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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.

 

Left to our own devices

We’re able to watch television on more devices than ever before, whether it be live TV or catch-up, it’s now possible to watch when we want, and where we want.  Online player apps now ensure there is no excuse to miss out on our favourite programmes.

But what devices, other than the old faithful TV set, do we prefer when it comes to watching premium television? Well, now we know.

With weeks to go before BARB’s new integrated measurement system is due to launch, BARB has updated their website to allow users to interrogate further just what devices are most popular for which player and which broadcaster. It’s the first time there is an audited viewpoint based on census data of online viewing by different devices in the UK, and it makes for interesting reading.

AllPlayersSource: BARB TV Player Report – All Audited TV Players

For starters, the device and screen do indeed matter. Much has been made of the role of mobile in video, and how it’s a potential game changer for viewing. Ultimately, this data, certainly for premium, high quality, immersive content, suggests otherwise.  Across the reporting period (May ’17 – Jan ’18), mobile made up less than 20% of all premium video, suggesting, given the chance, people will opt for a larger screen if possible.  Tablets made up the largest proportion of viewing at 46% of all viewing, followed by PCs/Laptops at 35%.

But ultimately, one size doesn’t fit all, and the popularity and use by device does change significantly by player and broadcaster.

iplayerSource: BARB TV Player Report – BBC iPlayer
itvhubSource: BARB TV Player Report – ITV Hub

Lets take the two main PSB Players, the BBC iPlayer and ITV Hub. The profile of respective device usage suggests some subtle differences, not only in the potential audiences, but perhaps also to the types of most popular programming.  The iPlayer profile, follows closely that of all players overall (not unsurprising considering it’s size and contribution to the base), with tablets accounting for 44% of viewing, PCs/Laptops 37% and mobile 18%. But for ITV Hub, this changes. Tablets and PCs are similarly popular (40%, 38% respectively) and indeed across late spring and early summer 2017, PCs were the most popular. For ITV Hub, it’s the shift to mobile that is most interesting with this device accounting for 22% of all viewing.

All4Source: BARB TV Player Report – All4

And what of other players, well, the profiles change once more. For All4, PCs/Laptops are the most popular (43%), above that of Tablets (37%), with mobile, like ITV Hub, above average at 20%.  This might suggest a significant demographic or content skew within All4 viewing driving PC viewing.  This perhaps rings true with other data provided from BARB. In a recent report based on data from their viewing panel, it suggested a young adult/student skew for this player. This is a demographic that is more likely to own and use a laptop for studies etc.

SkyGoSource: BARB TV Player Report – Sky Go

And what of Sky Go, the UK’s largest channel aggregator of broadcast television, well, again, the profile shift on the norm is significant, and it’s all about tablets. Across the period, 60% of all viewing to the Sky Go app, was via a tablet, with PCs only marginally above that of mobile with 22% and 18% of viewing respectively. From the same data we can see that SkyGo viewing is dominated by Live Streaming and of which we know that Premier League Football dominates the top programmes, so again, we begin to see how certain type of programming and audience segments have different device choices from the norm.

Of course, why does all this matter? Well, the environment in which we watch and how immersive that screen is surely has an impact on the effectiveness of commercials delivered to those screens. Simply put, are all screens equal? Maybe, maybe not, and this data, and the integrated data soon to be launched, will help in evaluating these questions.

 

Premier Pricing

In just under two weeks (8th February), the initial bids of the next round of Premier League football rights will be tabled. It’s always a fascinating time, of rumour, intrigue and speculation.  Just how high will the price go for the mother of all giffen goods?

As with the previous deals, there has been talk of significant increases in bid prices, both fueled by rumour of new entrants into the marketplace, but also due to changes to the package structure by the Premier League.

For the first time, over half of all Premier League games will be televised, which basically means, if you’re a season ticket holder to a major club, don’t expect to be watching your team at 3pm on a Saturday much longer. New packages and time slots mean late night Saturday games, together with full rounds of fixtures offered across three midweek periods, and a full fixture lineup over one bank holiday period.  For both the viewer and the broadcaster, there are significant changes afoot. 

These new slots have been seen as a way of enticing new entrants, such as Amazon, Facebook etc, into the domestic market. But given the times that these games are likely to be shown, it is potentially more likely that these packages will have international rights as the main part of their strategy, forcing games to be shown in the evening, UK time, to offer better viewing times stateside and therefore attracting higher international prices in the largest consumer market of them all.

But, going back to domestic rights, it really is anyone’s guess as to what the end value will be. The Business Insider recently suggested that they expect total rights to increase by a whopping 40% on the current £5bn paid by Sky and BT. Their justification is the apparent entry into the market by Amazon, something which was also suggested by Ampere Analysis. Interestingly, Ampere quote a direct Amazon representative suggesting they are interested in bidding. This is the first time there has actually been a confirmation from a third party that they were interested in bidding, which is significant.

Thinking about both of these claims. Business Insider is suggesting a 40% increase in rights, so, in effect an increase of £2bn for what is just an extra 32 televised games, or £21m a match. Obviously in reality the price differential is actually applied to all matches, so increasing the value of each and every match by a more reasonable £2m. But ultimately, what is the market for making this money back? The advertising model is just not going to cut it, so any new entrant without a subscription model is going to have to accept a loss leader on the £12m a match fee, with the gain being the opportunity to be a ‘disruptor’ in the UK pay-tv market. 

