2015 decoding the default - excerpt report

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DECODING THE DEFAULT J U N E 2 0 1 5 !

EXCERPT OF FINDINGS

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•  While many have predicted a “cord cutting revolution”, so far most consumers are adopting online sources to use in conjunction with pay TV.

The TV Revolution: Tidal Wave or Rising Tide?

DEFAULT SOURCE

In a world where the average pay TV subscriber also uses 2 or more online sources, more subtle changes could have equally profound results.

HOWEVER:

The first thing a viewer turns on when they want to watch TV

•  Our goal: to capture which TV platforms are emerging as consumers’ DEFAULT TV SOURCES

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•  Age 16 to 74 •  Watch at least 5 hours of TV per week •  Have broadband access •  U.S. census balanced

In June 2015, we conducted an online survey among 1,200 TV viewers in the U.S.

NOTE: In 2013, we conducted this study among online viewers age 18-54. Therefore, comparisons in this report between 2015 and 2013 are *only* among online viewers age 18-54.

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Executive Summary Overview of Key Findings !

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Among Netflix users:

Online sources are still more likely to be used in conjunction with “traditional” pay TV, rather than as a replacement

Netflix users allocate as much viewing time to Live TV as they do to Netflix

28 % 31 % Live TV

Netflix is more likely to be mentioned as a TV supplement (26%) than as a default source (19%)

The number of people who mention on-demand from their MVPD as a main supplement is twice as high (26%) as in 2013 (12%)

71% Close to ¾ of viewers age 16-74 name Live TV as either their default source (43%) or a main supplement (28%)

Netflix

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HOWEVER:

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Live TV Live TV accounts for nearly a third of total TV viewing time—down significantly from 2013

32 % Down from 41% in 2013

16 % Down from 21% in 2013

46 % Up from 34% in 2013

DVR DVR viewing also accounts for a significantly smaller percentage of total viewing than in 2013

All Online Sources Online platforms (including Netflix, TVE apps, Hulu, etc.) account for half of total TV viewing

Online TV viewing (especially Netflix) accounts for a greater share of total TV viewing time than in the past

% of Total TV Viewing Among viewers 18-54 who watch at least some online TV

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Some of the largest shifts in default TV sources are among the most valuable TV consumers and occasions

Among

Millennials: 31% A third of Millennials say that Netflix is

their default source

Millennials allocate nearly a quarter of all their TV viewing to Netflix 24%

What’s the first TV source you turn on when…

You have a specific show in mind you want to watch

Live TV

15% Netflix

26% vs. 29% in 2013 vs. 18% in 2013

You want to focus on a show, without any distractions 20% 26%

vs. 26% in 2013 vs. 19% in 2013

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Where Things Stand Sources Used and Defaults, Today

10!Q2A: Do you currently have any of the following television services in your home? Q2B: Have you ever had a cable, satellite, or fiber optic TV subscription in your name?

The vast majority of viewers still have some kind of pay TV subscription

WHICH OF THE FOLLOWING BEST DESCRIBES YOU?

6%

3%

Subscriber: Currently have a cable, satellite, or telco TV subscription!

Among 16-74 year olds

91% Cord Cutter: Don’t have pay TV now, but did in the past

Cord Never: Don’t have pay TV now, and never have

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68%

39%

32%

23%

17%

13%

Q3A: Have you ever watched TV programs or movies from an online source, on any device?

At the same time—more than three-fourths watch TV from at least one online platform

WHICH OF THE FOLLOWING HAVE YOU USED TO WATCH TV SHOWS OR MOVIES ON IN THE PAST SIX MONTHS?

Online streaming subscription e.g. Netflix, Amazon Prime, Hulu Plus

TV network site or app

Free aggregator e.g. Crackle, free version of Hulu

MVPD site or app

Online shows and movies bought/paid for individually

“Unofficial” sites e.g. Putlocker, uTorrent, Pirate Bay

Among 16-74 year olds

TOTAL: Watch at least one

online source

78%

12!

32!

41!

16!

21!

20!

16!

6!

4!

3 !

7!

23!

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Q5F: About how much of your TOTAL TELEVISION VIEWING would you say is from each source? !

