A week ago, my family crowded around our living-room TV to watch the Macy’s Thanksgiving Day parade, and I couldn’t help thinking about the ironic clash between tradition and innovation: On the one hand, we mirrored that classic tableau of the family gathered around a single source of entertainment; on the other, our smart TV offered a distinctly modern viewing experience.
This fine balance between tradition and innovation is widespread — especially in regards to the evolution of TV media. Our Consumer Technographics® data shows that US consumers’ love for TV is unwavering, but the ways in which viewers access content are rapidly changing. Streaming services like Netflix and Amazon Prime have been catalysts for this change; now Comcast’s recently launched Stream TV opens a new avenue for TV consumption that lives somewhere between cable and Internet properties. With Stream TV, Comcast is targeting a growing group of TV lovers who don’t actually have a TV:
Title got your attention? It should. In a report I just published this week, I use our Forrester Consumer Technographics® data to identify the 7% of adults who are digital cord-nevers — measured as people who have never paid for TV and who are under age 32. This is the worrisome group whose arrival TV-industry pros have nervously anticipated. As we show in the report, they are officially now larger than the entire adult population of cord cutters, who come in at 6% of all adults. Put them together, and you have 15% of adults who are not paying for TV while still getting all the TV value they need from a combination of Netflix, Amazon Prime Video, and other tools.
Don't jump out of any Times Square windows just yet. TV is still massively popular and will continue to be. I wrote that report earlier this year, and Forrester clients can read it here. These defector groups are going to grow over time, true. And as the title of this post suggests, if we model this behavior out over the next 10 years, we expect that 50% of adults under age 32 will not pay for TV, at least not the way we think of it today. That compares to 35% of that age group that doesn't pay for TV today. (That's right, a third of them are already out of the pay TV game.)
Julianne Pepitone's review of the upcoming US Supreme Court case American Broadcasting Companies, Inc. versus Aereo nicely covers the case's implications on two big industries, old and new: television and cloud computing. (P.S. Thanks for the shout-out to me, Julianne!) The potential impact on the TV industry is pretty clear, but the cloud? I'm not a lawyer, but the issue is likely to turn on the difference between the copy being in the cloud or in your home.
In 1984, the Supreme Court upheld the right of individuals to make a recording of a television program for their private viewing in what has become known as the Betamax case. So far, lower courts have used this precedent, in combination with Aereo's clever technical design, to say Aereo is legal. For the Supreme Court to rule against Aereo, it will have to find that some aspect of their model is different from a VCR.
And there it is: The VCR sits in your living room, while Aereo is in the cloud. No doubt ABC and the broadcast industry will make the case that this is a crucial difference and since Aereo is the entity sitting on these copies of their programming, Aereo is infringing on their copyright. It will be fascinating to see the arguments in detail and see how the Court views them.
Julianne notes in her article:
If the court rules against Aereo, the startup and its supporters warn the ramifications could put other services that use remote, or cloud-based, storage -- Google Drive, Dropbox, remote DVRs and many more -- at risk. Any of those outcomes depend on the scope of the Supreme Court’s decision.
Sure, the scarcity of inventory and the premium associated with professional video content drive caution and reluctance among sellers. But in a few years, short- and long-form video content, both user-generated and broadcast-native, will be bought programmatically in an inevitable takeover of automated trading that has already started today – and will work all the way up to TV buying. Two forces make programmatic buying unavoidable:
Traditional buying cannot cope with audience fragmentation across devices. The explosion of new platforms and ways of viewing videos will continue dispersing audiences, making it increasingly difficult to reach the desired number of viewers through linear TV alone. And many of these new platforms are digital, enabling a break from broad age/gender ratings buys and a move to addressing ads to individuals. Traditional manual buying approaches simply can’t cope with this volume of video sources and the shift to addressable advertising.
