TV in Transition: From TV to CTV -- Global Trends & Insights

By Karen Ring, Head of Research, Telaria, Inc.

Audiences are sending a message to the broadcast and cable establishment that they have found a better alternative for consuming premium video content -- Connected TV; and advertisers are listening. Linear TV, which once seemed impervious to the effects of digital media disruption, is beginning to see signs of erosion. According to Nielsen’s Q2 Total Audience Report, time spent viewing Live TV is down 14% from two years ago. 

Connected TV (CTV) now effectively delivers on the promise of a lean-back viewing experience with the control of on-demand viewing via online platforms. Industry estimates project CTV to reach 74% of all U.S. households by 2021. And the number of cord-cutters/nevers is predicted to increase 38% over the next 4 years, representing one-third of all TV households.

Advertisers are taking notice of this viewer migration to CTV platforms. Subscription VOD (SVOD), driven primarily by ad-free subscription-based services Netflix and Amazon, is powering this movement, but consumers can only support a few subscriptions before they reach a financial tipping point, eventually driving them to investigate cheaper options in the form of skinny bundles from Digital MVPDs. The growth in skinny bundle options translates into a growing supply of advertising inventory.  Advertising spend is following in the wake, with global AVOD ad revenues predicted to double over the next 5 years. 

At Telaria we’ve been tracking this transformation in viewing behavior. We call it “TV in Transition,” because in the very near future, there won’t be a distinction between Traditional TV and CTV – it will all just be TV. We see these lines blurring already:  our generational study with Hulu, “How Gen Z Connects to TV,” reported that 71% of GenY and GenZ define TV as watching a show/movie through an online source.

This phenomenon is not limited to the U.S. Although the U.S. is a leading advanced-TV market, almost every region around the globe is experiencing similar trends which is especially interesting given the cultural, technological, and regulatory differences around content viewing and advertising inventory.

Our “TV in Transition” research fielded online surveys in the US, UK, Australia, France, and Brazil screened for CTV device ownership or usage. These markets were chosen because they each exhibit different levels of adoption across the global spectrum.

5 KEY TAKEAWAYS

Watching TV content through a streaming device connected to a television set is considered “watching TV” by almost 60% of respondents.  Brazil, one of the leading TV markets in the world, has the broadest view what it means to watch TV, while France has the narrowest, with 23% less likely to define television in terms of online connected platforms.

2. Millennials spend more time with streamed content than older adults

One-third of all television viewing among millennials is going to CTV content, a figure that drops by half among older adults.  Among all the countries in our survey, U.S. millennials are 67% more likely to be CTV-only households, with over 25% reporting that they don’t have cable or satellite tv.  

3. The level of ad acceptance is high

TV Advertising is a fact of life, and consumers are used to it.  In our study, over half of all respondents felt that ads are a fair value exchange for access to free or low-cost content, and ads on streaming services were considered less annoying than those on linear TV.  The country with the highest level of ad acceptance was Brazil, where preference for ads on CTV was 50% higher than the total. 

4. CTV ads are effective at driving response

CTV’s 100% viewable ad environment has a significant payoff:  Over half of weekly users of CTV will take an action, such as researching or purchasing, after seeing an ad. Results were consistent across countries, with Brazil the highest at 60%, and Australia the lowest at a very respectable 47%. 

5. People want their CTV!

One of the true tests of consumer commitment is to ask people how much they are willing to give up something. Demand for premium video content is high. When asked how much they would miss connected television if they no longer had it, 41% of respondents said they would miss it “very much.”  Only 17% said they would not miss it at all. 

Telaria’s Multi-Country study of CTV usage and preferences around the globe has shown that consumers everywhere are ready for the next era of television viewing. As consumer viewing patterns shift to OTT environments, advertisers will follow their targets – driving demand for more inventory around the globe.

To access the infograph, click here.

To access the full report, email info@telaria.om