The Death of Television – Is it Finally Happening?

Death of TVAlthough year-on-year schedule based UK television viewing, as measured by BARB’s consolidated (Live + 7-days catch-up) Total TV audience, has been in decline since 2012, it was beginning to show signs of levelling off with a very notable slowing in the downward trajectory between 2015 and 2016. However, now that the final figures for 2017 are in, there has been a renewed acceleration in the rate of decline. Between 2012 and 2015 the annual average Individuals 4+ Total TV audience fell steadily at around 3% per annum (from 9.59 million to 8.75 million), but only declined by 0.6% between 2015 and 2016 (to 8.70 million), to then accelerate again in 2017 with a notable drop of 3.6% (to 8.39 million). To put this in context, the annual Total TV viewing forecasts to 2020 that I generated back in early 2015, and which have so far been very much on the mark, predicted that for 2017 the Individuals 4+ Total TV audience was likely to fall somewhere between 8.46 and 8.87 million, so the actual 2017 audience (at 8.39 million) is only just under the lower end of the forecast range. While this continuing decline is therefore not unexpected, the fact that while for 2015 and 2016 the actual Total TV audience always fell in the middle of the forecast range and has now suddenly dropped to the lower end is certainly cause for concern, and an updated forecast (potentially including other forms of video consumption as well as schedule based TV) may well be warranted to reassess where we are headed.

To begin with it is worth noting that the Individuals 4+ consolidated Total TV audience in 2017 is still roughly at the same level it was back in the mid-noughties, though this is within the context of significant population growth, so if we look instead at Individuals 4+ Average Daily Minutes of consolidated TV viewing at 203 mins in 2017, down by 16% (38 mins) from 241 mins in 2012, we are currently watching less Live + 7-days catch-up TV than at any point in the last 20 years. Even if we were to include 8-28 days TV set based catch-up viewing (BARB measured since July 2013), this would only add about 2.5% (5 mins), and by BARB’s own Project Dovetail estimates, including non-TV screen based broadcaster app catch-up viewing (scheduled for March this year) is only likely to add a further 1.5% (3 mins), so we’d still not quite get back to the mid-noughties level of around 215 minutes per day. So, is it finally time to hit the panic button? Are the Death of Television predictions that have now been a perennial thorn in the side of our industry for at least the last decade finally coming true?

First some perspective, schedule based television viewing in the form of Live + 7-days catch-up is still a very dominant activity, with the average person (aged 4+ in the 95% of UK households that own a working television set) still spending nearly three and a half hours every day consuming traditional television. That being said, there is a growing dichotomy between the viewing habits of older and younger viewers. Since 2012 the Average Daily Minutes of Live + 7-days catch-up TV watched by Adults 55+ has hardly changed, which is in stark contrast to what has happened with younger viewers, where the declines in schedule based TV viewing levels over the last 5 years have not only been significant, but are also more pronounced the younger the age-group.

So, what is happening to all this lost schedule based TV viewing among younger audiences? As noted above, we know that 8-28 days TV set based catch-up viewing only accounts for a relatively small proportion of this lost viewing (and could in any case be legitimately included as part of more traditional schedule based TV), so perhaps younger viewers are simply spending a lot less time in front of television screens? Paradoxically, all the available evidence suggests that this is not the case. We have always used our television sets for activities other than watching traditional schedule based television, from old-school video cassette players to DVDs, games consoles, using our TVs to listen to the radio and more recently access of a whole range VOD apps and services from the BBC iPlayer to Netflix. But while BARB has been capturing Live + 7-days catch-up viewing since the early 1990s, it has only been in the last few years that BARB has been consistently measuring the time spent on other TV screen based activities. From the middle of 2013 onwards, BARB has been progressively capturing 8-28 days catch-up viewing, using the TV to listen to the Radio, and most recently BBC iPlayer and Sky non-linear viewing, as well as the time spent on unknown activities that have been BARB measured since July 2013 and have more recently been grouped together as a single category called ‘Unknown viewing’. This category covers everything from TV based SVOD (Netflix, Amazon, Now TV, etc.) to Broadcaster’s non-linear VOD (where not separately measured), as well as post-28-days catch-up viewing (whether PVR or Broadcaster VOD based), watching DVDs, and not least of all gaming, and this ‘Unknown viewing’ has been growing significantly in recent years, though unfortunately it has only been reliably BARB measured since July 2013.

Even more interesting, however, is the fact that for all the main younger age-groups, the decline in schedule based TV viewing (defined for simplicity in the discussion below as Live + 28-days catch-up viewing) correlates extremely closely with the corresponding growth in the ‘Unknown viewing’ category. While correlation doesn’t necessarily imply causality (and a full discussion of the underlying statistical analysis is beyond the scope of this note), the consistency of the results is compelling, with a substantial proportion of the lost schedule based TV viewing for younger audiences being compensated for by a corresponding growth in ‘Unknown viewing’. So, for Children 4-15 we find that they watched 120 mins of Live + 28-days TV per day in 2014 and this fell to 89 mins per day by 2017 (down 26%), but with ‘Unknown viewing’ rising from 35 to 53 mins over the same period, their total time spent in front of TV sets has paradoxically fallen by only 8% from 155 mins in 2014 to 142 mins in 2017. It is a similar story for all the other under 55 age-groups. For Adults 16-34 Average Daily Minutes of Live + 28-days viewing fell from 159 to 127 mins between 2014 and 2017 (down 20%), but with ‘Unknown viewing’ growing from 39 to 61 mins, their overall TV set time only fell by 5% from 198 to 188 mins. For Adults 35-54 Live + 28-days viewing fell from 227 to 207 mins per day between 2014 and 2017 (down 9%), but with ‘Unknown viewing’ growing from 25 to 41 mins, their total TV set time only fell by 2% from 253 to 248 mins. For Adults 55+, on the other hand, there was virtually no change in Live + 28-Days viewing, which went from 327mins per day in 2014 to 326 mins in 2017, so with ‘Unknown viewing’ growing from 14 to 21 mins, total TV time was actually up by 1.5% from 342 to 347 mins, suggesting that for older viewers ‘Unknown viewing’ is more of a complement than a substitute for their schedule based TV viewing.

So, what is going on? The first thing that needs to be appreciated is that even younger viewers prefer watching long-form video content on the best available screen, and this is particularly true of the type of high quality content that is the core staple of major TV broadcasters and their VOD rivals. Tablets and smartphones have undoubtedly had a fundamental impact on our video consumption habits (we can literally watch videos almost everywhere and anywhere) but who wants to watch the latest episode of ‘Blue Planet’, catch-up with ‘Game of Thrones’, have a binge of ‘Stranger Things’, get in some family time with ‘Gogglebox’ and ‘I’m a Celebrity’, or even just relax with old repeats of ‘Friends’, squinting at a small screen when one has ready access to a 50-inch HD TV set complete with comfy sofa. It is no surprise that at Digital UK’s recent Outside the Box event, Channel 4 director of consumer insight Sarah Rose pointed out “that two-thirds of All 4 viewing takes place via TV sets, as opposed to computers or mobile”. The available evidence seems to suggest that viewing on smaller screens has in all likelihood been more of a complement than a substitute for traditional schedule based TV viewing, and it is only as the ability to readily watch a broad range of high quality VOD content (the bulk of which is non-linear or outside of the traditional catch-up window) on TV screens has proliferated in recent years that we have seen substantial declines in the levels of traditional schedule based TV viewing among younger viewers.

