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Connected TV Devices Reach Tipping Point
- by Aaron Baar , August 31, 2015
Viewers who are only getting their video programming solely from pay-TV providers or (gasp) over the airwaves are now in the minority.
According to The NPD Group, half of Internet-connected homes in the U.S. have a device that connects their television to the Internet (the tally includes Internet-enabled TVs, as well as separate devices Blu-Ray disc players, video game consoles and commercial streaming media players, that use the TV as a screen). In total, 46 million homes had some sort of connected-TV device in the second quarter of this year, up four million from the same period last year, according to NPD.
“We’ve hit mass-market adoption and scale, which is critical to programmers for distribution,” John Buffone, executive director of NPD’s Connected Intelligence service, tells Marketing Daily. “When you reach 46 million [households], networks and programs have a reason to release their programming over-the-top.”
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The big surge for connected streaming devices is coming from Internet-capable Smart TVs. According to NPD’s Retail Tracking Service, 45% of TVs sold in the U.S. supported over-the-top programming apps -- up from 34% in 2014. The rate of devices using the Internet has also increased. Currently 69% of all Internet-capable TVs are connected to the Internet, up from 61% last year.
“The increase in the number of homes that use a TV with apps is the result of three very important factors,” Buffone says. “Sales of TVs with apps have skyrocketed, their user interfaces have improved and there has been a surge in available premium services and programming.”
Among the streaming services, Netflix remains the most popular, followed by YouTube, Amazon Instant Video, Hulu and HBO Go, which displaced Crackle in the top 5.
The increased usage of Internet-connected streaming devices is good news for programmers who have many more opportunities to attract audiences, but the continued success will mean many networks, carriers and programming houses will have to work together to ensure success, Buffone says.
“It means change [for the Pay-TV providers], but it’s something they’ve been a part of for years,” he says. “This is not a story of Pay-TV vs. Internet programming; it’s about them beginning to work together.”
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Having a device and using it are two different measurements. Any detail on usage? Total reach is not average daily rating.
Yes, but it IS a story of Pay-TV vs. Internet programming.
Once you begin streaming your content, you discover a whole new world of diverse entertainment beyond the sorry, soul-sucking programming cable provides.
Cable still does offer better access to sports, but even that's changing as more streaming options become available. I now stream all my TV viewing, ad-free, for less than $40 a month. That sure beats the $100+ I was shelling out to Comcast.
But here's a word of advice to anyone considering streaming: Buy a dedicated streaming device like an Amazon Fire TV or Roku 3. Don't count on your smart TV or DVR to stream -- you won't get the same quality of playback.
'Tipping point'... Really? Stop with overly provocative headlines. The tipping point for connected TV devices -- understood as at least 50% penetration among Early Mainstreamers -- was reached years ago. It's now working it's way into Late Mainstreamers, indicative of a maturing market headed for mass diffusion. Get real.
Agreed, Douglas. Many "connected" people don't even use that option and the amount of viewing time for those who do use it is probably very small. Tipping point, indeed.
Agreed Doug & Ed. Ownership > Connected > Viewership.
Mind you by tomorrow the techos should have my Samsung, Apple TV, internet TV and cable Tv all working properly rather than a long Cat-6 cable. That might change things a little.
Having worked on Smart TV services previously for four years for a major television OEM, I've followed the usage trends closely. I estimate that Netflix's average daily viewing hours per person in the US is 0.92 hours.
What can we take away from this? Netflix is closing in on 50% (currently at 43.8%) of US broadband enabled homes. These homes and the people living there are watching almost an hour per day of Netflix delivered programming, while still watching almost 5 hours per day of live and recorded television (we don't know how Netflix viewing impacts the live and recorded television viewing). And people who don't have broadband, about 25% of households, are watching 0 hours per day of Netflix and other broadband services. So, for those people who have broadband and are using OTT video services, it appears that we are nearing, if not already reached, a tipping point.
A longer version of this with the calculations was published on Linkedin at https://www.linkedin.com/pulse/have-connected-tv-devices-reached-tipping-point-wendell-wenjen?published=t
Interesting, Wendell, as your estimate of Netflix content consumption jibes almost exactly with ours. Since some homes subscribe to two and even three SVOD services, I assume that in such cases, the Netflix numbers go down, while the other SVOD services cut into its share as well as the usage of broadcast TV and cable.
Earlier this week ANA in partnership with BrightLIne released new research titled, “The Connected TV Opportunity.” We found that only 43 percent of marketers surveyed claim to be “very” familiar with connected TV/over-the-top (OTT) and only one in five (22 percent) responded that their company has engaged in connected TV advertising over the past year. But connected TV appears poised for growth. The large majority of total respondents (71 percent) believe connected TV is an opportunity for the television advertising industry. Those currently engaged are extremely bullish on it, with 89 percent believing that connected TV is an opportunity. Reasons most often cited were targeting and following viewer behavior. Among respondents whose companies are not currently engaged in connected TV/OTT, the top barriers are not being familiar enough (cited by 44 percent), followed by budgets (29 percent) and then lack of agency recommendation (28 percent). More here: http://www.ana.net/content/show/id/connected-tv