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TIME SHIFTINGF E B R U A R Y 2 0 1 5

EXCERPT OF FINDINGS

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Untethering TV from a linear schedule has both invigorated and disrupted the TV industry• Watching on your own schedule has made TV a more compelling entertainment option

for consumers, in general

• It’s also made back catalogs more accessible, and thus more valuable

• But they’ve also put tremendous pressure on how the TV business has traditionally made money---TV shows watched live, with ads

Explore the usage and drivers of 4 main categories of time-shifting alternatives

DVR

Video on Demand

TV Everywhere

OTT platforms

The goal of this study:

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• Age 16 to 74

• Watch at least 5 hours of TV per week

• Broadband access at home

• U.S. census balanced

• Data collection completed in February 2015

We surveyed 1,210 TV consumers

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Executive SummaryOverview of Findings

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When it comes to TV viewing, consumers are increasingly living in the past

of all viewing among consumers16-74 is time shifted, vs. 47% live

53%

42% prefer watching episodes of a current season via time-shifting, vs. 28% prefer watching live

61% of viewing is time-shifted

Among Millennials,

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Viewers use a variety of devices to time shift

The average number of different sources (DVR, VOD, TV network apps, etc.) each viewer uses to time-shift:

2.3of all time-shifting is done through a DVR (34%) or VOD (19%)53%

% of all TV shows watched live among those who use/have:VOD:

(once per week or more)46%

DVR: 43%

NETFLIX : 36%

HULUPLUS : 30%

Use NFLX and uPlonly: 17%

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37% say the ability to skip ads is at least one benefit of time-shifted TV

41%say that having fast forward disabled on VOD is a major "frustration"

Ad avoidance is not the biggest reason people time shift—but it’s a factor

49%of VOD viewers fast-forward through EVERY commercial

When fast-forward is available…

56%skip every commercial when viewing from a DVR

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Allocation of the TV PieWith non-linear sources ubiquitous, how much viewing is still done live?

9Q3A: Think about all the TV shows you watch over the course of a week. Of all those shows, what percent would you say you watch “live” – and by live, we mean shows you watch when they’re on regular TV at their regular time?

PERCENTAGE OF TIME SHOWS WATCHED LIVE VS LATER

Total

47%Live

39%Live

61% Time-Shifted

Millennials

Significantly higher than total Significantly lower than total

53%Time Shifted

• Among Millennials, time-shifting is significantly higher

More than half of the shows the average viewer with broadband watches are time shifted in some way

10Q3A: Think about all the TV shows you watch over the course of a week. Of all those shows, what percent would you say you watch “live” – and by live, we mean shows you watch when they’re on regular TV at their regular time?

Watch

30%Live

49%Live

51% Time-Shifted

Don’t Watch

It’s lowest among Hulu Plus users—suggesting that Hulu is more of a live TV competitor than other OTT platforms

70%Time Shifted

PERCENTAGE OF TIME SHOWS WATCHED LIVE VS LATER

Significantly higher Significantly lower

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Shows you record on a DVR or TiVO

[PROVIDER’S] On-Demand service

Shows you stream from Netflix

Sites or apps from TV networks

Shows on Hulu or Hulu Plus

Amazon Prime or Amazon Instant

The site or app from [PROVIDER]

Any other online source

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19

16

8

6

3

3

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In aggregate, DVRs and VOD service account for more than half of time shifted viewing

Q3C: Next, think about the shows you do NOT watch live on their regular time. What percent of those non-live shows do you tend to watch in each of the following ways?

PERCENTAGE OF SHOWS VIEWED PER SOURCE

53%

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Time Shifting and GenresHow time shifting correlates with particular types of shows

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We asked viewers to tell us the TV genres they watch most often (in general, across TV sources and devices)

We looked to see which TV genres were most popular among the heaviest users of particular time-shifting methods:

• DVR

• VOD

• Netflix

• HuluPlus

THEN:

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These are the most watched genres in general—across live TV and all time shifted platforms

66%

61%

55%

43%

34%

32%

30%

26%

21%

19%

17%

16%

13%

Drama

Movies

Sitcom

Sports

News / Business

Documentary / Information

Competitive reality show

Lifestyle

Adult animation

Game show

Non-competitive reality show

Talk show

Kids’ show

WHICH TYPES OF SHOWS DO YOU GENERALLY WATCH?

