[opendtv] Re: Video on Demand: It's Actually Not Television's Enemy
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Wed, 9 Apr 2014 06:52:52 -0400
On Apr 8, 2014, at 5:50 PM, "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
wrote:
> "But there was one interesting growth area: broadcast TV content. The report
> shows that the total time spent viewing on-demand broadcast prime-time
> content grew to a billion transactions, up 23 percent from 2012. 'Remember,
> fast-forwarding is disabled on broadcast prime-time shows on demand,' says
> Rentrak Chief Executive Officer Bill Livek. 'So, to discover something on the
> VOD platform, someone who actually wants to watch a show has to sit through
> the commercials-and this shows that they are willing to make that trade-off
> for the convenience.'"
>
> Nothing to sneeze at, 23 percent gain, eh?
Clearly there was significant growth for the Broadcast TV VOD portals. This is
not surprising as the availability of content through these portals is a recent
phenomenon, and we have spent considerable time discussing the shift to VOD
consumption, away from watching the original broadcast or programming your DVR
for time shifted viewing.
What the report the Monty posted focused on the growth of the broadcast
segment, the overall report shows a somewhat different picture. Here is a
paragraph from the Rentrak press release about the report:
> According to the report, which is broken into three parts: Free on Demand,
> Subscription Video on Demand and Transactional on Demand, an average of 43.3
> million televisions accessed VOD content with almost nine hours of time spent
> viewing per month. The total time spent viewing all VOD content was 4.4
> billion hours, a three percent increase from the previous year. The TV
> Entertainment category, which includes programming from many of the top
> broadcast and cable networks, also saw a 17 percent increase in time spent
> viewing.
One must be careful when looking at statistics from companies that make their
living selling services to the content conglomerates. For example, the press
release notes that the free broadcast segment reached one billion transactions.
But the statistics above are all stated in hours viewed. Many broadcast
programs are only 1/2 hour (with up to 1/3 of that being commercials. So the
total hours viewed through these portals is probably significantly less than 1
billion hours, out of the 4.4 billion hours noted above.
It is also important to remember that the vast majority of programming viewed
via Netflix and other commercial free subscription services is syndicated TV
entertainment that was broadcast a year or more before it became available on
these services.
The fact that Rentrak notes the opportunity for the broadcast networks to
monetize VOD content that is older than three days, when it was "hot," is also
telling. The services provided by Rentrak are all based on the ability to
actually track "real numbers" for content that is viewed via the Internet or
through transactional services like pay TV (HBO Go), Redbox and DVD sales and
rentals. Broadcast ratings from companies like Nielsen are little more than
estimates, which have been overstated for decades. The broadcast OTT portals
provide real viewing data.
> As one who has been doing this regularly for several years, I can say that
> now, when I watch real-time broadcast prime time shows, the ad breaks are
> excrutiatingly long. This should be a hint, in case it isn't drop-dead
> obvious, that you get dimishing returns with excrutatingly long ad breaks.
This is a major reason I stopped watching broadcast TV a long time ago. That
and the fact that most of the programs are no longer entertaining. The report
notes that the broadcast OTT portals carry the same ads as the live broadcast,
so they screw you either way. At least if you program your DVR you can fast
forward through the ads.
With Netflix I do not suffer through ads. The content is not "hot," but I can
choose from the relatively few good shows from recent years and new programs
made for these portals.
> I wish that such obvious effects were not lost on the TV execs, as they seem
> to be. It should be drop-dead obvious that subjecting viewers to multiple
> minutes of ad breaks will simply make these viewers either record the show
> and fast-forward the ads, or quit watching. Why is this hard to understand
Because the networks are still selling ads and don't care about the saturation
on "Free TV."
It might even be intentional, to drive viewers to the services that have zero
ads or a much lighter ad load. If Rentrak tells them that Netflix hours are up
XX% over last year, what do you think will happen the next time the networks
negotiate a new content deal with Netflix?
Netflix is operating at the mercy of the congloms; their content cost are
rising rapidly, and they have little control over cost increases from the
networks. Netflix claims to be "data driven." Rentrak collects and reports that
data to its biggest customers...the movie studios and broadcast networks.
> Online TV prime time shows, with ~2 minute ad breaks, are tolerable. Start
> overloading those ads, and you'll see viewers taking action.
If the ad breaks are shorter online, it is only because they may run less
promos. And keep in mind that they can run pre-roll and post-roll ads as well.
The very clear take away from this story is that the congloms know exactly what
is happening, and are using real data to drive their efforts to move their
oligopoly to the Internet.
Regards
Craig
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