How We Use Cellphone Data

HTC-Incredible-S-SmartphoneNielsen recently took a look at how we use cellphone data. They installed apps on people’s phones that tracked data usage on both cellular networks and WiFi. The data comes from a massive study on the usage of 45,000 Android users in August. Nielsen also continues to study the usage of 30,000 cellular customers every month using the same app.

What Nielsen found wasn’t surprising in that they found that younger people use cellular data the most. They also found that Hispanics are the largest data users among various ethnic groups.

Here are the average monthly usage by age:

‘                      Cell Data         WiFi Data

18 – 24            3.2 GB            14.1 GB

25 – 34            3.6 GB            11.2 GB

35 – 44            2.9 GB              9.3 GB

45 – 54            2.1 GB              7.5 GB

55 – 64            1.4 GB              6.4 GB

65+                  0.9 GB              4.8 GB

This study quantifies a lot of things that we already knew about cellular usage. We know, for example, that younger people use their cellphones to watch video more than older people. I have anecdotal evidence of that by watching my 17-year old. If she’s representative of her age group then they are using cellular data even more than the 18-24 year olds. They communicate with pictures and videos where older generations use email, chat, and text messaging.

These numbers also show that most people are not yet using their cellphones as a substitute for landline data usage. Certainly there are many individuals for whom the cellphone is their only source for data, but these numbers show average cellphone data usage far below average landline usage. I have a number of clients that track landline customer data usage and most of them are reporting average monthly downloads somewhere between 100 GB and 150 GB per household. Comcast recently reported that their 6-month rolling median data usage is 75 GB – meaning half of their customers use less than that, and half use more. All of the numbers in the above charts, while representing individuals and not families, are still far below those numbers.

Nielsen also tracked data usage by ethnicity, as follows:

‘                                  Cell Data        WiFi Data

Hispanic                       3.8 GB          10.1 GB

Native American         3.5 GB            7.3 GB

African-American        3.3 GB            9.1 GB

Asian                            2.3 GB            9.9 GB

White                           2.2 GB             8.6 GB

This shows that Hispanics, on average, are the largest users of data, both cellular and WiFi. Whites are at the bottom of the average usage chart.

Nielsen also was able to look into usage by geography. They didn’t publish all of the results, but did provide some interesting statistics. For example, they have some strong evidence now that cities with widespread WiFi networks can save customers money on their cellphone plans. For example, New York City has a lot of public WiFi and users in the city use WiFi 14% more than the national average while using cellular data 12% less. Contrast this with a city like Los Angeles with little public WiFi, and citizens there use WiFi 9% less than the national average and use cellular data 13% more. This kind of study can provide the basis for a city to quantify the benefits to the public for building a public WiFi network.

ESPN and the Cable Industry

espnI’ve been writing periodically about ESPN because they seem to be the poster child for what is happening to cable TV and to programmers in the country. It’s been obvious over the last year or two that ESPN is bleeding customers, and the many articles about them concentrate on that issue.

ESPN is a good bellwether for the industry because they are carried by practically every cable TV provider, and because their contracts require that the channel be carried in the expanded basic tier – the tier that generally has between 50 and 75 channels. Only a few tiny rural cable systems don’t carry ESPN since they carry only a small number of channels.

When ESPN loses customers it can only come from one of two reasons – people that cut the cord and drop cable altogether or from cord shavers who downsize to the smallest basic cable package. Basic cable is the small package of 10 – 15 channels that includes the local network affiliates, government channels and a few cheap throw-ins like shopping channels.

But it’s not easy to figure out the real number of cord cutters and cord shavers. The largest cable companies report total subscriber numbers each quarter but they don’t report on the packages that customers buy. Various analysts estimate the number of cord cutters each quarter, but they differ on these estimates – and I haven’t seen anybody try to estimate the number of cord shavers.

Nielsen tracks the number of customers of each cable network and that tells us how the various cable TV networks are faring. The latest article on ESPN comes from Sports TV Ratings, a website that tracks subscribers to the various sports networks. That site shows that ESPN lost 621,000 subscribers just last month (October 2016). That is an astounding number since ESPN has roughly 89 million customers – it’s a drop of 7/10’s of a percent, which annualized would be over 8% of ESPN customers.

