. Operators are in a tremendous position to capitalize on the shifting interests of their subscribers.
What do you think? Post a comment now.
Yesterday's interview with market researcher Bruce Leichtman highlighted a key point in his latest study: that broadband video is most heavily adopted by 18-34 year old males. That point has been supported by research from other firms and is one of the key drivers behind a lot of the new broadband-only video programming that's sprouted up in the past couple of years.
A clear implication of this finding is that current video providers that target 18-34 males better be aggressively pursuing broadband video offerings if they want to stay competitive in this new media landscape.
But less clear is whether video providers that don't primarily target 18-34 males, or maybe have them as secondary audiences, should also be investing in this new medium in order to stay in synch with broadband users. Though other age groups and demos are also adopting broadband video, they are clearly less fervent, at least for now. In a world with finite resources, should these other video producers not worry so much about broadband video and instead stay mainly focused on their traditional approaches? Or should they invest in the broadband medium as well, even if their true target audiences may be smaller for now? I think they should do the latter, for the following 3 reasons:
1. Eventually broadband video usage will deeply penetrate all age groups. This is a macro trend that all programmers need to be in synch with. Previous technology adoption patterns show that what starts with young, and often male, early adopters, eventually spreads out to other groups as well. There's no putting the broadband video genie back in the bottle. Three-to-five years from now, virtually all Internet users will view video as just another routine application, alongside email, search, commerce, etc. Today's video providers need to position themselves properly.
2. Cultivating younger audiences is critically important. Marketing types always emphasize how important it is to cultivate younger audiences. Brand choices and loyalties are developed early, and it is more difficult down the road to influence these. Look around and see brands that once targeted somewhat older, and wealthier, segments but which now also try to target the young - Heineken, BMW and Tiffany to name a few.
The fact is that young people have energy, enthusiasm, spending power and a strong desire to promote their favorite brands to cohorts. So even video providers need that may not normally skew young need to figure out how to have some appeal to this group, because they will be key drivers of the brand's strength down the road. In fact this is what a number of cable networks, like Lifetime, AMC and Food Network been doing in recent years. Though they didn't originally target younger audiences, they began cultivating them through programming choices and marketing campaigns. They are all succeeding.
3. Now is the time to learn about broadband video. Given the above two reasons, it is urgent that video producers targeting all age groups and demos start their learning process now. Finding pockets of current heavy users to appeal to is the key challenge. As a new medium, broadband has its own set of capabilities well beyond being just another pipe to funnel current programming. Understanding these opportunities will not happen overnight. No video producer should wake up one day 3 years from now, when a healthy percentage of its viewers are spending substantial time on broadband, and realize they didn't cultivate the knowledge and skill sets to succeed in this new medium.
Video producers across the spectrum are grappling with how to attract and retain audiences in the broadband and on-demand era. Though 18-34 year old males are today's heaviest users, that will change over time. All video providers need to stay in synch with this.
What do you think? Post a comment and let us all know!
One of my continuing goals for VideoNuze is to bring relevant research about broadband video to your attention. Today I'm pleased to share a short interview with Bruce Leichtman, president of Leichtman Research Group, Inc. regarding a new survey his firm just released to its clients, "Emerging Video Services II." Bruce is a veteran media market researcher who I've known for many years since we were colleagues at Continental Cablevision.
Bruce has generously provided slides from his new survey exclusively at VideoNuze. The download is available here.
Following is an edited transcript of my interview:
VN: Please provide some background on your firm's new study.
BL: This is the second annual Emerging Video Services study that my company has done. The study is focused on non-TV-based services such as broadband video, mobile video and portable video (example iPod). This is one of five annual syndicated studies.
The survey was conducted in December '07 and January '08 with 1,250 people who were surveyed by phone. The reason that's important is that we're trying to reflect the entire population of the U.S. Remember about a quarter of U.S. homes are still not online, so when I'm doing these studies, I'm trying to project to the entire U.S., and so the studies are also pre-weighted to reflect the age and gender makeup of the U.S. population over 18 years of age.
VN: Talk about some of the study's high level conclusions.
BL: Not surprisingly, when compared to last year's study, online video usage is growing. But what's more important is the detail: who's using it, how are they using it, why are they using it? Today there is not across-the-board usage. It's still very weighted to young, 18-34 year-old males. So this has huge implications for players in this market. You need to know who's really using online video so you can better tailor your product to fit that demographic and the ones that may follow.
Another interesting finding is that the growth in the past year was in fact among the young. So online video's use is continuing to penetrate this demographic more and more deeply.
Yet another is that online video is really a medium unto itself, and consumers don't see it as a replacement for traditional TV, but rather for what it can do uniquely as a new medium. So it's important that companies not see online video as just a replication of TV.