It is of course true that although we know that younger viewers have been substituting their more traditional schedule based TV time for unknown TV set based viewing, BARB data cannot currently tell us precisely what this ‘Unknown viewing’ is. Undoubtedly, younger viewers will be spending some of this unknown TV time on already well-established activities like gaming (the BARB data suggests that around 23% of unknown TV viewing is via game consoles) or watching DVDs, but it is also highly likely that younger viewers have been increasingly substituting a proportion of their schedule based TV viewing for viewing of non-linear (i.e. non-schedule based) VOD content on their TV screens. This hypothesis is supported by BARB’s own Establishment Survey data on the rate of SVOD penetration in recent years, with the latest figures showing that SVOD subscriptions rose from 14% of UK households at the start of 2014 to 33.7% in the 3rd quarter of 2017. It is also the case that SVOD households are heavily skewed towards younger viewers, with around 50% of under 55s having access to least one SVOD service, with BARB’s latest white paper noting that: “we can see that access to SVOD services is highly prevalent in audiences under 55 […] far from being niche, SVOD services are now an established part of the television ecosystem”.

As for the SVOD services themselves, in terms of subscriber numbers Netflix is still the dominant UK player by a significant margin, although Amazon has been narrowing the gap since mid-2016, with Now TV coming in third place. The SVOD services, most notably Netflix, are now also readily accessible through a wide range of smart TVs, set-top boxes (STBs), and USB stick plugins, with some new smart TV models even coming with a dedicated Netflix button on the remote. My own estimates also suggest that in 2017 UK viewing on all SVOD services combined may have contributed in the region of 15 minutes of video viewing per person per day, and substantially more than this for younger viewers. To put this in context, this makes the SVOD services the rough viewing equivalent of CH4 and ITV2 combined, and they can now readily compete with the more traditional TV broadcasters for eyeballs (particularly younger ones) on TV screens. On top of this, traditional TV broadcasters have also been competing against their own linear channels by expanding their non-linear VOD offerings, with the most recent example being the pre-Christmas release of a sizeable range of box-sets on the BBC iPlayer, followed by the release of all 6 episodes of the new crime drama ‘Hard Sun’ immediately after the (6th of Jan 2018) premier of the first episode on BBC One.

So, is this the Death of Television? Despite all the challenges outlined above, I’m still very much of the opinion that the imminent demise of schedule based television remains a highly unlikely outcome. While it is easy to be influenced by the perennial doomsayers, another way to look at the situation is that in view of all the competition and market fragmentation highlighted above, it is a testimony to TV’s remarkable resilience just how much schedule based TV is still being watched, even among younger viewers. It is true that the SVOD services have experienced a particularly strong period of recent growth, but this has been off the back of huge (and potentially unsustainable) investments in content. As the market becomes ever more saturated, it is likely that the growth in SVOD subscriptions and viewing will start to level off. Traditional broadcasters have also been fighting back, not only with their own new hit shows and associated VOD offerings, but in the case of the PSB broadcasters by lobbying for being granted appropriate prominence on the growing proliferation of Smart TV and STB homepages that have been placed in front of the linear channel lists (EPGs), with this being seen as an important step towards protecting investment in homegrown content. The SVOD services for their part have also started acting more like traditional broadcasters, with new episodes of some of their most important shows (e.g. ‘The Grand Tour’ on Amazon and ‘Star Trek Discovery’ on Netflix) being released weekly rather than all in one go, and there also appears to be a growing trend towards commissioning co-productions with traditional broadcasters (e.g. ‘Dirk Gently’s Holistic Detective Agency’ a Netflix / BBC America co-pro, and ‘Paranoid’ a Netflix / ITV co-pro).

The continuing importance and resilience of schedule based television is also highlighted by a very recent example of just how important traditional linear EPG prominence remains to channel performance. As well as offering reliable access to a wide range of non-schedule based VOD content, Virgin Media (VM) is currently the only pay-TV platform in the UK to have Netflix on its EPG (no. 204 on the linear channel list) as well as in its App section. It is therefore no surprise that, according to BARB, 40% of VM homes have a Netflix subscription, and this rises to nearly 50% of VM homes with access to at least one SVOD service, more than for any other UK television platform households. It would therefore not be too unreasonable to expect the viewing impact of a gain in linear VM EPG prominence to be relatively limited, especially for an already well established younger skewing channel like E4, and the SD variant of E4 at that (unlike Sky, VM does not currently operate an automatic SD/HD EPG channel swap). However, when on 09/10/2017 E4 SD (at 144) moved into BBC 3’s old slot (at 106) on the first page of the VM EPG, its Individuals 4+ Share of viewing on the VM platform immediately went up by 50% (from around 1.0 to 1.5) and has persisted at this level ever since, while in stark contrast E4’s Share of viewing on all other platforms (where there was no EPG change) was actually down by around 10% over the same timeframe.

While TV is evolving, there is every likelihood that more traditional schedule based television will continue to be an important part of the video viewing landscape for many years to come.

If you would like to receive the associated research notes to Dr Farid El-Husseini’s blog posts please email him directly on: farid.el-husseini@feh-mi.com.

Posted in 2020 Forecast, Adults 16-34, Age Groups, Amazon, BARB, BBC 3, BBC1, Catch-Up TV, Channel 4, Channel List, Channel Schedules, Children, Death of Television, EPG, EPG Prominence, EPG Reshuffle, EPG Viewing Impact, HD, HD/SD Channel Swap, ITV, Linear TV, Netflix, PSB, Smart Phones, Smart TV, SVOD, Tablets, Television, Total TV, TV in 2020, Virgin Media, VOD | Leave a comment

Forecasting the Audience Impact of Sky’s Proposed EPG Reshuffle

Sky_Q_EPGThe announcement by Sky early last month that it was planning a radical overhaul of the increasingly complex Sky EPG, with a reshuffle target date of March 2018 after an appropriate consultation and adjustment period, will undoubtedly have set alarm bells ringing in the boardrooms and research departments of all the major broadcasters. As made clear in my research note from earlier this year, EPG prominence still matters and can have a very significant impact on channel performance, and there can be no doubt that the currently proposed reshuffle is potentially the most radical in the history of the Sky EPG, literally involving hundreds of channels changing position on the list. So, what do we know about the changes being proposed by Sky so far, and what impact is this likely to have on the performance levels of the affected channels? Nothing has, of course, been finalized yet, with the initial eight-week consultation period not due to conclude until early October, but from what has been made public about Sky’s proposals in a number of recent Broadcast articles, four core EPG reshuffle elements have emerged.

