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Cutting the Cord: Everything You Need to Know About the Shift from TV to Online


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Attention everyone: it's time to cut the cord. With your TV that is. This slideshare is all about the recent shift in programming and viewership from TV to online. Find out why it's happening and how you can be ahead of the curve when it comes to advertising in online programs. You don't want to miss this one.

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Cutting the Cord: Everything You Need to Know About the Shift from TV to Online

  1. 1. CUTTINGTHECORD Everything you need to know about the shift from TV to online
  2. 2. Once upon a time, online was where you went to catch up on what you missed on TV. Not anymore. The digital space is fast becoming the premier destination for quality content. “Cord-cutting” is at an all time high. A study by Morgan Stanley claims that 10% of pay-TV sub- scribers say they will definitely discontinue their cable service within the next year, while another 11% said they “probably” would. This is not to say that people are watching less content, it’s where and how they’re watching it that’s shifting drastically. While the amount of video watched across devices increased by 7.7% between 2009 and 2013, the amount of TV watched grew by a paltry 3.9%. Online video viewing, on the other hand, has grown by 103.1% while video viewing on mobile devices has increased by 77.1% according to Nielsen data. This market skew is well reflected in The Leichtman Research Group’s recent study. The report suggests that while Comcast and Time Warner Cable lost a combined 1.1 million TV subscribers in 2013, they were able to make up some of their lost revenue by adding a com- bined 1.5 million broadband consumers to their customer-bases. Simply put, people are watching more content, just not where you’d expect them to. But why are eyeballs shifting from the idiot box to other interfaces? As we consider the answer to that question and un- ravel this trend, it is worth noting that media consumption is not a zero-sum game. As the means toward accessing quality content increase, brands should consider reaching their consumers using a multi-pronged approach. Everything you need to know about the shift from TV to online
  3. 3. Everything you need to know about the shift from TV to online THE YOUTH FACTOR Delving further into the Morgan Stanley statistics referenced above reveals that the youth factor is at the heart of the shift from TV to online. Thirty percent of those who said they would “definitely” cut the cord this coming year were between the ages of 18 and 29, while a significantly lower 15% were between the ages of 45 and 64. The number of people watching TV on TV will continue to drop as the market begins to reflect the increase in the younger generation’s purchasing power. 1. AGE: 18-24 “DEFINITELY CUTTING THE CORD THIS YEAR”
  4. 4. I WANT TO WATCH THAT! What came first: the content shift or the audience shift? Did content move online to reach viewers who had already made the shift or are viewers moving online to bene- fit from the quality content that has already begun populating the online space? Much like with the chicken and egg quandary, the answer is inconclusive. However, whichever development it was that triggered the other, brands should take notice. Their messaging needs to situate itself where both quality content reigns supreme and where viewers are aplenty. Netflix revolutionized the online-entertainment game by introducing original pro- gramming available only to its subscribers. This was a major step towards establish- ing the online space as something more than a repository for repurposed TV con- tent. Netflix pulled off an entertainment coup by teaming up with megastar director David Fincher (The Curious Case of Benjamin Button, The Social Network) to pro- duce and release Emmy Award-winning series, House of Cards. The site’s fresh, daring and all-round fantastic second show, Orange is the New Black solidified its position as a major contender in the entertainment industry. Its resurrection of cult comedy classic Arrested Development in 2012 was another smart move by the com- pany that recently bought the rights to the final season of The Killing. The online giant plans to release a slew of other new shows; a drama by the makers of TV hit Damages and an animated series featuring Aaron Paul, a string of Marvel comic themed shows and a Breaking Bad spin-off called Better Call Saul. 2. Everything you need to know about the shift from TV to online
  5. 5. Everything you need to know about the shift from TV to online Hulu’s recent April Fools’ gag proved that the spin-off trend is here to stay. The site announced a line-up of shows based on some of TV‘s most loved characters; In the Kitchen with Hannibal, The Field (featuring Jeff Gordons of Brooklyn-Nine-Nine fame), That’s My Fitz (featuring Scandal’s Mellie & Fitz) and Hola Senor Chang (featuring Senor Chang from Community). While the shows aren’t actually going to be produced or aired, Hulu has managed to use the original programming trend to drive up traffic on its platform. Check out the hilarious promos here! Over-the-top providers aside, the Internet is populated by plenty of free content you can enjoy without forking over the $8 monthly subscription fee. The VICE docu-series, for instance, employs a “one man and a camera” filming style and a casual and often-times hilarious reporting technique to give viewers a riveting look at some of the world‘s most pressing issues and conflicts. Produced by HBO with Farid Zakaria acting as show consul- tant, the series is available free on YouTube. Zach Galifianakis’ online video series “Between Two Ferns” is available on website Funny or Die. The show features Galifianakis deploying his trademark comedic timing whilst “interviewing” famous guests. President Obama recently made history by agreeing to appear on the online-only show, where he talked healthcare with his hilarious host. (Read our blog post on how the spot increased traffic on by 40% here) Channels like Bravo have launched successful spin-offs of their own shows which, are available to stream for free on its website. Bravo’s Last Chance Kitchen is an online appendage of their super-successful show Top Chef and features eliminated contestants battling it out for a chance to re-enter the main competition.
