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Altman Vilandrie & Co. 2013 Consumer Video Research Excerpts

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These are key findings from Altman Vilandrie & Co's 2013 Consumer Video Research showcasing online video viewing adoption, attitudes toward pay-TV and cord-cutting, and millennials' use of broadcast …

These are key findings from Altman Vilandrie & Co's 2013 Consumer Video Research showcasing online video viewing adoption, attitudes toward pay-TV and cord-cutting, and millennials' use of broadcast TV.

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  • 1. 2013 Consumer Video Research Excerpts for VideoNuze 21 November 2013
  • 2. Altman Vilandrie & Company AV&Co. is the leading strategy firm focused on the Telecom, Media, and Tech sectors Background Locations  Founded in 2002 in Boston  Led by 8 Directors and 8 Principals San Francisco  80+ consultants in North America New York City Boston London Munich Budapest  Additional 40 consultants in Europe operating as Solon Management Consulting Value Proposition  Telecom, Media, & Technology (TMT) focus results in better advice and speed  Fact-based, highly analytical, and economics-based approach  Serve corporate and private equity clients Confidential – Do Not Reproduce Countries where AV&Co./Solon has assisted clients 21 November 2013 2
  • 3. 2013 AV&Co./Research Now Video Survey – Methodology and Approach AV&Co.’s 2013 Video Survey explores the transformation of consumer behavior in TV show and movie watching Sample Areas Explored Survey Background • Web survey conducted in July, 2013—similar to surveys done in summers of 2010-2012 • Conducted in partnership with Research Now, an online panel provider • Sample of 2,548 respondents (~500 in each of 5 age bands) who are video-decision makers for their household • Paid-TV subscribership – cord-cutters, cord-nevers, cord shavers • Online video usage – paid, ad-based, pirated • Devices used to control and watch video • Mobile viewing – location, devices, and rationale • Interest in a la carte channel offers • Attitudes toward live viewing, prerecorded shows, and genres • Multitasking and binge-watching • TV Everywhere – awareness, usage, preferences • Interest in an “add-on” service depending on brand, price, content, live channels, and device availability • Impact of Netflix offer and pricing scenarios Confidential – Do Not Reproduce 21 November 2013 3
  • 4. Online Viewing Adoption Internet TV show/movie viewing is growing across all ages; younger consumers watch online video more frequently, but older consumers had a large increase in 2013 How often do you watch TV shows/movies on the internet? (% responding at least weekly) 81% 80% 75% 2011 2012 2013 72% 68% 62% 60% 54% 51% 45% 37% 36% 33% 24% 26% 18-24 25-34 35-44 45-54 55+ Age Base: All respondents Source: 2011, 2012 and 2013 AV&Co./Research Now Surveys; AV&Co. Analysis Confidential – Do Not Reproduce 21 November 2013 4
  • 5. Drivers of Paid Online Video Adoption Viewing flexibility is a main driver of internet video service subscriptions, but almost 40% of online video subscribers report saving money as a motivating factor Why do you use a paid internet video service? (% selecting each option) 53% I can watch on my own timetable 43% I can easily get TV shows I want to watch 39% It saves me money overall 34% I can watch everywhere I go I can get TV shows and movies I can't get anywhere else 30% It lets me watch TV in rooms different from where the primary household TV is located 28% It is easier to use than Pay-Per-View or Video-onDemand services from a cable provider 24% It has a better recommendation system 15% The user interface is better than the cable TV 14% Base: Respondents who use at least one paid internet video service Source: 2013 AV&Co./Research Now Survey; AV&Co. Analysis Confidential – Do Not Reproduce 21 November 2013 5
  • 6. Paid Internet Viewing by Source Netflix dominates online video-watching among consumers who watch online video at least weekly Do you watch TV shows and/or movies on these paid online video services on a weekly basis? (% of respondents who watch online video at least weekly) 76% 35% Netflix Instant 33% 32% 32% HBO GO Hulu Plus Amazon Prime Paid on demand video services Paid Online Video Service Base: Respondents who watch online video at least weekly Source: 2013 AV&Co./Research Now Survey; AV&Co. Analysis Confidential – Do Not Reproduce 21 November 2013 6
  • 7. Multichannel TV Subscribers Growth in multichannel video subscribers has not kept pace with TV household growth; ~4% of households are “new” non-subscribers who have emerged in the past 5 years • Historically, 90% of occupied TV households subscribed to multichannel TV Occupied TV Households (millions) 118.0 110.0 11.1 10% 4.4 11.9 4% 10% “New” Non-Subscribers “Traditional” Non-Subscribers (held at 10%) Use antenna, watch DVDs only, don’t care about video, etc. • Subscribers are now at 86%— incremental 4% are “new” nonsubscribers 98.9 90% 101.7 86% Multichannel TV Subscribers Cable, Satellite, or Telco TV 2008 2013 Source: SNL Kagan, AV&Co. Analysis Confidential – Do Not Reproduce 21 November 2013 7
  • 8. Multichannel TV Subscribers Of non-subscribing households who “care about video,” the majority use online video at least weekly Composition of Multichannel TV Non-Subscribers Who “Care About Video” (% of occupied TV households) 4.9% 1.7% 4.7% of occupied TV households are non-subscribers who watch online video at least weekly 3.4% 1.7% 1.3% 4.9% 1.5% 0.4% Other cord-cutters and cord-nevers don’t watch online video weekly (1.9% of occupied TV households) "True" Cord-Nevers "True" Cord-Cutter (never subscribed, (former subscribers who but care about video) care about video)  5.6-7.6%* of TV households are true cord-cutters or cord-nevers (care about video but who watch video through other means); ~4-5% are driven at least partially by emergence of internet video  The number of cord-cutters and cord-nevers was approximately the same as in last year’s survey * Range based on margin of error of survey Source: 2012 and 2013 AV&Co./Research Now Surveys; AV&Co. Analysis Confidential – Do Not Reproduce 21 November 2013 8
