OTT gains on traditional TV particularly among Millennials.

Late yesterday, measurement specialist comScore, issued a research paper titled "The U.S. Total Video Report" that looks at shifting TV viewing habits in the digital age. There's little doubt that American's viewing patterns are quickly changing, and our youth are leading the way.  The study – The U.S. Total Video Report, which tabulated results from 1,159 respondents in August – found that Millennials (adults 18 -34), watch original TV shows on digital platforms one-third of the time. ComScore notes that the older the viewer, the more likely to watch on a TV set. In other bad news for TV broadcasters, comScore found that 1 in 6 millennials hadn't watched an original series on a TV set in the past month. Instead, they're getting their video from set-top boxes such as Roku and Apple TV, and game consoles.

Unsurprisingly, Millennials are also more likely to be cord-nevers or cord-cutters and they are more likely to time-shift their viewing: 46 percent of them time-shift shows, while only 35 percent of those 35 to 54 do so.  Among other findings, consumers who subscribe to paid digital video services are more likely to binge-view TV shows over a monthly period – 87% vs. 69%. TV via the DVR (43%) is the preferred binge-viewing platform, followed by the TV via VOD (19%); Internet connected TV devices (12%); live TV – a category that includes reruns or marathons from MVPDs – (11%); tablets (4%), desktops/laptops (3%); and smartphones (2%).

While comScore's results are interesting, their methodology  and approach called Total Video to track unduplicated audience metrics across platforms has some flaws. ComScore surveyed 1,159 viewers with an online questionnaire, so those surveyed are all active internet users. The report is available for free download (registration required). MORE: TechCrunch 10/14/14 - Netflix Leads In U.S. Digital Video Subscriptions In Home And Among Millennials by Ingrid Lunden

Roku gets Smart (TV)

Anthony Wood broke the news late Sunday prior to the CES show that Roku has decided to take another route to win the war for controlling your TV, soon Roku will be integrated into your new smartTV. Partnering with TCL and Hisense, the company plans to release the Roku TV later this year. This is a bold move from a company that has already positioned themselves as the leader in the OTT world. The field however is becoming crowded with existing and new entries all over at the 2014 CES show. This new strategy if carried out correctly could be the beginning of an entirely new era for connected TV's.
 MORE: Roku Blog - 01/05/14 Introducing Roku TV or WIRED - 01/06/14 Roku TV Is the First Smart TV Worth Using or

Online Video Viewing on the Rise

According to Nielsen’s 2013 OTT Video Analysis, released last week September, viewers are streaming video at a breakneck pace - up 38% year over year, largely direct by the rapid growth of tablets and smartphones.  The data also surfaced details that some 38% of Americans are users or subscribers to Netflix, 18% are Hulu users (including 6% who subscribe to Hulu Plus) and 13% are Amazon Prime Instant Video users. The report also found that 88% of Netflix customers and 70% of Hulu Plus customers are binge users who stream three or more episodes of the same TV series in one day. This new ability to watch multiple episodes or even entire seasons of certain programs in one sitting is shifting the way viewers consume content and demonstrating incredible binge appetites for programming available anytime and anywhere on services such as Hulu, Netflix and Amazon Prime. MORE: 09/18/13 Nielsen.com - "Binging" is the New Viewing for Over-The-Top Streamers

Netflix - Masters of "Backward Integration"

This past February Ted Sarandos, Netflix’s chief content officer, said during an interview with GQ magazine “the goal is to become HBO faster than HBO can become us.” The company, once the leader in the DVD mail order rental business has masterfully reengineered itself into the leader in online video streaming. A strategy that appears to be paying off when yesterday the company released its first quarter results and they were much better than analysts expected. Its stock soared 24% in after-hours trading to $215.40 after they announced that it had gained two million new U.S. customers in the first three months of 2013, a total of 29.2 million and a additional 1 million internationally.

