Summer Not Loving for SVOD

It’s been an eventful second half to what has been a great year of television.  Broadcast TV, against the backdrop of new competitors and often hyperbolic screeching of its demise, we have seen a plethora of big hitting, ratings winners. I will come back to that particular topic in another post however. Today I would just like to turn our attention back towards SVOD (what? Again?!).

At the beginning of this year, SVOD was continuing its meteoric rise. In fact, across Q1 we saw the strongest SVOD subscriber growth measured by BARB.  So much so, I even predicted that I expect total SVOD subscriber penetration to break 50% of all households by the end of this year.

However, following that strong Q1 growth, we have witness two subsequent slower growth periods, culminating in Q3 figures that shows the slowest growth ever recorded by BARB.

SVOD Numbers

Across the entire three months, SVOD services added less than 50k households to their subscriber services, with all three main players experiencing flat returns on the quarter.

Now, it’s fair to say that the third quarter of any year is not exactly a boon time for growth, it is the summer after all, and TV viewing historically is impacted severely during the summer months and in hot weather.  So, in part, it is not surprising that after a long hot summer, this had a knock on effect on SVOD take up, as well as traditional TV viewership.

WeatherModel

It is of course unclear as to whether this slowdown in growth is temporary or a potential plateau in the scale of these services, and eyes will be on Q4 data when it is released by BARB in early 2019.  Until then we can just hypothesise.

What we do know of course is that the role of SVOD is already mainstream, and whether a plateau or not, with 41% of all UK households subscribing to a service, their influence on TV continues to be significant. 

So much is the impact of SVOD, that at a recent Royal Television Society evening, Justin Sampson, CEO BARB, highlighted that the amount of viewing on the TV set that is ‘unidentified’, and therefore to content that does not relate to a broadcast programme, has increased by 58% since 2015.

This equates to 19% of all TV set viewing.  Now, what is not clear, by definition of being ‘unidentified’, is that we dont know how much of this is SVOD, but the trend is clear. Justin Sampson even went further, with flagging that for 16-34s, the ‘unidentified’ component equates to 38% of all their TV set viewing.  

Not surprisingly, Justin announced that identifying this content was of utmost priority for BARB in the coming months and years, with investments and tests with both Nielsen and Kantar Media technologies.

Nielsen themselves announced at the recent ASI TV & Video conference that they are now regularly reporting SVOD viewing figures at a programme level to subscribers in the US, with some fascinating results. Unsurprisingly, there were large viewing levels to the big promoted shows across Netflix, Amazon etc, but of increasing interest was the value that archive, low-cost comedy series provide in viewership levels. Friends for example across the year providing as much minutage of viewing as some of the high budget commissions. Although at first surprising, you can see, even from data in the UK, why Netflix first went for the show, it still drives constant audiences to Comedy Central, getting a reach over the year in excess of 15m. Being able to look at this non-linear SVOD viewing as well however provides event more context. With this extra data, existing within a single source data sets, subscribers will not only be able to see whether SVOD viewing is cannibalising their broadcast, but additionally it will allow their programme sales teams to potentially re-evaluate the true value of their programmes, many years after their initial broadcast rights cycle. Netflix in particular already spend multiple billions on programme acquisitions, should this sort of data become increasingly available, it may be that traditional studios begin demanding a fairer share for their content?  We can see this with Friends itself, quite possibly off the back of the data provided by Nielsen, with Netflix having to increase its rights offer by $70m to a whopping $100m, up from its current $30m.

Q4 promises to be a crucial few months in the growing position of SVOD in the UK TV Landscape, all eyes will be on BARB in early 2019.

Addressing the right questions

‘Addressable TV’ is here. Depending on who you talk to its either the future of TV advertising, or indeed its saviour, or probably both.

Like most people, I’m very optimistic about ‘Addressable’. The potentials for media owners to maximise and increase their inventory by reducing wastage, as well as the potential for planners to execute and target campaigns more efficiently, what’s not to like?

Well, part of me has a niggling worry that the move to ‘addressable’ will mean a move to more short term direct response metrics to assess effectiveness (when the true value of TV advertising as we know is in the long term brand build), but away from that what worries me most is that we as an industry get the measurement right (quelle surprise).