But that number may not be a huge aberration. FierceCable reported earlier this year that ESPN had lost 2.2 million customers between February and August of this year, which is a clip of 440,000 lost customers per month. And the network has lost more than 11 million customers since its peak in 2013 when it had almost 100 million customers.

Trying to count cord shavings gets even more complicated because of OTT content. The cited drop of 610,000 ESPN customers is from the Nielsen numbers for carriage on cable systems. This doesn’t include online content which includes ESPN. For instance, the basic package on Sling TV includes ESPN and Goldman Sachs estimated that Sling TV will have almost 2 million customers by the end of this year. There are a number of new OTT offerings just hitting the market that will include the network, but for now Sling TV has most of the online ESPN subscribers.

ESPN has an advantage over many other networks in that it probably can add back customers by selling to people directly on the web. And so perhaps the network can find an equilibrium number of customers at some lower threshold than today. But this is not going to be true for a lot of other content. As an example, in October the Golf Channel lost 600,000 subscribers and The Major League Baseball Channel lost 515,000 customers – and those kinds of networks have very limited appeal on a standalone basis. That is the real story behind the losses at ESPN – the vast majority of cable networks are bleeding customers right now.

Some of the content providers are not too worried about the drop of US cable customers since they are picking up far greater numbers of new customers worldwide right now. But networks that are US-centric – sports, news, weather – are in for a rough ride over the next few years as the industry settles out to a new and lower norm. I think we can expect to see a transformation of sports programming as the numerous sports networks bleed customers. This probably means more emphasis on live programming and fewer sports networks.

Does Cable Still Need to be in the Bundle?

Fatty_watching_himself_on_TVI’ve read several things lately that make me wonder about the need to include cable TV in the bundle. I saw an article that blamed part of Google Fiber’s performance on the fact that Google’s cable TV is more expensive than the competition.

The first place to look for this answer is with nationwide surveys. There have been major surveys for the past five years that report that somewhere between 15% and 20% of homes say they are considering dropping cable in the next year. Yet they don’t do it. That demonstrates a lot of dissatisfaction among customers, but something about the cable product keeps people connected even though they are unhappy. We are probably on track to see about 1.5 million people drop cable this year. That may sound like a lot, but with the total number of cable homes just under 100 million, true cord-cutting is still a relatively minor phenomenon.

We also see clues that tell us that people are downgrading cable packages when they can. It’s been reported that ESPN has lost millions of customers more in the last few years than can be attributed to cord-cutting. The only way for that to happen is for a lot of households to be downgrading to packages that don’t include ESPN. And since ESPN is in the expanded basic package for most cable companies, that means that households must be downgrading to the smallest possible basic packages – that that have 20 channels or less. But cable companies don’t report these numbers, so we can only guess the extent of cord shaving.

There is also the issue of affordability. Certainly there are many homes that can no longer afford expensive cable TV packages. Affordability probably accounts for a significant portion of the 30% of households that don’t have a cable package. But since cable rates continue to increase faster than the rate of inflation there must be more homes each year that find they can no longer afford cable. We now know that affordability is the major factor that is capping broadband subscriptions nationwide in markets where broadband is available.

And my guess is that broadband is growing to become more valuable than cable to many households. There is enough entertainment available online that a household dropping cable is not isolated from video like they were just a few years ago. We certainly see a lot of homes subscribing to on-line video. A Nielsen survey from the first quarter of this year reported that more than half of all households are buying at least one online video service. Nielsen estimated that by June of this year that over 45 million homes will pay for Netflix. Hulu had over 12 million subscribers by the end of May of this year. We don’t know how many people watch Amazon Prime video, but the Prime shipping service has over 54 million customers.

Over the last year I know a half dozen smaller telcos that have dropped the cable product altogether and have directed their customers to one of the satellite services. Small companies all tell me that they are losing money on cable TV, and the numbers behind their decision are compelling. Larger companies can gain some economy of scale with cable TV, but only the largest dozen cable companies are actually making money with the product.

We know that when Google Fiber first launched service without a cable product they stumbled. They seem to have done a lot better after adding cable. But part of their problem also has to be the $70 gigabit product that a lot of homes can’t afford. I’m guessing that they’ll do better in Atlanta where they now offer a 100 Mbps product for a flat $50.

But still, even with those many trends acting against the cable product, somewhere around 70% of all homes in the country still buy cable from one of the cable providers – landline or satellite. It seems really hard to ignore a product that 70% of households are willing to buy. As a consultant I still have a difficult time telling companies to not offer cable TV in new markets.

