In case there was any doubt that the future of all video entertainment is on-demand, a new report confirms the nonlinear genie is out of the bottle and it’s not going back in.
Today’s younger viewers in the 18-to-39 age group regularly watch TV on an on-demand basis, with some watching TV programming only on their computers. Within seven years, that generation probably will consume 80 percent of its TV on-demand via broadband, DVR, iPod or VOD, said Kaan Yigit, analyst with Solutions Research Group in Canada, which issued the report “Digital Life America” to its TV network and studio clients last week. The report is designed to help them understand how TV viewing behaviors are changing.
Given the newness of online video and how quickly viewers have glommed onto it, the study suggests that once you’ve been to Paris, you don’t go back to the farm. “Networks have to think about a future where everything is nonlinear, more or less, and everything is picked out to watch on any and all platforms,” Mr. Yigit said.
That mindset will affect how networks plan and finance programs and integrate advertisers into them. There will be more shows with “brought to you by” or “sponsored by” messages, Mr. Yigit said.
“The analogy would be when Napster was breaking in 1999,” Mr. Yigit said. “We are in the very early stages, and what that means is the smart ones will have to adapt or try to adapt faster to what’s happening now and will stop dismissing certain behaviors as marginal.”
Indeed, when grouped together, on-demand viewing is not marginal at all — it’s the wave of the future, he said. With the exception of perhaps 10 major TV events, such as the Super Bowl and the finale of a show like “American Idol,” the new generation of TV viewers will be watching shows on-demand, with a remote or keyboard in hand.
Already, 50 percent of adults 18 to 39 have watched TV shows on-demand online, on VOD or on a DVR or iPod on a monthly basis, according to the study. To put that in perspective, five years ago virtually none of these viewing options existed. Only a handful of cable operators offered VOD then, and networks weren’t streaming shows online or on iTunes. Now consumers are taking advantage of those new viewing opportunities.
“You give on-demand to people, no matter which way they do it, and they just flock to it,” Mr. Yigit said. “It’s all about saving time.”
That’s why 52 percent of the study’s respondents say they always skip ads when watching shows on DVR. Another 29 percent frequently skip ads. They don’t dislike ads; they’d simply rather gain another 10 to 15 minutes an hour. In fact, skipping ads and saving time appears to add to their TV viewing enjoyment, another reason VOD and DVR usage will continue to rise, the study reported. About 76 percent of respondents said VOD increased their viewing enjoyment and 86 percent said DVR viewing did.
Consumers also are taking quickly to online viewing. Though TV networks have only started to offer their shows online regularly in the past year, already one-quarter of online Americans over the age of 12 — or about 45 million people — have streamed full TV shows at some point. What’s more, 10 percent of Americans have a TV show stored on their computer and 24 percent have a show stored on a mobile device.
In addition to TV shows, they are watching both short and longer videos online. The study found 33 percent of respondents are watching videos longer than 10 minutes and 52 percent are watching videos shorter than 10 minutes on the Internet. These findings suggest networks will continue to face more competition online from new content producers.
The younger generation will lead this massive viewing change in the next five years. Already 43 percent of Americans 20 to 29 have streamed TV online. That’s about twice the number of 40- to 50-year-olds who have. However, as younger folks spend time with their parents in today’s blended families, they’ll introduce them to new ways of watching TV, Mr. Yigit said. In turn, today’s younger viewers will pass on their habits to their kids.
Mr. Yigit urged networks to look at consumer behavior changes in the aggregate and not individually for each new medium.
“If I watch VOD on a Saturday night, it’s really the same fundamental behavior as downloading a movie for a 22-year-old. It’s driven by the same general instinct,” he said.