  • 9. Cord-Cutters’ Reasons for Unsubscribing Price and value are the main reasons cord-cutters cancelled their subscriptions; availability of internet video is the third largest driver To what extent were each of the following important in your decision to "cut the cord", i.e., stop subscribing to a cable service? (% of cord-cutters responding “important” and “very important”) I could no longer afford Cable TV 66% Cable TV was a poor value 53% Internet Video was enough for my needs 50% It was difficult to find good programs and/or movies on cable TV 42% Basic Antenna Cable was enough for my needs 35% I didn't care about live TV (e.g., sports and news) I didn't care about seeing TV shows as soon as they were released My cable TV Provider had poor service I didn’t have enough time to watch shows or movies 31% 29% 27% 25% Base: Cord-cutters who watch video through other means Source: 2013 AV&Co./Research Now Survey; AV&Co. Analysis Confidential – Do Not Reproduce 21 November 2013 9
  • 10. Reasons for Maintaining a Cable TV Subscription Current cable subscribers value access to live news and sports, as well as the ability to watch new television shows as soon as they are available Why do you choose to subscribe to cable TV instead of relying only on internet video for shows, movies, and other television programs? (% of cable subscribers who agree with statements) Live news is important to me 74% I want to watch TV shows as soon as they are available 66% Live sports are important to me I'm open to cancelling cable, but others in my household want it 59% 28% Watching TV shows when they become available is especially 55+ important to younger cable subscribers Age Under 35 My internet connection is too slow for video 76% 19% 35+ 62% Base: Current cable TV subscribers Source: 2013 AV&Co./Research Now Survey; AV&Co. Analysis Confidential – Do Not Reproduce 21 November 2013 10
  • 11. Broadcast TV Watching Even with growing online alternatives, the level of TV watching during normal broadcast time is roughly the same as in 2010 How often do you watch shows on TV during their normal broadcast time? (% viewing at least weekly) 2010 89% 2013 80% 73% 80% 84% 85% 87% 72% 65% 60% 18-24 25-34 35-44 Age 45-54 55+ Base: All Respondents Source: 2010 and 2013 AV&Co./Research Now Survey; AV&Co. Analysis Confidential – Do Not Reproduce 21 November 2013 11
  • 12. Non-Subscriber Future Plans 36% of non-subscribers expect to subscribe to cable within 5 years, including almost half of subscribers under 35 What is the likelihood that you or your household will subscribe to cable TV service five years from now? (% of non-subscribers that responded “likely” or “very likely”) 53% 46% 32% 33% 27% 18-24 25-34 35-44 Age 45-54 55+ Source: 2013 AV&Co./Research Now Survey; AV&Co. Analysis Confidential – Do Not Reproduce 21 November 2013 12
  • 13. TV Show/Movie Viewing on Tablets Tablet video consumption has more than doubled since 2011, driven by increased tablet ownership; increased usage, especially among older consumers, has also contributed How often do you watch TV shows and movies on a tablet? (% viewing at least weekly) Tablet Ownership 2013 2011 51% 51% 43% 36% 32% Watch TV shows and movies on tablet weekly 2013 2011 22% 18% 16% 29% 24% 9% 18-24 12% 25-34 26% 7% 35-44 11% 2% 8% 14% 45-54 1% 9% 55+ Age Base: All Respondents Source: 2011 & 2013 AV&Co./Research Now Survey; AV&Co. Analysis Confidential – Do Not Reproduce 21 November 2013 13
  • 14. TV Show/Movie Viewing on Smartphones Smartphone TV show and movie watching nearly tripled from 2011 to 2013, driven primarily by increased usage but also from growth in ownership How often do you watch TV shows and movies on a smartphone? (% viewing at least weekly) 73% 68% 66% Smartphone Ownership 2013 2011 56% 48% 47% 41% 43% 40% 30% Watch TV shows and movies on smartphone weekly 2013 2011 32% 28% 11% 18-24 20% 13% 5% 25-34 35-44 3% 9% 45-54 0% 4% 55+ Age Base: All Respondents Source: 2011 and 2013 AV&Co./Research Now Survey; AV&Co. Analysis Confidential – Do Not Reproduce 21 November 2013 14
  • 15. TV Everywhere Awareness by Age TV Everywhere awareness has increased slightly over the past year, but younger consumers are still more aware than older consumers Does your cable TV subscription include access to TV Everywhere? (% of subscribers with access to TV Everywhere) No 32% 32% Don’t Know 19% 31% 21% 37% 29% Yes 50% 36% 42% 2012 Yes 47% 35% 18-24 34% 25-34 35-44 33% 45-54 24% 55+ Age Base: Cable TV subscribers with access to TV Everywhere Source: 2012 and 2013 AV&Co./Research Now Survey; AV&Co. Analysis Confidential – Do Not Reproduce 21 November 2013 15
  • 16. TV Everywhere App Preferences 82% of consumers prefer a single TV Everywhere app over separate apps for each channel; younger consumers are more open to separate apps than older consumers If you were using TV Everywhere on your devices, which of these options would be better for you? (% of all cable subscribers) A separate app for each channel you subscribe to, each giving you access to TV shows from that specific channel A single app from your cable TV provider that gives you access to all the shows from channels you subscribe to 32% 30% 68% 70% 18-24 25-34 21% 79% 35-44 Age 15% 11% 85% 89% 45-54 55+ Base: Cable TV subscribers Source: 2013 AV&Co./Research Now Survey; AV&Co. Analysis Confidential – Do Not Reproduce 21 November 2013 16