One thing that is making it a bit easier is that the cable product is starting to finally move to the cloud. For example, Skitter TV now offers a cable product that can save a company from investing in a headend. And perhaps that is the long-term solution – for most cable providers to offer programming from the cloud to avoid the costs and issues of trying to go it alone.

Millennials and Broadcast TV

Fatty_watching_himself_on_TVYouTube recently caused a big stir in the broadcast world by announcing that it now reaches more Millennials (individuals between 16 and 36) than any broadcast or cable network. Of course, since massive advertising dollars are at stake, the cable networks all pushed back on the claim. And the fact is, nobody knows the real numbers because YouTube is not measured by Nielsen ratings in the same way as broadcast and cable networks.

But one thing is clear – that Millennials are abandoning traditional TV in droves. Just this last TV season there was a huge fall-off in Millennial viewers almost across the board, as measured by Nielsen. This not only has a big impact on advertising and on content providers, but it has to be of great concern to anybody that offers a traditional cable TV product.

Nielsen reports that during the 2014-15 TV season that there were 19 shows broadcast in primetime that drew 1 million or more Millennials. In this past season that dropped to 12 shows. And the drop is almost across the board. ABC Millennial viewers were down almost 19%. The CW that has programming for younger viewers was down 16%. NBC dropped 10%, Fox dropped over 7% and CBS was down 3%.

Some individual shows lost a lot of support from Millennials. For example, How to Get Away with Murder and Family Guy each lost an average of 700,000 live weekly viewers. Scandal and Once Upon a Time each lost 500,000 live viewers. The trend isn’t just one of Millennials abandoning live viewing. Nielsen tracks viewing also on video-on-demand. In 2014-15 the show How to Get Away with Murder had 2.7 million viewers aged 18 – 34 in live-plus-three and 2.8 million in live-plus-seven viewing. Those numbers dropped in one year to 1.7 million and 1.9 million, a drop of 37%.

This trend is one of the primary drivers that is moving advertising away from traditional TV to web-TV like YouTube’s Google Preferred. eMarketer reports that 2017 will be the year where Web advertising passes TV advertising. They are predicting $77.4 billion for web advertising compared to $72 billion for TV. And they predict after that web advertising will skyrocket while TV advertising will remain flat. They also predict that by 2020 that mobile advertising will eclipse TV advertising.

None of these statistics are good signs for traditional TV networks and for cable TV operators. An entire generation of viewers is tuning out, and the expectation is that generation Z behind them will have almost no affinity for television. Recent studies suggest that peoples’ TV viewing habits are largely set by their experience with the medium as children, and the children of Millennials are going online far more than watching traditional TV.

This doesn’t mean that watching video content is down. The average hours for individuals to watch some kind of video content has grown slightly over the last decade. But that viewing time is now being spent watching YouTube, Netflix, Amazon Prime and other non-TV sources of video. And the viewing is rapidly shifting away from the TV screens to other devices.

Millennials are an interesting generation. They are old enough to remember the time just before the explosion of technology, but they are young enough to have adopted new technologies as they came along. They are the generation that has experienced the biggest change during the shortest period of time for digital technologies. But it seems that as they are getting older that they are becoming more like their kids and are abandoning older technologies like sitting in front of a TV.

I’m not sure that cable companies really are going to have any product to attract the attention of this generation and certainly not for their children in generation Z. Cable companies are hoping that things like TV Everywhere and skinny bundles will slow people from dropping TV entirely, but even that might not be enough. Broadcast TV is now largely something that is being produced for – and watched by – Baby Boomers. And they aren’t going to be around forever.

Why Aren’t There More Cord Cutters?

rabbit earsVarious analysts have been trying to define the number of cord cutters and they differ a bit in their estimates. That’s not surprising since there is no easy way to count cord cutters. One statistic that regularly gets reported is the drop-off in traditional cable TV subscriptions. But even that statistic doesn’t tell the whole story. Usually what is reported is the change in cable subscribers from the largest cable companies. That misses the changes in subscribers from the many smaller cable providers. And the analysts rarely account for the fact that there are approximately 250,000 new housing units in the US each quarter. When you consider that, even should the nationwide cable numbers stay identical from one quarter to the next there are actually 250,000 homes that have dropped or elected not to buy cable.