Creating a dedicated group for swapped HD/SD simulcasts in the 800s: Back in Feb-2011, to promote the growing number of HD channels, Sky implemented an HD channel swap for those customers with relevant HD boxes and subscriptions, whereby HD simulcast channels, having generally launched later and so in less prominent EPG slots than their SD counterparts, automatically swapped places (i.e. channel numbers) with their more prominently placed SD variants. As outlined in one of my research notes from the time, the resulting impact on HD channel viewing was dramatic. Due to issues with their regional opt-outs (such as local news and adverts) not being broadcast in HD, the main terrestrial PSB (public service broadcaster) channels didn’t participate in the HD/SD channel number swap, though considerable progress towards doing so has been made in the intervening years and it is likely that where HD regional variants now exist they will be swapped as part of the forthcoming reshuffle. However, the growing number of HD/SD simulcast channels (excluding regional PSB variants, there are currently around 90 channels for which both an HD and SD variant is listed on the Sky EPG) has also resulted in considerable cluttering of the Sky EPG across all the main channel genre groups, with many channels effectively being listed twice (i.e. both an HD and SD variant) within a given genre section. Sky’s proposed solution would appear to be grouping together all the swapped SD simulcast variants and putting them in their own group in the 800s (similar in the way to which regional variants of the PSBs are available in the 900s), thus both decluttering and freeing up a considerable amount of space in all the main channel genre sections, most notably in Entertainment, Sports and Movies. While it isn’t clear from the information that has been made public, presumably it is the HD simulcast channels that would be relegated to the 800s where subscribers do not have the appropriate HD channel access. As for the likely viewing impact, not having the same channel effectively listed twice within any given genre group, but in a separate group at the back of the channel list (where they are less likely to attract passing viewers), will probably result in some losses for the affected channels. On the other hand, given the clear need for streamlining Sky’s current EPG, this does (notwithstanding any potential technical issues with how this would be implemented across different subscription packages with varying HD channel access) constitute a logical extension of the HD/SD channel swap that has already been in place for over 6 years.

Creating a dedicated time-shifted (‘+1’) group in the 700s: There are currently 75 time-shifted channels (virtually all ‘+1’ with the occasionally ‘+2’) listed on the Sky EPG across the main channel genre groups, with 45 (60%) of these being in Entertainment. Over the last 12-months they accounted for around 8% of BARB measured Individuals 4+ consolidated (i.e. Live + 7-days catch-up) viewing on the Sky platform, though their viewing contribution to certain channel portfolios will be significantly higher than the platform average. Sky’s currently proposed plan would appear to be for all the time-shifted channels to be grouped together and moved to a dedicated time-shifted genre in the 700s, with the time-shifted channels also being reordered in their new genre to reflect the relative placement of their primary counterparts. Broadcasters would retain control of the vacated slots into which they could either move up one of their primary channels, or alternatively sell the slot to a rival broadcaster. Unsurprisingly, this proposed move has proved particularly controversial with the affected broadcasters. To begin with, any reordering of the time-shifted channels (whether collectively moved to a dedicated genre group or not) would be closely scrutinized by broadcasters, and those who feel they have unfairly lost EPG prominence could well mount a challenge under the FRND (fair, reasonable and non-discriminatory treatment) requirement of the Ofcom EPG Code. There is also likely to be very serious concern about the negative viewing impact of moving all the time-shifted channels into a group close to the back of the channel list. Past experience suggests that while some of the less well placed channels may benefit from being in a dedicated group where they can be more closely associated with key players, for the currently better placed channels the viewing impact is much more likely to be negative. When Sky moved the Lifestyle channels out of Entertainment and into their own dedicated genre group in Feb-2006, this resulted in a statistically significant 20% drop in viewing for the group as a whole, and with further declines over the years Sky eventually moved the remaining Lifestyle channel back into Entertainment in August 2014. On top of this, those time-shifted channels that are currently listed next to their primary counterparts (around a third of the total) will almost certainly suffer additional losses, with numerous past examples showing how (due to the strong promotional impact of the primary) splitting a time-shifted channel from its primary counterpart results in significant additional audience losses for the time-shifted channel above and beyond what can be attributed to an any associated loss in EPG prominence. Some commentators though, may well argue that time-shifted channels are becoming redundant in an age where access to on-demand and catch-up services is fast becoming ubiquitous, though as a counter one can just as easily point out that even on the Sky platform 80% of viewing remains live.

Merging the Documentaries with the Entertainment channels: With a significant amount of space being freed up in the Entertainment section, with a combined total of around 75 swapped HD/SD simulcast and time-shifted channels potentially being moved out of Entertainment under the aforementioned proposals, Sky has additionally proposed to merge Documentaries (currently starting at 520) with Entertainment. There are currently 34 channels listed in the Documentaries section of the Sky EPG, but as 10 of these are time-shifted and a further 7 are swapped HD/SD simulcasts, only 17 channels from the Documentaries section will actually need to be accommodated in Entertainment. As discussed in two of my previous research notes (see: note 1 and note 2) MTV’s move from Music into Entertainment on both the Sky and then Virgin Media EPGs clearly highlights how a move from a more specialized genre section (even when very prominently placed there) into the Entertainment section can result in very significant viewing benefits that persist over time. That being said, this does very much depend on whether or not one can secure a sufficiently prominent slot within Entertainment. When Lifestyle was merged with Entertainment on the Sky EPG in August 2014, this did not result in a universal performance boost for all the channels involved, with some channels making significant gains, while others lost out. Indeed, as a group the Lifestyle channels suffered a performance drop of around 6% on the Sky platform in the 12 months following the reshuffle, while in contrast the same channels on Virgin Media (where they remained in a separate Lifestyle section) were up by around 12% as a group. There is also likely to be some concern among the operators of the News, Sports, Music and Movies channels that will be leapfrogged by the Documentaries channels. There are certainly historical precedents to suggest that being leapfrogged by a competing channel group can have a significant adverse viewing impact, though this will also depend on how closely the two channel groups are likely to be competing for the same viewers.

Moving up the Kids channels to just behind Entertainment: The final element of Sky’s reshuffle proposal would be to move the Kids channels (currently starting at 601) up the EPG as a group to sit just behind Entertainment, and in anticipation of having a tidied up Entertainment genre this would have the Kids genre potentially starting at 250 under the current proposal. One would certainly expect the Kids channels to welcome this move, while the channels being leapfrogged are likely to be concerned, particularly those targeting younger viewers. Much will depend on the extent to which younger viewers are likely to navigate directly to a specific channel genre section rather than scrolling through the entire channel list. It is also worth mentioning that the current ordering of the Kids channels on the Sky EPG has been a bone of contention with the BBC, who argue that CBBC and CBeebies (as PSB channels) should be at the top of their genre list, something that is contested by the commercial Kids channels who argue that this would be unfairly detrimental to their performance. It remains to be seen to what extent the currently proposed reshuffle will be used as an opportunity to address any such outstanding contentious issues.