Linear TV advertising, by and large has always been and still today measured in a fully transparent and audited way. In the UK it’s run by a JIC (Joint Industry Currency), no black box, a published methodology and with input from all sides of the trading ecosystem. It’s not for everyone I appreciate, but these fundamentals mean that it is trusted, but also fair. Neither side can game the system to their own liking, its independent. And that’s hugely important.

So, what of ‘’addressable? Well, in the online world, for video just as other display, the trade is largely conducted via self reporting by the publisher or ad-exchange. Those that are in control of the measurement ultimately. On its own, I have no issue with this, but if the measurement is abused, mis-interpreted or ill-judged, then ultimately we abuse the media itself, and that concerns me.

Now I should be clear, I’m not suggesting there is or will be any abuse at play, but my concern is that television viewing is unlike other media consumption or at least other ‘online’ media consumption, and the measurement needs to be fully aware of this and take this on board when aggregating impressions and deriving demographics.

So this is an informal call to arms for the industry to set out its stall for standards, its minimum level of reassurance that what we are buying is what is actually happening, to show our working, and not make the mistakes that have impacted other areas of online buying and selling. As Dominic Mills put it far better than I in a recent Mediatel article, there is a growing need for the industry to see more transparency in the algorithms used by media owners to justify the spend by clients. It’s not much to ask for really.

My hope is that ‘addressable’, like traditional linear spot advertising will be conducted in an open, transparent and critically audited manner.  As such, here are my top six categories and questions for agencies and clients to consider when buying addressable from publishers and platforms:

  1. Who is the actual viewer?

BARB estimates there are 62.8m people with a TV set in the UK. Those 62.8m people live within 27m households, meaning on average there are 2.3 people per household as potential viewers. Old, young, male, female, all potentially very different in every viewing occasion. Furthermore, around 4% of TV viewing is actually in someone else’s home, so how is this taken into account? Of 16-24 viewing, 12% is actually in another person’s home.

If your data is based on a single login entry, device ID or registration, is it clear as to whether the demographic is household or individual based?  If the provider is claiming to know with accuracy who the viewer is, if so ask them to show you how they know? How sure is the provider as to whether the viewer is the original subscriber or someone else in the household or indeed someone from a totally different household?

  1. Shared Viewers

Television is not just a solus viewing experience, it’s a shared experience, to enjoy with friends and family. As such, around 50% of all television is with at least two people in the room watching. Who are these viewers, can they be counted? Especially as the shared viewing ratio changes depending on the type of programme people are watching or indeed the type of TV set they are watching on. The larger the TV set, the more people generally watching together.

VpV Factors

With this in mind, how does the ‘addressable’ provider account for this potential wastage as this, even if not charged to the client should be taken on board when assessing the overall campaign.

  1. No Viewers

The TV may well be on, but is anyone actually watching?  Within the BARB measurement, around 10% of TV On time is discarded within their measurement, because even though the TV is on, there are no viewers watching. Does the ‘addressable’ data you are buying take this into account, especially as this time away from the TV is likely to be around advertising breaks (to go to the toilet, the kitchen etc)?

  1. TV Off

Similarly to above, the TV might be off, but the data relating to ‘addressable’ (set top box, tuner/IP connection) may itself be on, so does the data relating to addressable reporting ensure that only data coming from TV sets that are switched on, is included within the reporting?

  1. Demographics

Just what are the demographics from which the provider is selling? Is this based on declared demographics from users (registration data), or is this derived, say from behavioural algorithms based on viewing patterns and choices? Whichever it is, is this clear to the buyer and has this been validated (if so, by who)?  Furthermore, how do the demographics from one seller, differ or compare to that of a different seller?

  1. Aggregating impressions

How are the aggregations of impressions scaled as part of the reporting? Is this based on a census of all TVs/set top boxes, or is this based on a sample and scaled to the total population? In either manner, this should be clear to the buyer, and equally independently audited. What are the universes from which this scaling is happening, who determines the population size? Is this transparent?