But even with those caveats, most analysts would agree that there is now probably somewhere in the range of 500,000 households leaving traditional pay-TV per quarter, which works out to about 2% of the industry annually. When looked at from that perspective it’s clear that unless something starts driving people away from pay-TV a lot faster that there are going to be huge numbers of cable subscribers around for many years to come. With the major cable companies starting to offer skinny bundles, it’s certainly possible that the losses will slow or even slightly reverse.

One way to understand why there are not more cord cutters is to look at what people watch. Nielsen, Variety and others publish statistics on the most watched shows and programming on TV. For the most recent full 2014-15 season of TV the list of the 50 most-watched shows on TV is striking in that it is still made up almost entirely of shows that are on the major traditional networks. This starts with The Big Bang Theory that averaged 21.3 million weekly viewers down to The Goldbergs that averaged 9.2 million. Also on the list are Sunday-night, Monday-night, and Thursday-night football.

There are only three series on the list that are not from one of the primary networks: The Walking Dead on AMC at #4 and with 19.9 million average viewers, Downtown Abby on PBS at #20 and with 12.9 million viewers, and Game of Thrones on HBO at #45 and with 9.4 million average viewers. That leaves 44 of the top 50 series that were on ABC, CBS, Fox, or NBC. It is worth a note that Netflix does not release the viewers for their own series and some of them might belong on this list.

In addition to various weekly series there are also numerous one-time events on TV. It turns out last year that 34 out of 35 of the most watched one-time events were all NFL football games, with the one exception being the Macy’s Thanksgiving Day parade. But there are lots of other one-time events like the Emmys, the Oscars, or all of the other kinds of sporting events that people regularly watch.

I’ve always wondered why more people don’t drop expensive cable subscriptions since most of the series and the one-time events they love are on network TV. Most people in a metropolitan area can get great reception with a $100 digital antenna and can watch all of the network series and sports carried on those networks. With Hulu you can see the vast majority of the network shows that you might have missed live. And with Sling TV you can get a few of the most popular cable channels plus ESPN.

The cable companies have done a good job at making it easier for people to keep their expensive subscriptions. For example most of them now offer the TV Anywhere app or some proprietary version of it. This lets people who pay the traditional cable bundle watch many shows from any device over the web. But there generally is a delay of a day or more until most shows make it to the TV Anywhere lineup.

A big part of that answer has to be that there is programming within the big cable bundle that people value enough to keep paying the big monthly bill. For instance, parents with smaller children want access to several cable-only channels that cater to the kid demographic. People really like cooking shows or travel shows or reality TV that are on one of the various cable networks. But again, the vast majority of this programming can be watched on Netflix, Hulu, or Amazon Prime, albeit on a delayed basis. But I guess that many cable network shows are not individually popular enough to be watched by many people, but yet which each has their loyal followers.

Some of the reason for lack of cord cutting is also probably that people are either not quite yet comfortable enough to take the big leap away from cable or are procrastinating on the eventual decision. We saw this as landlines went down and that many people kept a landline in their home for years after they did all of their communications by cellphone. I’ve noticed that most surveys show a lot more people who say they are going to drop cable than who actually do it. Those are the folks that probably have the cable companies worried, because the cord cutting trickle could turn into a flood if the public decides en masse that the alternatives are good enough.

Our Shifting Viewing Habits

Old TVNielsen did a huge survey earlier this year where they asked 30,000 viewers worldwide questions about how they view video content. The responses show how quickly people are changing their viewing habits in response to the proliferation of new options.

Even as recently as a little more than a decade ago, options to view video other than at the scheduled broadcast time  time were rare. I was an early adapter to TiVo and got my first set in 2000. At that time almost nobody watched TV on a time-delayed basis. But TiVo let me watch things on my own time schedule and I quickly invested in a CD burner that would let me capture content from the relatively small TiVo hard drive to further expand my options to watch on a time delay.

The cable companies responded to TiVo by introducing video on demand, which provided watch-anytime capabilities to a subset of their programming. I am probably somewhat unusual in that I can’t recall as an adult having ever watched a network TV series by watching at the scheduled time. I just have never been able to structure my life in that manner (or even remember what day of the week it is).

