TV Everywhere Research

TV Everywhere Research

A summary of research findings regarding TV Everywhere from

various sources

Compiled August, 2015 by CTAM

TV Everywhere

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Contents THE UNIVERSE OF TVE USERS ....................................................................................................................... 2

How large is it overall? .............................................................................................................................. 2

Use by network? ....................................................................................................................................... 4

Use in home vs. out of home? .................................................................................................................. 8

Growth/trends of unique users? .............................................................................................................. 8

Profile of the TVE User vs. Non-User? ...................................................................................................... 9

BEHAVIOR ................................................................................................................................................... 13

Frequency ............................................................................................................................................... 13

What has the frequency of use been over time? ................................................................................... 14

How has usage of live stream vs. on demand changed over time? ........................................................ 15

What percentage of time is spent, by demo, streaming content by device? ......................................... 15

What does streaming of older, library content look like vs. episodes from current seasons? .............. 16

How is viewership of short- and long-form content changing? ............................................................. 16

What are the demos of streamers of different content, on different devices? ..................................... 16

What does usage look like by device? .................................................................................................... 17

What does usage look like in terms of time of day and content? .......................................................... 21

Do users prefer MVPD-aggregated services or network services? ......................................................... 22

ISSUES & OPPORTUNITIES ........................................................................................................................... 24

What percentage of consumers could use TVE but aren’t? Why not? .................................................. 24

What do we know about the authentication process? .......................................................................... 28

How does TVE fit in with other viewing platforms, what occasions drive usage? ................................. 30

Is TVE being used in place of other platforms or in addition? ................................................................ 34

To what extent does password sharing occur? ...................................................................................... 35

Is TVE driving eyeballs back to linear? .................................................................................................... 35

PERCEPTIONS, SATISFACTION & EXPECTATIONS ........................................................................................ 35

What is the consumer perception of TV Everywhere? ........................................................................... 35

What do we know about satisfaction? ................................................................................................... 38

What do viewers want or expect? .......................................................................................................... 39

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ADVERTISER VALUE & MONETIZATION ...................................................................................................... 42

What’s the incremental value of TVE content to the advertiser? .......................................................... 42

What do drop off rates at varying ad loads look like? ............................................................................ 46

Metrics of digital video monetization ..................................................................................................... 46

THE UNIVERSE OF TVE USERS

How large is it overall? 86% of the total U.S. Internet population watches online video.1

Reported actual numbers and share of viewers using TV Everywhere vary across sources.

Adobe reports that on average, 13 million household viewers tuned in to TVE services in 2014; up 116%

from 6 million in 2013. 12.5% of Pay-TV subscribers actively viewed TV Everywhere content in Q4

2014; up 184% since Q1 2013 (Fig. 1).2

(Fig. 1)

In 2014, Parks Associates estimated that there were 27 million North American TV Everywhere users,

and projected this number to grow to nearly 64 million by 2018 (Fig. 2).3

1 ComScore Presentation: The Future of TV is Total Video, November 2014. Manish Bhatia, Chief Revenue Officer,

comScore 2 U.S. Digital Video Benchmark: Adobe Digital Index 2014 Annual Report

TV Everywhere

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(Fig. 2)

Hub Research found that by June, 2015, 44% of cable subscribers use TVE at least once a month (Fig.

3).4

(Fig. 3)

3 Parks Associates TV Everywhere 2.0: The Next Steps in Multiscreen, March 2014

4 Hub Research, CTAM TV Everywhere Wave Four Report, Among P18-64, July 2015

TV Everywhere

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Per Parks Associates, of those subscribers aware of TV Everywhere services from their pay-TV

provider, 77% claim to use the TV Everywhere service, a 19% increase from 2012.5

Early 2015 research commissioned by natpe/CEA identified 71% of the U.S. population A13-54 (with

high-speed Internet access) are “TV Streamers” overall.6

Use by network? Hub Research reported for June, 2015 that TVE viewing of basic cable networks remained widely

distributed across networks (Fig. 4). Expansion of the networks surveyed in this wave of the study

revealed highest penetration for History Channel and Food Network (Fig. 5), as well as AMC (Fig. 4).

Watch ESPN remains the most mentioned sports TVE app, with Fox Sports Go on its heels (Fig. 6) and

HBO Go the most widely mentioned premium source (Fig. 7).7

(Fig. 4)

5 Parks Associates TV Everywhere 2.0: The Next Steps in Multiscreen, March 2014

6 NATPE/CEA Consumer Choice in a Dynamic TV Landscape, November 2015


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(Fig . 5)

(Fig. 6)

TV Everywhere

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(Fig.7)

Use of non-authenticated broadcast sites and apps continues to fall, per Hub Research (Fig. 8).8

(Fig. 8)


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A study commissioned by Discovery Networks and conducted among P18+ also found a similarly wide

distribution of monthly/+ viewing across sources (Fig. 9).9

(Fig. 9)

9 Discovery Media Consumption Study, December 2014

Total 18+ Pay TV Sub 18+

Base: 1411 1171

Netflix 32% 29%

YouTube 17% 16%

ABC 12% 12%

CBS 11% 11%

Hulu 11% 9%

Amazon Instant Video 11% 10%

NBC 9% 9%

HBO Go 9% 9%

FOX 9% 8%

Cable or satellite provider's site or app 9% 9%

Hulu Plus 8% 7%

TBS 7% 8%

ABC Family 6% 7%

A&E 6% 7%

USA 6% 7%

TNT 6% 7%

Comedy Central 6% 6%

AMC 6% 7%

History Channel 6% 6%

ESPN 5% 6%

Discovery Channel 5% 6%

PBS 5% 5%

FX 5% 5%

TLC 5% 5%

Syfy 5% 5%

Lifetime 4% 5%

The CW 4% 4%

MTV 4% 4%

Showtime Anytime 4% 4%

Crackle 4% 3%

Nickelodeon 3% 4%

Animal Planet 3% 4%

Spike TV 3% 3%

Bravo 3% 3%

Starz Play 3% 3%

E! 2% 3%

Max Go (Cinemax) 2% 3%

BET 2% 2%

Encore Play 2% 3%

VH1 2% 2%

Univision 1% 1%

Q5A. How frequently do you watch full episodes on each of these ... sites or apps? (% Monthly+)

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Use in home vs. out of home? The Diffusion Groups’s Senior Analyst Joel Espelien notes that, ironically, mobile video is primarily

about in-home viewing, rather than viewing while on the go. “According to February 2015 research,

close to 80% of tablet viewing and 50% of smartphone viewing takes place in the home. It’s less about

‘mobile’ viewing as commonly imagined and more about the individualization and personalization of TV

itself.” 10

Similar, Hub Research found that 78% of viewers were at home the last time they watched TV on a

tablet, and that 69% reported, “My most recent viewing session on a mobile app was inside home”.11

Of note, certain types of viewers are more likely than others to associate TV Everywhere specifically with

out of home viewing. While 14% of the base surveyed agreed that “Watching TV shows and movies

from your TV service when you’re at another location (someone else’s home, airport, hotel, etc.) came

closest to their understanding of “TV Everywhere”, 21% of Amazon Prime and Roku users agreed with

this description. And, not surprisingly,19% of those who watch on a phone were more likely than the

base (14%) to describe TVE as “Watching TV shows and movies from your provider outside your home”,

as were 22% of Apple TV users.12

The average number of devices used to watch TV online in 2014 was 2.7, vs. 2.3 in 2013. Mobile devices

like tablets are increasingly being used as devices for viewing at home. “The last time you watched on a

tablet were you…”: At Home 78%, Away from home 22%. (Base: have watched TV on computer, tablet

or smartphone).13

Growth/trends of unique users? According to new research from TDG, mobile video viewing on smartphones and tablets will

experience strong growth over the next decade (2015-2025), taking share from both legacy TV and PC-

based broadband video viewing. By 2025, mobile video will account for more than 20% of total video

viewing minutes among US consumers (including legacy TV).

