Consumption of video is shifting to a variety of devices and younger viewers are more likely to view it on-demand and on personal screens. This is not exactly news, but it's always important to know how many are doing what, and how often. That's interesting information collected by UK regulator Ofcom in its latest annual report on video activity in the UK.
The report is primarily focused on monitoring and evaluating the impact of public broadcasters, such as the British Broadcasting Corp. (BBC) , to ensure that they continue to fulfill their purpose and remain relevant. However, some of the information provided is interesting for the market as a whole.
According to the report, which covers viewing habits for the calendar year 2016, the "television landscape is changing; people are increasingly viewing content in a variety of different ways, both on the television set and on other devices." That's a widely recognized trend, but it is interesting that these behavioral changes are not entirely restricted to young audiences; in fact, they are being seen among people aged up to 45.
Consider some basic market statistics from the beginning of 2017:
Interestingly, while almost all UK adults have used VoD, the most used services are the free services from broadcasters BBC and ITV rather than SVoD from Netflix Inc. (Nasdaq: NFLX) or Amazon.com Inc. (Nasdaq: AMZN). In fact, among those who had used VoD in the past week, less than half used a pay service like Netflix, Amazon or iTunes. That may have changed somewhat since the beginning of the year -- Netflix has broadened its UK portfolio, launched and promoted more original content and developed its partnerships with UK pay-TV providers. But it's unlikely there will have been a massive shift in just six months.
The shift to on-demand is more pronounced among different age groups. The average daily broadcast viewing time for the UK in 2016 was three hours and 32 minutes, 2% lower than the previous year. However, among those aged 65 and over, viewership was five hours and 44 minutes, just three minutes less than in 2012. In comparison, 16-24 year olds viewed just one hour and 54 minutes per day, a decline of 43 minutes over the same time span.
Instead, on-demand video is taking up an increasing amount of younger viewers' time. Students and households without children typically consume two hours and 19 minutes per day (not including an additional 19 minutes spent viewing DVDs or Blu-Ray). By contrast, families with children view approximately one hour and 20 minutes of on-demand. And empty-nesters view just 41 minutes of on-demand video during the average day.
Overall though, the Ofcom report again highlights that we are at still at an early stage of a video viewing transition. In 2010, live broadcast TV accounted for 92% of all time spent consuming video in the UK. Today, it's about 80%, with DVR and VoD accounting for the remaining 20%. Clearly, that's a substantial shift in just seven years -- but four out of every five minutes consuming video is still spent with live broadcast TV.
It is clear that multiscreen, on-demand video consumption has taken hold. But its impact is somewhat muted among older demographics, and the majority of video consumption is still built around live, broadcast TV. So it's really the younger viewers who are driving this shift in the video market. The central question, then, is will these multiscreen consumption behaviors be sustained as they age, and enter different life stages? Or is the personal screen/VoD preference more to do with their current lifestyle, and might mortgages and children will bring them back to the TV in time?
For pay-TV providers, this is probably the most important question to answer as they develop their product strategy for the coming years.
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation