[opendtv] Re: TV Technology: Ooyala Sees OTT as Gateway to Broadcast’s Future
- From: Craig Birkmaier <brewmastercraig@xxxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Fri, 04 Mar 2016 12:53:19 -0500
Thanks for finding this article, and the other story and report links. There is
a lot of information to digest here. Some of it is inaccurate, as I will relate
in my comments. And some is difficult to actually quantify...
On Mar 3, 2016, at 10:17 PM, Manfredi, Albert E
<albert.e.manfredi@xxxxxxxxxx> wrote:
Craig will note that 79% of the US population now subscribes to "some sort of
pay TV service," while OTT subscriptions are at 78%, at least according to
Ooyala. Not exactly sure what that means, but it sounds like they mean MVPD
service. A bit of an apples and oranges comparison perhaps, but the trends
are respectively down and up.
This is also discussed in the Videomind story that includes data from other
studies.
What it means is that about 80% of U.S. Homes subscribe to some kind of MVPD
service. The Videomind story provides an actual number (about 93.97 million
homes) , which is 80.7% of the 116.4 million homes Nielsen reports for 2015.
These articles report 79%, which is probably a bit on the low side, but within
a reasonable margin of error.
The 78% number is homes that subscribe to some paid OTT service like Netflix or
Amazon Prime. While the numbers are similar, there is a significant area where
they do not overlap. Many of the OTT subscribers are likely among the ~20% who
do not subscribe to a MVPD service. There was an interesting stat in the full
Ooyala report that Bert did not mention. It says that 45% of the homes that do
not subscribe to a MVPD service now use over the air television, although it
does not say how often. It implies this is due in large part to live sports,
which the report cites as the backbone of live TV, but watching other live
events and premieres of popular shows is probably a factor as well.
According to Ooyala, "PwC said that its survey showed nearly 23% of pay-TV
subscribers trimmed the cord in the past year, and some 16% said they had
unsubscribed in the past year." - See more at:
https://www.ooyala.com/videomind/blog/will-2016-be-pay-tv-s-waterloo-new-pwc-survey-says#sthash.6dPshvgG.dpuf
The e is a glaring mistake in these numbers. The PwC reports says that the cord
cutters were 6%, not 16%. This could be true, if they were assuming we went
into 2015 with 85% of homes subscribing to a MVPD service. But the number they
provide in the Videomind article suggest a drop of about 5%. Again, this may be
within the margin of error, or just sloppy journalism.
As for cord shaving, it's hard to say exactly what this means. Some MVPD
services have a bunch of optional tiers, and in 2015 it became possible to
access HBO and other premium movie services OTT. I concur implement with the
reports that consumers are fed up and want ala carte!
So, the cord shaving phenomenon persists, still significantly outdoing
all-out cord cutting. The numbers don't appear to be slowing down, rather
accelerating, although hard to say for sure.
Glad to see Bert say that it is hard to say for sure. We are still seeing a
wide range of data points, based in part on the biases of who is behind the
reports. I guess this is to be expected.
Another interesting factoid is that millenials, with their different viewing
habits, now outnumber boomers. Whoa.
"One quarter of Millennials without children currently don’t have cable.
'That’s all I need, that’s all I use, an Internet company,' one 25- to
34-year-old female told PwC. 'I don’t need cable because we have Netflix and
Amazon Prime.' Added another in the same demographic, 'Everything I would
want to watch on cable… you can get it all on Netflix.'” - See more at:
https://www.ooyala.com/videomind/blog/will-2016-be-pay-tv-s-waterloo-new-pwc-survey-says#sthash.6dPshvgG.dpuf
There is a bunch of misleading or incomplete information here. For example the
25% of Millennials without children do not have cable. That suggests that 75%
do, which is only slightly less than the 79% they report across all
demographics. They do not tell us the rate of cable adoption among Millennials
with children, or the percentage with or without children. But we have seen
other reports that say when Millennials have kids they tend to subscribe to a
MVPD service.
This goes to the question of whether OTT is just "a complement." Not
necessarily, not anymore.
It is hard to deny that OTT is complementary for a large percentage of homes.
If you do a Venn diagram of the 79% and 78%, by necessity, more than 50% must
overlap.
From our recent discussion about the rapid growth of TVE last year, it is
evident that MVPD subscribers are using TVE on the big screen in the family
room for catch-up and other on demand services. These articles re-enforce that
conclusion. They also re-enforce the finding that more people are watching full
length TV entertainment on small screens.
The quote above about the female who gets everything "we" need from Netflix and
Amazon Prime says more about her than any meaningful trends.
The Ooyala reports states:
Sports (particularly live sports) continues to be the most expensive and most
sought-after TV content around the globe. (Just ask Discovery Eurosports and
NBC.) That’s a key reason consumers stick with and come back to pay TV, and
also why ESPN has resisted launching its own OTT service. Sports is a driver
for TVE, and 4K and mobile continue to be drivers for sports. In the U.K. and
Ireland for example, Ooyala has found that more than 45% of sports viewing
occurs on smartphones and tablets.
So traditional pay TV services may survive for a long time, with the enhanced
services enabled by TVE.
Says that "traditional TV viewing" is now 45% of the total, not too different
from the 47% our last numbers claimed.
Yup. That's the king of meaningful YoY data we need to understand the "trends."
I totally agree with the "If you can't beat'em, join'em" sentiment, but
clearly TVE hasn't gone far enough to "join'em." Joining them means
rethinking the neighborhood restrictions and the mandatory proprietary
infrastructure connection. And I'm obviously not talking about the neutral
broadband infrastructure connection.
TVE has nothing to do with geographic restrictions. It is available to DBS
subscribers who may reside anywhere in the U.S., and it is available to
subscribers of any MVPD limited by geographic restrictions.
The whole point of TVE is to enhance a MVPD subscription, taking advantage of
the ability to extend access to the content you are paying for via the Internet
- i.e. away from the umbilical or dish.
While there is some logic in divorcing TVE from a MVPD subscription, the
alternative is to pay for each service ala carte, ala CBS All Access. OR to
finally allow VMVPD services access to all of the content available through the
legacy MVPD services. Or even better, to allow for slam carte VMVPD bundles, as
Les Moonves tells us will happen...
Eventually.
Regards
Craig
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