“The concept of ‘watching television’ is being redefined,” notes TDG’s Senior Analyst Joel Espelien,

“transforming from a social medium characterized by groups of viewers sitting in front of the living

room television, to an individual medium defined by solitary viewers watching programs on smaller,

more personal devices such as tablets and smartphones.” Importantly, this transformation represents

10

TDG Press Release: TV Gets Personal: Mobile Video to Account for 20% of Total Viewing by 2025; March 4, 2015; www.tdgresearch.com 11

Hub Research 2015: What’s TV Worth Study; April 2015 12


Hub Research 2015: What’s TV Worth Study; April 2015

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the replacement of mass-market broadcasting by personalized video apps, some of which are already

generating half of their total video traffic from such devices.14

FreeWheel’s take on the strong growth of video ad viewing during 2014 is that viewers finding new

ways to watch their favorite “ultra-premium content” are expanding the TV ecosystem. To wit:

Live viewing grew 297% year-over-year, driven by strong growth in Sports streaming and News simulcasts

First-run broadcast shows attracted far more viewers in Q4 2014 than in the year prior (67 % increase in digital video ad views)

Over-the-top (OTT) streaming devices, overwhelmingly used for long-form and live viewing, overtook tablets, accounting for 8% of all video ad views

Viewers are accessing current season content throughout the television season. 64% of viewing occurred over a week after that content’s original air date.

Authenticated viewing grew 591% year-over-year, as 56% of all video ad views on long-form and live content now come from behind authentication walls.15

Profile of the TVE User vs. Non-User? Viacom identifies two groups of viewers:

Authenticators complete authentication as pay TV subscribers. They are early adopters –21% of authenticators started using TVE because they like to be the first to try new things.

Digerati watch shows on apps and sites but don’t authenticate.16

Parks Associates has identified seven viewer segments which are based on time spent consuming

video and display platforms used (table below, Fig. 10).17

Avid Viewers Above average consumption of video across all devices. Relatively higher levels of education. Relatively younger. More than 50% have children. More than 90% are pay-tv subscribers. High video spending. Enjoy staying on top of technologies and like owning the latest devices. Don’t worry about saving money and getting the best value as much as other segments.

Traditionalists Above average video consumption on the TV. Below average on all other devices. Relatively higher levels of education. Less likely to have children in the home. Do not often watch TV with others. Likely to follow a particular series on TV and to watch at the time of broadcast. High spending on triple play bundles and access services. High use of premium Pay-TV features. Relatively older.

14

TDG Press Release: TV Gets Personal: Mobile Video to Account for 20% of Total Viewing by 2025; March 4, 2015; www.tdgresearch. 15

FreeWheel Video Monetization Report, Q4 2014FreeWheel Video Monetization Report, Q4 2014 16

Viacom Strategic Insights & Research, TV, Here, There, (Not Quite) Everywhere, 2014 17

Parks Associates Digital Media: Q3 Market Focus: The Death of Linear TV?, Q3 2014

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Travelers Above average video consumption on mobile devices. Relatively younger. High percentage of females. More than 50% have children. Children heavily influence spending and viewing in the home. Use mobile devices while watching TV. Relatively low spend on triple-play bundles, but high spend on broadband and mobile services.

Rooted Viewers Above average video consumption on large screen devices (TVs and computers). Below average on mobile. Relatively lower income. Relatively lower levels of education. Value-conscious. Low spending on TV, but moderate overall video spending. High use of VOD. Others in the household rarely influence video spending.

Multiscreeners Above average video consumption on computer and mobile devices. Below average on TV. Relatively younger. Less likely to be married than other groups. Relatively lower income. Lower rate of home ownership and higher rate of apartment dwelling than other groups. Lowest likelihood to have a pay-TV subscription. Relatively low ARPU for triple play services or standalone broadband / TV services. High overall spending on video, including paid VOD. Higher than average TV Everywhere awareness. Feel that online video is just as good as Pay-TV.

Purists Exclusively watch video on a television. Relatively older. Less likely than other groups to have children at home. More than 90% are Pay-TV subscribers. Lower overall video spending, but high ARPU for standalone TV services. Among groups, most likely to be married and most likely to own a home. Do everything they can to save money and get the best value when purchasing anything.

Light Users Below average video consumption across all devices. Among groups, highest triple-play bundle ARPU. Low overall video spending. Lowest use among groups of all premium pay-TV services. More likely than other groups to watch TV programs when broadcast but do not necessarily follow a particular series. Less open to technology as a way to save time. Less likely to pay more for convenience.

Source: 18 (Fig. 10)

One distinguishing characteristic of Multiscreeners is a heavy reliance on computers as a viewing

platform. Computers account for 64% of Internet video consumed by this group, as well as a majority

of all video consumed by this group.19

18

Parks Associates Digital Media: Q3 Market Focus: The Death of Linear TV?, Q3 2014 19


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TV Everywhere users have several characteristics that set them apart from average pay-TV

subscribers, including:

Younger age (on average, seven years younger)

More likely to have children at home

A higher rate of connected device ownership

Higher monthly ARPU

Higher spending on all types of video (Fig. 11, Fig. 12)20

(Fig. 11)

(Fig. 12)

Parks Associates reveals that TVE use is inversely proportional to age (Fig. 13)21, and further determined

that TV Everywhere users are more likely than average subscribers to have downgraded their pay-TV

package in the past year to a lower cost option, so called cord-shaving or cord-trimming. However, the

higher overall ARPU for TV Everywhere users suggest that these subscribers either make up for their

20

Parks Associates TV Everywhere 2.0: The Next Steps in Multiscreen, March 2014 21

Parks Associates Access & Entertainment Services: Q3 Market Focus. TV Everywhere Use & Authentication, Q3 2013

TV Everywhere

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lower-priced TV package with a higher priced broadband package or that they still have more

premium video services than average subscribers, even after a downgrade.22

(Fig. 13)

Hub Research has identified a preference for mobility as an important characteristic of TV Everywhere

users. They are more likely to use a portable device for email than an average subscriber, twice as

likely to update Facebook with a tablet, and 50% more likely to catch up on news and blogs via

smartphone. TVE use is higher among premium channel subscribers and Smart TV owners.23

Demographic differences are less dramatic, although use is stronger among males and Millennials, and

data from Hub Research suggests that men will be more attracted to messages touting TVE as an

exclusive benefit (Fig. 14).24

22




TV Everywhere

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(Fig. 14)

BEHAVIOR

Frequency According to Hub Research, heavy TVE users – those MVPD subscribers who say that they access TV

content that requires MVPD authentication “daily or several times a week”- have grown from 15% to

23% in the six months between the waves collected in January and June, 2015 (Fig. 15).25