But today we have a huge array of options and this survey shows that people are using them. We can, of course, still watch TV live and sit and surf the channels. But the cable company video on demand offerings are much larger than in the past. The large cable companies and networks have also provided on-line delayed viewing for most of their popular content that is available with a cable subscription. There are the huge libraries of content at Netflix, Amazon Prime, and other streaming services. There is some pretty decent content today being produced only for the Web, along with an absolute mountain of content on YouTube. And for those willing to hunt, there are huge piles of older movies, newsreels, and offbeat content all over the web.

Here are a few of the more interesting findings of the Nielsen survey:

  • Only 48% of people now prefer to watch video live. This means that the shift to time-delayed viewing is now the predominant way of viewing video.
  • A gigantic 63% of people say that time-shifted viewing best fits their personal schedules.
  • Only 51% think that the big screen TV is the best device for watching video. This is a pretty amazing shift that says that people not only have gotten used to watching video on computers, tablets, and smartphones, but a lot of them now find those alternatives to be their favorite way to watch video.
  • 37% now finding watching video on their cellphone to be ‘convenient’.
  • Another 37% say that a tablet is as good of an alternative as a television screen or a computer.
  • 58% of people like to catch up on content through binge viewing and watching more than one episode at a time.
  • 21% of people are more likely to watch content that has a social media tie-in.

The survey also shows that the type of content affects which device we use. People still prefer the television when watching live news, documentaries, comedies, and dramas. But less than half of viewers choose the television screen to watch reality TV shows. And almost nobody uses a TV screen to watch short videos under 10 minutes in length.

Probably the most interesting phenomenon is that the choice of multiple screens is killing off the once-powerful social impact of watching television with others. I remember the days when the whole family sat around in the evening watching whatever happened to be on (since we could only get three networks that wasn’t a big choice). But this survey shows that 65% of viewers now watch video alone. I know that my wife and I share almost no common interests among the things we watch, and we routinely watch different things at the same time.

This shift is certainly still not over. I still have many older relatives who only watch traditional TV on the screen as it is broadcast. But just about the opposite is true of young viewers and they have largely abandoned the big TV screen except perhaps as background noise while they are multi-tasking on their phones.

The one place where these shifts ought to soon have a huge impact is TV advertising. With over half of all viewers now watching content on a time-delayed basis the traditional advertising model is quickly dying. Surprisingly, TV advertising spending is only slightly down this year, but it won’t be surprising one coming year to see a huge fall-off in TV advertising spending. It seems a waste to pay to advertise where fewer and fewer of us are viewing.

What’s Up With Cable?

Fatty_watching_himself_on_TVThe results for 2014 are in, so today I am going to take a fresh look at the cable industry. The largest nine traditional cable companies lost just under 1.2 million cable customers in 2014, an improvement over the 1.7 million they lost in 2013. But looking at the bigger picture, the top thirteen cable companies lost only 125,000 customers for the year, which is slightly higher than 95,000 in 2013. Within those numbers, Direct TV and Dish Networks together added 20,000 subscribers for the year and Verizon and AT&T added just under 1.1 million cable customers for the year, down from 1.4 million from the prior year.

The industry as a whole is hanging solid and these thirteen companies have 95.2 million customers. Hidden in these numbers is the growth of cord cutters. For a number of years running, the cable industry as a whole has been slightly shrinking even though there is roughly one million new households entering the market each year.

Of course, the growth for the cable companies is in broadband. The largest cable companies in the group added 2.6 million high-speed data customers in 2014, while AT&T added 1,000 and Verizon 190,000. Time Warner Cable said in their annual report this year that their data product has a 97% margin, a number that opened a lot of eyes.

There are two other trends that are not captured in these numbers. First is the growth in time spent by people watching online programming like Netflix and Amazon Prime; and with that a corresponding decrease in time spent watching traditional cable TV programming. The overall hours spent per viewer for traditional cable dropped 4.4% for the year, but Nielsen reported that this was accelerating at the end of 2014. The most shocking number published this year came from Nielsen which reported that over 10 million millennials had largely fled linear TV just in the last year. Primetime viewing dropped by 12% during 2014 as more viewers are changing to time-shifted viewing.

The other trend is in the continued increase in rates. Most of the cable companies are reporting profits up 7–9%, due in part to more data customers, but also due to continued rate increases. As an example, Cablevision raised cable rates by 5.3% last year, or $7.86 and their average revenue per customer is now up to $155.20. It’s a bit mind boggling to think that’s the average and that there are a lot of households paying a lot more than that.