A call to arms

Reassuringly, in the UK at least, the current main provider of linear addressable, Sky Media, do indeed take on board 3rd party auditing of their algorithms (via the audience measurement specialists, RSMB) and they try to ensure many of the issues above are taken on board which is great to know. However, as linear ‘addressable’ (via the TV set) grows, it is important these endeavours will be replicated by new entrants into the market and transparency is shown to clients. If not, then there is an argument that the industry itself should intervene to set and enforce standards of transparency in the data used as part of ‘addressable’ trading.  Ideally, and maybe romantically, I would hope the future trading would still come under the remit of the JIC, in this case BARB, providing that level of trust in buying and selling that currently exists. But if this is not possible, in the absence of that, then perhaps ISBA or the IPA representing their clients should be the custodians, enforcing a minimum audited specification for providers to adhere, an industry stamp of approval/certification if you like.

In either case, the television industry has a fantastic opportunity to make TV advertising even better than it already is. It would be terrible if this was not full-filled because of poor measurement.

 

Netflix Ad’d value?

It was recently announced that Netflix has been in the process of both developing and testing the ability to insert targeted promotions within its programming and its got people quite excited. The reason being, is this the start of Netflix moving to an ad-funded model?

It is easy to see the potential attraction, its base of subscribers continues to grow, viewing levels are now on par with one of the larger (UK) TV channels, and with viewer data and profiles, the ability of the platform (sic) to insert the right ad to the right person is a potential game changer, what’s not to like?

However, as a content provider, Netflix is already successful and the trend is in a right place, it’s USP has always been an ad-free positioning, so why change that?  Well, of course, the reality might be a two or even three price point plan, potentially offering a subs free access for access with ads perhaps, whilst still providing an ad-free service to those that are happy to pay. A winner.

But let’s look at the numbers?

Latest BARB data suggests that Netflix continued its impressive growth in Q2 of this year, increasing subscriber households by over half a million, to now account for 9.7m households. That means Netflix is in 34% of all UK households, and they are paying (kerching).

SVOD Numbers

So, on the one hand there is plenty of scope for additional household penetration who may be happy to accept ads without having to pay, indeed, 66% of UK households dont have Netflix.

However, when we break this down by demographics, then the scope starts to look less attractive.  At the end of 2017 BARB estimated that just under 60% of 16-24s had access to Netflix in a subscribing household. Since then, Netflix has added an additional 1.5m subscribers, so some simple profile factoring and we can estimate that 60-65% of 16-24s already have access to Netflix.  As we know, this is a prime, attractive, advertising sub-demographic and they already have an ad-free Netflix access.  So, is the intention to just try and attract the remaining 35%? Maybe.   If so, then the proposition to planners becomes less attractive.  One of the biggest draws, and indeed drivers of effectiveness for TV is its mass reach brand building impact. So, if only 35% of your target audience is potentially available, then it’s less of a one stop shop, and now just one of many avenues in my marketing mix in which to place my campaign.  That’s not to say it will still not be a valuable channel for marketers, it is just not the ‘game changer’ some have made it out to be. The TV sales houses can sleep easy for now.

The other alternative of course is that Netflix takes a hit on actual subscribers in order to offer ads to clients. This is a dangerous game for any brand that has positioned itself not to accept advertising, and also one that is still doing relatively well to increase market share.  It would of course also be a big gamble, hoping the TV ad revenue would more than compensate for the lost subs. With decreasing linear TV viewing time, then there is scope, but its a risky business for sure.

Elsewhere, although Netflix continued its strong growth in Q2, Amazon Video was relatively unchanged, adding less than 100k subs in the quarter.  Now TV fared only marginally better with just over 100k additional subscribers in the quarter.

SVOD Penetration

This means that across the three main services, Netflix, Amazon Video and Now TV, Netflix is now growing the strongest. Overall, UK households subscribing to an SVOD service increased by 22% in the year to June with 41% of UK households now having at least one of the three services.

SVOD Annual Growth

As for Netflix and their plans to introduce advertising, the next 12 months should prove very interesting and the devil will very much be in the detail.