  6. 6. SPOILED FOR CHOICE Aside from over-the-top providers like Netflix and Hulu, consumers have an array of pay-per-episode options including iTunes, Amazon Video and Google Play. set-top boxes like Roku, Chromecast and Apple TV are also popular in the market. In fact, Amazon just launched its highly competitive set-top box product, FireTV which boasts 3X the processing power and 4X the memory of Apple TV. FireTV is also voice-search enabled, meaning you won’t have to expend vast amounts of time and energy typing out movie titles letter-by-letter on a controller. Antennae to Internet streaming options like Aero have also shown promise in the market. However they’re still a somewhat controversial option given the fact that they are currently embroiled in legal battles with numerous TV stations. 3. THE DOLLA’ BILLS FACTOR Cable is fast-becoming the platform that costs the most and gives you far less than the range of competitive options in the marketplace. Everything you need to know about the shift from TV to online 4.
  7. 7. I KNOW WHAT I WANT Binge-watching once meant spending hours on the couch, mindlessly surfing through hundreds of channels. Today, people know what they want to watch. They’re more likely to pick a show and binge-watch an entire season of it than peruse “what’s on TV right now”. Whether it’s last night’s episode of Suits or the whole first season, you can find it with a few clicks online. Television is essentially becoming something that’s “on in the background” or a larger screen to plug your laptop into and stream off of. 5. ...AND I WANT IT NOW Increasingly, fewer and fewer people have the time or desire to tune into TV broadcasts. They want to catch up on the latest episode of Scandal when and where it’s most convenient for them, whether that’s while waiting for a flight or curled up in bed. 6. DID YOU KNOW… There are more women streamers than men Yet men stream more content per streamer Women stream more long-form content than men Men seem to prefer short-form video and professional videos Everything you need to know about the shift from TV to online
  8. 8. NO ADS/FEWER ADS/OR ADS YOU CAN CHOOSE Netflix and pay-per-episode services like iTunes don’t punctuate your enter- tainment with ads. Videos on YouTube often include pre-roll ads, but they’re generally skippable. Plus, one pre-roll is definitely preferable to five ads every fifteen minutes of programming. Full episode players like Hulu operate on the TV advertising format, meaning your episode is most likely going to be inter- rupted several times by messages from its sponsors. The silver lining here is that thanks to Ad Tailor, you can often pick the ads you want to watch. Plus, people tend to view an online ad much longer than a TV commercial. Everything you need to know about the shift from TV to online Banner ads are another productive option for brands. Not only are they arguably the least intrusive form of advertising from the consumer’s perspective, but also a subtle yet effective advertising tactic from the brand’s perspective. Seeing an ad on TV after having seen the brand’s banner ad online increases general recall by 20% and brand recall by 25%. VIEWERS WATCH AN AVERAGE OF 87% OF AN AD WHEN THEY WATCH IT ONLINE. 7. SALE BANNER AD Everything you need to know about the shift from TV to online
  9. 9. DRAWBACKS TO THE DIGITAL LIFE Everything you need to know about the shift from TV to online
  10. 10. Everything you need to know about the shift from TV to online TV PREMIERES FIRST Fox broke this rule in 2012 when it debuted New Girl online before on TV. The move was successful, leading the network to post premieres of The Mindy Project and Ben and Kate online before TV as well. The CW followed suit with its premiere of Emily Owens M.D. as did ABC with three of its comedy series premieres in 2013 and USA with Denis Leary’s Sirens series. What’s interesting is that even though this convention has already kicked off, it seems to be primarily used for premieres as opposed to the entire season. It’s being used as a tactic to get people hooked on the show online and then drive them back to TV. However, we expect this to change. As networks and advertisers alike begin to wholly absorb the value of the online space, TV schedules and air times will be a thing of the past and content will be released uniformly across platforms. Plus, even if your favorite show isn’t quite up to speed with this new media release convention, the longest you’d have to wait to watch the latest episode, in most cases, is the next morning. 2. 1. CAN INTERNET SPEEDS KEEP UP? Three-fourths of American homes have access to some form of high speed Internet. Yet, all of us have pulled our hair out in frustration over slow streaming speeds at one point or another. As the traffic in the online space skyrockets, and people begin to depend solely on the Internet for their entertainment needs, Internet providers will have to step it up. BUFFERING...
