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NON-TRADITIONAL TV F E B R U A R Y 2 0 1 6

EXCERPT OF FINDINGS

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Non-traditional, online-only video content is a growing source of competition for total viewing time

•  Reach: In 2015, the one-week audience for top 10 multichannel networks on YouTube reached 370 million views*

•  Frequency: More than 1/3 of viewers 16-29 watch online video at least 3 times per day – usually not on a TV set*

•  Engagement: Among young viewers, YouTube personalities are rated more appealing and influential than Hollywood celebrities**

* Piksel, August 2015 **August 2015 survey by Variety

Source: Zenith Optimedia ^ Projected

23% 40% 58%

2012 2014 2016^

% of time with online video spent on mobile devices

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•  A way to get noticed: Win new audiences on platforms that make it easier to find and target viewers who will be interested

•  Lower costs: Leverage existing audiences, shorter development cycles, and lower production costs

•  New genres and audiences: Build content around very specific genres, like gaming, lifestyle, and eSports, with millions of potential viewers

•  New ways to monetize: Advertisers can be part, or a partner, in the show—and can take advantage of opportunities to hyper-target viewers

But it also offers an opportunity for traditional providers to adapt to the new TV marketplace

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What barriers must “big media” to contend with in entering this market?

•  Distribution Cost: Existing platforms (e.g. YouTube) take a big slice of revenue

•  Brand Image Risk: When the line between consumer and producer starts to blur, there’s a unique appeal to viewers—but also some loss of control over content

•  Perceived Authenticity: Attempts to exert too much control could “kill the golden goose” - undercutting the independence that draws many viewers to these sources in the first place

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Audience •  How big is the audience for online video? •  How often do people view? •  What are the characteristics of viewers overall, and

viewers of specific genres?

Attraction •  What’s the fundamental appeal of online video viewing? •  What genres and sub-genres are most popular?

Impact •  What’s the impact of online video viewing on viewing of

traditional shows from TV networks? •  Which online video genres complement, or cannibalize,

traditional viewing?

Opportunities •  Do online video viewers see a place for established

media companies in the online video ecosystem? •  How can established companies most effectively take

advantage of these opportunities?

Goals of this research:

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•  Age 16 to 74 •  We sampled younger consumers more heavily to enable deeper

analysis of online video activity •  At least 5 hours of TV per week •  Broadband access at home •  Sample weighted to U.S. census distributions •  Data collection completed in February 2016

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We surveyed 1,246 TV consumers

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1.  "Online Original" TV shows

These have the same general length and structure as shows on regular TV, except they’re only available online. Some well known examples: House of Cards, Orange is the New Black, Narcos, Transparent, Master of None, etc.

2.  Music videos Videos from popular performers like Katy Perry, Bruno Mars, Rihanna, One Direction, Taylor Swift, Justin Bieber, or from amateurs doing a version of a popular song

3.  Clips from TV Shows

Online videos that show a segment from a regular TV show, like Jimmy Fallon, Jimmy Kimmel, Conan O’Brien, The Daily Show, The Ellen Show, etc.

4.  Online video series

Video series that come out regularly online, with a theme, like Bad Lip Reading, Funny or Die, College Humor, AutoTune the News, Barely Political, etc.

5.  News Video clips with latest news (world, national, business, technology, entertainment, science, etc.), sports highlights or clips, weather, etc.

6.  Special interest Videos on a range of lifestyle topics or hobbies, including food, travel, autos, beauty, health, mindfulness, business and finance, etc.

We captured data on 12 categories of online video:

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7.  Educational Videos to educate on a topic or how to do tasks or projects, such as Ted Talks, NASA TV, Talks at Google, Crazy Russian Hacker, etc.

8.  Gaming videos Videos with gameplay from video games like Minecraft, Grand Theft Auto, Battlefield, Halo, etc.

9.  Product reviews Video reviews of new products being introduced, or videos showing people opening up the boxes that new products come in

10.  Online series with hosts

Video series that come out regularly online, created or hosted by the same person. For example: PewDiePie, Smosh, My Drunk Kitchen, Good Mythical Morning, FouseyTube, Jenna Marbles, Superwoman, Jérôme Jarre, Shaun McBride, Cameron Dallas, Brittany Furlan, etc.

11.  “Extra” content from shows on TV

Webisodes, interviews or behind the scenes videos from popular TV shows (The Walking Dead, Empire, Game of Thrones, etc.), only available online

12.  Videos for kids Cartoons or other video content targeted to kids, only available online, like Little Baby Bum, ChuChu TV, Mother Goose Club, etc.

We captured data on 12 categories of online video:

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Excerpt of Findings

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77% of all viewers have watched these kinds of online videos in the past 6 months

Despite being a relatively new category, online video has already built a massive audience

88% of those age 16-24 have viewed in past 6 months

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Those viewers are highly engaged – especially younger ones

of viewers watch at least once a week

watch every day

38% subscribe to at least one online video channel

76% 35%

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Consumers perceive some compelling differences between online video and “regular” TV shows. For example:

FORMAT:

•  They’re shorter: For certain genres, we see up to 75% watching in sessions of 15 minutes or less—a window that “regular” TV doesn’t offer

•  They’re mobile: easy to consume on laptops and mobile devices (which is overwhelmingly how younger viewers watch them)

QUALITY: They’re perceived as more inventive and creative—without a hard line between creators and consumers, and outside the paradigm of traditional TV shows

CONNECTION: Discovery takes no effort: 49% of all video viewing is “pushed” to viewers, on posts, sent by others, or through notifications

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And online video does take a bite out of regular TV viewing—especially among younger viewers

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6

21

24

Age 16-24

Age 25-34

Age 35 +

Online Video Traditional TV

15 hours per week

20 hours per week

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But this is also a category where traditional media companies could expand, successfully

say they would feel “positive” about an online video personality they watch signing on with a major media company

prefer online videos from “big” media companies, vs. only 14% who say they’d prefer online videos to come from independent creators

48%

34%

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Conclusions The most important things to remember

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Conclusions

Online video is thriving

Yes, you can still find cat videos. But the online video ecosystem has grown organically into much more. •  Massive reach and frequency •  Especially among viewers that advertisers covet—

Millennials, but also 16-24 year olds specifically •  Woven into the daily routine of consumers, so much

so that they interrupt other things they’re doing to watch spontaneously

Traditional media is vulnerable

In many ways online video performs best where traditional TV is weakest •  Tremendous amounts of content •  Desirable genres/formats traditional TV doesn’t

offer—including niche genres and sub-genres that would be unprofitable for a mass medium

•  Consumption is especially strong on mobile, where young people watch but traditional TV lags

•  Many options for whether and how to pay •  Near effortless distribution that makes sharing with

others part of the experience

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Conclusions

Online viewers watch less traditional TV

Consumers who view online video already watch fewer hours of TV than non-viewers—not surprising given that the average viewer already watches 8 hours of video content per week. And many predict that they’ll watch less TV in the future as a result these video options. The threat to TV’s business model is real.

But the way is clear for “big media” to participate in non-traditional TV

Even the youngest consumers don’t see an adversarial relationship between online video and traditional TV. In fact, it’s just the opposite. •  Most would welcome seeing popular video

personalities sign with established media firms •  More prefer videos from established companies

than from individuals

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For information on the full findings from this research, please contact us.

Jon Giegengack Principal Hub Entertainment Research (603) 661-0068 jong@hubresearchllc.com