Netflix takes The Crown

It’s now official. In the latest BARB data for Q1 2018, in terms of the number of subscribing households, Netflix is now the largest paid for TV provider in the UK, knocking Sky off it’s throne that it has sat on for over 30 years.

Its been called a disruptor, a new entrant, a protagonist, but there is now no escaping that Netflix is mainstream and availability alone, the largest player in town.

SkyvsNetflix

Netflix in the first three months of 2018 saw its largest increase in subscribing households since BARB began measuring, with nearly 1m new households taking up the service early this year. It is now estimated that 9.1m households in the UK are subscribing to Netflix. That’s a 12% increase in just a single quarter.

SVOD Numbers

It’s not just Netflix that has performed well in Q1 of course, Amazon Video also continues to increase it’s footprint, with an increase of 0.6m households in the quarter, a quarterly growth of 13%, in line with that of Netflix.  Alongside these double digit increases however, Now TV experienced a relatively sluggish Q1 remaining relatively unchanged on Q4 2017.

Although these are no doubt disappointing numbers for Now TV, underlying this is a yearly growth that does indeed outpace it’s rivals (albeit from a much lower base).  Comparing Q1 figures year on year, Now TV has seen a 38% uplift in subscribers, above that of Netflix (31%) and Amazon Video (35%).  So, it’s possibly too early to tell whether this quarter is simply a blip or a slowdown in general.

SVOD Annual Growth

So, what does all this mean to the average household in the UK. Well, as already mentioned, Netflix is now the leading distributor of paid television in the UK, with 32% of all households in the UK paying for Netflix. This is followed by Amazon Video which is in 17% of homes, and Now TV in 5%.  Overall, 39% of all homes have access to at least one SVOD service, and if this rate of growth continues, this may get close to 50% by the end of 2018.

SVOD Penetration

This data highlights an interesting question of course, the UK has always had a traditional free to air cohort of homes of around 10-11m. We’ve seen in previous analyses from BARB that SVOD subscribers skew heavily towards pay-tv so potentially the biggest disruption of these services will be if they take hold in homes that have otherwise previously been reluctant to pay for television, and given the growth above, that looks like it’s already happening.  If Netflix, and Amazon can convert those types of households to embrace paying for access, then they truly are a game changer. Interesting times ahead for sure.

 

E-P-G…is easy as 1-2-3

People, at their very heart are creatures of habit. We find reassurance in things we are used to, aware of, and of course trust. Getting people to try something new or different continues to be a challenge no matter the industry.

How we watch television is no different. For sure, it is changing, and seemingly every day, there is a blog, article, or protagonist stating the cataclysmic shift in the way we engaging in television. The reality is far less severe however.  It’s probably fair to say, since the arrival of digital television, how we get to our television content has been constantly disrupted, the programme guide, home page, recommendations, series linking, promotions. I could go on and on. Platform operators and channel brands are continuing to push different methods and journeys towards their content. Which as a viewer is great.

It’s great because it gives us more choice and control over what we want to watch, and when we want to watch. Yet still, today, live scheduled television, delivered and controlled by channel brands continues to be the main way in which we engage with television.  With all this choice, we still rely and depend on channel distributors to curate a schedule for us, providing programming to suit our need states at different times of the day.

As live TV continues to dominate our viewing experiences, then by default how we get to our live TV continues to play an important part. For sure, channel brand awareness continues to grow (I know off by heart the numbers of my favourite channels), but the position of a channel within the EPG still to this day is important in driving organic exposure as viewers work up the EPG to find something that appeals to them.  It’s a force of habit that is still prevalent.

In Feb 2011, we saw possibly one of the largest shake-up of a channel line-ups within a platform operator, when Sky ‘re-shuffled’ their EPG listings. And with it, huge impacts on channel audiences.

Fox, previously in EPG slot 164, moved forty places to 124. It’s audiences jumped around 30%.  MTV, in a period of self definition, moved from slot 350, to 126.  It’s audience more than doubled.  These are just two examples of many.  The point is, as any channel researcher will tell you, EPG position matters.  It matters because it still represents a fundamental way in which many of us access and discover programming.