25

Hub Research, CTAM TV Everywhere Wave Four Report, Among P18-64, July 2015

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(Fig. 15)

What has the frequency of use been over time? Parks Associates reported in 2013 that roughly one-half of those that report having TV Everywhere

service used it on a monthly basis, and that most pay-TV subscribers who reported successfully using

online video that requires authentication also reported doing so with some level of frequency—13%

watched authenticated video at least monthly.26

Parks Associates also observed in 2013 that 21% report watching video on websites that require

verification several times a week or daily (sum of “daily/almost daily” – 8% and “1-3 times a week” –

13%).27

Adobe observed in the U.S. Digital Video 2014 Inaugural 2014 report that the frequency with which

viewers are logging in and engaging with premium subscription gated content is growing rapidly, driving

TV Everywhere to become more mainstream. TV Everywhere average active quarterly viewers grew

from 6% to 13% year over year.28 Most recently, Adobe has observed that active monthly household

viewership was up 6% quarter over quarter in 1Q 2015, rising to 13.2% of HH’s.29

26

Parks Associates Access & Entertainment Services: Q3 Market Focus. TV Everywhere Use & Authentication, Q3 2013 27


Adobe U.S. Digital Video 2014 Inaugural Report, Adobe Digital Index 29

Adobe Q1 2015 Digital Video Report, Adobe Digital Index

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According to data collected for natpe/CEA, 52% report viewing full-length TV programs or series on

network websites once a week or more often, and 51% report using official apps with this frequency.30

How has usage of live stream vs. on demand changed over time? Linear video (vs. non-linear video) accounted for roughly one-fifth (19%) of the video consumed on

smartphones in 2014, down from 25% in 2012.31 Although smartphone live viewing is down, delayed

viewing is on the rise.32

Live sports have been deployed as a “gateway drug”, hooking new adopters and indoctrinating digital viewing habits. Live events are also more likely than other digital video content to be viewed across device platforms and are used as an entry point for TV Everywhere offerings.33 During 2014, each successive quarter brought record volumes of live streaming, culminating with a 297% annual growth rate. Strong volumes seen in Q2 and Q3, largely propelled by the World Cup, were eclipsed by events such as the College Football Bowl Season in Q4, as 23% of Programmer ad views were on live content and 83% of live ad views came from Sports.34

What percentage of time is spent, by demo, streaming content by device? Those A18-34 and digital video subscribers are most likely to time-shift their TV viewing, per comScore

findings (Fig. 16).35

(Fig. 16)

30

NATPE/CEA Consumer Choice in a Dynamic TV Landscape, November 2015 31

Parks Associates Digital Media: Q3 Market Focus: The Death of Linear TV?, Q3 2014 32

Nielsen: SVOD Services in 41% of U.S. Homes, 3/11/2015 9:00 AM Eastern, Jon Lafayette, Broadcasting & Cable 33

FreeWheel Video Monetization Report, Q4 2014 34


comScore Presentation: The Future of TV is Total Video, November 2014. Manish Bhatia, Chief Revenue Officer, comScore

TV Everywhere

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Further, 82% of those A18-34 report using a second screen device while watching TV programming on

a TV set at the same time (42% “frequently” and 40% “Occasionally”). This figure is 70% overall, and

drops with age, to 57% for A50-64.36

What does streaming of older, library content look like vs. episodes from

current seasons? FreeWheel first reported on relative age of content being viewed for Q4 2014. Video ad views of

Broadcast show current seasons grew 67% during 2014. While most Broadcast networks saw Fall TV

ratings drop or remain stagnant in 2014, the fact that digital viewing spiked so dramatically suggests

that viewers are not going away so much as finding new ways to connect with their favorite

programs.37

94% of ad views were during current season content in Q42014 (vs. 86% in Q42013). Correspondingly,

ad views during archival content dropped from 14% to 6%.38

How is viewership of short- and long-form content changing? FreeWheel reported a 43% increase in video ad views on long-form (20+ minute) content year over

year (Q4 2014 vs. Q4 2013), continuing a trend observed as viewers replicate the TV experience in the

new digital living room and outside the home. By successfully packaging bite-size clips for digital

platforms, publishers grew video ad views 19% on short-form (less than 5 minute) and mid-form (5-20

minutes) content.39

Long-form content accounted for 52% of Programmer video ad views in 4Q2014. FreeWheel

hypothesizes that long-form content is poised to increase share as digital-first Publishers make original

content a strategic priority.40

What are the demos of streamers of different content, on different devices? When Millennials watch original TV series on a TV set, they often do so through a digital connection,

streaming the series online. 32% report using an Internet-connected TV device within the past month

for the purpose of viewing original TV series content, and 25% report using a gaming console or Blu-Ray

player.41

Attitudes toward viewing live vs. streaming vary on a few dimensions. SVOD subscribers A50-64 are

much more likely than those who are younger to report that they “prefer watching shows live, at the

time they air, so I can discuss the latest episode with friends/family”. Younger SVOD users, A13-34 and

36

comScore Presentation: The Future of TV is Total Video, November 2014. Manish Bhatia, Chief Revenue Officer, comScore 37





ComScore Presentation: The Future of TV is Total Video, November 2014. Manish Bhatia, Chief Revenue Officer, comScore

TV Everywhere

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A35-49 are more likely than older users to report that they “prefer waiting until a whole season of a

show is available to watch so that I can watch the entire thing.”42

What does usage look like by device? TV Everywhere users have 2.7 more Internet-connectable CE devices than the average pay-TV subscriber

and are likely to have more screens in their homes, more devices connected to the television, and more

mobile devices than average subscribers.43

TV-E authenticated videos grew 467% from January 2013 to December 2014 (Fig. 17).44 Authenticated

video starts grew 282% year over year through 1Q 2015, even in the absence of a major sporting event. 45

(Fig. 17)

Gaming Console & OTT device share of videos rose 50% during 2014. iOS share was down 21% YOY and

19% QOQ.46 Connected TV devices like Apple TV, Roku and Xbox grew 4x share year over year in 1Q

2015, increasing from 6% to 24% of authentications.47

iPad is the most popular device for streaming TV-E content (of the device breakdowns shown below),

with 29% share of authenticated videos in Q4 2014; Roku is most popular OTT device (Fig. 18).48

42



U.S. Digital Video Benchmark: Adobe Digital Index 2014 Annual Report 45

Adobe Q1 2015 Digital Video Report, Adobe Digital Index 46



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(Fig. 18)

Mobile continues to increase share of video views; smart phone share up 55% YOY in 2014, to 15%, and

tablet share up 25% YOY to 12%.49 Apple TV drove growth of connected TV devices in the most recent

year ended Q1 2015, doubling its share of all authentications quarter over quarter (from 5% to 10%).50

Larger screens lead to more time spent viewing online videos. Q42014 vs. Q32014, smart phone

viewers spent 24% more time per month, however time spent watching content on a desktop was 14

times longer than watching on a smart phone in Q4 2014.51

Hub Research corroborates this finding in use of devices to watch TV “in the past six months” (Fig. 19).52

48






TV Everywhere

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(Fig. 19)

By creating a device index which multiplies incidence of reported device use by share of total usage

for TV, Hub Research pegs the website/PC as the runaway favorite, with Roku, game console and

