While awareness of TV Everywhere options and digital pay-TV extensions are growing, the monetization models have yet to catch up with the consumer momentum. However, pay-TV operators testing the multiscreen waters can leverage connected innovation going forward to ultimately uncover new revenue sources.
More or less half of U.S. pay-TV customers aged 18 to 64 are now aware of TV everywhere as a concept, according to CTAM research. That survey also showed that 44 percent of MVPD customers have verified into the service at least once to view TV content in the past six months—a notable groundswell for usage.
Sports are a major driver, as the success of digital and mobile streaming for the 2014 FIFA World Cup showed.
"The combination of rapid growth in available content, a record number of viewers watching major sporting events on multiple devices, and a unity of purpose through CTAM's TV Everywhere initiative is putting the category on a fast-track to success," said John Lansing, CTAM president and CEO. "The research…is a rallying call for the industry to collaboratively and aggressively communicate the extraordinary value of TV Everywhere."
Mobile consumption of video is driving usage of TV apps, with 55 percent of U.S. smartphone owners and 61 percent of tablet owners using a TV-related app at least once a month. The number of global TV app users on smartphones will reach 1.29 billion by 2018, according to Parks Associates.
The availability of TV Everywhere is set to escalate as well. The movement was spearheaded by Comcast, Time Warner Cable and other major MSOs, but some see a benefit for other tiers of operators as well—and other segments.
For instance, to facilitate the rollout of digital TV extensions by wireless carriers and other non-traditional providers, MobiTV is plotting a white-labeled TV Everywhere service for operators, delivered via an Amlogic-powered streaming stick solution.
"A significant point of differentiation for the MobiTV Connect streaming stick is that it is distributed to consumers under our operator customer brands, and is integrated with their billing and current product offerings," said Charlie Nooney, CEO at MobiTV. "Our partnership with Amlogic encourages a more powerful, full-service offering to wireless operators that is both low-cost and able to reach customers on a variety of screens, including full HD content to the big screen in the home."
The white-label streaming stick will be offered to wireless, IPTV, OTT and SDL broadband operators, so that they can use their existing networks and multi-service product bundles for immediate in-home deployment.
Building Consumer Value
With usage on the rise, the primary benefit of TV Everywhere to date would seem to be churn reduction and value creation. In the CTAM survey, a healthy percentage (49 percent) said that they feel more positive about their service because of the availability of TV Everywhere. And, 55 percent said that TV Everywhere makes the pay-TV subscription a better value for the money, while three-fifths said that it makes a subscription to a premium network like HBO or Showtime a better value.
"This research uncovers a significantly positive halo effect on value perceptions,” said Jon Giegengack, a principal at Hub Entertainment Research, which carried out the CTAM survey. “By educating customers that TV Everywhere comes at no additional cost and fundamentally expands the viewing experience, cable companies and networks have an unusual opportunity to create deeper, more durable relationships with consumers.”
Some networks are pointing the way forward in terms of re-gaining loyalty among demographics that are most likely to cut the cord on traditional TV. ABC News for instance recently announced the release of ABC News on Apple TV, providing viewers with access to live and on-demand news content. The line-up of original and on-demand content for the Apple TV is instead aimed towards a younger, digitally savvy audience than what ABC typically sees in its linear ratings.
It’s no secret that the audience for daily broadcast news skews older, and is shrinking. But the Apple TV play is meant to wrap in younger eyeballs that prefer their news in personalized capsules.
“We are delighted to deliver ABC News to a whole new and growing audience,” said James Goldston, president of ABC News. “Now the stories that interest you most and anything that’s happening live is instantly available to you on Apple TV from ABC News.”
In a nod to the frenetic attention span of today’s digital generation, the content mix for Apple TV is served as up to four live streaming events at once, allowing users to alternate between live events and breaking news throughout the day. It includes world news and political updates, entertainment news, live hourly updates, original programming and video highlights from Good Morning America, World News with Diane Sawyer, Nightline, 20/20 and This Week with George Stephanopoulos.
ABC News on Apple TV also delivers local news updates and video highlights from nine major market ABC television stations across the country, along with 50 years of historical video footage from ABC News’ archives.