While we have highlighted some of the key areas of concern for the affected broadcasters, it is also important to point out that the proposed Sky EPG reshuffle offers an unprecedented opportunity for broadcasters to not only reorganise/optimise the positioning of their channel portfolios, but to also potentially acquire some of the more prominent vacated Sky EPG slots. While for some this will help mitigate any reshuffle induced losses, others could well find that they have an opportunity to boost the overall EPG prominence (and hence performance) of their portfolios as a whole. The devil is in the detail, and what is clear is that a significant amount of well-informed research and analysis will be needed to predict all the likely future outcomes.

If you would like to receive the associated research notes to Dr Farid El-Husseini’s blog posts please email him directly on: farid.el-husseini@feh-mi.com.

Posted in +1 Channels, BARB, Channel List, EPG, EPG Prominence, EPG Reshuffle, EPG Viewing Impact, Forecasting, HD, HD/SD Channel Swap, HD/SD Simulcast Channels, High Definition, Ofcom, PSB, Sky, Sky Platform, Television, Time-Shifted Channels, TV, Viewing, Virgin Media | Leave a comment

EPG Prominence and Channel Performance – It Still Matters

VM_EPGIn the late noughties, I was at a conference where one of the delegates noted how EPGs (electronic programme guides) with their ordered lists of channels and schedule information were so archaic that they might as well be considered ‘Victorian’, if not quite steam powered, though the jury was still out on that one. With the viewing impact of EPG prominence being one of my core areas of expertise, I was not amused, but there is no telling some people and I was clearly dealing with a revolutionary who was convinced that the tyranny of the schedule was over and that no one would be watching any live television in a few years’ time. My work on the audience impact of EPG prominence for Ofcom a few years later certainly showed how important a good EPG slot can be when it comes to boosting and maintaining a channel’s performance. However, given all the changes and challenges the TV industry has faced in recent years, with the rapid expansion of internet based VOD and the associated OTT apps and services from Netflix to YouTube, can a channel’s position on a linear EPG anchored to a live broadcast schedule still have a significant impact on its performance?

To answer this question, I will begin with my perennial announcement that traditional schedule based television, even among younger viewers, is not dead or dying, but evolving, and as the only true demonstration of a forecaster’s abilities is past performance, I am happy to engage in some shameless self-promotion by noting that my Total TV viewing forecasts from early 2015 have so far turned out to be very much on the mark. If nothing else, there must be a plausible reason to explain why Amazon has been so keen to advertise the online release of ‘The Grand Tour’ on linear television – put simply, it is still the best and quickest way to get your message across to a wide audience. If schedule based television remains a force to be reckoned with, then it would also seem logical to assume that EPG prominence remains important, but in the interest of not engaging in a spot of ‘post-truth’ analysis (‘I believe it, therefore it must be true’) it is important to provide some actual concrete evidence to support this claim.

Ideally, of course, I would be conducting a comprehensive analysis of the viewing impact of recent EPG reshuffles, but unfortunately that would be well beyond the scope of this short research note, though I do have one rather compelling recent example that I can share. On the 29th of November 2016, 4Seven was moved from no. 195 to no. 143 on the Virgin Media EPG, which (when accounting for the occasional numbering gaps) constitutes a very significant gain in EPG prominence of 50 channel ranks. Just as importantly, 4Seven’s position on the Satellite (i.e. Sky & Freesat) and DTT (i.e. Freeview, YouView, BT, TalkTalk & Plusnet) EPGs did not change over the relevant timeframe, therefore providing a baseline for comparison. The Virgin Media platform is also one on which a combination of VOD (both SVOD and broadcaster catch-up) and PVR playback have been available for a long time, and even Netflix, the constantly touted killer of television, has been available on Virgin Media since the autumn of 2013, where it can be accessed from both the App section of the guide and at no. 204 on the linear channel list. With so many ways of escaping the tyranny of the schedule, one might be tempted to make the case that traditional EPG prominence, in the form of a gain in channel ranks on a simple channel list with linear schedule based information, is unlikely to have a significant impact on a channel’s performance, particularly on an advanced pay-tv platform like Virgin Media. However, while such pseudo-logical arguments are undoubtedly compelling, what does the actual evidence tell us?

The main piece of evidence must necessarily be 4Seven’s performance on Virgin Media (VM) and the Satellite and DTT platform control groups around the time it moved 50 channel ranks up the VM EPG on 29-11-2016. As it’s been around 3 months since this change took place, it is also reasonable to look at 4Seven’s performance in the 12 weeks before the VM reshuffle, and then compare this to its performance in the 12 weeks after. So, in the 12 weeks before its gain in VM EPG prominence, 4Seven averaged an Individuals 4+ daily Share of viewing of 0.199 on VM, while on DTT it averaged a daily Share of 0.290, and on Satellite it averaged a daily Share of 0.362. In the 12 weeks after the VM reshuffle, 4Seven averaged an Individuals 4+ daily Share of viewing of 0.485 (up 144%) on VM, while on DTT it averaged a daily Share of 0.356 (up 23%), and on Satellite it averaged a daily Share of 0.420 (up 16%). Now, all of these changes are statistically significant, so clearly 4Seven was doing better on all platforms in the period after the VM reshuffle, but what cannot be ignored is the sheer size of the performance gain on VM relative to the control groups, with 4Seven’s average daily Share of viewing on the VM platform being nearly two and a half times higher post reshuffle, while there were only relatively modest gains of less than a quarter on both DTT and Satellite. Even more pertinent, however, is the fact that when we look at 4Seven’s performance time-series in detail, there is a highly pronounced upward step-change in 4Seven’s Share of viewing on the VM platform at the precise time of its gain in VM EPG prominence, with no such step-change being evident on either the DTT or Satellite platforms where 4Seven’s EPG positioning has remained unchanged over the relevant timeframe.

This is certainly compelling evidence to highlight the continuing importance of EPG prominence to channel performance, and in the case of 4Seven, if we err on the side of caution and assume that its Share of viewing on the VM platform merely doubled as a direct result of the gain in EPG prominence, this still translates into an additional Individuals 4+ Average Audience of approximately 2,500. While this may not sound like much, it must be remembered that what this means is that every minute of every day 2,500 more viewers will (on average) be watching 4Seven as a direct result of the fact that it is now more visible on the VM channel list. If we were to translate this into the kind of ‘Big’ numbers that dominate online viewing reports, our analysis suggests that 4Seven stands to benefit to the tune of an extra 22 Million Hours (or 1.3 Billion Minutes) of viewing per annum.

So, yes, EPG prominence definitely still matters!

If you would like to receive the associated research notes to Dr Farid El-Husseini’s blog posts please email him directly on: farid.el-husseini@feh-mi.com.