For yet another year the largest cable companies came in dead last in nationwide customer satisfaction surveys. This puts cable companies behind banks, airlines, and large chain stores and the satisfaction scoring for the cable companies dropped significantly just since 2013.

There is anxiety in cable boardrooms. Just in the last weeks there have been mixed signals from Wall Street when some industry analysts downgraded cable stocks due to the FCC’s net neutrality ruling, while others said there would be no significant impact from it. I tend to side with the second crowd since the FCC has excused broadband from rate (and most other kinds of hands-on) regulation.

But the real anxiety comes from a look at the demographics supporting the industry. The average age of cable viewers is increasing quickly as younger people eschew watching traditional TV. The average age of viewers for many shows and networks is now over 55, up sharply from even a decade ago. This is already starting to be felt in terms of advertising revenues, with the pre-sale for the current ad season down sharply from 2013.

There is also a lot of anxiety over Over-the-Top (OTT) programming on the web. It seems like there are weekly announcements of new alternatives coming online. The biggest recent shocks were when HBO, Disney, and ESPN said they would have some product on the web. These have been considered the bedrock channels of the cable company line-ups. Sling TV seems to be doing well with an abbreviated line-up (but which keeps growing). Sony is supposed to be unveiling what they are calling a major new online product later this year, and there are another dozen companies trying to put together web TV packages. The FCC is also looking at changing the rules that might make it easier for online content providers to obtain programming. The feeling is that 2015 is possibly going to be a sea change year and that we will start to see major shifts in the industry.

Meanwhile, programmers keep raising the rates they charge to cable companies, and the rate of programming increases is accelerating. Many programmers don’t seem overly concerned about the problems faced by the cable companies because many of them expect to have content included in online packages, and many are seeing explosive growth internationally in subscribers.

Liberty Media chairman John Malone chastised the industry recently for not implementing TV everywhere fast enough. That is the product that lets customers watch programming on any device on their own time. He says that this is probably the number one reason why Netflix and others have fared so well (which does sort of ignore the cost issue).

The larger cable companies are putting more effort into this area as witnessed by the new X1 settop boxes that Comcast is deploying. They have reported that there is significantly less churn from customers who have the newer technology. What can be said is that the industry is in turmoil. It may not look so bad when looking at customer numbers, but everybody in the industry senses that things are going to start changing quickly.

As an aside, I know somebody with the new X1 box and they tell me a different story than what Comcast is publicly saying. They recently moved and were given the new X1 box and they hate it. It regularly won’t record shows, or it goes offline and they can’t access regular programming or their recorded programming. They’ve asked repeatedly to get back their old style of box. They instead have been given numerous credits and one manager, as he was giving them a credit, admitted that Comcast had rolled out the new box too fast and there were problems with it everywhere. They have called several times to cancel but have instead been given another credit. When I told them what I was writing, they speculated that there is less churn because Comcast is just not letting people go. I don’t know how widespread the problems are with the new box, but cable companies have been known to withhold bad news from investors in the past.

How We Get Our Entertainment

Fatty_watching_himself_on_TVNielsen just published The Total Audience Report for the third quarter of 2014 in which they look in detail at how Americans are getting their entertainment. They define entertainment broadly and include things like web browsing on computers and cellphones. But they do not count voice calling or texting, which are communications.  This report concentrates on the time that people spend on different devices. The report looks at the data in a number of different ways and I found a few of the comparisons to be quite interesting.

The report shows that the way we are accessing entertainment is changing rapidly. Consider the following statistics comparing the number of hours per day that the average person uses various devices , for the third quarters of 2012 and 2014 (in hours and minutes):

‘                                                            3Q 2012          3Q 2014

Watch Live TV                                        4:50                  4:32

Watch Time Shift TV                              0:24                  0:32

Watch DVD / Blu-Ray                            0:09                   0:09

Use a Game Console                             0:09                  0:12

Use Internet on a Computer                1:04                  1:06

Use a Smartphone                                 0:53                  1:33

Listen to AM/FM Radio                          2:51                  2:44

Use a Multimedia Device                      0:00                  0:04

The total time spent by the average person doing these activities increased over the two years from 10 hours and 20 minutes to 10 hours and 52 minutes. The time spent watching traditional TV and listening to AM/FM radio dropped while everything else stayed the same or climbed. The most dramatic shift was in the use of smartphones for entertainment which grew by 75% in just two years.

