Webinar Chasing Tomorrow’s TV Audience In A Multisource Video World Jim Nail, Principal Analyst November 18, 2013. Call in at 10:55 a.m. Eastern time

Agenda Consumer video viewing behaviors diversify. New technologies delight consumers with more control. Devices, economics, and content reshape the industry. Marketers should prepare for TV’s addressable future now.

Agenda Consumer video viewing behaviors diversify. New technologies delight consumers with more control. Devices, economics, and content reshape the industry. Marketers should prepare for TV’s addressable future now.

Half of consumers combine TV, DVR, and online viewing DVR is the main alternative viewing source. 15% complement DVR with online viewing. 4% use all three: linear, DVR, and online. Source: October 30, 2013, “How Online Video Will Challenge DVRs’ Role” Forrester report

Linear TV still dominates time spent watching TV Source: October 30, 2013, “How Online Video Will Challenge DVRs’ Role” Forrester report

Many DVRs sit idle In a given month: 26% of US online DVR users watch no shows on their DVR. 35% watch no more than five shows. Source: North American Technographics® Online Benchmark Survey (Part 2), 2013

Online trumps DVR among triple source viewers Source: October 30, 2013, “How Online Video Will Challenge DVRs’ Role” Forrester report

Online viewing starts undercutting DVRs DVR penetration has stalled since 2010, dropping with Gen Z. Source: October 30, 2013, “How Online Video Will Challenge DVRs’ Role” Forrester report

Online viewing starts undercutting DVRs (cont.) Gen Y and Z embrace online viewing. Source: October 30, 2013, “How Online Video Will Challenge DVRs’ Role” Forrester report

DVR users could be swayed by a better offering “I would prefer not to [give up my DVR] because I like its convenience. But, if another technology that is more user-friendly is developed, I’d most likely switch.” (Male, age 50 to 54) “I continue to look for a DVR alternative that I could connect to a variety of services but not pay a monthly fee for the service. I would enjoy having a DVR that would see online, satellite, cable, and OTA [over the air] and would search everywhere to find your show for you.” (Male, age 35 to 39)

Agenda Consumer video viewing behaviors diversify. New technologies delight consumers with more control. Devices, economics, and content reshape the industry. Marketers should prepare for TV’s addressable future now.

Viewers who have discovered online sources tend to dismiss DVRs Viewers embrace online sources for: Freedom in terms of location. Compatibility with any device. Flexible program schedules.

Online viewing is held back by the viewing experience and hassle The main complaints about online viewing are: Incapacity to watch on a big-screen TV. Connecting computer to TV is too much work. Poor video resolution quality. Unreliable streaming. “I had a month free trial of Amazon instant video and had to hook my laptop up to the TV to watch. That was a bother. So we will not subscribe to a streaming service until we have an Internet-connected TV.” (Female, age 18 to 24)

So what do consumers want? Image source: Allday (http://allday2.com/) So what do consumers want?

Some younger viewers are DVR fans “I mostly only watch live broadcast TV. I would like to have a DVR, so I could watch the shows I want when I want and skip most commercials.” (Female, age 18 to 24) “I watch shows via DVR majority of the time — I rarely watch live TV. I enjoy not having to watch commercials and not feeling forced to watch a TV show at a specific time.” (Female, age 25 to 29) The shows that I do watch religiously are all programmed into the DVR so that I never miss an episode when I am in and out and then I can watch it whenever I want to.” (Male, age 25 to 29)

. . . while older viewers see advantages to online “We watch TV mostly live, but we do access on-demand through our cable box when we miss an episode. We have Netflix for movies and can catch a lot online through the networks’ own websites. I don’t have a DVR because it seems like an unnecessary expense.” (Female, age 45 to 49) “I’ve never used a DVR, but I do watch TV using the Web, and I also use the apps on my iPhone. I also watch on-demand via my cable provider guide. I use these when I simply do not have time to see a program or movie live. I appreciate them because they don’t show commercials.” (Female, age 45 to 49)

Content and experience matter more than device and location Viewing experience Winner: DVR Time- shifting Winner: draw Cost Winner: online TV Winner: online TV Ubiquity

The mobile mind shift will accelerate viewing behavior changes The expectation that any desired information or service is available, on any appropriate device, in context, at a person’s moment of need Same expectation will apply to video consumption. 27% of the US online population “shifted;” additional 17% are “roamers.” Desirable advertising target

Agenda Consumer video viewing behaviors diversify. New technologies delight consumers with more control. Devices, economics, and content reshape the industry. Marketers should prepare for TV’s addressable future now.

Multitude of connected devices levels the field between DVR and online TV Address online video’s major drawback, and end the complexity of multiple set-top boxes: Video game consoles, Google Chromecast, etc. Cable and satellite’s “TV anywhere” services TiVo’s Roamio DVR

Content bundling comes under fire from new technologies and legislators Bundling is driving subscription costs up. Television Consumer Freedom Act of 2013 Content owners separate digital and linear rights.  Aereo Image source: Aereo (https://www.aereo.com/)

Agenda Consumer video viewing behaviors diversify. New technologies delight consumers with more control. Devices, economics, and content reshape the industry. Marketers should prepare for TV’s addressable future now.

Stop forcing time-shifted audiences into GRPs As ad placements on nonlinear viewing sources becomes available, they will generate higher value. Image source: Business 2 Community (http://www.business2community.com/)

Demand new advertising options now VOD growth will call for increased efficiency in addressability and dynamic ad insertion. Image source: FlickSided (http://flicksided.com/)

Shift audience definitions and TV performance KPIs TV goals will shift from highest reach to the deepest penetration of a specific audience. Devote 10% of TV budgets to test addressable ads. Use MMM to quantify impact on TV ROI. Image source: YurTEH.net (http://yurteh.net/)

Get ready for programmatic buying Increasing fragmentation across sources and devices will necessitate greater automation. Addressability of online streams and VOD will enable audience-centric versus content-centric buying. Image source: FCBR (http://fcbr.org/)

Jim Nail +1 617.613.6198 jnail@forrester.com