Albeit crude, there is a diminishing relationship between audience, share and EPG position the lower down the EPG you go, although genre of channel, among many factors does create outliers. But a relationship exists, and from which you can model to some degree expected changes and differences.

EPGposition

So what of Sky’s recent EPG shift at the beginning of May? It is certainly not as radical as their re-shuffle in February 2011, they have moved all the +1s out of their slots in the 100s and in their place taken the opportunity to bump many brands higher up the positioning. But how have these changes impacted on audiences?

Although possibly too early to tell for sure, but looking at all platform viewing by BARB (so including not just Sky viewing), some channels have certainly shown signs of benefiting from the changes.

One of the biggest beneficiaries is that of Sky Two, which shifted forty places from 163 to 123. As with Fox seven years ago, in the two weeks following the change compared to two weeks before the change, viewing increased by nearly 30%.  Discovery and National Geographic, both of which moved out of the 500s into slots 125 and 129 respectively, have seen viewing increases in double digits.  And it’s not even just the ‘multichannels’ that have been affected, ITV HD, previously in slot 178 on Sky, moved to the prime 103 spot in regions where the regional delivery matches that of the home region.  This change has seen ITV HD audiences jump by over 60%.

Of course, not all channels seem to have benefited at this stage. But it should be noted this data is based on all platforms, rather that just Sky Viewing itself (which is possible to analyse via a BARB data provider), so it may be the case some of the changes are even more magnified than is shown.

However, as much as it’s clear EPG position continues to play an important role in overall audience size, behaviours are changing, and in subtle ways in which to suggest this importance is potentially decreasing.

Over the last couple of years, although the number of TV channels broadcast has increased (306 BARB Reported Channels in January 2016, compared to 331 channels in May 2018), the average number of channels we are actually watching in a given week has continued to decrease.

The chart below identifies that of BARB reported channels, based on a minimum of 3 minutes viewing, in recent weeks we are now watching fewer than ten different channels each week.

AverageNumberChannels

These figures will differ by demographic of course, but the trend is possibly the most significant. We are becoming choosier in the channels we watch.  This of course is not necessarily a reflection of decreased EPG importance, it could be due to a variety of reasons, including viewing moving to non-linear formats and the impact that has on television viewing time.  One additional possible reason perhaps as to the recent agreement by Sky to carry Netflix within it’s Q platform, keeping viewers within it’s own EPG without them leaving the Sky platform altogether.

So, what does this all mean, well, things are changing, and we’re becoming more choosy in the variety of channels we watch, which if you’re a TV buyer may be of concern if you want to maximise your reach, and may yet be another indicator of the growing need for addressable ad-tech within television.  That being said, even with some of these changes, there is no denying that the EPG and the broadcast schedule still continue to provide a key and important role in how and what we watch on television.

 

 

One Player to rule them all

If the stories are true, the UK PSBs are poised to abandon a decade of competition in the delivery of television online, and join forces to offer a single online VOD player.  This new service, in effect a return to the ditched Project Kangeroo, will act to counter the ever growing threat of subscription services as a route away from linear broadcast.

As behaviours change, the ability to access a wider variety of programming from a single point of entry can only be a good thing for the viewer. Obvious questions remain about how it would work, especially in terms of BBC and commercial content working side by side, and of course, it is unclear as to whether this service will be a subscription or free at the point of access service, which if it is begs the question as to how competing sales houses integrate with each other. A lot of details to sort out for sure, but if it is the latter then there are significant potential benefits for the commercial TV industry. VOD is an ever important market, but the ability to buy consistent demographics and in a transparent way, continues to elude us.  This tie up in effect would see all PSBs collecting the same information on viewers, to the same standard, in the same manner, for the first time.  Given the recent collaboration by ITV and Channel 4 in this field, I wouldn’t be surprised if this manifests.

Whether this has any real impact on the rise of Netflix and Amazon however remains to be seen. On the face of it, we’re initially talking about a reduction in button pressing, which is of course great, but if it continues to be external to the main EPG, then there are still barriers at play, and the success of online players can be down to multiple factors.