Smart TV rounding out the above-average devices other than the TV screen (Fig. 20).53

(Fig. 20) 53


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Freewheel reports that 30% of monetization in 4Q2014 came outside of desktop and laptop

environments, bringing the share of viewing outside of “traditional” digital platforms up about 20%

for all of 2014. While each device saw double-digit growth in both the quarter and 2014 as a whole,

monetization on smartphones and OTT streaming devices exploded, growing 70% and 236%

respectively, in 4Q2014. In addition, 4Q2014 was the first in which OTT streaming devices (such a

Roku, AppleTV, Chromecast, FireTV, Xbox and PlayStation) combined to account for a larger share of

monetization than tablets. Dramatic increases in purchases of streaming media players and slower

growth of tablet sales globally demonstrate many viewers prefer the “lean-back” experience of

streaming content onto their television set vs. the smaller tablet screen.54

TV viewing habits were found to be most closely replicated on OTT devices. Live streams are more

likely than other digital video to be viewed on OTT devices, accounting for 37% of live volume,

compared to 8% of all viewing. Additionally, 91% of video ad views on OTT devices come during long-

form and live content.55

Meanwhile, desktop computers, laptops, and smartphones continue to be used for viewing shorter

content. 70% of desktop computer and laptop video ad views and 75% of smartphone video ad views

are on content under 20 minutes in duration. Computers and smartphones are used to “snack” on

content through the workday while tablets and OTT devices tend to live in the hone and are “binge

viewing” portals.56

Confirming these findings, Parks Associates reports that TVs are the preferred platform for movies and

TV programs. Computers come second; tablets and mobile phones a distant third. The consumer’s first

display choice to watch a movie or TV program is generally not a computer, tablet, or mobile phone.

Consumers fall back to these options when TV viewing isn’t feasible or is too expensive. Further,

viewing habits differ little by platform. Regardless of which platform consumers use to watch movies

and TV programs, their habits are remarkably similar. They watch the same kind of content

(mainstream titles), at the same time (evenings), and in the same locations (living rooms and

bedrooms). They also watch a similar balance between previously seen and unseen content (50/50%)

and oftentimes watch with family and friends. Alternative platforms provide only slightly less social

viewing than the TV.57

Parks Associates finds that frequency of viewing is directly proportional to screen size (Fig. 21).58

54






TV Everywhere

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(Fig. 21)

Even so, Parks Associates notes that premium content consumption on mobile devices saw sharp

increases from 2011-13, with broadband households reporting that they “use the Internet to watch TV

shows and moves on a mobile phone/tablet” growing from 14% to 27% over the period.59

comScore identifies the significance of Millennials as early adopters. In 2014, A18-34 reported 19% of TV

viewing on computer, 6% on smartphone and 6% on tablet, paving the way for mainstream

multiplatform adoption. In fact, 1 out of 6 Millennials did not watch from traditional TV sets in the past

month. 60

What does usage look like in terms of time of day and content?

Adobe reports that viewers turn to TV Everywhere to stream movies, with unique visitor growth up 216% over 2014. However, Sports content has over 3 times as many unique visitors as Movie content; Broadcast & Cable content has almost twice as many unique visitors as Movie content.61

59


ComScore Presentation: The Future of TV is Total Video, November 2014. Manish Bhatia, Chief Revenue Officer, comScore 61

U.S. Digital Video Benchmark: Adobe Digital Index 2014 Annual Report

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More recently, Adobe notes that TV Everywhere authenticated video starts see a continuation in growth; even during a period without unique landmark sporting events like the Olympics and World Cup. This has led Adobe to conclude that the technology has crossed the chasm and moved into the “Early Majority” stage.62 With only 7% of sports authenticated content viewed through a gaming console or OTT device, TV Everywhere viewers are less likely to watch sports programming in the living room, compared to other types of programming, such as movies – 14% of which are played through a gaming console or OTT device. TV Everywhere movie viewing is more common on an Android device; compared to the rest of the industry. Android share of authenticated movies was 27% in 4Q2014, compared to an industry-wide 15% share of all authenticated videos.63 The highest share of video authentications occurs on Wednesdays, followed by the weekend, observes Adobe in its 1Q 2015 report. The Friday night “TV Death Slot” is actually a popular time for binge viewing.64

Do users prefer MVPD-aggregated services or network services? Hub Research finds that TVE (authenticated) use is fairly evenly distributed across MVPD, premium

cable, and basic cable sites and apps. Have watched online content from a/an…:

MVPD (authenticated) – 32%

Broadcast Network – 64%

Premium Network (authenticated) – 30%

Basic Cable Network (authenticated) – 26%. In addition to authenticated content, 6% say they’ve watched broadcast TV content from a site or app.65

Websites are the most common form of access across providers (Fig. 22).66

(Fig. 22)

62


Adobe U.S. Digital Video 2014 Inaugural Report, Adobe Digital Index 64




Accessed through…

Have watched content from…

Website Tablet App (or) Smartphone App

Connected TV App or Icon

MVPD 22% 16% 17%

Broadcast Network

59% 28% 27%

Premium Network 24% 20% 17%

Basic Cable Network

20% 19% 16%

TV Everywhere

23

Websites, then mobile and connected TV apps are the most frequented vehicles for authentication

(Fig. 23).67

(Fig. 23)

According to a Discovery Media Consumption Study, among Pay-TV subscribers A18+ over the past

year:

25% streamed from a broadcast or cable TV network’s own site or app (e.g., NBC.com, BravoTV.com)

15% streamed from a premium TV channel’s site or app (e.g., HBO Go, Showtime Anytime)

11% streamed from a cable/satellite provider’s site or app (e.g., Xfinity TV, TWC TV) 68

Research performed for natpe/CEA found that among SVOD subscribers over the past 6 months:

25% sourced TV programming from a network website

12% sourced from a network app

12% sourced from a TV service provider streaming video app 69

67

Hub Research, CTAM TV Everywhere Wave Four Report, Among P18-64, July 2015 68

Discovery Media Consumption Study, December 2014 69

NATPE/CEA Consumer Choice in a Dynamic TV Landscape, November 2015

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Hub Research also finds that satisfaction is higher with VOD services than with MVPD sites or apps (Fig.

24).70

(Fig. 24)

Viacom reports that TVE helps networks preserve a favorable fan base. 68% have a more favorable

impression of networks that offer TVE apps/sites. 71

ISSUES & OPPORTUNITIES

What percentage of consumers could use TVE but aren’t? Why not? The majority of aware non-users claim that they do not use TV Everywhere because “watching

programs on computers, smartphones and tablets is not enjoyable.”72

Viacom’s identified Digerati segment don’t see a need for TVE, but also worry about fees and login

issues. Reasons Digerati don’t use TVE:

Simply no need - 34%

Worried about costs/fees - 28%

Login issues - 23% (32% for Kids)

Lack of awareness - 21%

Tech concerns - 20%

70



Parks Associates TV Everywhere 2.0: The Next Steps in Multiscreen, March 2014

TV Everywhere

25

Kid concerns - 19%

Not offered by provider - 12%

Privacy concerns - 9%

Don’t think it has current episodes - 6% 73

Viacom’s Off-Liners don’t see a need for TVE either, but also are concerned with screen size and hidden

fees. Reasons Off-Liners don’t use TVE:

Simply no need - 61%

Small screen size - 32% (57% of teens vs. 18% of kids)