It’s also interesting to look at these same statistics by age group. Consider the following that shows weekly statistics for the average person in three different age groups (in hours and minutes):

‘                                                               18 – 24            35 – 49            65+

Watch Live TV                                         17:34              29:41               47:13

Watch Time Shift TV                                1:43                3:40                 3:19

Watch DVD / Blu-Ray                               0:46                1:08                 0:37

Use a Game Console                               3:35                1:03                 0:07

Use Internet on a Computer                  4:54                7:22                 2.48

Watch Video on Internet                        1:46                 1:48                 0:26

Using an App on Smartphone               9:40                 9:39                 1:16

Watch Video on Smartphone                 0:29                 0:14                 0:00

Listen to AM/FM Radio                          10:30              13:48               12:06

Use a Multimedia Device                        0:38                 0:30                 0.13

This shows a dramatic difference by age for watching traditional TV. The younger you are, the less TV you watch. Young people in the 18-34 age group watch 63% less TV than those over 65 while 35-49 year olds watch TV 37% less. It’s the dramatic decrease in TV viewing by younger viewers that has the TV industry worried. This is certainly going to mean a major shift in advertising dollars away from TV, something that has recently become noticeable. And this same trend of caring less about TV might be what breaks the traditional cable model rather than cord cutters. Young people still watch TV, but a lot less than older generations.

There is also a huge difference between generations in terms of total hours spent using these devices. The 18–24 year-olds spend 51 hours and 20 minutes per week, those 35-49 spend 68 hours and 20 minutes, and those over 65 spend 68 hours and 6 minutes.

People under age 50 have made a dramatic shift to using their smartphones for entertainment, be that playing games, browsing the web or shopping. Both the 18-24 year olds and the 35-49 year olds use their smartphones over 9 hours per week. Interestingly, I have read a lot of articles talking about how smartphone video usage is growing rapidly and will eventually swamp other kinds of viewing, but these numbers don’t support that contention. This shows that even those in the 18-24 group are watching video on the smartphones less than a half-four per week on average. Certainly usage of smartphones in general is way up, but they still only represent a very tiny sliver of the market for watching video.

These charts also reminded me how much people still listen to AM/FM radio. I listen to Sirius XM radio in my car since I am a talk radio junky and I haven’t listened to regular radio in years. But these numbers still show that all age groups are listening to the radio more than 10 hours per week.

Sports Programming is Still Ratings King

Super Bowl FootballI have been reading a lot about sports programming and its role in the cable industry. I will be writing a series of blogs that talk about different aspects of the sports programming business. For anybody that likes sports or anybody who thinks they are paying too much for cable this is pretty fascinating stuff.

The reason that sports programming is so important to the cable companies is that it is the only major source of programming that people still insist on watching live. Many cable broadcasters like ESPN and regional sports networks rebroadcast sporting events, but Nielsen reports that 96% of sports viewing is still done live. People are not interested in watching sports after everybody knows the winner.

Years ago before DVRs, TiVo and Netflix all programming was watched live. But that is no longer the case and a significant amount of TV viewing is done on a delayed basis. That matters to cable companies because the premium advertising revenues come from the live broadcast of a show with lower advertising (or often no advertising revenue) coming from subsequent airings. As an example, look at the numbers for the recent premiere episode of Fox’s top series Sleepy Hollow. A very impressive 10.1 million viewers watched it live when it was first aired. But another 5.2 million watched in on a delayed broadcast within the first 3 days. 2.8 million viewers have watched it on VOD after 4 days (a number that is still slowly growing). Finally, another 3.1 million viewers watched it on other platforms such as NetFlix. This means that the total viewers was 20.2 million, with only half of them watching it the day it was first aired. (And imbedded in that number are a significant number of millions who recorded the show on a DVR to watch later).

The percentage of delayed viewing varies widely by the type of content. Very popular shows like Sleepy Hollow actually have some of the higher percentages of same-day viewers and there is a lot of content where the majority of views are done on a delayed basis. Some shows, like the Daily Show on Comedy Central have promoted delayed viewing as a tactic to expand their appeal.

So the networks love sports programming because it’s a hook to get people watching them. And in the cable industry, eyeballs equates to advertising dollars. Advertisers like sports programming for several reasons. Perhaps primary is that it draws the younger male demographic in one of the few ways that advertisers can count on. But second is that it gets a lot of viewers. Let’s look at some of statistics.