  11. 11. Everything you need to know about the shift from TV to online THE INTERNET IS A BIG PLACE: WHERE SHOULD YOU SEED YOUR BRANDED CONTENT? GENRE News and informational video has an 87% reach in the online space followed by TV shows and clips (41%). SHORT OR LONG-FORM? 92% of streamers watch short-form video, while only 20% watch long-form video. Four out of five minutes are spent streaming short-form content. PROFFESSIONAL OR USER-GENERATED CONTENT Two-thirds of the time spent watching digital content is spent watching professionally created videos. As of 2012, professional online content was growing 8% a year. TIMING Historically, there’s a spike in online video viewing during the month of January.
  12. 12. 3. THE “TRUST” DEFICIENCY Everything you need to know about the shift from TV to online “More technology and increased automation make digital media more profitable and scalable for agencies, but this shift toward auto- mation is largely incompatible with the human relationships that un- derpin the TV advertising business,” claims Nielsen and Simulmedia’s report on on the future of advertising. The digital space is a data goldmine, but some brands and entertainment companies seem to be hesitant towards hinging too much on digital.
  13. 13. Everything you need to know about the shift from TV to online
  14. 14. DISH just signed a major deal with Disney to bring ESPN, ABC and Disney content online using the over-the-top format. Simi- lar to the Netflix model, over-the-top implies that all you need to enjoy programming is a subscription to the site and a work- ing Internet connection. Dave Shull the company’s Chief Com- mercial Officer said the move was targeted at Millennials in the 18 to 34 age range and subscription is likely to cost around $20-30 a month. DISH is also in talks with other networks and channels to expand its online content offerings. Charles Ergen, DISH’s dynamic Chairman also spoke of combining satellite TV with a wireless network provider. A proposition that T-Mobile’s CEO John Legere found most intriguing. Everything you need to know about the shift from TV to online
  15. 15. Having already acquired online video publishing company thePlatform in 2006, the entertainment giant just bought online advertising firm FreeWheel for roughly $375 million. FreeWheel was founded in 2007 and aims to streamline in-programming ad offerings across devices. Comcast’s interest in FreeWheel and FreeWheel’s immense success over the last five years are indicative of the growing need for multi-platform streamable ads to keep up with content that is increasingly becoming characterized by its multi-platform playability. Comcast also inked a deal with Netflix, which provides the online entertainment giant with a direct connection to the Comcast network allowing Comcast Internet subscribers a better Netflix experience than their counterparts on Verizon or AT&T for instance. One of the most controversial mergers in play right now, the Comcast and Times Warner Cable union, is set to undergo some heavy anti-trust scrutiny. The merger comes at a time when their core business is on the decline and thus perhaps hints at their shared desire to armor themselves in the TV v. online battle to come. Everything you need to know about the shift from TV to online
  16. 16. Everything you need to know about the shift from TV to online Verizon bought Intel’s “digital TV” company OnCue earlier this year. “The OnCue platform and team will help Verizon bring next-generation video services to audiences who increasingly expect to view content when, where and how they want it,” said Verizon CEO Lowell McAdam. The telecom giant is also in talks with online content providers to explore the possibility of expanding its TV-for-mobile offerings.