Worried about costs/fees - 26% (39% of teens vs 22% of kids)

Tech concerns - 24%

Lack of awareness - 17%

Kid concerns - 7%

Don’t think it has current episodes - 7%

Privacy concerns - 4% 74

A key inhibitor to TV Everywhere use is simply an aversion to watching movies and TV programs on

alternative platforms. One-half of those not using TV Everywhere say it is because of this. Service

providers can do little to change this sentiment. At the same time, a notable portion of subscribers cite

problems with the service or a limited understanding of how it works—factors the service providers can

influence.75

Viacom found that the top concerns current users have with TVE are tech-related, followed by issues

with the content. Tech-related issues with TVE (among Authenticators):

Long loading/buffering – 24%

Crashing/freezing -23%

Too many ads I can’t skip - 21%

Poor video quality - 15%

Start/stop issues - 12%

Device incompatibility - 12%

Poor sound - 11%

Content-related issues with TVE (among Authenticators):

Episodes disappear - 16%

Lacks current episodes - 15%

73




TV Everywhere

26

Lacks all seasons - 13%

19% say they have no problems with TVE.76

Awareness is still a significant issue. Despite the widespread availability of TV Everywhere services in

the U.S. market, only 24% of pay-TV households in 2013 claimed to have a feature from their pay TV

provider which allows users to watch programs on a computer, mobile phone or tablet. This

awareness measurement was double the 12% figure found in 2012, and varied by less than 10

percentage points across providers, with DISH at 20% and Comcast/Xfinity at 28% (Fig. 25).77

(Fig. 25)

Awareness grew coming into 2015 but has plateaued in 1Q2015. Hub Research shows aided awareness

of TVE among Cable subs A18-64 is flat, with 57% “definitely aware” (Top Box) after the concept is

described, as of July 2015 (Fig. 26).78

76




TV Everywhere

27

(Fig. 26)

As Hub Research summarizes, “TVE the name is not well known – even among TVE users. Neither is the

value proposition. As things stand now, Netflix and Hulu stand to benefit from promoting TV Everywhere

as a brand.” Those who claim the strongest understanding of TVE are actually more likely to say it

applies to ANY provider including Netflix, Hulu, iTunes, and so on. And those who actually use TVE the

most are especially likely to say the concept only applies to viewing in transit (heavy TVE users, 12%

vs. 6% of the base). What’s more, even those who say they’re familiar with TVE have less than a

consistent definition. Only 1 in 3 (34%) of those who have at least heard of TVE understand “TV

Everywhere” to mean watching TV shows and movies from your cable or satellite service on different

devices – computer, smartphone or tablet.79

Viacom research also identified as barriers to overcome TVE’s lack of awareness and understanding.

Noting no go-to source for discovery, the recommendation in light of the low awareness is to consider

all audiences and marketing avenues. Optimizing messaging to alleviate cost concerns and

communicate TVE value (content & flexibility) are suggested approaches to improving

understanding.80

79


Viacom Strategic Insights & Research, TV, Here, There, (Not Quite) Everywhere, 2014

TV Everywhere

28

What do we know about the authentication process? Over one-half say they must authenticate every time they use the site or each time they watch

something. Of note, another 11% say they must authenticate occasionally, but they are not sure

when.81

A majority (57%) of those that watch authenticated video say that they are deterred by the

authentication process some of the time. 8% of pay-TV subscribers are deterred by the authentication

process on a monthly basis.82

A number of factors deter subscribers from using authenticated video (Fig. 27).83

(Fig. 27)

The nature of the beast is such that the more often subscribers must authenticate, the more

frequently they are deterred from watching video (Fig. 28).84

81





TV Everywhere

29

(Fig. 28)

4 in 10 have abandoned the log in process for viewing TV shows from any online source, according to

Hub Research. The top barriers to entering sign in information are perceived time commitment and

forgotten passwords.85

Making the login process less arduous would have the biggest impact on authenticated online TV use.

Changes that would have the biggest impact on adoption:

Entering a minimal amount of information – 38%

Only having to enter your information once, and it is remembered every time – 34%

Having a better understanding of exactly what shows or movies you’d gain access to – 31%

If by entering your information, you’d have access to additional content others can’t get – 27%

If all sites that allow you to watch online asked for your account info, not just certain ones – 23%

Having just one password that you can use across all online services – 23% 86

The authenticated video process causes many headaches for subscribers:

85



TV Everywhere

30

Nearly three quarters of those watching authenticated video say they must authenticate more than once. 43% say they must authenticate every time they use the site; 17% say they must authenticate each time they want to watch something.

Nearly one-half of those trying to watch authenticated video say they are deterred from watching video some of the time. Moreover, as usage increases so does the occurrences of deterred viewing.

Subscribers are deterred from watching authenticated video for many reasons. 41% are deterred because they do not have access to the content; 38% say the process is too much of a hassle; 34% were unable to complete the authentication process.87

Only 23% think that the login process for TV content is consistent across sources. More consistency

across apps – how they work, what they do, the UI – would also drive adoption. 60% report that they

would be “a lot more interested” (28%) or “a little more interested” (32%) if TV apps worked more

consistently.88

Lack of communication and coordination among systems and platforms forces users to launch and

authenticate viewing sessions on each device independently. Thus, each platform is its own “island”

experience that is separated from experiences on other platforms.89

How does TVE fit in with other viewing platforms, what occasions drive usage? More TV is watched live than any other way:

Largest share of total TV consumption, at 40%

Most common “default” source for TV, at 38%

Most “indispensable” TV source, at 45% 90

DVR or TiVO, Netflix and Hulu Plus ranked just below “live TV” as first choice source of programming, in

a 2015 survey conducted on behalf of CEA and NATPE, 20% of consumers named service provider

apps, and 10% mentioned network apps (Fig. 29).91

87






TV Everywhere

31

(Fig. 29)

A media consumption study by Discovery conducted in 4Q2014 asked about ways in which viewers had

watched a full episode of any TV show in the past year. 55% of pay-TV subscribers reported streaming

from any source, and 25% had streamed from a broadcast or cable TV network site or app, while 11%

had streamed from a cable/satellite provider’s site or app (Fig. 30).92

92

Discovery Media Consumption Study, December 2014

TV Everywhere

32

(Fig. 30)

Online sources continue to gain traction, however. 74% of MVPD subs use at least one online TV

source. And the percent of viewers who say that live TV is their default source is falling, from 50% in

2013 to 38% in 2015.93

TV Everywhere serves a variety of purposes.

Two-thirds use it for “catch-up” TV viewing.

52% use it to watch programs when outside the home.

41% use it when the TV set is being used by someone else. 94

TV Everywhere users gravitate toward particular use cases, according to Parks Associates. In particular,

three groups stand out:

Busy Viewers (26%) – Use TV Everywhere to catch up on missed programs; this group is only interested in the catch-up aspect of TV Everywhere viewing and is uninterested in other use cases

Travelers(30%) – Use TV Everywhere outside of the home; in the backseat for the kids, stave off boredom in waiting rooms, catch-up on favorite shows during their commute; changes are even if Travelers had not missed the latest episode of a favorite show, they would still be watching some content on their phone or tablet. The mobility of the service drives their use.

