The Cross-Platform Report: TV's Doing All Right -- For Now
Having seen what digital media did to the music and newspaper businesses, the television industry has understandably viewed the Internet with a certain amount of dread. The fear has long been that viewers will start watching television shows online and bypassing the traditional cable, satellite and over-the-air broadcast platforms. This, in turn, would undermine the industry's ad-supported business model.
With the release of Nielsen's new Cross-Platform Report (the successor to the former Three Screen Report), television executives can breathe a sigh of relief, at least for another quarter. Despite a few warning signs, the report indicates that for now at least, traditional television remains king. Some of the key findings include (all numbers are Q1 2011 and include in-home viewing only):
· The amount of time people spend watching TV in the home rose to 158 hours and 47 minutes per month, up 22 minutes over 2010.
· The much-feared phenomenon of cord-cutting, in which viewers drop their cable or satellite connections to watch TV over the Internet, remains small: there are only 4.5 million American TV homes with a broadband connection but no cable/satellite hook-up. There is no decline in the very large number of homes that continue to get TV via cable and satellite.
· The average American spends about 70 times more time watching video on TV than he or she does watching TV over the Internet.
On the other hand, there are a number of countervailing trends that bear watching.
Younger audiences continue to be the most enthusiastic viewers of Internet video. The average 25-34 year-old watches almost an hour of online video a week (compared to 30.5 hours of traditional TV.) This is not a high number in itself, especially since this includes homemade YouTube videos, music videos, clips from network shows and full episodes from Hulu and the network websites. But if these viewers increase their Internet viewing significantly, it could eat into their traditional TV time.
Also, Nielsen released numbers that showed that the heaviest users of Internet video are also the lowest viewers of traditional television. Specifically, Nielsen found that the top quintile (the top fifth of Internet video users - about 28 million people in all) watched about 19 minutes of online video per day. These same people watched about 272 minutes of traditional television per day -- the lowest of any of the other quintiles. This is contrary to earlier reports that the heaviest Internet users were also the biggest TV watchers. It could mean that a segment of the population is substituting the Internet for traditional television.
This is an analysis we will need to keep an eye on, to see if the trend increases, but at this point, it doesn't seem to presage a dramatic move away from television.
First, the people who watch the most Internet video don't proportionately watch that much less TV than everyone else (272 minutes a day vs. 282 minutes a day for the average viewer in the other quintiles). We're talking about very small differences.
More to the point, it's likely that the heaviest users of Internet video are deploying the Internet to time-shift shows that they would have otherwise missed, making online video an additive rather than a substitutive practice.
Nielsen has found that TV viewers use the "best screen" available to them. If they can watch on an HDTV set, they will; if HDTV is not available they will use standard TV; if TV is not available they will use a computer; and if absolutely forced to, will they use a mobile device. If they have a DVR and remember to use it they will record shows they would otherwise miss; if not, most will go without but others will use the Internet to catch up. And since more than half of homes have no DVR at all, the Internet can become a DVR equivalent for many families.
The anxiety about cord-cutting has largely been driven by a small group of tech-savvy opinion leaders who actually prefer bypassing traditional TV and don't mind making the extra effort to access favorite shows on the Internet. But what has been overlooked in the cord-cutting debate is the nature of the television experience itself. TV is probably the most passive mass media ever invented. People like it because they can turn on the tube, lie on the couch and let the ions wash over them. It's the ultimate "lean-back" activity. Using the Internet, by contrast, is a "lean-forward" experience, requiring users to be more actively engaged.
In other words, until the Internet becomes as simple to use as a TV and has the same range of content, traditional TV will remain the video platform of choice. Of course that could change in a heartbeat if someone figures out a technology to make Internet TV simple. The rise of Netflix is introducing a broader audience to a new way to watch video on the living room television, so the ground has been prepared. But as long as online video is primarily viewed on a laptop or computer, it won't threaten traditional television.