Posted in 4Seven, Amazon, BARB, Channel List, Death of Television, DTT, EPG, EPG Prominence, EPG Reshuffle, EPG Viewing Impact, Forecasting, Freeview, Internet TV, Linear TV, Live TV, Netflix, Ofcom, PVR, Sky, SVOD, Tablets, Television, The Grand Tour, Total TV, TV in 2020, Virgin Media, VOD, YouTube | Leave a comment

Trends in Commercial Impacts – or How to Get Ahead in Television Advertising

eyeball-on-screenNot only has year-on-year quarterly BARB measured Total TV viewing (i.e. how many people, on average, are watching TV at any given point in time) in the UK risen for the first time in over 3 years from 8.25 million Individuals 4+ in 2015-Q2 to 8.30 million in 2016-Q2 (+0.6%), using a broader (and thus more robust) timeframe by comparing the year (i.e. 12 months) ending Aug-2015 with the year ending Aug-2016, we find that average Total TV viewing levels for Individuals 4+ have effectively remained stable (at around 8.80 million) over the last 2 years. Needless to say this is good news for the television industry!

That being said, looking back to the peak in Total TV viewing levels during the early years of the decade, there can be little doubt that there has been a significant downward adjustment, though television has retained its position as the best medium for quickly, effectively and (by no means least) verifiably reaching a mass audience. The recent news that Facebook has significantly overestimated how much video people have watched on its platform for the last two years is certainly a rather timely validation of the fact that, despite the perennial claims that TV is dead, advertisers have rightly retained their confidence in the power of television. As long as the demand is there prices will ultimately adjust to reflect changes in supply, and the fact is that despite the declines in viewing levels, TV net advertising revenues in the UK have risen consistently from £3.5 billion in 2012 to £4.1 billion in 2015 according to Ofcom. Nevertheless, while advertisers are clearly still willing to pay for the mass audience impact of television in an increasingly fragmented media landscape, it is interesting to speculate about how the amount of advertising actually being watched on television has changed over the last 5 years.

Focusing on the broadest trading demographic (Adults 16+) and looking at the last 5 years (i.e. 12-month periods) ending August, the first thing to consider is that the BARB measured consolidated (i.e. Live + 7-day timeshifted) Total TV audience for Adults 16+ has declined significantly every year between 2012 and 2015, though it now appears to have stabilised with no further declines in the year ending Aug-2016. Nevertheless, we are still looking at an overall decline of 7.9% over the period in question. On top of this we also need to consider the fact that while in the year ending Aug-2012 live viewing accounted for 90.2% of the Adults 16+ Total TV audience, this has now dropped to 86.6% for the year ending Aug-2016. It is important to remember that BARB does not count any viewing that is fast forwarded, and as it is not unusual for 80% or more of ads to be skipped this way in timeshifted viewing streams (interested readers may wish to read my blog post on this topic), this is not good news for commercial broadcasters wishing to get more eyeballs on their ad breaks.

All this considered, one might therefore reasonably expect the total volume of Commercial Impacts (i.e. number of 30 second ad breaks viewed) for Adults 16+ to have declined significantly over the last 5 years. The actual data, however, tells a different story and despite a 7.9% drop in the consolidated Total TV audience coupled with rising timeshifted viewing levels, the number of BARB measured Adults 16+ Commercial Impacts has only declined by 1.5% over the last 5 years, less than a fifth of the decline in Total TV.

So, how can such a seemingly paradoxical feat be achieved? The simplest way would be for the BARB measured commercial channels to increase the number of minutes of advertising shown per hour, but while some tweaking might be possible, regulatory restrictions generally prevent the UK’s commercial broadcasters from doing so, with most already operating at the legally prescribed limits. More effectively scheduling to optimise the live viewing levels of key programmes could also help reduce ad-skipping, though again the overall impact (given the already highly competitive nature of the UK television market) is likely to be small. Launching more Commercial Impacts trading channels and/or improving the content of existing ones would be another option, though there would also be the risk of significant cannibalization. Ultimately, whatever the underlying causality might be, if the Total TV audience isn’t growing then the only way to get more eyeballs on adverts is for the commercial broadcasters as a group to increase their Share of Total TV viewing at the expense of the BBC and those commercial channels (like the shopping channels) that do not trade in BARB measured spot advertising. In other words, they need to increase their Share of the shrinking Total TV pie, and this is indeed what has happened. In the year ending Aug-2012, the Commercial Impacts trading channels had an Adults 16+ Total TV audience Share of 62.7, but by the year ending Aug-2016 this had risen to 65.6. This translates into 235,000 more Adults 16+ watching the Commercial Impacts trading channels in 2016 than would have been the case had their collective Share remained at the 2012 level.

As for what has ultimately driven this growth, one might reasonably point to the fact that (with the London Olympics and the Queen’s Diamond Jubilee) 2012 was a particularly good year for the BBC and some subsequent adjustments in favour of the commercial channels would always have been likely. Increases in commercial multichannel content spend (which are well documented by Ofcom) are also likely to have played a significant role, but what really stands out as the most probable primary driving force (particularly when viewed in conjunction with rising programming budgets) is that there has been a substantial proliferation in the number of Commercial Impacts trading channels over the last 5 years. In the year ending Aug-2012 there were 248 BARB measured Commercial Impacts trading channels, but by the year ending Aug-2016 this had risen to 300, a 21% increase over 5 years. It is also important to appreciate that we are not just talking about relatively minor/obscure channels, but notable brands like: Drama, ITVBe, Spike, Tru TV, TLC, BT Sport 1, 2 & 3, ITV Encore, My5, Your TV and Lifetime, and while there will inevitably have been a significant amount of cannibalization, the net result is that the Commercial Impacts trading channels as a group have benefitted from a substantial increase in their overall Share of Total TV viewing over the last 5 years.

This, more than anything else, puts the BBC’s closure of BBC 3 as a linear TV channel in February this year into perspective. It is the exact opposite of what the BBC’s commercial rivals have been doing, and while the BBC must rightly put on a brave future facing face, there can be little doubt that the closure of BBC 3 was driven by an overriding necessity to save money and not the belief that any resulting enhancement in the BBC’s online presence among younger viewers would be able to compensate for the loss of a highly successful youth orientated television channel. In fact, youth focused online brands like Vice Media are recognising the benefits of enhancing their market reach by launching linear TV channels, with Viceland UK having just launched (19/09/2016) on Sky in a relatively prominent EPG slot (channel 153).

With this in mind, it is worth ending with another compelling statistic. Among the high value Adults 16-34 trading demographic, the Share of Total TV viewing of the Commercial Impacts trading channels (for years ending August) has risen from 69.6 in 2012 to 75.8 in 2016, a collective increase that is comfortably more than twice BBC 3’s Adults 16-34 Share of 2.8 in 2015, its last full year as a linear TV channel.