VN: What are the implications of the growing intensity of broadband video adoption by the young?
BL: For companies targeting this demo the key is how to tailor product appropriately. There's a ton of multi-tasking going on, so younger people don't even necessarily see online video or TV as one OR the other, sometimes it can be both at the same time. They obviously live lives that are different than preceding generations. But given they're just one segment, we shouldn't conclude that everything is going to change in the next 3-5 years.
VN: Can you discuss actual usage time?
BL: Across the whole population, people still spend twice as much time watching TV as being online. However, among young males the gap is being squeezed. I don't want to read too much into this data, but TV watching is beginning to decline a bit in the group. Their use of media is changing, but we don't see that across all age and gender groups. The same is true on an income basis. The traditional gap remains for lower income groups.
As with so many things in consumer adoption, it's more about evolution than revolution. Basically what we're seeing is a market evolving. Increase in the number of broadband subscribers, increase in the content that's out there, and an increase in usage. But it's still just a small percentage compared to TV.
VN: What does the study find regarding session lengths?
BL: Over half of those who consume online video say they do it less than 10 minutes at a time. comScore talks about the average session as 2.8 minutes. Today it's really bite-sized morsels, its news clips, UGC, YouTube, comScore says one-third of all legal video is YouTube.
VN: How about in longer-form?
BL: Certainly there's interest in TV and movies, but the challenge is that in reality consumers have choices. And I always like to say "TV is a good place to watch TV." Given a choice of watching a TV show on TV, that is their choice vs. watching online. So there has to be a compelling reason for them to watch online that's differentiated.
VN: Did the survey offer any insight about consumers' interest in dropping cable subscriptions in favor of broadband-only options?
BL: From a consumer's standpoint it's not either/or. Just 4% say they'd switch to online only. The overwhelming majority of people, 87%, would not consider switching.
VN: Did you ask about what kind of broadband video consumers would like to watch on TV?
BL: We really only asked about YouTube and UGC. Do people want to see it on TV? Generally they said no. Just 13% said yes. So maybe this confirms that online is a better medium for this stuff. Those most interested are young men: 29% of men 18-34 said yes, they want it, with 17% of women in the age bracket saying they want to see it.
VN: Thanks for sharing information about this new study.
Last week's NATPE conference brought numerous opportunities for attendees to learn about broadband and digital media. Based on the Q&A I heard, plus the hallway chatter, there is intense interest - especially from independent producers - about how to take advantage of the rapidly changing video landscape. Today I want to spend a few minutes reviewing some of what I learned at the conference.
A big chunk of my time was spent hosting a day-long Digital Briefing track, during which 10 companies presented for 30 minutes each, back-to-back throughout the day. The companies that presented were:Leichtman Research Group, Joost, SpotStock.com, Broadband Enterprises, Livid Media, Vuze, Enticent, Teletrax, PermissionTV and Digital Fountain.
These companies offered a highly diverse range of products, services and solutions, all aimed at growing the broadband video industry. Joost, Vuze and Broadband Enterprises in particular drew lots of audience questions, focused on distribution and monetization, 2 key items for indie broadband producers. Similarly PermissionTV received lot of interest for how it can help large and small content providers build out their broadband presence. And Digital Fountain's demos of its high-quality video distribution network garnered a lot of attention (btw, it's soliciting participants for its beta trial here).
The other companies also showed valuable products and services: Livid Media demonstrated its personality-based content and Enticent its loyalty programs. SpotStock premiered its new digital stock footage library aimed at helping indie producers quickly and legitimately gain access valuable resources. And Teletrax explained how its watermarking technology helps broadcasters secure and track their digital streams. Last but not least, Bruce Leichtman of Leichtman Research demystified what's really happening with consumer behavior changes based on his firm's extensive market research.
Outside of the Digital Briefings day, the advertising-related sessions provided lots of needed information to attendees about how monetization is unfolding for broadband delivery. I've already written about Shelly Lazarus branded entertainment speech. Tim Armstrong, head of sales at Google provided insights on how the company is approaching YouTube monetization. Another session elicited reactions from big-time brand marketers about issues with pre-rolls and explored alternatives. And as I previously wrote, NBCU's Jeff Zucker delivered a candid wake-up call to the industry about challenges ahead. Even as someone who follows this stuff pretty closely, I thought there was a lot of new info and perspectives being shared.
All in all, these sessions all served as another reminder to me about how broadband video is becoming a vibrant part of the overall economy. There is so much entrepreneurial energy going into developing all the pieces of the overall broadband ecosystem. A consistent theme I heard at NATPE was that people recognize broadband is challenging incumbent media distribution, but it is also expanding producers' options in unprecedented ways. For me that's the real potential ahead.
If you want to discuss the specifics of any of these, just drop me a line!