93



Total 18+ Pay TV Sub 18+

Base: 1411 1171

Live on TV 81% 87%

Recorded/from a DVR or Tivo 45% 52%

On Video on Demand from your cable/satellite provider 36% 41%

From a DVD 38% 37%

Any Online Streaming or Purchased Eps [Net] 59% 55%

Streamed from a broadcast or cable TV network’s own site or app (e.g.,

NBC.com, BravoTV.com) 27% 25%

Streamed from a premium TV channel's site or app (e.g., HBO Go,

Showtime Anytime) 14% 15%

Streamed from a cable/satellite provider's site or app (e.g., Xfinity TV, TWC

TV) 10% 11%

Streamed from a free video site/service that offers TV shows from

different networks (e.g., Hulu, YouTube) 25% 23%

Streamed from a subscription video site/service (e.g., Netflix, Hulu Plus,

Amazon Instant Video) 39% 36%

Streamed or downloaded from an unofficial or unauthorized source (e.g.

BitTorrent, Project Free TV) 7% 7%

Purchased episode(s) from an online source (e.g. iTunes, Amazon) 9% 9%

Other way (please specify) 1% 1%

I haven't watched an episode of a TV show during the past year 2% 1%

Q4. Please think about your TV viewing during the past year. In which of the following ways have you

watched a full episode of any TV show during the past year? Please select all that apply.

TV Everywhere

33

Maximum Multiscreeners (44%)– Have integrated TV Everywhere into their lifestyle. Unlike the other two groups, these people use TV Everywhere inside their own home when the TV is not available, but they also use it for catch-up purposes and while on the go. This group takes full advantage of every feature, and has the heaviest use among the three groups. 95

Catch-up viewing is the most common TVE use case among consumers:

67% report “I watch the programs that I missed at original time of broadcast”

52% report “I watch the programs when I am outside my home”

41% report “I watch the programs when somebody else is using the TV” 96

comScore found that when viewers are asked why they watch original TV on the Internet, flexibility and

convenience rule. 56% indicate that they prefer to watch on their own schedule and 52% indicate that

it is more convenient. Further, adoption drivers vary by age, with older viewers (A55+) using online to

catch missed episodes (29%), and younger adults (A18-34) preferring fewer ads (13%) or cost savings

(12%).97

Viacom has identified specific content related drivers of TVE usage among Authenticators:

Re-watch episodes – 31%

Start show from 1st season – 22%

Only way to watch show – 17%

Access exclusive content – 14% 98

Further, these TVE users report using TVE vs. an app or site without Pay TV login because (top

reasons):

It has more shows - 42%

It has the shows/series I want to watch - 38%

It has exclusives - 23% 99

41% of U.S. homes have access to a subscription video-on-demand service like Netflix, up from 36% a

year ago. 100

95






Nielsen: SVOD Services in 41% of U.S. Homes, 3/11/2015 9:00 AM Eastern, Jon Lafayette, Broadcasting & Cable

TV Everywhere

34

In 2014, 34% of U.S. broadband households subscribed to some type of OTT service, an increase of two

percentage points from the prior year. 101

Viacom research finds that, after live TV, TVE is as viable a source as VOD, DVR and subscription

streaming services. Further, TVE supplements viewing rather than cannibalizing – more than half of

TVE users now watch more TV. Since starting to use TVE (among authenticators), 64% watch more TV

overall (72% of P18-24), and only 36% watch the same amount. 102

In homes with streaming services, usage of TV-connected technology is nearly 50 minutes per day

greater than in a typical TV home. 103

YouTube is a significant source of streamed full length program viewing among Millennials (36%

watched in past 6 months), outpacing other types of streaming options, like network websites, free

websites like Hulu and Crackle, and other subscription services among this age group. Millennials are

also more open to viewing on other devices, most notably the laptop, selected as the preferred device

for viewing TV shows among 19% in this age group. Portability is a key driver for Millennials and many

cite this as the reason for their preference for laptops. Some also reference that is has a larger screen

than other portable devices.104

Is TVE being used in place of other platforms or in addition? TVE provides flexibility – allowing viewers to watch shows when, where and how they want. Flexibility

related drivers of TVE usage (among Authenticators, per Viacom’s research):

Couldn’t watch the show live - 30%

Watch away from home - 28%

All TVs were being used - 22%

Can move around house - 22%

Watch a show privately - 15%

Use DVR on another device - 14% 105

Parks Associates notes that computers and smartphones marginally contribute to linear video

consumption, accounting for only about 10% of linear viewing hours across all platforms. Linear video

accounts for roughly 15% of all video consumption on a computer and one-fifth of the video

consumed on smartphones.106

101



Nielsen: SVOD Services in 41% of U.S. Homes, 3/11/2015 9:00 AM Eastern, Jon Lafayette, Broadcasting & Cable 104




TV Everywhere

35

To what extent does password sharing occur? Research from The Diffusion Group (TDG) reports that more than 20% of adult broadband users that

stream video from an online subscription service are ‘cord cheaters,’ consumers who access these

services using the account name and password of someone that does not reside in the same

household. The incidence of this for Netflix streaming at 19.9% is similar to that of HBO Go (18%).107

“While it is widely acknowledged that ‘cord cheating’ is occurring, few comprehend how widespread

the behavior has become,” noted Michael Greeson, TDG Founder and Director of Research. According

to a TDG’s latest research, a sizable segment of online subscription video viewers live in households that

are not paying to enjoy on-demand access to movies, TV programs, and a host of other high-value video

content. Content providers are losing substantial revenue by not enforcing more restrictive

authentication procedures. 108

Only 12% say they’ve shared account info with a friend or family member that lives somewhere else,

however, self-reported credential sharing is twice as high for cable sites and apps as for Netflix (6%).109

Is TVE driving eyeballs back to linear? In 2014, 51% of viewers A16-74 report having watched a show live that they first discovered online.

Among viewers A16-54, this figure is 61% and has not changed significantly vs. 2013 (64%).110

72% of Millennials watch TV shows on regular TV that they first discovered online.111

52% of viewers A13-34, and 41% of total viewers, consider “a recommendation from a streaming

service based on other things I watch” to be a very or somewhat important source of TV

programming.112

PERCEPTIONS, SATISFACTION & EXPECTATIONS

What is the consumer perception of TV Everywhere? 24% of pay-TV subscribers report having TV Everywhere as part of their service up from 16% in Q2/13.

The increase in awareness was primarily among subscribers age 18-34. Nevertheless, awareness is far

below the actual number of subscribers that have TV Everywhere service. Service providers have

generally completed their roll-out of the capability.

