Digitalsmith have put out their Q3 2013 Video Discovery Trends Report where they look at a laundry list of ways people get video content including Pay-TV, VOD, OTT, Connected Devices and Next-Gen Features. They talk about cord-cutting, cord-thinning and cord-cheating, the continuing trend by consumers to seek on-demand video content from third-party services and OTT services as an alternative to their traditional Pay-TV provider. I don't like the term personally, cheating has negative connotations in most usage so it sounds like the consumer is doing something wrong. Trying to keep to the online video portion of things shows a complicated mix of devices and services favored by the masses. Game consoles, tablets, apps, smartphones and OTT boxes make up the diverse landscape that consumers now tread.
Subscription Video-on-Demand (SVOD)
It's no revelation that Netflix owns the SVOD market with 41.7% of consumers saying that's where they get their TV and movies from monthly. The next closest service is Amazon Prime with just 12.9%. Hulu is doing well but is a distant third not even breaking double digits with just 9.4% saying they pay for it. Redbox Instant, still newer in Q3 2013, had a respectable 2% which is only going to grow I'm sure. Blockbuster also made the list with 1.8% saying they still use its online streaming service. Interestingly, over 50% stated that they don't use any of the above for video content. No mention of YouTube premium channels.
In terms of spending, the largest portion of consumers in a single category is 38.6% who are spending $6-8 a month. The majority of them are most likely Netflix with some Amazon and Hulu thrown in. The $9-11/month percentage is 18.6% meaning that over 50% are in the $6-11 a month range. Also, 28.3% are paying $12 or more per month.
In terms of paying to rent content for a set period of time, Redbox kiosks still take a big share with 16.5% even though 71.3% state they don't use them at all. Next up is Amazon with 8.9% then comes iTunes at 7.2%. YouTube paid got 1.3% topping both VUDU and CinemaNow.
In terms of per month payment over 58% stated they pay $8 or less per month for this type of content with the biggest single range being 28% who pay $3-5 a month.
At $3-5 a month it comes out to 2-4 rentals a month at Redbox prices and 1-2 at other digital rental places depending on the content.
Pay TV VOD
A major reason that drives users to use the SVOD and PPR services may be the limited selection on Pay TV VOD options. Over 25% stated that it's not easy to find a movie they will enjoy in the VOD catalog from their Pay TV provider. That's up from 23.4% in the second quarter of the year. Just 6.7% of respondents stated that they have, on average, purchased two pieces of content from this source and 72.9% said it's zero on average. This may be a combination of limited availability, viewing restrictions and price point of pay VOD from the Pay TB subscribers.
Actually, it's convenience which is most oft cited as the reason consumers seek out a third-party solution. Then again, almost half (48.3%) say it's price (cheaper) and 42.6% said it's the specific content they want. About one-third said it's a better selection.
However, the other end of the scale is interesting as well. I'll talk about the discovery aspect in another post since there's a lot of info on that in the report. Nearly one-quarter (23.4%) of respondents stated they want the ability to watch content on iPad or tablets and 13.5% said they wanted to watch on smartphones. There could be some overlap there so you can't add them together. Another interesting point is that 15.3% said it's due to no pay TV service.
Connected Devices Summary
Even though numerous reports place a video game console in every household, or a vast majority of them, according to Digitalsmiths, that's not the case. Having been a video games journalist for more than six years I can see a trend in their data that denotes certain demographics might have been targeted or responded more often than not. Why? The most popular game console in their report is the Nintendo Wii – mostly aimed at children and families. It's a full 10% more than both PlayStation and Xbox 360 in the report. Also, 48.6% stated they have no game console which is amazing considering that over four million PS4s and Xbox Ones were sold in the last three weeks (which is admittedly, outside the realm of the report).
Here's my reasoning. According to VGChartz, who has been tracking this sort of thing for a long time, both the PlayStation 2 and the Xbox 360 have more sales than the Wii. In fact, 53.65 million and 45.40 million respectively in comparison to the Nintendo Wii sales of 45.16 million. When you add in the sales of the PlayStation 3 (27.89M) and PS (38.94M) you can see what I mean. PlayStations have sold 120.48M units or 2.67 times more units than the Wii, yet the Wii shows as the most popular console in this report.
This, to me, means that the respondents probably skew older in general, probably more likely to have kids in the house and possibly less disposable income because of it. The methodology of the report simply states "over 3,177 consumers, 18+ in the US and Canada," meaning 3178-3179 because if it was 3180 they'd most likely say that.
It could also account for the higher Pay TV subscriptions and lower cord-cutting numbers across the board in the report. I'm not casting aspersions on Digitalsmiths or the 'leading third-party survey service' they used for it, I'm just trying to point out the fact that perhaps the numbers are unintentionally skewed in relation to the wider Internet audience.
Tablets and Smartphones Prevalent but Used Infrequently
Just under two-thirds of respondents said they had a smartphone and under half said they have a tablet. In fact, quite astonishingly, 25.8% said they own neither!
Well, according to comScore, only 149.2M Americans have a smartphone which is 62.5% mobile subscriber market penetration, so I mom is doing OK in keeping up with the times. Tablet sales worldwide for this year are predicted to reach 184M units according to Gartner.
In terms of video consumption on the iPads and Tablets, almost 58% said they watch an hour or less per week. That rockets to nearly 82% for smartphones. The most popular content on the tablets was movies at 28.2% of respondents with reruns of TV shows in at 21.7% and previews of TV and movies at 21.6%.
On smartphone the main content is news at 42.3% but previews came in second at 36.2% and 30.9% said they watch movies on their phones. TV reruns fared better as well with 27%.
Theoretically, those would be percentage of those with smartphones but there doesn't seem to have been an "I do not own a smartphone" option like there was with the tablet content question.