“Our goal is to put our users in control of their news,” said Joe Ruffolo, senior vice president of ABC News Digital. “We are very excited to be extending our leadership and innovation onto an amazing platform like Apple TV. Utilizing hours of live video each day, opening up our archives, extending our strong local brands, and bringing the trust of ABC News to our users when and where they want it.”
ABC said that it sees its digital distribution push as a big differentiator for the network, and has been out in front in attacking the digital space in many ways.
In 2012, ABC News launched the redesigned, day-parted ABC News App for iPad, developed to reflect the natural viewing behaviors of online news consumers throughout the day. Building upon this model, it launched three, live video feeds and a simultaneous social feed to cover the Republican and Democratic National Conventions that year.
“ABC News continues to lead the industry in digital, delivering live, original and VOD programming to millions of users across desktop, mobile, tablets and now connected TVs,” it noted. “For 28 consecutive months the Yahoo-ABC News Network has remained the No. 1 source of news and information online, delivering more content to more users than any other online news competitor.”
Ruffolo added, “We’re No.1 on air and No. 1 online, surging in mobile and expanding to connected televisions. We are very focused on what’s next.”
Taking Aim at Monetization
Despite the clear opportunity for engendering greater consumer loyalty and satisfaction, significant advertising revenue for TV Everywhere has yet to materialize, leading operators to mull other ways to monetize the initiative.
According to a report from The Diffusion Group, overall advertising growth will remain sluggish for several years,regardless of the emergence of a plethora of new TV and video distribution platforms and services.
The firm found that since 2004, overall TV and video spending has risen just 9 percent from $195 billion to $213 billion in 2013, representing a mere 1 percent CAGR. Moreover, TDG expects TV and video revenue over the next five years to be much like the previous five years in terms of inflation-adjusted dollars, running primarily flat with growth rates of business and consumer spending for TV and video having remained negligible since 2010.
This comes despite the maturity of TV Everywhere, which while showing promising in-market results, are still in TDG's eyes are relatively nascent and taking shape in a business landscape known for changing very slowly.
"Total TV and video spending rose only 3 percent from 2010 to 2013," explained report author and TDG senior advisor Bill Niemeyer. "It's like turning a super tanker while you are rebuilding it. It takes a long time to take new platforms from first in-market trials to fully realized revenue-generating ecosystems. There will be revenue winners and losers during the next five years, but the total TV/video dollar pool will stay the same. Even as they implement TV Everywhere and VOD, operators and content providers have to make key decisions now about going forward on new advanced techniques and technologies. These will be critical for long-term growth, but will not begin to generate significant revenues until after 2020."
However, other consumption patterns are coalescing to underpin fresh opportunities. The average consumer owns four or more connected devices each, according to researchers at TNS. And that provides a rich surface for “screen-stacking” and use cases that link TV apps and TV Everywhere portal access with paid offerings like home automation or e-health.
"TV app usage is altering the use cases for multiple connected devices; currently 57 percent of connected game console owners are using the device to watch TV shows," said Stuart Sikes, president at Parks Associates. "We are also seeing new revenue opportunities emerge through in-app solutions in the smart home and Internet of Things.”
For instance, Parks Associates analysts report that more than 70 percent of smart-TV owners have the device connected to the Internet. Also, nearly two-thirds of people shopping for a flat-panel TV this year plan to buy a smart TV. The firm believes that the smart TV has a significant role in the connected home and is a key device to extend new services and experiences to consumers.
To wit, it can be the gateway to a personalized consumer experience that spans devices, like one centered around, say, exercise. A mobile pedometer app could interface with the TV at home for reminders and serving related rich content—including subscription TV fare, to bookmark for viewing later across devices. Also, with HTML5 gaining momentum as a rich-media enabler, TV apps can more easily sync across PCs, tablets, smartphones and TVs, so they better drive the consumption of media in these kinds of new ways.
The industry is shifting, but it’s clear that TV Everywhere will continue to evolve into a significant momentum-driver for pay-TV.
"Customers clearly love the ability to view TV shows, sports, and news on multiple devices, but the impact of TV Everywhere reaches beyond satisfaction with the service itself," remarked Hub Entertainment Research partner Peter Fondulas.
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