Anyone interested in launching another Commercial Impacts trading channel or two?

If you would like to receive the associated research notes to Dr Farid El-Husseini’s blog posts please email him directly on: farid.el-husseini@feh-mi.com.

Posted in Ad-Skipping, Adults 16-34, Adults 16+, Advertising Revenue, Adverts, BARB, BBC 3, Commercial Impacts, Death of Television, EPG, Facebook, fast-forward, Linear TV, Live TV, London Olympics, Ofcom, Television, Timeshifted TV, Timeshifting, Total TV, Total TV audience, Total TV Viewing, TV, Viceland UK, Viewing | Leave a comment

Expectations versus Reality: TV Viewing by Age Group

kids-watching-tv-2715Over the last decade in particular, our industry has been plagued by poor predictions resulting from an overestimation of the disruptive viewing impact of technological change. To counter this, it has been suggested that any new forecast should be accompanied by the forecaster’s predictions from the previous year. With this in mind, in my blog post from this time last year I noted that 2015 was likely to be: “another tough year for television, with the Individuals 4+ Total TV audience predicted to fall to 8.78 million in 2015 (-2.0%)”. In the event, the actual 2015 Total TV audience in the UK was 8.75 million, down 2.3% on 2014. Not too shabby, even if I do say so myself!

As predicted, this also constitutes a notable slowing in the decline of UK television viewing levels over the last few years, and this is despite the fact that there is likely to have been considerable downward pressure on Total TV viewing levels in 2015 with both the warmest December and highest Employment Rate since records began. It is noteworthy that despite a decade of potentially disruptive technological innovations (with the proliferation of PVRs, internet based VOD/Catch-up services, tablets and smartphones) the BARB measured Average Daily Minutes of television viewing for Individuals 4+ in 2015 (at 216.4 minutes) are practically the same as they were in 2005 (at 219.0 minutes), giving some cause for optimism about the long term future of television.

Among those predicting the demise of television, however, a future scenario based around the changing viewing habits of younger viewers has been gaining currency. It is pointed out that while the disruptive viewing impact of technological change has been more marginal for older age groups, the impact has been much more pronounced for children and young adults (with the latter often being referred to, rather vaguely, as ‘Millennials’). It is then argued that as they age, the younger viewers of today will largely retain their much more limited television viewing habits, resulting in a sustained decline of overall television viewing levels going forward.

While it is certainly not implausible that our current viewing habits will have an influence on the viewing choices we make as we age, there is little to support the view that our habits will not also alter significantly with age. It has always been the case that older viewers watch significantly more television on average than their younger counterparts. So, even if we focus on relatively narrow age groups, it is true to say that in both 2005 and 2015 Children (4-15) watched less television on average that 16-24s, who in turn watched less than 25-34s, and so on. What has changed, however, is that in 2015 younger viewers watched significantly less television than they did in 2005, while older viewers generally watched significantly more. So, comparing Average Daily Minutes of television viewing in 2005 with 2015 we have that: Children (4-15) are down by 17.6% (135.0 vs 111.2), 16-24s are down by 21.2% (157.2 vs 124.0), 25-34s are down by 22.4% (208.4 vs 161.8), 35-44s are down by 11.4% (219.5 vs 194.4), though 45-54s are down by only 1.0% (241.9 vs 239.4), while 55-64s and 65+s are up by 12.5% (263.6 vs 296.7) and 13.6% (300.9 vs 341.9) respectively.

There are likely to be a number of factors that have resulted in this shift. Firstly, it is important to appreciate that since 2005 the digital switchover has meant that everyone (most notably older viewers who are generally later adopters of new technologies) now has access to multichannel television which, with the proliferation of PVRs and HD TVs, has greatly enhanced the quality, choice and convenience of the television viewing experience. This, combined with the exceptionally cold weather and low Employment Rate, certainly helps explain the exceptionally high levels of overall TV viewing over the 2010 to 2012 period, as well as the more recent declines over the last 3 years which have been characterised by milder weather and a strong economy. For younger viewers, however, it is also the case that BARB measured TV viewing levels have been declining much more persistently and were already starting to do so at a time when TV viewing among older age groups was at a record high during the early years of this decade. The most plausible explanation is that this has indeed been caused by the growing disruptive influence of technological change, with younger viewers spending an increasing amount of time using connected small/second screen devices instead of watching television on the big screen.

On the other hand, at least some of the time not spent in front of a TV set will be used to consume both live and catch-up TV content on a PC, tablet or smartphone, and as BARB’s Project Dovetail progresses the eventual incorporation of this viewing as part of the consolidated television audience figures will at the very least begin to mitigate any continuing future declines. That being said, the fundamental question remains of whether or not we are moving towards a fundamental paradigm shift that will see a continued youth driven decline in BARB measured TV viewing levels in the coming years, or are moving towards a new equilibrium that will see viewing levels stabilise. Though only time will ultimately tell, there is certainly some early trend based evidence that TV viewing is beginning to level out for the younger age-groups.

Another piece of evidence worth considering is how younger and older audiences choose to consume what they watch on their TV screens. BARB’s consolidated audience figures currently include all Live and 7-day timeshifted (whether PVR recorded or internet VOD based) viewing though any TV set or associated TV set connected device (be it a Sky+ box or games console), and we already know that according to the consolidated BARB figures young viewers on average watched significantly less in 2015 than they did in 2005 while older viewers watched significantly more. Based on this, one might also reasonably expect the way younger and older audiences distribute their TV set based viewing between Live only and 7-day timeshifted to have grown apart over the last 10 years. With this in mind, it is noteworthy that in 2005 98.6% of consolidated BARB measured Individuals 4+ TV viewing was Live only, with little variation across the different age groups. Unsurprisingly, with the proliferation of PVRs and VOD catch-up services, only 86.8% of consolidated BARB measured Individuals 4+ TV viewing in 2015 was Live only. However, contrary to expectations, there does not appear to have been a considerable polarisation in the amount of TV set based Live only versus 7-Days timeshifted viewing by age group. So, we find that in 2015 Live only TV set based viewing accounted for 85.0% of the Children (4-15) consolidated audience, for 16-24s it was 83.1%, for 25-34s it was 80.4%, for 35-44s it was 83.6%, for 45-54s it was 85.7%, for 55-64s it was 88.1%, and finally for 65+s it was 91.6%. If we are indeed heading towards a youth driven paradigm shift rather than a new equilibrium, one might well have expected the younger and older audiences to be much further apart.

In conclusion, despite a growing number of screen based activities competing with television, as well as numerous opportunities for timeshifted viewing of TV content, there does appear to be a substantial underlying demand for consuming Live schedule based programming on a big TV screen, even among younger audiences. As I have said many times before, the staying power of television should not be underestimated. It is a compelling form of entertainment which, despite significant challenges, is likely to remain an important element in the audio-visual media consumption habits of all ages for the foreseeable future.