At $7.99 per subscription, revenue nearly equaled the full price of the $100 million "House of Cards" series that debuted early this year. So did "House of Cards" lure 2 million more people, alone? That's doubtful and as Piper Jaffray analyst, Michael Olson, told the New York Times, ”It appears original programming may be driving better subscriber numbers. At the least, we believe original exclusive programming is reducing subscriber churn.” A very important factor in the subscription business and a strategy that helped them to edge out HBO in total subs for the first time. That said, Netflix has a ways to go before catching up worldwide. According to SNL Kagan, HBO has 114 million subscribers across the globe, a far cry from the 7.14 million Netflix has outside the U.S. Now... I must get back to my binge-viewing... popcorn anyone?

The Netflix Effect

Television viewing of both cable and broadcast networks fell among adults under age 50 in the fall season. According to Nielsen, the major broadcast networks lost an average of 15% of their viewers in the 18-49 demographic compared with the prior season. In contrast, A record 456.6M online videos were watched in 2012 by more than 182M users. The switch is obvious in my test lab (aka: household) where my tech savvy wife and highly connected teens stream 90% of the video they watch from the web. While this all makes sense I have also noticed the ginormous audience growth that each new season of shows like "Breaking Bad", "Sons of Anarchy" and the resent return of "The Walking Dead" were seeing. Is there a snowball effect to new seasons viewing because of the easy access to past episodes? Just how are streaming services like Hulu, Netflix and others effecting the viewership of television? In a quest for quantifiable data to answer these questions, I uncovered two 2012 studies, one done by Bernstein Research and the other by GfK North America that confirmed my theory and shed some light on my questions.

The Bernstein Research analysis of viewing patterns was conducted in Tivo homes during the first quarter of 2012. What the study identified was that ratings for AMC, which exclusively licenses several of its original series to Netflix, were actually 15% higher in homes with Netflix than non-Netflix homes. Tie this back to the lift in viewers for the new season of "The Walking Dead" where it recently returned for the second half of its already much-improved third season to even higher ratings than before: 12.3 million viewers. Impressive numbers especially when you consider that it was up against the Grammys on its premier night.


Netflix itself seems to back up the finding by contending that its service gives viewers more opportunities to sample programming in its first window by providing older episodes that let them see what they've missed hence, they are more likely to watch new episodes of those shows when the new seasons return.

The GfK study concurs, stating that more than half of the Netflix subscribers in their focus groups said that it had no effect on their viewing from more traditional sources. But what’s even more interesting is how many respondents said they watched scheduled TV even "more" than they did before subscribing to the service.

Singling out first-run dramas, for example, reveals 22 percent of respondents said they watch more new episodes of dramas on scheduled TV than they did before getting Netflix, with 10 percent who said they watch less (See GfK chart below for more details on viewing patterns.)

"House of Cards" - The Game Changer?

Netflix is betting the house that "House of Cards" will become the juggernaut that propels the company onto the next level. The company reportedly spent $100 million to secure the rights to the series starring Kevin Spacey, out bidding other mainstream networks like AMC and HBO. This is the first TV series developed/distributed exclusively on Netflix and the company has decided to also take a nontraditional approach by releasing all 13 episodes at once.
This trend is not new for legacy programming as services like Netflix, Hulu, as well as digital video recorders, have transformed the TV viewing experience by enabling viewers to devour multiple episodes or even entire seasons in marathon viewing sessions. Since the inception of television Hollywood has always fed audiences on a steady diet of, "Wait a week and we'll give you new episodes, then wait a season, we'll give you another season," Netflix Chief Content Office Ted Sarandos said. "The Internet is attuning people to get what they want when they want it," Sarandos said to an LA Times reporter. "'House of Cards' is literally the first show for the on-demand generation." If successful, the strategy could begin to unwind 60 years of serialized television but what else could it change? Potentially everything... the way we talk about what we watch, the way we share it, the way reviewers critique shows, and even the way the industry monetizes content.
In the meantime, will "Cards" be a success? We may never know since Netflix does not divulge ratings or numbers, following in the footsteps of the pay cable networks, which only like to discuss actual data when it suits them. Will this non-conventional launch approach stick? I bet it will!! Let’s be sure to revisit this topic later in the quarter when the independent research groups or Netflix begin to release their findings.