HOW IS YOUR TOTAL TV VIEWING TIME DISTRIBUTED ACROSS SOURCES?!

Live TV ! DVR !

The share of time spent on Live TV and on DVR has fallen since 2013—while Netflix’s share of time has grown

TIME!

TIME!

VOD !

Network site/app!

Other !2015

2013

È Ç È Ç

Among online viewers age 18-54

È

13!

34%

20%

5% 3% 2%

24%

4% 1%

50%

21%

2% 2% 3%

13%

2% 5%

Live TV DVR VOD Hulu (paid) Hulu (free) Netflix MVPD site/app

Network site/app

Live TV is still the single most common default source—but it’s lost ground significantly since 2013

Q4F: Of the different TV sources you use, which is your DEFAULT source—the one you turn on first when you want to watch something? !

% Default (2015)

% Default (2013)

Ç

Ç

È

È

Among A18-54 who watch at least some online TV (2013 vs. 2015)

WHICH OF THESE SOURCES IS YOUR DEFAULT SOURCE FOR TV SHOWS?

(paid)

(free)

14!

43%

20%

4% 2% 2%

19%

3% 1%

28%

24%

26%

5% 5%

26%

7% 9%


Network site/app

Netflix is used as a supplemental source more often than as someone’s default source

% Main Supplement

% Default

71%

44%

30%

7% 7%

45%

10% 10%

Q4F: Of the different TV sources you use, which is your DEFAULT source—the one you turn on first when you want to watch? !Q5I: Which source or sources do you consider to be your main supplements to your default source?!

(paid)

(free)

Among all respondents age 16-74

DEFAULT AND SUPPLEMENTAL SOURCES

•  But taken together, the default + supplement percentage ranks second only to live TV (nearly tied with DVR)!

15!

43%

20%

4% 2% 2%

19%

3% 1%

28%

24%

26%

5% 5%

26%

7% 9%


Network site/app

VOD is mentioned as a main supplement twice as often in 2015 as in 2013

71%

44%

30%

7% 7%

45%

10% 10%

Q4F: Of the different TV sources you use, which is your DEFAULT source—the one you turn on first when you want to watch? !Q5I: Which source or sources do you consider to be your main supplements to your default source?!

(paid)

(free)

Among all respondents age 16-74

DEFAULT AND SUPPLEMENTAL SOURCES

% Main Supplement

% Default

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What Matters Most? Why viewers to choose one source as their default over others

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How we quantified the impact of specific factors on a platform being chosen as a default: •  We used a technique called Maximum Difference Scaling to identify the factors

that had the biggest impact on their choice of default platform.!•  We tested a list of 16 attributes. Respondents reviewed 4 attributes at a time,

along with this question about the platform they had identified as their default source for TV:!

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The one that BEST EXPLAINS why you chose that platform as your default TV source

the item that has the LEAST TO DO WITH why the source is your default TV source. !

•  The tradeoff question enables us to derive both the RANK ORDER of features, and also their OVERALL IMPACT on consumer interest compared to the others. !

On the following screens, you’re going to see reasons that someone might choose a particular source as their default source for TV showsand movies. Please select two

items within each group: !

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The attributes we tested:

Easy to Browse The interface makes it easy to find something to watch when I don’t have something specific in mind

Easy to Search The interface makes it easy to search for a specific program

One-Stop Shop Puts a wide range of different content, from different sources, all in one place

Discovery Includes features that help me find new shows that I didn’t already know about

Flexible Allows me to watch TV or movies wherever and whenever I want to

Low Price The cost to view TV is lower than other sources

Selection Quantity Has a deep selection of programs to choose from

Viewing Quality Offers high definition picture quality

Exclusives Allows me to watch original or exclusive shows that are not available from any other source

Live TV Offers live episodes of drama, comedy, or reality shows on the day and time they air for the first time

Live Sports Offers sports events that you can watch live

Premium Shows Allows you to watch new and older episodes of shows from premium networks

Basic Cable Shows Allows you to watch new and older episodes of shows from basic cable networks

Broadcast Shows Allows you to watch new and older episodes of shows from broadcast networks

Online Shows Allows you to watch new and older episodes of shows from online sources

Customized Makes it easy to choose only the shows and networks you’re interested in, and ignore those you aren’t

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How to interpret the results:

Q6A: Next, we’d like to get your reaction to a list of possible features that might be included in the next release of DotP. Within each group, choose the features that would be MOST and LEAST likely to persuade you to play the next release of DotP.!

