nScreenMedia OTT multiscreen media analysis

Pay TV subs opting for open TV platforms

Share of TVE starts by access type 2015-2017

A small but growing number of pay TV customers are dumping their operator set-top box in favor of viewing their subscribed TV content on more open TV-connected devices.

TV Everywhere focus switching to connected TV

One of the most striking trends to emerge from Nielsen’s Q2 2017 Total Audience Report is the prodigious growth in the use of connected TVs. Nielsen says that streaming media players have increased their monthly reach from 28% in Q2 2016 to 41% in Q2 2017. This remarkable fact appears to be confirmed by Adobe in the company’s latest State of Digital Video report.

In the report Adobe analysis TV Everywhere (TVE) authentication data from more than 4 billion events across over 300 sites and apps in North America. The data shows that over 20% of pay TV subscribers are now regular TVE users. Moreover, increasingly the connected television is the preferred device to watch on. In January 2015, 20% of TVE video starts originated from a TV connected device (TVCD.) January 2017 saw this share swell to nearly a third of requests.

Connected TV taking over from mobile, PC

Connected TV’s increased usage comes at the expense of mobile and the PC. Mobile devices, which dominated video starts in 2015 and 2016, fell below 50% in late 2016 and rested at 46% in January 2017. The PC’s share also fell, from 26% to 22%, over the same period.

Except for news, consumers switched viewing of every TV content genre from PCs and mobile to TVCDs. For example, music and movie video starts decreased 28% to mobile devices and 16% to the browser between 2014 and 2017. Teens and toons video starts decreased 11% to mobile and 16% to browsers. News on mobile was the only genre to maintain its share over the same period.

It looks like TVCDs are likely to continue their strong growth. The CTA says that 22% of consumers plan to purchase a streaming media player this holiday season, up from 18% last year.

TVCDs taking over from operator set-top boxes

Though Adobe does not give specifics on the number of video starts, it does show when most of the authenticated viewing is taking place. Turns out TVE viewing mirrors traditional TV viewing very closely. Peak viewing of TVE occurs in primetime (8 to 11 PM), and lowest usage occurs in the wee hours of the night.

TVE viewing mirrors traditional TVWeekdays account for nearly two-thirds of TVE video starts. 52% of evening viewing (4 PM to 11 PM) is view TVCDs, 54% of daytime viewing and 57% of primetime viewing is on mobile. Mobile and TVCDs account for three-quarters of all authenticated video starts.

This data suggests that a small but significant group of pay TV customers (perhaps 6-8% overall) are eschewing their operator provided set-top box. Instead, they are choosing to watch their favorite shows through programmer and operator TVE apps on more open connected TV platforms.

There is strong evidence for this phenomenon in the Q2 2017 TiVo Video Trends Report. The company says that 13% of streaming media player (SMP) owners say they access their pay TV services with their devices. Further, 19% say they have replaced one or more of their operator’s STBs with an SMP.

The change in consumer behavior is fine with some operators. For example, Comcast now allows customers to use a Roku rather than the X1 set-top box. Saving the hundreds of dollars that putting an STB in the home costs appears to be a powerful motivator for some pay TV operators.

Why it matters

TV connected devices are being increasingly used by pay TV customers to access their subscribed content.

These consumers are choosing a different, more open experience than provided by their pay TV operator.

The data reflects a growing trend among consumers to choose self-aggregation of content and experiences over pay TV operator aggregation.

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