  17. 17. VIMEO recently announced $10 million in funding for con- tent producers using its online video platform. The company will help users produce their videos in exchange for the abil- ity to stream them exclusively via VIMEO On Demand. Read our blog post about the latest additions to this list: “Online Video Updates: HitFix and Disney Join the Fray” Everything you need to know about the shift from TV to online
  18. 18. Everything you need to know about the shift from TV to online TAKE-AWAYS FOR BRANDS
  19. 19. GROWTH: RIDE THE WAVE EARLY TV still has the highest reach of all the media options in the market, reaching 283 million people monthly (while online video stands at 150 million). However, its growth curve is basically flat. Online video viewing, on the other hand, is rising exponentially; online video viewing has grown by 103.1% between 2009 and 2013, while the monthly hours streamed per streamer increased by a whopping 49% between 2011 and 2012. In fact, Nielsen reports that by shifting 15% of its advertising budget towards digital advertising, brands could increase their reach by 4%, CPG’s could reach 17% of their audience on BOTH platforms (read about the duplication effect below), and non-CPG’s could increase their reach by 6%. People spend roughly 36% of their time online, but brands seem to only spend 10-12% of their budgets on advertising in the digital space, resulting in a $50 billion shortfall between consumer and advertiser. 1. 283 MILLION AVERAGE PER MONTH 150 MILLION PER MONTH & GROWING Everything you need to know about the shift from TV to online
  20. 20. Everything you need to know about the shift from TV to online Lean forward interfaces like laptops and smartphones are conducive to multi-tasking and high activity content consumption. lean back mediums like TV imply a more relaxed and passive type of content consumption. Nielsen reports that online video advertisements are more effective than TV video ads in terms of general recall, brand recall and overall effectiveness. HIGHER ENGAGEMENT: LEAN FORWARD V. LEAN BACK2. FULL EPISODE PLAYER ADS V. TV ADS General recall is enhanced by 39% Brand recall by 85% Message recall by 100% Brand Likeability by 87% ADS IN SHORT-FORM VIDEO V. ADS ON TV General recall is enhanced by 4% Brand recall by 14 % Message recall by 14 % Brand Likeability by 13 % ONLINE VIDEO OUTPERFORMS TV ADS
  21. 21. Everything you need to know about the shift from TV to online TVs have a place in almost every American household and a reach of over 280 million people a month. Sixty-nine percent of ad execs (as part of a placemedia survey) claimed that TV video impressions were more important than online video impressions when brands want a wide variety of people to see it. Only 27% said TV was more important when building anticipation for an event, 23% said it was more important to showing the market that a brand has “arrived”, 22% said it was more important to builds excitement, 19% said it was more important when determining whether the whole video will be watched and 13% said TV impressions were more important than online when the brand needed an immediate response. What these possibly confusing statistics demonstrate is that TV impressions matter more than online video impressions only when you’re trying to reach “everyone”. While TV might be a great medium to use if you’re trying to promote the presidential debate, it doesn’t really offer brands the targeting options they need to navigate the market- place today. Not everyone wants to or will buy your product or service. Targeted advertising is the key to helping your brand reach the right people at the right time. Contextual, geo- graphic and user-specific data makes the digital space the ideal medium through which to reach your ideal demographic. For instance, going the digital route means that your high-tech cooking utensil will be advertised to someone who has just watched Top Chef, an episode of a cooking vlog or searched molecular gastronomy related gifts online instead of to a far broader demographic of 30 to 45-year-old women who tune into a particular cooking show. This might change in the future as TV advertising metrics evolve, but for now, digital is where it’s at for targeted advertising. TARGETED V. PENETRATIVE REACH3.
  22. 22. Everything you need to know about the shift from TV to online MID-ROLL/PRE-ROLL/POST-ROLL? Mid-roll ads seem to be the best bet for brands. SHORT-FORM VIDEO Mid-roll ads are watched 99% to completion and have an attentiveness score of 88. Pre-roll ads are watched 79% to completion with an attentiveness score of 76. Post-roll ads are watched 71% to completion with an attentiveness score of 64. LONG-FORM VIDEO Mid-roll ads are watched 89% to completion with an attentiveness score of 73. Pre-roll ads are watched 81% to completion with an attentiveness score of 78. Post-roll ads are watched 79% to completion with an attentiveness score of 80. Reciprocally, data collection in the digital space allows brands to construct better outreach strategies. For example, Hulu’s Ad Tailor allows viewers to pick the ad they’d like to stream and often prompt viewers with questions about whether the ad they’re viewing is relevant to them or not. If your ad is picked out of the line-up more often during Scandal than during Breaking Bad, you know where to place your content. If your ad seems to have a spike in “relevance” during cooking shows as opposed to late night segments, you have a better idea of whom you should be targeting. CHOOSE YOUR EXPERIENCE
  23. 23. Simply put, e-commerce and the versatility of digital interfaces means that placing your brands con- tent online makes pushing your consumer down the purchase funnel, that much easier. When your ad plays in a full episode player for instance, your website and product are a mere click away. The iPad is incidentally the interface that reports the highest percentage of cart-to-purchase conversions. Everything you need to know about the shift from TV to online PURCHASE CONVERSION4. Advertising online provides brands with the wriggle-room to get truly creative in their attempts to inspire consumer engagement. Whether it’s a pop-up game or a branded survey, advertising online allows companies to move beyond the comparatively passive video format (e.g. Carlsber’s World Cup Quiz on Social Arcade). VIDEO PLUS5. Online ads are the best way to reach light TV viewers or people who watch less than 40 minutes of TV a day. Light TV viewers tend to be younger and towards the more affluent end of the wealth distribu- tion scale, making them crucial for brands. According to YouTube and Nielsen, adding an online video component to your campaign increases your reach into the Light TV Viewer demographic by 4% and costs 92% less than it would if you were to attempt those same results using just TV. (TechCrunch) REACHING LIGHT TV VIEWERS6.