107




Citation-L 111

Citation-L 112


TV Everywhere

36

Pay-TV subscribers do not necessarily associate authenticated video services with their pay-TV

provider. One-half of those using authenticated video from their provider monthly report that they

do not have TV Everywhere services as part of their pay-TV package.113

Pay-TV subscribers that watch movies and TV programs from alternative sources and on alternative

platforms should be prime users of TV Everywhere services. In reality, over one-half of them are not

even aware that they have access to TV Everywhere services.114

Viacom found that TVE awareness does not equate to really “knowing”. 68% of all respondents are

aware of the TVE concept:

Authenticators - 81%

Digerati - 61%

Off-Liners 42% 115

Asked directly, consumers vary somewhat in the type of online content they think MVPDs offer, but

the prevailing sentiment is uncertainty. “As far as you know, do MVPDs offer you the ability to: 116

Watch past episodes of TV programs on a computer, through their website – 43% Yes / 7% No / 50% Don’t Know

Watch live TV on a smartphone or tablet while you’re at home, through their mobile app – 39% Yes / 7% No / 54% Don’t Know

Watch live TV on a computer while you’re at home, through their website – 39% Yes / 9% No / 52% Don’t Know

Watch past episodes of TV programs on a smartphone or tablet, through their mobile app – 38% Yes / 10% No / 52% Don’t Know

Watch live TV on a computer when you’re away from home, through their website – 35% Yes / 10% No / 55% Don’t Know

Watch live TV on a smartphone or tablet when you’re away from home, through their mobile app – 35% Yes / 10% No / 55% Don’t Know

Viacom further notes that our definition of TVE is not short & sweet: “Have you ever heard about TV

Everywhere sites/apps that allow you to watch full-length TV shows by logging in with your cable or

satellite information? These apps are available on tablets and smartphones, or you would watch on an

Internet-connected/Smart TV, video game system/console, computer, or media playing device (like

Apple TV, Roku), etc.” 117

113






TV Everywhere

37

Subscribers won’t get much value from TV Everywhere if they don’t know that it exists. Awareness

levels are thankfully increasing, but service providers should make greater efforts to educate their

subscribers. Placing more advertisements in billing, price sheets, and websites will help boost

awareness. Older subscribers, in particular, are unaware of TV Everywhere offerings.118

Nearly all authenticators agree that TVE adds value to their pay TV subscription and increases loyalty.

98% say TVE adds value to their pay TV subscription; 67% say TVE adds a lot of value. And 93% are

more likely to stay with a provider because of TVE.119

Use of TVE services has had a major impact on consumer’ engagement and perceptions of an MVPD

subscription (base: have watched TV on computer, tablet or smartphone) (Fig. 31).120

(Fig. 31)

Hub Research finds that among all MVPD Subs, 61% report feeling somewhat or a lot more positive

about their TV provider because of the availability of TVE services. The impact is especially strong

among younger viewers (e.g., Millennials). Among A16-34, 71% report feeling somewhat/a lot more

positive and among A35-64, this figure is 55%. 121

The impact is also stronger than average among households with young kids age 5 and under (73%

feel somewhat or a lot more positive), and among those HH that say TV is an “essential” part of their

entertainment lives (75% feel somewhat or a lot more positive).122

The availability of TVE also seems to reduce the appeal of cord-cutting. 83% of heavy TVE users report

that availability of TVE services makes them more likely to continue getting service from their MVPD,

and 66% of all TVE users report this, whereas the average for all MVPD subscribers is 54%.123

118






TV Everywhere

38

48% of non-TVE users say that their MVPD subscription is an excellent/good value. 67% of all TVE

users report this, as do 82% of heavy TVE Users, 59% of moderate TVE users and 52% of light TVE users. 124More than half (51%) of cable subs say their cable subscription is more valuable because of TVE.125

54% of all MVPD subscribers report that the ability to watch TV content on different devices makes

them feel a little or a lot more positive about a cable network. 69% feel a little or a lot more positive

about a premium network in light of this ability.126

What do we know about satisfaction? For viewing sources in general, satisfaction with apps and network sites trails that of more traditional

and familiar methods of access, including DVR, SVOD and live TV (Fig. 32).127

(Fig. 32)

Online viewers are happiest watching via Netflix, premium apps and basic cable sites (Fig. 33).128

123



Hub Research, CTAM TV Everywhere Wave Four Report, Among P18-64, July 2015 126

Hub Research, CTAM TV Everywhere Wave Three Report, Among P18-64, February 2015 127


TV Everywhere

39

(Fig. 33)

Device-wise, consumers are more satisfied with watching on a connected TV on a site or app, and give a

7.8 (10 –scale) rating for watching on a TV set vs. 7.2 on a smartphone or tablet app and 6.6 on a

website.129

What do viewers want or expect? According to research performed by Viacom, a majority of Authenticators want deep content libraries,

the flexibility of a DVR and excellence in functionality:

True Flexibility: Start/stop functionality, Watch on any device, Use outside home Wi-Fi;

Smart Search: Search for specific show, content organized by genre, create queue/list of favorites;

Complete Content: Instant access to recent episodes, old seasons of shows still on air, Old episodes of shows still on air;

Custom Logins: Accounts for multiple users, App specific logins130

Consumers have varying expectations about what content should be available from online sources:

Any episode from the current season of a show - 65%

Episodes from the network’s MOST POPULAR shows - 64%

Episodes that are available one week after airing for the first time on live TV - 59%

128




TV Everywhere

40

Episodes that are available 2-3 days after airing for the first time on live TV - 58%

Any episode from the previous season of a show - 52%

Episodes that are available immediately after airing for the first time – so as soon as they finish on live TV - 46%

Any episode from 2-3 seasons ago for a show - 42%

Episodes from ALL of the network’s shows, current and past - 40%

Live episodes, so you can watch at the same time it’s on regular TV - 39%

Episodes from the network’s PAST shows, no longer on the air - 39%

Extra content from the network’s shows, such as interviews and behind the scenes videos - 29%131

Consumers are most likely to feel that they would find current episodes on premium and basic cable

online sources. 65% would expect to find current season episodes from premium and basic cable

networks (vs. Netflix, Broadcast, MVPD, etc.). 64% would expect to find episodes from most popular

shows from premium and basic cable networks. They are more likely to expect back catalog episodes

from Netflix. 52% expect to find any episode from the previous season on Netflix, and 42% expect to

find any episode from 2-3 seasons ago there. 39% also expect to find past shows no longer airing on

Netflix. Broadcast online sources (and VOD) are among the last places consumers would expect to find

older episodes.132

In light of these findings, Hub Research suggests that TVE messages emphasizing multiple devices, deep

catalog and no additional cost will be most effective (Fig. 34).133

131




TV Everywhere

41

(Fig. 34)

For premium channel subs, the strongest messages are those focusing on exclusivity and deep catalog

(Fig. 35).134

(Fig. 35)

134


TV Everywhere

42

TV Everywhere services still lag other OTT offerings in terms of features, despite advances in quality

and availability on mobile devices. As a result, operators and solution providers are focusing on feature

improvements to better compete with OTT and to differentiate TV Everywhere services. Many TV

Everywhere 2.0 features address the user experience and how it will be enhanced in the future. OTT

services have consistently maintained an advantage over TV Everywhere offerings in content

discovery. To date, few pay-tv providers have yet added personalized recommendations to their

multiscreen interfaces, but many are expected to do so in the near term.135

ADVERTISER VALUE & MONETIZATION

What’s the incremental value of TVE content to the advertiser? According to FreeWheel - the advertising technology company acquired by Comcast last year -

authenticated viewing (defined as viewing that occurs after a viewer enters his or her MVPD

credentials) accounted for more than half (about 56%) of long-form and live content monetization in

the fourth quarter of 2014. This represents 591% growth from Q42013 to Q4 2014 (Fig. 36).136

(Fig. 36)

According to a report from TDG, revenue from OTT TV advertising –- that is, commercial advertising

placed in full-length TV-quality programming delivered via broadband –- is expected to grow nearly

four- fold between 2015 and 2020.