If you would like to receive the associated research notes to Dr Farid El-Husseini’s blog posts please email him directly on: farid.el-husseini@feh-mi.com.

Posted in 2020 Forecast, Age Groups, BARB, Catch-Up TV, Children, Death of Television, Digital Switchover, DVR, Employment Rate, Forecasting, Future TV, HD, High Definition, Internet TV, Live TV, Millennials, Project Dovetail, PVR, Smart Phones, Smart TV, Tablets, Television, Timeshifted TV, Timeshifting, Total TV, Total TV audience, Total TV Viewing, TV, TV in 2020, Viewing, VOD, Weather | Leave a comment

Forecasting the Total TV Audience in 2020

TTV_2020Annual BARB measured television viewing levels in the UK have fallen again significantly for the second year running, further highlighting the end of the exceptionally high and stable levels of Total TV viewing that were a hallmark of the new BARB panel over the 3 year period from 2010 to 2012. Having fluctuated at just over 240 minutes a day, Total TV viewing (i.e. both live and catch-up combined) for Individuals 4+ fell to 231.8 minutes per day in 2013 (-3.7%) and has fallen again to 220.6 minutes per day in 2014 (-4.8%). The growing UK population, however, has meant that the Total TV audience (i.e. how many people, on average, are watching TV at any given point in time) has declined somewhat less in percentage terms, falling from 9.59 million Individuals 4+ in 2012 to 9.30 million in 2013 (-3.0%) and then 8.97 million in 2014 (-3.6%).

The obvious questions to ask are: why is this happening, and where are we headed? The first thing to note is that through a combination of the general economic uncertainty and exceptionally cold winters in 2010 and 2011, followed by the ‘Jubilympics’ and an unusually wet summer in 2012, the 2010-2012 period must be seen as one where the Total TV audience was particularly high. After all, between 2009 and 2010 the Individuals 4+ Total TV audience rose by 8% from 8.89 million to 9.60 million (and then persisted at this level through to 2012), and while the BARB panel change in Jan-2010 may well have contributed to this (through a more accurate reflection of the evolving television landscape than the previous BARB panel), there is little reason to doubt that it also reflected a genuine underlying increase in the Total TV audience at the time. However, given the unusual nature of the 2010-2012 period, an eventual downward adjustment was always going to be likely. That being said, there can also be very little doubt that the increasing use of second screen devices (most notably tablets) to watch both catch-up and live television will have contributed significantly to the decline in BARB measured TV viewing levels (particularly among younger viewers), as viewing on such devices is not currently included in the BARB data. The good news is that BARB’s Project Dovetail has been making significant progress towards measuring and reporting viewing on such devices, though the complex nature of the task means that we are unlikely to see this reflected in the consolidated BARB viewing figures before 2016 at the earliest. It must also be acknowledged that Project Dovetail will not be able to counteract all the downward pressure on the BARB measured television audience, as opportunities to watch content outside the catch-up window as well as VOD films and material from broadcasters’ archives that fall beyond the scope of BARB’s Gold Standard consolidated TV audience metric continue to grow.

These are therefore clearly challenging times for the television broadcasting industry, and the latest figures will undoubtedly fuel the perennial speculation about the imminent demise of television. There has certainly been no shortage of rather extreme and largely unfounded claims, and as any serious analyst of television viewing habits will confirm, when it comes to speculating about the future of television it is (rather depressingly) far too often the case of not letting the actual facts get in the way of a good story about the death of television.

So, in the interest of letting the actual data (rather than new media pundits) do the talking for a change, what does one of the most relevant datasets (i.e. the BARB viewing data) tell us about the likely trajectory of the Total TV audience in the UK? Where are we likely to be in 2020? To answer this admittedly difficult question we’ve been developing a Total TV forecasting model built around the trends in the average daily minutes of viewing by age-band demographic (how much TV we watch a day and the rate at which this has been declining is highly age dependent) combined with ONS UK population projects (the UK population is aging but also growing) to generate a set of Total TV audience forecasts to 2020.

In the short term (with Project Dovetail unlikely to be implemented before 2016 at the earliest) all the trend based evidence is pointing towards another tough year for television, with the Individuals 4+ Total TV audience predicted to fall to 8.78 million in 2015 (-2.0%). To predict further into the future, however, we need to make some additional assumptions, and the best way to define where we are likely to end up is to forecast the likely outcomes based on two polarised positions to define a lower and upper forecast range, with the most probable outcomes being somewhere in between. Under the pessimistic lower forecast range we see the strong downward trends persisting through to 2020, despite the underlying efforts by BARB and the broadcasters to counteract this. This would see the Total TV audience fall to 7.96 million. The more optimistic upper forecast range, on the other hand, would suggest that through a combination of Project Dovetail and a persistent underlying demand for schedule based television (both live and catch-up, and irrespective of the platform or device on which it is consumed) there is a reasonable chance that we could actually see a significant recovery in the Total TV audience levels. This would see the Individuals 4+ Total TV audience rising from a predicted low of 8.78 million in 2015 to 9.06 million in 2020.

Based on the current evidence, the likelihood is that we will probably end up somewhere in between the upper and lower forecast ranges, but what to my mind certainly stands out the most is that even under the pessimistic lower forecast range we are still predicted to be in a position where in 2020 just under 8 million people in the UK are, on average, watching a combination of live and catch-up television at any given point in time. That is a likely minimum average of 8 million people in the UK watching TV every minute of every day in 2020, or to use one of those large numbers that new media pundits like to quote as evidence that VOD streaming services are eclipsing television, that is 4.2 trillion minutes of BARB measured television viewing. To conclude, while it is certainly true to say that television is evolving and facing significant challenges, this does not (as so many seem to believe) automatically translate into conclusive evidence that it is in decline. In fact, while it is difficult to predict the future, the actual direct evidence that we do have from the BARB panel suggests that television will prevail.

If you would like to receive the associated research notes to Dr Farid El-Husseini’s blog posts please email him directly on: farid.el-husseini@feh-mi.com.

Posted in 2020 Forecast, BARB, BARB Panel, BARB Panel change, Catch-Up TV, Death of Television, Forecasting, Project Dovetail, Tablets, Television, Total TV, Total TV audience, Total TV Viewing, TV, TV in 2020, Viewing, VOD | Leave a comment

Total TV Viewing Trends (2010 – 2013)

TTV_TrendsAnnual BARB measured television viewing levels in the UK have fallen significantly for the first time since the advent of the new BARB panel in January 2010. Having fluctuated at just over 240 minutes a day during the three year period from 2010 to 2012 inclusive, average daily total television viewing (i.e. both live and timeshifted combined) for Individuals 4+ fell to 231.8 minutes in 2013 (down 8.8 minutes = 3.7%). As one would expect, the decline was even more pronounced when looking at live viewing only, with average daily live television viewing falling from 216.4 minutes in 2012 to 205.6 minutes in 2013 (down 10.8 minutes = 5.0%), having previously only dropped by around 1.9% per annum from 2010 to 2012.

