JC Lupis | Marketing Charts | Tue, 24 May 2016 13:30:43 +0000

Recently, an IAB study [pdf] released in conjunction with the NewFronts was greeted with much press proclaiming that viewers now prefer digital video to primetime TV. (The actual results weren’t quite as clear, but did show that users of TV and original digital video tended to associate the latter more with terms such as “innovative,” “exciting,” “edgy,” and “worth my time.”) Now two new studies issued by independent firms take up the TV versus digital video debate in much starker terms.TDG-Preference-Pay-TV-v-Subscription-Streaming-Svc-May2016

The first of these, from TDG Research, frames the question in the clearest terms possible: “if you had to choose between traditional pay-TV service (cable, satellite, or telco-TV) and subscription streaming video services, which would you choose?” The question was posed to adult broadband users who use both traditional TV and subscription services.

Somewhat predictably, the responses differed by age group. Predictably, that is, based on the widening gap in traditional TV viewing between younger and older Americans.

According to the results 18-24-year-old dual-service users would choose streaming services over traditional TV by a 2:1 margin (66.3% versus 33.8%), with 25-34-year-olds showing a similar skew towards streaming services (61.8% vs. 38.2%).

The script then flips markedly. For the 35-44 age bracket, 61% would choose their traditional pay-TV service over streaming services, compared to 39% who would choose their streaming service. This is in almost diametric opposition to the 25-34 group, which suggests quite a cultural gap between Millennials and Gen Xers when it comes to TV viewing.

That gap exacerbates with age, with each successive age group preferring traditional TV to streaming services by a larger margin. Indeed, more than 3 in 4 respondents aged 65 and older would choose pay-TV over streaming services, though it’s worth noting that this group has a small sample size (75).

As TDG’s Director of Research, Michael Greeson, notes: “Importantly, the relationship between age and service choice is strikingly linear.”

Meanwhile, a new study from E-Poll Market Research similarly finds that there’s an age tilt in video viewing behavior, but that one streaming service in particular beats all other TV viewing sources across age groups (measured up to age 54).

The survey asked 1,354 respondents aged 13-54, each of whom had viewed a full-length streamed program within the prior 6 months, where they go most frequently when they want to watch a TV show. The first choice for all age groups was the Netflix streaming subscription, garnering 33% share of all responses, though cited twice as often by young Millennials (18-24) than Boomers aged 50-54.

The next-most cited source is a TV channel during its original air time (16%), followed closely by DVR or TiVo service (15%). Not surprisingly, these were much more commonly cited among Gen Xers and Boomers than teens and young Millennials, but still failed to match Netflix in any age group.

Among the 8 sources that garnered at least 2% of respondents each, 5 were digital (Netflix, Hulu paid subscription, YouTube, online on a free site, and Amazon Prime subscription) with the remaining 3 being the domain of legacy TV (a TV channel during its original air time, DVR or TiVo service, and video-on-demand). Tallying up the traditional TV versus streaming responses, the results indicate that 54% overall turn to a digital source most frequently, as opposed to 33% to a traditional TV source (with the remaining 13% allocating their responses to one of the 14 other choices listed).

Among Gen Xers (35-54), the most frequent destination for TV shows was almost evenly split between digital and traditional sources (discounting the 13% allocated to “other” sources), while for Baby Boomers (50-54), there was a very slight lean to traditional sources (again discounting the 15% allocated to unspecified “other” sources.)

There were some other interesting results to emerge from the research:

  • Some 17% of teens (13-17) specified YouTube as the place they go to most frequently when they want to watch a TV show, equal to a TV channel during original air time (11%) and DVR or TiVo service (6%) combined; and
  • A majority 51% of younger Millennials turn first to Netflix, more evidence of their affinity for streaming.

No wonder, then, that another new study, this time from CSG (conducted by TDG Research) [download page], found young Millennials spending more than half of their weekly TV viewing time watching OTT content.

Lack of commercials was one of the reasons cited in the CSG survey for younger Millennials’ affinity for streaming content. The E-Poll Market Research report similarly finds that the lack of commercials is the most common reason that impacts Netflix users’ decision to subscribe, even ahead of the ability to watch at a convenient time, which is one of the main benefits ascribed to streaming video.

The shift away from traditional TV to streaming services – and the associated lack of or reduction in ads – has big implications for advertisers, obviously. That’s especially the case in light of a new study [pdf] funded by ABC and conducted by Accenture Strategy. The analysts analyzed the Accenture database of $12 billion in anonymized marketing spend over a 3-year period across more than 20 leading national brands representing 6 industry categories. The report concludes that multi-platform TV (linear TV and professionally produced premium long-form video content viewed online) has a halo effect on search, display, and short-form video advertising within integrated campaigns. In other words, without multi-platform TV’s halo, the average ROI of those digital channels would decline by 18%, with paid search (-21%) impacted the most.

It’s certainly worth considering the source of the research (ABC) here, but other independent research (such as that carried out by MarketingCharts) similarly finds a strong purchase influence ascribed to TV advertising. So as streaming services gobble up viewing time among youth, it will be interesting to see how marketers adapt.