  24. 24. “Television plus digital scores much better in resonance than two TV or two digital ads,” said Randall Beard, Global Head of Advertiser Solutions, Niel- sen. We couldn’t have put it better ourselves. Duplication makes sense. When a potential consumer sees a brand’s TV ad after having already seen its ad played online in either a short-form video or full episode player, they are far more likely to both remember, enjoy and engage with the brand. THE DUPLICATION EFFECT7. SHORT-FORM VIDEO Brand Recall is enhanced by 32% Message Recall is enhanced by 50% Brand Likeability is enhanced by 40% FULL EPISODE PLAYER Brand Recall is enhanced by 33% Message Recall is enhanced by 45% Brand Likeability is enhanced by 50% Everything you need to know about the shift from TV to online
  25. 25. Everything you need to know about the shift from TV to online MUTLI-DEVICE IS THE FUTURE By 2015 smartphones will have grown from 450 million (today) to 1.1 billion. Tablet usage is also set to grow from 252 million to 326 million in the next year. People are increasingly engaging with a multitude of devices, often at the same time. Seventy percent of iPad users for instance, reported using their iPad most whilst watching TV. Plus, if Ellen’s epic selfie and this year’s Super Bowl are anything to go by, entertainment is spilling across interfaces. In fact, the Super Bowl broke the record for the most number of social media interactions initiated during game-time, three times the number recorded at last year’s event according to Trendr. Brands that don’t account for the wide range of interfaces people seem to be using to get their daily entertainment fix aren’t tuned in to the big picture. The device is soon going to become irrelevant. What’s going to be the most important aspect of branding in years to come is creating content that is multi-device playable and multi-device relevant. A vision of the future courtesy Elan Lee, creative director of Microsoft’s Xbox Entertain- ment Studios: “Let’s say you’re watching Game of Thrones and there’s an archer on the screen. He’s on top of a castle tower looking out across a valley and he sights the enemy coming across the field on horseback. He takes a bow and arrow and pulls back the arrow and lets fly. You see it fly across the TV screen, across the valley, across your living room, and on to your phone, where it lands with a thud as the thing shudders in your hand. That’s a device. That’s an ecosystem of devices, aware of its environment and aware of how to use those systems to make storytelling more immersive.” 8.
  26. 26. French media company M6, was originally a go-to site for catch up TV. This year, it launched four free online channels on its digital platform 6play. The channels, segregated by interest are Style (fashion and beauty), Stories (TV movies), Comic (come- dy and shorts) and Crazy Kitchen (cooking). FRANCE British TV channel BBC Three just went completely digital. The corporate decision was primarily motivated by the BBC’s urgent need to slash its budget. Given that lower production and broad- cast costs are a hallmark of the online platform, the move will most likely lead to great results for the company. Especially when one considers the fact that its target audience is 16 to 34-year-olds, a demographic that probably already prefers watches content online. BRITAIN Aside from Netflix launching in Europe with plans to expand, regional Euro- pean entertainment companies seem to be embracing the TV to online shift. NOT JUST AN AMERICAN THING… Everything you need to know about the shift from TV to online
  27. 27. Everything you need to know about the shift from TV to online
  28. 28. AT VIRALGAINS WHAT’S UP AT VIRALGAINS We just launched a brand new series on our blog to give the world a closer look at the people who power ViralGains. Titled “Behind the Scenes” we profile one member of the team each week, and rest assured, hilarity ensues. Take a look at our profiles of early team members Hannah Brenzel and Vitor Petrone as well as the piece on our charismatic CEO Jay Singh. Everything you need to know about the shift from TV to online