The madness that is the Consumer Electronics Show (CES) has finally subsided, people are safely home (some never arrived thanks to cancelled flights), and we’ve had sufficient time to read the CES stars and foretell what it means for 2014 and beyond. Condensing this show down to so few points requires omitting some things, even some fun things like Michael Bay’s meltdown and T-Mobile CEO John Legere’s attention-grabbing tactics, but it’s my job to say what it means. So here I go, predicting what will happen in 2014 with three (admittedly long) bullets:
A spate of events this month argues that the industry that revolves around video entertainment and advertising (I no longer call it the "television" industry!) has entered a period where long-delayed change will burst out:
Video ad networks/technologies YuMe and TremorVideo both went public. While neither was blockbuster, these IPOs signal that investors have enough confidence in the future of digital video that they'll put some chips on the table. They see advertisers using online video to extend their TV campaigns and this sector growing at rates far higher than the advertising market as a whole.
Two $400 million + deals for cross-device video ad technologies. The much-hyped AOL/Adap.tv deal and the quieter Extreme Reach/DG deal reflect different corporate strategies, but both are rooted in the idea that the distinctions between TV and digital video will continue to diminish. Marketers increasingly realize they must put their sight/sound/motion messages on every device if they hope to achieve the reach that TV alone used to deliver.
CBS/Time-Warner dispute. The mutual benefit of carriage fees has made the programmer/distributor relationship cozy for years. Now this relationship is fraying, and outright wars that include blackout of stations like the current CBS/Time-Warner fight have become increasingly common in the past couple of years. The lure to programmers of streaming their programs online increases in direct proportion to how contentious this relationship becomes.
Summer 2013 may be bringing about a renewed enthusiasm for surfing — and not only on the beach: Many consumers are turning to online video services to skim the waves of new content.
In Q3 2012, Forrester’s Technographics Data Insight showed that around one in ten US online adults had canceled their TV service in order to stream content exclusively from the Internet; those who did not cancel their programming cited their desire to channel surf as the primary reason for maintaining TV service. However, as online video evolves, consumers are finding that the Internet enables an equivalent channel-surfing experience. Participants in our ConsumerVoices online community say they look to Netflix to discover new entertainment content rather than to simply stream a specific show:
“Every time I use Netflix, it is to discover what is on. I never go on there at certain times looking for specific shows. I like having all their movies and shows available to me when I want it.”
I swear I've been here before. Not here, as in here at CES, where I spent the week checking my product assumptions against the actual offerings arrayed on the showfloor. But here, as in at a crucial moment in time when a single industry rushes to push a massively expensive, relatively unnecessary technology on unsuspecting consumers. That's the case with Ultra HD at CES 2013. Formerly known as 4k TV (because of the rough number of horizontal pixels employed in the technology) and now already truncated to UHD by company reps on the floor and in the hallways, Ultra HD is supposed to be the next thing every consumer will want.
It ain't gonna happen. The reasons evoke a ready comparison to 3DTV. And indeed, I have been here before, back at CES 2010 where I wrote a piece called 3DTV at CES: Poking Holes in the Hype. That year, some industry thinkers had conducted a survey and concluded that as many as 5 million consumers were ready to jump into 3D with both feet while opening their big, fat wallets. So I wrote the obligatory post that said, pointedly, no.
The comparison between 3D and Ultra HD is obvious. They were both too expensive at introduction (Ultra HD much more so than even 3D); they both suffered from a dearth of content availability; they both required a complete retooling of the equipment used by video production teams and film studios; and they both landed at a time when consumers were pretty happy with the awesomely large, cheap TV screens they already had.
The poorly kept secret that is the Google Nexus 7 tablet was just announced amid much developer applause and excitement. The device is everything it was rumored to be and the specs — something that only developers care about, of course — were impressive, including the 12 core GPU that will make the Nexus 7 a gaming haven. True, it's just another in a long line of tablets, albeit a $199 one that competes directly with Amazon's Kindle Fire and undercuts the secondary market for the iPad.
But as a competitor to the iPad, Nexus 7 isn't worth the digital ink I'm consuming right now.
But Google isn't just selling a device. Instead, the company wants to create a content platform strategy that ties together all of its ragtag content and app experiences into a single customer relationship. Because the power of the platform is the only power that will matter (see my recent post for more information on platform power). It's unfortunate that consumers barely know what Google Play is because it was originally called Android Market, but the shift to the Google Play name a few months back and the debut of a device that is, according to its designers, "made for Google Play," show that Google understands what will matter in the future. Not connections, not devices. But experiences. The newly announced Nexus 7, as a device, is from its inception subservient to the experiences — some of them truly awesome — that Google's Play platform can provide through it.