•  The number on the chart represents the mean importance for each item, among all respondents.

•  The scores sum to 100 across all 16 items. So an item with a score of 10 has twice the impact on choice of TV default as an item with a score of 5.

The analysis shows both rank order of importance, and the relative impact each attribute had on their choice of that TV source as their default.

9.8 9.4

8.9 7.3

6.8 6.7

6.1 6.1 6 5.9

5.3 5.2

4.9 4.6

3.9 3.1

Broadcast Show Access Flexible

Basic Cable Show Access Selection Quantity

Easy to Browse Low Price

Customized Live Shows

Viewing Quality One-Stop Shop

Premium Show Access Easy to Search

Live Sports Online Show Access

Exclusives Discovery

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•  Specifically—sports and live shows are among the biggest reasons someone would default to live TV

9.8 9.4

8.9 7.3

6.8 6.7

6.1 6.1 6.0 5.9

5.3 5.2

4.9 4.6

3.9 3.1

Those who default to Live TV over-index most on *access*—especially to live shows and sports

Q7D: On the following screens, you’re going to see groups of words that could describe why people choose a certain source as their default source for TV programs and movies. Please select two items within each group: (1) the item that BEST EXPLAINS why [SOURCE] is your default TV source, then (2) the item that has the LEAST TO DO WITH why [SOURCE] is your default TV source. !!

10.9

10.0

7.7

9.5

Among those who default to Live TV

6.8









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“The best way to see something ‘first’.”

Q5B: What are the main reasons live TV is your default source for TV viewing?

Breadth of content also came up as a driver of live TV, along with communal viewing and spontaneity

“It's s9ll the easiest way for me to watch new episodes of my favorite shows with

the whole family in the room.

“Convenient....bigger screen to watch the

program...family viewing...”

“Watch a lot of spor9ng events -‐ big sports fan. Have to watch them live.”

Breadth of content

Ability to watch/keep up with others

No need to plan

“I want to catch the latest and be up to date.”

“Easier to find. Not everything is on demand.”

“I like all the choices on TV.”

“Don't want schedule 9me for just watching a program. BeLer to watch

when its aired.”

“Some9mes I just do not know what to watch so I skim around un9l I see

something interes9ng. It is easier on the TV than to stream because I may click back and forth from one channel to another.”

“No advance planning to record shows or research what is available online.”

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9.8 9.4

8.9 7.3

6.8 6.7

6.1 6.1 6 5.9

5.3 5.2

4.9 4.6

3.9 3.1

Those who default to their DVR put more value on attributes of the *viewing process*:


13.6

9.9









6.0

Among those who default to

DVR

•  Flexibility of viewing, a customized experience, and ease of searching for specific shows

23!Q5B: What are the main reasons the DVR is your default source for TV viewing?

The ability to focus on specific shows and customize their TV experience also came through in open ends from DVR “defaulters”

“Due to work and 9me

constraints, I use the

weekends to catch up.”

“I record the shows I want to watch, but don't always have 9me to watch when they air. With

the DVR I can watch them when I want.”

“It allows me to watch the shows I want on my own

9meframe.”

“There are too many good things to watch on TV to be able to watch ALL of them at the same 9me, it works best for us to record

ALL of them and then watch them at our leisure.”

Can catch up Watch whenever I want

Can watch shows that air at the same time

“[I’m] Almost never around when programs view live and I am usually trying to catch up on older shows I missed.”

“I like all the choices on TV.”

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9.8 9.4

8.9 7.3

6.8 6.7

6.1 6.1 6 5.9

5.3 5.2

4.9 4.6

3.9 3.1

Those who default to Hulu over-index primarily on one attribute: TV content for the *lowest price*










9.1

6.5

Among those who default to

25!

Scenarios How default sources vary for different TV scenarios

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Turning to trends from 2013: while Netflix has gained ground, Live TV is still the go-to for spontaneous viewing

40%

50%

29%

41%

53%

60%

45%

52%

27%

15%

29%

16%

23%

9%

17%

11%

Q5H: Tell us which source you’d be most likely to turn to first in each of the following specific situations. !