Which essentially leaves just Amazon. But again, let’s do the maths on this and go back to the Business Insider piece, which suggests that its model is to attract Premier League rights, force cord cutting and increase their subs to video, which is currently £79 a year. Recent BARB analysis clearly shows that existing Sky, Virgin and BT subscribers already over index significantly with Amazon subscribers, so, there is a good chance that even if cord cutting did occur (a big if I might add), then a significant chunk of these households would not be turning to Amazon Video, simply as they already have it. And further still, if Amazon were to want to get any sort of return on the investment, then the £79 a month fee would have to be significantly adjusted. Therefore, it is likely that if Amazon do come in, then it will be at the lower end of the scale, most likely for the new packages and at a value (per game) far below those currently being offered for current packages.

But what about the current incumbents, the ones that have, up to this point, actually got their wallets out? Will they succumb to the same worries as previously, blink first and up their bids? The better question might be, can they?

Taking Sky, after a difficult 2016, subs have held steady across 2017 with both subscribing households and sports subscribers relatively unchanged, as measured by BARB. Access to all the sports channels on Sky is £27.50 a month, although average household monthly rates are likely to be higher on the basis of HD upgrades etc. Generously, if we assume a household monthly cost of £32.50, and taking BARB data as a gauge, then there are 4.6m subscribing ‘sports’ households (including Virgin Media), meaning a ‘sports’ revenue of £1.8bn a year for residential channel subscription. Yearly costs of the current Premier League rights for Sky come out at £1.4bn (£4.176bn/3). Clearly there are other revenue streams, from commercial subs, Now TV (which incidentally BARB has identified strong growth in) and of course the pay-tv Youview platforms, but the point being that even the current deal squeezes Sky’s margins. If they were to increase their bid significantly, then this would have to be passed on to the customer ultimately, which in the current market, might just be a tipping point.

And what about BT? Well, the Champions League bidding has shown that they do still have appetite to be competitive, but likewise, they have also publicly stated that the rate of inflation in rights need to stop. Additionally, since that time, BT and Sky have come to agreements on content sharing of channels and there is general talk of a truce ahead of the auction. 

So, what might this all mean for overall rights prices? Well, there are new packages available, which, on any merit, will drive new revenue to the Premier League. But that said, the nature of many of the new packages are not necessarily conducive to the viewer. The mid-week and Bank Holiday packages in which all matches will be across a few days mean it is unlikely that a viewer will even be able to watch all the matches available to televise, as many of them will have to kick-off at the same time, a point made clearly by media commentator Adam Bowie last month.  Even with some potential new entrants (and to date, other than Ampere’s contact, remember that there has been no confirmed public interest), I can’t see, and I certainly wouldn’t recommend either Sky or BT upping their current bids by any significant margin. 

And lastly, a point that hasn’t really been discussed at all, do viewers actually want this? Nearly all top category games are already televised, so what do the viewers get in their extra 32 games? A Burnley away trip to Huddersfield perhaps? Ratings per game do change significantly by club, so the idea that a 20% increase in televised games will warrant a 20% increase in viewing (and therefore cost at least 20% more) is folly .  As Mitchell & Webb parodied, perhaps there is already too much football on TV?

 

 

 

 

Democratisation of Data

It’s been 100 years since the Representation of the People Act was passed into UK law allowing women (or rather some women) to vote in UK elections. It was a landmark act which today may seem rather perplexing that it was even necessary, but all the same, it was part of a continued progress towards full democracy; government elected by the people, run for the people.

But, for democracy to work in practice requires accountability and transparency. If we don’t know what our representatives are doing, or we don’t have a free press to bring transparency to their actions, how can we, as voters, make informed and judged decisions?

Why, you may think, am I talking about universal suffrage in relation to media, and indeed data? Well, the same applies ultimately. The media world in which we operate now offers so many new ways in which to measure and track our audiences, to understand what content people like, where, and when. For planners, we are able to to use new 3rd party data sources to efficiently target and evaluate campaigns against those we want to actually target. We should be in a new golden age. But what happens if the data in which we plan, in which we measure, in which we trade, is not transparent, is not accountable? How do we know we are seeing and interpreting what we think we are seeing and interpreting?

Well, back to the world for democratic accountability, the parliamentarian Tony Benn famously posed five key questions to anyone in positions of power or responsibility.

  1. What power have you got?
  2. Where did you get it from?
  3. In whose interests do you use it?
  4. To whom are you accountable?
  5. How do we get rid of you?

They were a litmus test if you like on how well your elected representative served you as a voter and in who’s interests they did this.

So, shouldn’t we in the same vein apply that similar criteria to our data, especially if that data on which we rely is 3rd party, owned and delivered by another organisation, perhaps with other interests to our own?

The answer is of course a categoric yes! New audience data, are a wonderful thing, but unless we ask of it the right questions, we may not always be sure of the purpose or what it actually represents.

  1. What data do you have?
  2. How was this data collected?
  3. In who’s interest was this data collected?
  4. How is this data accountable, validated or verified?
  5. What alternative data is available?

So, whether you’re buying a campaign or wanting to understand your audience better, perhaps start by asking these simple five questions of the data you have or receive. If you don’t like the answers you get, or indeed don’t even know the answers, then perhaps it’s time to take a step back and re-evaluate the virtue and value of the data you are receiving and whether it really serves the purpose you would like it to.

If, of course, you’d like any help with any of these questions or with audience data in general, then don’t hesitate to get in touch.