We can see this in the performance of the native players themselves as there are some divergences by broadcaster in recent times. BARB TV Player Report data collects viewing data from all streams in the UK and what can be seen is that some are performing better than others.

Onlineplayers

Now it should be noted, that BARB data within this report only includes viewing to devices (PCs, Laptops, tablets and Smartphones), so it misses out the big growth area of TV applications, but results are interesting nonetheless.

Across the last year, there have been notable declines in viewership to both the iPlayer and Sky Go, but alternatively increases in viewership for All4 and ITV Hub.

Even just looking at quarter 1 this year (and therefore removing the impact of Love Island etc), then we see year on year growth of 14.4% for ITV Hub and 24.1% for All4.

Q1yoy

These are impressive statistics considering these players have been available on all devices (operating systems) for some time and therefore just go to show how successful both Channel 4 and ITV have been in curating content for their online players that suit the screen size and the demographic most likely to use it.  I myself have been a long time critic of the future growth in viewing on devices, in part noting the growth on TV Set platforms (which it should be clear more than off sets any declines on devices), but these results from ITV and Channel 4 show just how it is still possible to create and target content that works across all devices, even if I do still believe the big screen is the screen of choice.

Whereas the Sky Go results (declining 9% in Q1 2018) can in part be attributed to the growth in the SkyQ app which is not measured by BARB, it is the decline in BBC iPlayer usage that most highlights the changing behaviours of many.

onlineplayersYoY

These numbers if anything also highlight the now rather curious decision of the BBC to shut down the BBC3 linear channel which specifically served younger audiences. There is little suggestion they have moved to the online service, on devices at least.  That being said, the BBC themselves have recently stated that Q1 2018 was their most popular quarter to date for the iPlayer, so this can only mean significant growth on the TV set platforms and away from devices, which is not surprising given their heavy drama based programming. But it does further re-iterate the need for joined up thinking for player apps, you might have the best integrated collaborative app around, but if it still difficult to access from the EPG then you’re in trouble.

Either way, these recent developments have got to be a good thing, not only for the viewer, but also for the UK television industry as a whole.

Vodding along nicely

It was a good end to 2017 over at Netflix HQ as they recently announced that worldwide subscriptions had now numbered 117 million, a rise of 8.3m in the final quarter, of which 6.4m from outside the US.  Impressive growth by anyone’s standards.

So, clearly non-US growth is becoming a major revenue stream to Netflix, but where does the UK come in all of this. Well, BARB, has now released their latest data for quarter 4 2017. Arguably, one of the best estimatse of subscription numbers in the UK, their Q4 data is based on a sample of over 12,000 randomly selected households.

After a slow Q3 for all the major players, it seems the winter months, and potentially the Christmas and holiday season has rejuvenated interest.  In the final 3 months of the year, BARB estimates that Netflix subscribers grew by 662k households to 8.1m homes overall, a quarterly growth of 8.8%.  It further means that the UK represented around 10% of the entire of the non-US growth in subscriptions in the final quarter, suggesting the importance of the UK for it’s platform. The recent announcement of a tie-up with Sky just goes to prove this point.

Amazon Video likewise, saw an increase of 424k homes to a base now of 4.3m households, a whopping 11% quarterly growth.  Now TV posted the most modest increase, of just 54k households, but that still means it achieved a year on year growth of an impressive 40%.

SVOD Numbers

What this means for the UK, is that there are now over 10m homes in the country that subscribe to an additional SVOD service, as well as their traditional linear TV services. and the take-up doesn’t yet look like stopping.

SVOD Penetration

Not yet in a majority of homes, but growing, SVOD services are now in over 36% of all homes, Netflix in 28.8%, Amazon Video in 15% and Now TV in a respectable 5%.

If rates continue, then in as little as 36 months, SVOD services could be in the majority of UK homes, a tipping point when it really can be said to be ‘mainstream’.  Whether this will happen however is debatable of course. But what does seem to be clear, is that the need for additional content viewed in a non-linear fashion is becoming a staple part of our viewer preference, and this will almost undoubtedly have an impact on scheduled television for years to come.