Nothing specific in mind just want to browse

Show on in background while do other things

Want to relax and not think

Short amount of time to kill

Live TV 2015

Live TV 2013

Netflix 2015

Netflix 2013

Ç

Ç

Ç

TV VIEWERS AGE 18-54, WHO WATCH AT LEAST SOME ONLINE!

È

È

È

È

27!

Netflix has also gained ground in scenarios where TV viewing is a social activity, matching or surpassing Live TV

39%

16%

18%

49%

25%

23%

25%

28%

19%

15%

19%

13% Ç


Watching with others

Check out a show people are talking about

Keep up with what other people are watching

Live TV 2015

Live TV 2013

Netflix 2015

Netflix 2013

Ç

Ç


È

È

28!

15%

20%

29%

26%

26%

26%

18%

19%


Specific show in mind to watch

Focus on what's on, without distractions

Live TV 2015

Live TV 2013

Netflix 2015

Netflix 2013

Online options—especially Netflix—are now more common first stops for targeted, highly engaged viewing

Ç

Ç


È

È

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In fact, Netflix is the beneficiary of new TV occasions that didn’t even exist in the past

23%

28%

19%

16%

15%

14%

8%

11%

21%

30%

36%

38%

35%

45%

52%

57%


With others but want to watch your own show

Traveling

Waiting somewhere outside your house

On a break at work

Netflix 2015

Netflix 2013

Never watch this way 2015

Never watch this way 2013

Ç

Ç

Ç

Ç


È

È

È

È

30!

Profiles Which sources deliver the best value for the money?

31!

31% say Netflix is their default, and…

47% use live TV when they want something on in the background (vs. 19% for Netflix)

33% Less than a third default to watching Live TV

24% of their total viewing is on Netflix

29% choose Netflix when they want to focus on what’s on (vs. only 19% who choose Live TV)

Millennials: 18-34 Young people are a sweet spot for Netflix

37% OF SAMPLE

32!

9% OF SAMPLE

47% say Netflix is their default TV source

25% say Hulu (free or paid) is their default

47% have changed their default TV source in the past two years

28% use over the air TV as a main supplement

No Pay TV Netflix and Hulu are the lifeline for TV viewers without pay TV

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Takeaways Things to remember!

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Conclusions

People choose default sources for different reasons and purposes

Live TV is the go-to for those who value the most popular shows, in part so they can feel connected to other viewers. DVRs are the choice for those who want to make sure they never miss an episode. For those who value a vast catalog and a flexible experience—at a low price—Netflix is the first stop.

But overall, TV’s center of gravity continues to shift from “live” to “when I want it”

Live TV is the default for fewer viewers, and fewer TV occasions, than in the past. At the same time, on-demand platforms (especially Netflix, but also VOD) are assuming a more central role as the source of choice for TV

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Conclusions

Live TV has lost the most ground in TV scenarios that some might say matter the most

Live TV remains the leading default source for “unengaged” viewing—e.g. channel surfing, or when the TV will be on in the background. But for highly engaged viewing (e.g. a favorite show they want to watch without distraction), people are more likely to to turn to Netflix

DVRs are also being used less often as the default

The DVR may soon become a casualty of the growing popularity of “on-demand” libraries that are both vast and easy to navigate. Why take the time to manually manage your own imperfect collection when VOD, TV Everywhere and Netflix will connect you directly to an exhaustive one?

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4

36!

Conclusions

Online TV platforms have created new TV scenarios, and planted a flag on them

In a very short time, big numbers of viewers have adopted previously unknown ways to watch TV—e.g. watching their own show while others watch on a TV, watching at work, watching in transit. And this new territory has been claimed by online sources

As with most things media-related, Millennials look like a bellwether of change

Viewers age 18-34 are not only more likely to say Netflix is their default than live TV in general, but they also turn first to Netflix when they want to feel connected with “what others are talking about.” For Millennials, online sources have supplanted linear as the TV “water cooler”.

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2015 decoding the default - excerpt report

Documents

tv viewers

tv supplement

tv platforms

tv revolution

hours of tv

live tv netflix

live tv live tv accounts

traditional pay tv