Commentary
Is Web Video Withering While TV Wins The Game?
- by Dave Morgan , Featured Contributor, July 1, 2010
Which way is the wind blowing when it comes to Web video versus TV viewing?
Like many of you, I have been reading and hearing a lot about how folks in the U.S these days, particularly younger ones, are using their computers to watch a lot of their video, including shows that they used to watch on their TVs. I am sure that this is true. I know a lot of folks who regularly use services like YouTube, Hulu and Boxee. I know even more folks who tell me that their children are watching a lot of video that way. However, I have always wondered whether actual Web video viewing patterns actually matched up to all of the hype surrounding the platform.
Apparently, my skepticism was warranted. Earlier this week, on The Ad Contrarian, I read a review of Nielsen's "Three Screen Report" for the first quarter of 2010 that highlighted a couple of really powerful data points in the report. First, as has been widely reported, TV viewing time in U.S. homes continues to increase, growing 1.3% (or an incremental 2 hours per month) year over year. During the same period, Internet video viewing time grew 5.9% (or an incremental 11 minutes) year over year.
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Who would have thought the average increase in time that Americans watched television in early 2010 compared to early 2009 would be over ten times more than the average increase in time for watching Web video? Not me. I'm particularly surprised that Web video viewing only grew 5.9% over that time, when it was coming off such a small base. Web video viewing still represents less than 2% of the time that folks in the U.S. devote to consuming video.
Maybe a lot of that Web video time has shifted to mobile devices? Smartphones are exploding, and many millions of us now carry iPhones, BlackBerries or Droid, or similar phones capable of playing video. Nope. The Nielsen report tells us that there was no growth in subscriber mobile video consumption over the past year.
This is important stuff. As we all know, a lot of media and telecommunications companies, and a lot of their executives, are in the process of making some really big decisions about where they should be focusing their video resources now and in the future. If you're a studio, do you produce short-form products for the Web and mobile? If you're a TV network, do you push your video onto the Web to try to capture early audiences, even if this undermines the multibillion-dollar relationships that you have with cable and satellite operators? If you're a multichannel TV operator, do you make massive investments to build or partner for a "TV Everywhere" platform, to ensure that Web-only viewers are satisfied, too?
A lot of big bets are going to be made by these companies. A lot of big risks are going to be taken. If these companies and their executives are making decisions under the impression that Web video viewing is exploding in America, and TV viewing is falling, the recent data suggests that they are wrong -- and they may be in for a rude awakening when their Field of Dreams is built and no one shows up. What do you think?
If I'm a TV network, I'd be interested in three things:
(1) Evaluating the benefits of a carrier exclusive, just as Apple did with AT&T...and making sure my contracts with episodic television and especially sports supported my ability to enter into such an exclusive arrangement.
(2) Reviewing the state of vestigial sideband and closed-captioning to see if there were simple ways to get Twitter content playing alongside my shows. As we saw years ago with Mystery Science Theatre and VH-1 Pop-Up Video, there's a lot of engagement yet to be mined out of existing libraries.
(3) Dusting off old MDU and closed-circuit agreements to see if there are new ways to license product to the new occasions afforded by all of these new platforms. Why not create a new distribution window for college campuses?
While seemingly far-fetched, any of these three initiatives would do more to unlock the value that already exists with TV operators than investing in copycat web video portals.
But then again, what do I know?
DVR use grew really slowly, too. But it grew. And I remember all those look-how-slowly-it's-growing stories from 2003. Nowadays no one discounts the impact of DVRs.
Just you wait -- for the big growth in web video. And study the media habits of pre-teens.
Dave: I don't think the +5.9% growth in time spent watching online video that you cite is correct. There's no way it can be that low. In fact, our comScore data show that total time spent watching video online has doubled from Q1 2009 to Q1 2010. That said, I agree with you that online has a long, long way to go before it catches TV. But, the race is certainly on.
There is a lot of SEO value to videos. In addition, online videos allow brands that don't have the budget for TV spots the ability to publish rich-media content to their target audience in ways not previously available. So, I think there will be growth in web video because many brands will publish videos such as "how its made", "how to use", and maybe even entertaining skits. Moreover, with the proliferation of handheld video devices the amount of UGC videos are going to grow.
But, I still prefer TV watching on DVR to watching via my web browser or smart device. Moreover, we recommend our clients consider a comprehensive content strategy so not all their eggs are in the video bucket.
Aren't high unemployment and reduced spending a big factor when it comes to TV viewing?
Dave, I agree with your overall assessment that total online viewing is growing but not fast enough to declare a tipping point from "TV" to "Online” video.
I think the most important perspective to take is to examine what User Experience will be demanded by consumers.
By User Experience I mean what will they demand in terms of "any screen" (not three-screen) accessibility to their cable subscriptions, or Hulu packages, other "TV Anywhere" package or iTunes-type purchases.
We seem too focused on the pipe. Online Video *versus* “TV” and “three screens” is not helpful to understand the convergence of consumer entertainment experiences. Seeing it as a "tipping point" path is looking at it from the wrong perspective. That’s regressive, and doesn’t recognize the new reality of “the chaos (and opportunity) in the middle.”
Disintermediation and innovation started around broadcast networks, then moved to cable/satellite and now has made another pivot to an IP connection. The middle is where the action is. It is also where the consumer experience is forged. Only now, consumers have more power, more information at their disposal (read: more empowerment to make informed competitive decisions), and more vendors trying to get their attention. It's a new game.
So turn the picture sideways and set the consumer on the left and the content on the right. We are talking about the middle. Where the pipes used to be. The conduit and pipes are irrelevant, or soon will be.
Let’s set UGC and highly produced Indy content aside for a quick moment. Following the big money, let’s talk about “TV.”