The biggest draw on TV is always the Super Bowl. If you look back at the history of the most watched programs in TV history it is a mix of a few events like the last episode of Mash plus a big string of Super Bowls. In recent years the Super Bowl has gotten over 100 million viewers, which is off the charts for TV viewing.

And there are other sporting events that draw big audiences. If you look at TV events that draw over 30 million viewers in recent years you will find that it’s the Oscars, an occasional final episode of a popular TV series and sports events. To contrast this with only ten years ago, in 2004 less than half of the big drawing events were sports-related. So part of the story is not just that there are popular sporting events. Events like the Kentucky Derby, the Master’s golf tournament, the BCS football championship game or the NCAA basketball championship have always drawn well. But the number of big non-sporting events has dropped drastically due the number of people that now watch their entertainment on a delayed basis.

Of course, sports is not as predictable as the networks would like. There is a huge difference in ratings when the playoffs for football, baseball, basketball and even hockey involve teams from major US markets. For example, the current World Series is drawing over a 45% rating in Kansas City, as you would expect, but the series as a whole has a much lower rating than when the Yankees or some other major market team is involved.

But even with its unpredictability, sports programming is still the advertising king. It creates dozens of events each year that are will predictably have large numbers of viewers, and viewers of a demographic that is otherwise elusive. Sports is going to remain the darling of the broadcast world as long as the current broadcast model is in place.

Tomorrow: ESPN and a la carte programing.

The Growth of Mobile Video

ipad-review-3-new-10One trend worth noting is the explosion of mobile video, meaning on-line video that is watched on devices other than televisions or computers. Ooyala recently published a report looking at the trends in mobile video and the numbers are eye-opening.

  • In the past year mobile video watching has doubled and the rate of growth is accelerating. In February 2014 it represented 21% of all on-line video being watched and by June had grown to 27%.
  • It’s projected that by 2016 that more on-line video will be watched on mobile devices than on televisions and computers.
  • Cisco projects out further and says that mobile data could represent 69% of the world’s Internet traffic by 2018.

This has some real implications for anybody in the video business. Not only is on-line video growing rapidly with content being provided by Netflix, AmazonPrime and YouTube, but that video is being watched more and more on smartphones and tablets rather than televisions and computers.

This trend is being driven by a lot of different factors:

  • In the US this trend is partially driven by age. A recent Nielsen poll showed that Millenials are now watching 4.5 hours less of traditional TV per month than they did a year ago.
  • There is a big increase in TV Everywhere and cable operators say that about 90% of US cable subscribers now have access to TVE.
  • There has been an explosion in the number of mobile devices capable of watching video and sales of smartphones and tablets are sharply up.
  • There are now more worldwide users connected to the Internet through mobile devices than through landline connections.
  • There has also been rapid growth worldwide in both 3G and 4G mobile networks. Akamai reports that the average mobile data speed in the US is 5.5 Mbps. They also say that there are 21 countries that now have mobile speeds that average over 4 Mbps.
  • There are huge amounts of content being produced, particularly in the shorter lengths of under 30 minutes.

Viewing habits still vary by size of screen:

  • 81% of the on-line video watched on television screens is of lengths greater than 10 minutes.
  • 70% of the on-line video watched on tablets is of lengths greater than 10 minutes.
  • But smartphone users prefer shorter content and 45% of the video watched on smartphones is of 6 minutes or less. But the viewing of 30-minute+ videos on smartphones is growing rapidly

The interesting thing about mobile data is that in the US a large percentage of this traffic is being carried through WiFi using landline connections. The capped mobile data plans make it very hard for most customers in the US to watch very much data on their mobile plans without paying a big premium price. As I’ve reported in other blogs, American consumers are getting very smart about using WiFi whenever it’s available.

It’s also worth noting that video quality is increasing. Netflix and others broadcast a lot of content in high definition and are now starting to stream in ultrahigh definition 4K. The quality for shorter videos on sites like YouTube is also getting better with much more HD content. And better quality means more bandwidth demand for the network operator.

What does this all mean to network owners? My takeaways include:

  • The explosive growth of on-line video that is being watched on landline networks means a continued pressure to offer faster speeds in order to support multiple devices watching video.
  • A cable provider must offer a TV Everywhere product to stay relevant.
  • This is more mounting evidence that we are losing Millenials from traditional cable TV packages.