Contending with Another Challenger When youre King of

Contending with Another Challenger § When you’re “King of the Hill, ” challengers, pretenders and wannabes come at you from all sides. § For “traditional” TV, it started with videocassettes and videodiscs, then cable and satellite, DVD/Blu-Ray, game consoles, the DVR, PCs, smartphones and tablets. § The latest challengers are streaming media services, or SVODs: Netflix, Amazon, Hulu, You. Tube and an ever growing list of even newer players.

Live TV Has the Leverage § No doubt, these disrupters have eroded some of TV’s dominance; however, the average time spent per adult per day with live TV is still more than twice as much as any of the 8 other media measured by Nielsen during Q 1 2016. § Nielsen doesn’t measure SVODs in great detail in its Total Audience Reports, but they reached 50% penetration of TV households during Q 1 2016 – according to Nielsen; however, HD TV penetration was 94%. § With most of the major SVOD services promoting themselves and being perceived by viewers as “TV networks, ” it’s important to understand their effect on total media consumption – and that’s the purpose of this Special Report from THE MEDIACENTER.

Inside the SVOD Numbers § According to May 2016 data from Strategy Analytics, a research and consulting firm, Americans will increase their spending by 22% for SVOD services during 2016. All video acquisition categories will decrease, except for the purchase of downloads. § Of all SVOD viewing, 80% occurs on a TV, 58% on a mobile device and 42% on a desktop or laptop. Only 10% of You. Tube and other video-sharing sites’ content are viewed on a TV. § Despite such low numbers for You. Tube viewing on TV, it will have the most overthe-top (OTT) video services users during 2016, at 176. 1 million, compared to Netflix’s 126. 9 million, and will remain first through 2019.

Streaming Media Is Youth-Driven § A 2016 survey of broadband users who had access to both traditional TV and subscription-based streaming video services found that 66. 3% of adults, 18– 24, and 61. 8% of adults, 25– 34, would choose SVOD over traditional TV, given a choice. § Among older adults it was just the opposite, as 68. 1% of those 45– 54, 76. 6% of those 55– 64 and 77. 3% of those 65+ would choose traditional TV first. § Another survey, of 1, 354 participants age 13 – 54, who had watched a full-length streamed program during the past 6 months, found that Netflix, at 33%, was their first choice to watch a TV program.

TV’s Halo Effect on Ad Spending ROI § ABC/Accenture Strategy conducted a study of the advertising spending of 20 leading national brands during a threeyear period. § The study found that multi-platform TV, which includes linear TV as well as premium long-form video content viewed online, creates a halo effect on search, display and short-form advertising within integrated campaigns. § Remove the halo effect, and the average ROI of the digital channels would decrease by 18%.

SVODemographics, Part 1 § According to data from The Media Audit, 49. 0% of adults, 18+ in the Milwaukee. Racine market said they used streaming media services to watch video or TV shows during March 2016 while 30. 5% did in Atlanta during October 2015. § Men and women in both markets used streaming media services at relatively the same rate – Atlanta: men, 49. 4%, and women, 50. 6%; Milwaukee-Racine: men, 52. 1%, and women, 47. 9% § Despite the strong numbers for Netflix, Amazon and Hulu for male SVOD users in both markets, You. Tube garnered the highest percentage of men: 61. 3% in Atlanta and 87. 3% in Milwaukee-Racine.

SVODemographics, Part 2 § The Media Audit survey data by age group confirmed that adults, 18– 24 were the primary SVOD viewers; however, the largest group of You. Tube viewers in both markets was adults, 35– 49. § Ethnically, European Americans had more than 50% of the viewer audiences for the four major SVOD services; however, African American viewers of You. Tube scored higher than all other ethnic groups in both markets. § SVOD users tend to have higher incomes and more education, although, once again, You. Tube had the largest percentage in the more moderate $35, 000–$50, 000 income bracket in Atlanta and Milwaukee-Racine.

Tracking Progress § Netflix added just 1. 7 million new subscribers during Q 2 2016, compared to 3. 3 million during Q 2 2015 and 6. 74 million for Q 1 2016. It had forecast an increase of 2. 5 million new subscribers. § Although Netflix is forecast to have 126. 9 million users to Amazon’s 73. 2 million for 2016, Amazon had more US subscribers than Netflix as of the end of 2015, or 54 million versus 44. 74 million. § In addition, Amazon’s $99 Prime membership provides its subscribers with an advantage not available from Netflix: free shipping for all their Amazon. com purchases.

The Curious Case of Amazon Prime § According to a spring 2016 random survey of 380 current Amazon Prime members, 91% said free two-day shopping was the primary reason they purchased a membership, compared to just 22% for Prime Instant Video access. § The survey also found that 19. 2% of Amazon Prime members never use its video streaming service, with just 9. 7% using it daily; 34. 8%, weekly; and 36. 3%, monthly. § These results shouldn’t scare Netflix, however, since 38% of Amazon Prime members use Netflix daily, and even 12% use Hulu daily. In addition, more than 80% of Amazon Prime members also have Netflix subscriptions.

Upping the Ante § During April 2016, Amazon raised the competitive stakes by offering a separate monthly video-streaming plan for $8. 99, which is one dollar less than Netflix’s $9. 99/month. § Then, during May 2016, Amazon trained its sights on You. Tube by offering everyone the opportunity to post video content on the Amazon Website and generate revenue from advertising and royalties. § You. Tube accepted the challenge and is planning a separate monthly videostreaming bundle of cable TV channels, called Unplugged, to be accessible on the Internet during 2017.

Sweetening the Pot § To date, Amazon and Netflix have been uninterested in streaming live programming, but Hulu is launching just such a service during 2017, providing subscriber access to ABC, Fox, ESPN, Disney and likely NBC’s many cable channels. § Hulu is also initiating a first-of-its-kind interactive advertising system. People with either smart TVs or a streaming media player will be able to click an on-screen ad to gain access to discounts and new product or other brand information. § Turner, the parent company of Turner Classic Movies (TCM) will launch Film. Struck, a “new subscription video ondemand service for film aficionados, ” during fall 2016, which will “steal” the Criterion Collection from Hulu.

Live TV Ad Sales Are Still the Gold Standard § At the current time, many of the streaming media services, Amazon and Netflix, for example, promote their commercial-free programming as a benefit of becoming a subscriber. Other SVODs, such as Hulu and Crackle, sell and run advertising spots. § Unlike the targeting of specific demographics with ads on live TV, SVOD advertisers tend to want a specific number of impressions, which has resulted in a much higher rate of repetition, much to the displeasure of Hulu subscribers, specifically. § Local advertisers will have to continue to rely on linear TV as the only advertising medium of its kind to reach local audiences – and that should be an advantage and selling point for you and your station.