The following slides show the genre results

for viewers who allocate the GREATEST

amount of their time shifted viewing to a

particular source.

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Those who do most of their time shifting via DVR are more likely to watch a wide range of genres

74%

61%

61%

51%

39%

30%

38%

29%

19%

19%

23%

20%

11%

Drama

Movies

Sitcom

Sports

News / Business

Documentary / Information

Competitive reality show

Lifestyle

Adult animation

Game show

Non-competitive reality show

Talk show

Kids’ show

GREATEST SHARE OF TIME SHIFTED SHOWS WATCHED ON: DVR

…and they don’t under-index

compared to the total viewer

sample, on anything.

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GREATEST SHARE OF TIME SHIFTED SHOWS WATCHED ON:

Those that allocate the most time shifted shows to VOD look very much like TV consumers in general

66%

58%

52%

39%

32%

32%

25%

27%

16%

18%

15%

16%

16%

Drama

Movies

Sitcom

Sports

News / Business

Documentary / Information

Competitive reality show

Lifestyle

Adult animation

Game show

Non-competitive reality show

Talk show

Kids’ show

VOD

Two exceptions:

• They’re much more likely than the

average viewer to watch entertainment

news magazines* (17%)

• They’re less likely to watch adult

animation

*not included on graph (least watched genre overall)

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Time Shifting and Ad ViewingAd avoidance as a driver of time shifting

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60%

37%

37%

34%

33%

29%

19%

Q6D: What do you consider to be the biggest benefits of watching episodes of a current show at a later time?

All Respondents

TOP REASONS FOR WATCHING SHOWS LATER

Although ad avoidance is not the number one reason for time shifting, it plays a significant role

Significantly higher Significantly lower

Watch when convenient

See missed episodes

Skip ads

Can pause or rewind

Takes less time to watch

Not available during live airing

Can watch back-to-back

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58%

38%

29%

33%

29%

35%

24%

60%

37%

37%

34%

33%

29%

19%

Millennials

All respondents

Significantly higher Significantly lower

Watch when convenient

See missed episodes

Skip ads

Can pause or rewind

Takes less time to watch

Not available during live airing

Can watch back-to-back

Millennials are less concerned with skipping ads, and more with catching shows they’re not available to watch live

Millennials

TOP REASONS FOR WATCHING SHOWS LATER

Q6D: What do you consider to be the biggest benefits of watching episodes of a current show at a later time?

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HOW OFTEN DO YOU FAST-FORWARD THROUGH COMMERCIALS

BASE: can fast-forward on some/all networks

1%2%

15%

32%

49%

Every commercial

Most commercials

Some commercials

Hardly any commercials

Never

Those who DO use fast-forward during VOD use it a lot: half fast-forward through every commercial

29%Not sure

10%On all

networks

15%Not on any networks

45%Only on some

networks

Q8H: When you’re watching an episode from On-Demand that DOES allow you to fast forward, how often do you actually fast-forward through the commercials?

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8% 34% 56%

Never Less than half the time About half the time Most of the time All the time—at every commercial break

Q8I: When you are watching a show you’ve recorded on your DVR, about how often do you fast forward through the commercials?

DVR users are no different: almost 90% fast-forward through most or all of the ads in their DVR recordings

HOW OFTEN DO YOU FAST-FORWARD THROUGH COMMERCIALS (DVR)

Among those record shows using a DVR

1%

2%89%

NET:All/most of the time

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The Attraction of Time ShiftingLogistical, emotional, or both?

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OPTION A

OPTION B

We asked a battery of questions to capture consumers attitudes about time shifted viewing

In each question, we asked them to use a slider to indicate their position in relation to two opposing

alternatives

The slider captures their rating on each question on a zero-to-10 scale

24Q6A: Use the slider below to tell us your general preference for watching episodes from current seasons live at their regular time, vs. later from a DVR, On-Demand, or online

THE WAY I PREFER WATCHING TV, IN GENERAL, TODAY IS…

28% 30% 42%

0 to 2 3 to 7 8 to 10

PREFER WATCHING

LIVE

PREFER WATCHING LATER

10

Mean

5.80

The number of people who prefer to time shift is much larger than the number who prefer to watch live

25Q6A: Use the slider below to tell us your general preference for watching episodes from current seasons live at their regular time, vs. later from a DVR, On-Demand, or online

THE WAY I PREFER WATCHING TV, IN GENERAL, TODAY IS…

28% 30% 42%

0 to 2 3 to 7 8 to 10

PREFER WATCHING LATER

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In fact 24% prefer time shifting completely (rank it a 10 out of 10)

24%Completely prefer time shifting

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Case StudyFollowing the decision process for one show

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Up to this point we’d asked viewers questions about their TV viewing in general.