By now, we surely know that the pipe doesn’t matter. My 9-year old daughter does not care if her entertainment comes via a cable box, or even why a cable box is different from a modem or a WiFi hotspot or a satellite dish. And she should not care.
Very soon there may not be cable boxes—as the flat screens will have integrated ports that connect to a home gateway or modem and WiFi zone. She won’t care if her entertainment comes via multiple pipes, or even from any third party (or even the content creator directly.. hello NBC and hello Disney... and hello Viacom...).
What she (and her entire generation) care about is their User Experience. Hooray for that!
Namely, they'll care most about what devices will support their needs, what carriers and networks (wireless and otherwise) will be proactive in presenting them with the dead-simple experience they need to get to the content they care about. And what branded User Experience (whether that is a browser, or a Website, or Portal, or TV/phone App, or handset or tablet maker) will support their need to tap-into their content in an organically social way, supporting their needs for connectedness, discovery, meaning and expression across their social graph(s).
Very soon my home will have video delivered from my vendor partner (cable or otherwise) on a digital / IP signal, meaning that the opportunity for cloud-driven content delivery of content will be real and cheap.
The most important innovation is happening in the center.
The only innovations left that matter are in discovery, social-experience, expression (including UGC and commentary "on top" of or "alongside of" studio content) and as mentioned, dead-simple any-screen access and user experience.
This is where we're working hard, and where we believe the innovations are that enable people to combine the three-screen numbers into a single User Experience component...
If people end up "watching X minutes/hours" more each month, and if they end up spending more time in social-TV or social-entertainment experiences, or more importantly, if they end up having a better User Experience and becoming more open to marketing messages (and buy more stuff from advertisers) and subscribe to more value-add services... then we all win.
We call this Consumer Experience Management. Kind of like CRM but with the key factor of User Experience as paramount. I’d love to hear more commentary about how the User Experience innovation community is experimenting with social viewing, discovery, commentary/expression and curation/management across an “any screen” on-demand landscape.
Thanks for you great MediaPost columns and I look forward to your next one.
Best
Matt Weeks
CEO and Founder
EyeTMedia
mweeks@eyetmedia.com
650-520-8808
Dave:
I too was surprised by the reported growth in online video reported by Nieslen. So surprised, in fact, that I checked what we (comScore) show.
We show that the average online viewer consmed 410 minutes of online video in May 2009, and 807 minutes in May of 2010-- almost 100% more (note: the base is total online viewers, not the total US population; we show 183 million online monthly viewers in May 2010. Spread across total population the time spent would of course be somewhat smaller.)
The increase is driven by both an increase in streams per person-- from 110 to 186-- and by a longer average view time per stream (from 3.7 to 4.3 minutes.)
Oops! I see Fulgoni beat me to it.
Hey Josh ... the early bird, etc :)
Ease of use, availability and consumer cost haven't been discussed. Happy 4th.
Mr Ferguson is wrong. Despite all the hysteria over DVR usage, they currently only account for 6% of viewing.
I can't speak to the data, but having broadband and a computer connected to my TV allowed me to ditch cable eight years ago. I get all my long-form viewing over the air, or streaming from the web.
Total viewer numbers are not everything. Demographics also play a part in this discussion. The increasing number of TV viewers may come from a low socio-demographic segment of the population and only have a small discretionary budget...? I would guess that this is the case and would add that any gap in discretionary income between TV viewers and online / mobile video viewers would increase over time... maybe...
Funny Neilsen publishes another study on TV viewing right away its gospil. I've been suspect of how both numbers continue to climb with only so many hours in a day to consume media. I'm no conspiracy freek but NSI has more riding on keeping TV strong than the other way around.. All I can say is in my own observation in my home my kids (16 15 and 12) are watching more and more video online and using the DVR more and more to skip the excessive clutter from their favorite TV shows.
Um, web video withering? Tv winning? Wait a minute - what about the incredible increase in viewing times of online video while broadcasters struggle to stay afloat? The sands are clearly shifting - but maybe the "Three Screen Report" will shed some light on the true nature of the shift. Oh, wait - who prepared that report? Who is their major client? Who pays their bills? Hmmmm....
Matt, Great post. I agree with what you wrote, that the "middle" of the TV eco-system won't matter that much long-term. I am also a big believer that the big area of short-term innovation will be in content discovery, social-experience, expression. In fact, that is why I think that we will see the "TV device" continue to be the dominant viewing platform, and the smaller screen (laptop, mobile) will probably continue to play more complimentary roles, rather than primary viewing roles.
Another consideration outside of all this industry terminology and current report statistics is the macro-level generational shift will take time. Many people over 40 or 50 (not people in this industry, regular Americans) don't use DVR and certainly are not web video adopters, even if they have smartphones. As the current Gen X and Gen Y group matures and the Millenials move to adulthood there will be a natural growth rate in these newer technologies, though not necessarily the attrition away from TV that many predict. Also factor that this is still a figment of the imagination in many developing countries.
Thus building the mobile battlefield is useful, but will those that build it now be leap frogged by time its mainstream is another question.
Dave,
Brilliant as always.
I just don't know how to use the data in the absence of a thoughtful analysis of subscription and advertising revenue streams.
High quality, professionally produced video content needs to be distributed profitably.
Any discussion about time spent watching TV that does not also attempt to look at time spent watching TV commercials is ripe for misunderstandings.
The growth in time spent watching TV does little for the video content producer's business model if exposure to advertising is simultaneously declining - assuming that advertising revenue is a critical driver of the content producer's ROI.
The consumer is king but great content still needs to get paid for and that is where we need guys with your talents helping us. What do the macro data trends for TV tell us about time spent watching TV commercials?