According to TDG’s analysis, the average ad load for a 30-minute legacy linear program will decline by

38% between 2014 and 2020, from approximately eight minutes to around five minutes. During the

135


TV Everywhere Ad Views Jump 591% in Q4: FreeWheel, 2/24/2015 1:00 PM Eastern, Jeff Baumgartner, MultiChannel.com

TV Everywhere

43

same period, average OTT TV ad loads will increase 63%, from 3.2 minutes to 5.1 minutes, during the

same time period, bringing OTT TV ad loads in line with that of legacy linear TV (Fig.37).137

(Fig. 37)

This shift in ad load is not all bad for content networks. According to Alan Wolk, TDG senior analyst, the

value of legacy linear TV advertising in 2020 will be worth considerably more than today. Wolk adds that

new forms of advertising such as native and sponsored promotions will generate additional revenue

and keep total TV ad revenue stable through 2020 (no growth in total revenue, but no decline, even as

dollars are shifted to OTT TV ). By 2020, OTT TV ad revenue will be approximately $40 billion, just

under half of 2020’s projected $85 billion in total TV ad revenue.138

Observes FreeWheel, “Also of interest are the patterns by which viewers consume new seasons of

content. 28% of viewing occurs within three days of a show’s linear air date, while 64% occurs after a

week. While most linear TV ad sales are transacted on the first three days, the fact remains that the

vast majority of digital viewers are not beholden to traditional scheduling and are now watching at their

own convenience.”139

137

TDG Press Release: TDG: OTT TV Ad Revenue to Increase Four-Fold by 2020; New Report Examines the Future of Video Ads in Long-Form TV Quality-Programming Delivered via Broadband. April 9, 2015, www.tdgresearch.com 138

TDG Press Release: TDG: OTT TV Ad Revenue to Increase Four-Fold by 2020; New Report Examines the Future of Video Ads in Long-Form TV Quality-Programming Delivered via Broadband. April 9, 2015, www.tdgresearch.com 139

FreeWheel Video Monetization Report, Q4 2014

http://tdgresearch.com/wp-content/uploads/2015/04/040915-e1428574094631.png

TV Everywhere

44

Driven by “must-watch” live streaming and the need for consumers to catch-up on TV series,

authenticated, TV Everywhere ad viewing soared 591% in the fourth quarter of 2014 versus the year-

ago quarter, FreeWheel found in its latest report.140

comScore reports share of ad spending in online video at 9%($7B) expected in 2015 (Fig. 38). 141

(Fig. 38)

In the Nielsen Mobile TV Ratings: National Preview Report (July 28-October 19, 2014), it was observed

that a greater percentage of potential C3-qualified commercials was viewed on mobile than on TV

(Fig. 39). Greater likelihood for C3-qualified ads to be viewed can make mobile an effective ad viewing

environments.142

(Fig. 39)

140

TV Everywhere Ad Views Jump 591% in Q4: FreeWheel, 2/24/2015 1:00 PM Eastern, Jeff Baumgartner, MultiChannel.com 141


Nielsen How Mobile Is Changing Media: Findings From Our Total Audience Measurement, July 2014

TV Everywhere

45

Nielsen reports that mobile presents an opportunity for programmers and advertisers to reach elusive

younger audiences with TV programs and ads, and specific networks can see markedly different

audiences for their programs on mobile vs TV sets - critical to understand their audiences across

platforms. Further, publishing to the intended audience has proven to be more accurately accomplished

via mobile (Fig. 40).143

(Fig. 40)

According to FreeWheel, Q4 2014 marked the first quarter in which over half of long-form and live

monetization came via authenticated viewing, with this share more than quadrupling (from 13%) vs.

the year-prior quarter, a 591% growth rate (Fig. 41).144

(Fig. 41)

143

Nielsen How Mobile Is Changing Media: Findings From Our Total Audience Measurement, July 2014 144


TV Everywhere

46

What do drop off rates at varying ad loads look like? FreeWheel reports that long-form ad completion rates are at 92% “as viewers are more committed to

the content and tolerant of mid-roll ads.” In 4Q2014, FreeWheel also saw a 43% increase in video ad

views on long-form content (20 minutes or more) amid a shift of viewing to digital devices in and out of

the home.145

Ad completion rates on long-form content have never dipped below 90% since this metric was first

reported. One trend that reversed course slightly in 4Q2014 was the move towards longer, “TV-style” ad

breaks on long-form content. After several consecutive quarters in which the average ad break crept

up in duration, the average mid-roll break shrank from 4.0 ads in Q3 to 3.9 ads in Q4, with an average

duration of 93 seconds, down from 101 seconds. Still, there was a 27% increase in ads per break year

over year.146

Metrics of digital video monetization Most monetization in 4Q2014 came by way of a show’s current season (94%) compared to archival

content (6%), versus 86% and 14%, respectively, in the 3Q2014. Additionally, 28% of viewing occurred

within three days of a show’s linear air date, while 64% occurred after a week.147

23% of programmer ad views were of live content, with the bulk of them (83%) coming from sports,

versus 12% for news, 2% for comedy/variety shows and 3% from scripted dramas. On the on-demand

end, ad share was more evenly distributed: documentary/reality (25%), news and music/trailers (19%

each), sports (15%), scripted dramas (10%) and comedy/variety (9%).148

FreeWheel also found that 30% of monetization in 4Q2014 came outside of desktops and laptops.

Usage on smartphones and OTT streaming devices (Roku, Apple TV, Chromecast, Amazon Fire and

gaming consoles, etc.) grew 70% and 236%, respectively, in 4Q2014. Of that group, OTT devices

combined to account for a larger share of monetization than tablets.149

145





TV Everywhere Ad Views Jump 591% in Q4: FreeWheel, 2/24/2015 1:00 PM Eastern, Jeff Baumgartner, MultiChannel.com

TV Everywhere

47

Sources:

Nielsen: SVOD Services in 41% of U.S. Homes, 3/11/2015 9:00 AM Eastern, Jon Lafayette, Broadcasting &

Cable

TV Everywhere Ad Views Jump 591% in Q4: FreeWheel, 2/24/2015 1:00 PM Eastern, Jeff Baumgartner,

MultiChannel.com


FTDG Press Release: TV Gets Personal: Mobile Video to Account for 20% of Total Viewing by 2025;

March 4, 2015; www.tdgresearch.com

FTDG Press Release: TDG: OTT TV Ad Revenue to Increase Four-Fold by 2020; New Report Examines the

Future of Video Ads in Long-Form TV Quality-Programming Delivered via Broadband. April 9, 2015,

www.tdgresearch.com


Parks Associates TV Everywhere 2.0: The Next Steps in Multiscreen, March 2014

Parks Associates Access & Entertainment Services: Q3 Market Focus. TV Everywhere Use &

Authentication, Q3 2013


U.S. Digital Video Benchmark: Adobe Digital Index 2014 Annual Report

Nielsen How Mobile Is Changing Media: Findings From Our Total Audience Measurement, July 2014

Adobe U.S. Digital Video 2014 Inaugural Report, Adobe Digital Index

Hub Research, CTAM TV Everywhere Wave Three Report, Among P18-64, February 2015

Discovery Media Consumption Study, December 2014

comScore Presentation: The Future of TV is Total Video, November 2014. Manish Bhatia, Chief Revenue

Officer, comScore





TV Everywhere Research

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