In this section, we asked them to focus on a

specific show they watch that is current—i.e., there are new episodes airing this season/available to

watch on live TV.

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Once they had a specific show in mind, we asked how many episodes of that show they had watched this season

Average # of episodes of that show watched this

season:

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Q4E: About how many current-season episodes of SHOW FROM Q4B have you watched, either live on it’s regular time, or later on a DVR, on On-Demand, or online?

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Then we asked whether they tended to watch those episodes live or time shifted (through any source)

Average # of episodes of that show watched this

season:

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34% Have time shifted ALL episodes

29% Have watched ALL episodes live

23% Have watched MOST episodes live

13%Have time shifted MOST episodes

Q4F: As best as you can remember, divide the episodes you watched into the following categories:

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DISTRIBUTION OF TIME SHIFTED EPISODES

Among those who watch some episodes of favorite show time

shifted

Then we asked them what percentage of the episodes they time-shift they watched through each source

DVR

49%

VOD

19%

MVPD site or app

File sharing site

2%

3%8%

Other 9%

10% TV Network site or app

Q4F: As best as you can remember, divide the episodes you watched into the following categories:

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Viewers who do most of their time shifting via VOD are less likely to watch episodes within the first three days

Viewers who allocate the greatest share of their time shifted viewing to…

DVR VODNetworkSite/App

Within three days 70 58 68 67

4-7 days from live 22 27 16 12

More than 7 days from live 8 15 15 21

HOW QUICKLY SHOWS ARE WATCHED AFTER AIRING LIVE

• DVR users are the LEAST likely to time shift TV shows more than a week into the future

Q4G: How many of these episodes would you say you watched in each of the following time frames?

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¾ of lifestyle reality episodes, and nearly two-thirds of non-competition reality episodes, were watched live

% of Episodes Watched Live

Lifestyle reality 72%

Non-competition reality 64%

Competition reality 59%

Sitcoms 55%

GENRES WITH HIGHEST % OF EPISODES WATCHED LIVE

Q4F: As best as you can remember, divide the episodes you watched into the following categories:

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Dramas are the most watched genre overall—but viewers said they watched fewer than half of the episodes live

% of Episodes Watched Live

Lifestyle reality 72%

Non-competition reality 64%

Competition reality 59%

Sitcoms 55%

GENRES WITH HIGHEST % OF EPISODES WATCHED LIVE

% of Episodes Watched Live

Drama 44%

Adult animation 38%

GENRES WITH LOWEST % OF EPISODES WATCHED LIVE

Q4F: As best as you can remember, divide the episodes you watched into the following categories:

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Conclusions

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Conclusions:

Time-shiftedviewing is now the default

With the exception of sports and some reality genres, most TV shows today are watched sometime after they air. All of which makes the question of how to track viewership and monetize programming more challenging, and more urgent, than ever.

If anything, time-shifting is only going to increase

Start with the DVR, sprinkle in VOD, and add OTT services, and suddenly the ability to watch TV on your own schedule has shifted from a benefit to an expectation. It's all part and parcel of the new mindset that the Internet has wrought—providers of any service must deliver in a way that meets the consumers' needs, rather than the other way around.

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Conclusions:

Most time-shiftinghappens on platforms the traditional TV industry controls

Most time-shifted TV is still watched on a DVR or on VOD. And while OTT platforms like Netflix or Hulu do reduce the amount of live TV people watch, they’re used in tandem with a DVR, VOD, or network apps.

Ad avoidance is a force to be reckoned with

Until new methods of monetization are developed, the industry is going to continue to need to decide which is the lesser of two evils—compel viewers to watch ads knowing it will frustrate many, or accept the fact that significant numbers will fast forward through every ad on VOD and DVR.

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