Is this the beginning of the end for traditional ‘linear’ television? Are we inevitably moving to a world of small screens and personalised schedules where people getting together to watch a live television broadcast on the main living room TV screen is reserved for major sporting events and talent/game shows? While any significant decline in BARB measured TV viewing levels is a cause for concern, it certainly isn’t time to hit the panic button just yet. At an average of 232 minutes per day BARB measured TV viewing levels remain high, and are still comfortably above the 225 minutes per day at which the old BARB panel peaked back in 2009. While few would disagree that the increasing use of second screen devices (most notably tablets) to watch both catch-up and live television will have contributed to the decline in BARB measured TV viewing levels, as viewing on such devices is currently not included in the BARB data, the good summer weather in 2013 (not the mention the absence of mass audience events like London 2012) as well as the growing optimism about the economy (with more people able to afford nights out and foreign holidays) will also have played a role. Nevertheless, as I noted in a previous research note back in November 2012: “Whether we see a significant decline in measured total TV viewing levels (i.e. live and timeshifted combined) in the coming years will, rather ironically, largely depend on BARB’s ability to capture TV viewing on non-TV devices”. The good news is that BARB has been making significant progress towards measuring and reporting viewing on such devices, and while timescales can be rather elastic the current target is to start reporting TV viewing on desktops/laptops and tablets by the summer of 2014.

Sceptics, however, would still point out that while this might help mitigate the decline of BARB measured total TV viewing levels, it would do nothing to arrest the decline in the levels of live TV viewing. In fact, viewing on laptops and tablets is even more likely to be timeshifted catch-up viewing, though one can also watch live on such devices. They would also be able to point to the fact that as the take-up of PVR and VOD enabled devices has proliferated, the proportion of BARB measured total TV viewing that is live (as opposed to catch-up) has fallen consistently from 92.9% in 2010 to 88.7% in 2013. With up to 80% of adverts being skipped/fast-forwarded in timeshifted viewing streams, there is a risk that if such a decline were to continue unabated, then advertisers would lose confidence in TV’s ability to deliver mass audience ratings. Rather than continue chasing a dwindling supply of TV based Commercial Impacts and putting up with the associated rise in CPTs, they would eventually allocate more of their advertising budgets to other forms of advertising, spelling disaster for those commercial broadcasters that are too reliant on TV advertising revenues. That this is something which the TV industry is taking seriously, can also be said to be reflected in ITV’s increasing shift towards a more subscription based business model, most notably in its recent deal with Sky, whereby the new channel ITV Encore will be exclusive to Sky combined with the wider availability of ITV’s channels and programmes on all of Sky’s platforms including Sky Go, Sky Store and NOW TV.

Being cautious and diversifying one’s income stream, on the other hand, is simply good business practice, and there will always be those who watch very little live television once they have access to robust and convenient timeshifting technologies. What really matters, however, is that the hard empirical evidence to date suggests that there is a limit to how much TV viewing the average UK Individual is prepared to timeshift. The best way to appreciate this is to look at the live TV viewing levels on a mature platform where timeshifting is an integral part of the viewing experience. Sky+ fits the bill perfectly, having been one of the UK’s first PVR platforms, and with the latest generation of Sky+ boxes also incorporating internet connectivity and the associated access to VOD. In 2010 82.9% of total TV viewing (i.e. live and timeshifted combined) on the Sky+ platform was live and this did fall quite sharply to 80.8% in 2011. Over the 3 year period from 2011 to 2013, however, the proportion of live viewing on the Sky+ platform remained stable, holding at 80.8% of Sky+ total TV viewing in 2012 and only dropping marginally to 80.1% in 2013. This stability in the proportion of live viewing on the Sky+ platform over the last 3 years is particularly pertinent, as it coincides with a period of increasing internet connectivity for the platform, with even more VOD content and the ability of connected Sky+ users to catch-up on missed shows whether they remembered to record them or not.

The moral of the story is that live TV viewing is likely to continue to dominate even in an environment where everyone has ready access to a variety of PVR and VOD enabled devices, and while the way we are watching television is changing, our fundamental need for a shared live viewing experience in front of the main living room television set has remained the same. As I have pointed out on many occasions during my career as a broadcast media consultant, the empirical evidence does not support the perennial predictions of the demise of television.

If you would like to receive the associated research notes to Dr Farid El-Husseini’s blog posts please email him directly on: farid.el-husseini@feh-mi.com.

Posted in Ad-Skipping, Advertising Revenue, Adverts, BARB, Catch-Up TV, Death of Television, fast-forward, ITV, Live TV, PVR, Sky, Sky Platform, Sky Plus, Tablets, Television, Timeshifted TV, Timeshifting, Total TV, TV, Viewing, VOD | Leave a comment

EPG Prominence Back in the Spotlight

EPGThe long awaited communications strategy paper (published by the DCMS at the end of July) has reconfirmed the government’s support for the abolition of PSB retransmission fees, which was also the topic of my previous research note. Another topic of interest, however, is the government’s commitment to ensuring ‘that the PSBs retain prominence on EPGs by updating the existing regime to reflect technological developments and to make it flexible to adapt to future changes’ with the cost of not doing so (evaluated in the accompanying impact assessment) being put at a £198m ‘loss in UK and European originated and independent content investment’. 

This has put the issue of EPG prominence back in the spotlight, and is likely to be a point of some contention in the forthcoming consultation. The PSBs will naturally be in favour of any legislation securing their future prominence as EPGs evolve in an increasingly fragmented and on-demand viewing environment, while the (non-PSB) commercial broadcasters will understandably be against extending any legislation that could be seen as distorting the market in favour of their PSB rivals.

What is unlikely to be in doubt, however, is the growing consensus about the very significant value that can be attached to EPG prominence. My recent work for Ofcom on the audience impact of EPG prominence, which reviews the recent empirical evidence from 2010 to 2012, highlights how channel operators who don’t manage to secure prominent EPG slots for their channels almost always lose out. To emphasise this point, it is always good to look at a particularly interesting and recent example, and MTV’s move from the Music to a prominent slot in the Entertainment section of the Virgin Media EPG (from slot 311 to 134) on 31/05/2013 stands out, as MTV made a similar move on Sky in February 2011, the impact of which I’ve also covered in a previous research note.        

It is certainly the case that MTV’s Share of viewing on the Virgin Media platform increased by a dramatic 357% (from 0.085 to 0.387 Share points) in the 6-week before versus the 6-week period after its gain in EPG prominence, resulting in a statistically significant structural break in its daily Share time series at the time of the reshuffle. This is in stark contrast to MTV’s daily Share time series on Sky, which remained statistically stable over the period in question.

There is, however, a complicating factor to consider as MTV also moved from the L to the M+ package as part of its move into the Entertainment section of the Virgin Media EPG. With lower tier M+ subscribers being able to watch MTV for the first time, it is important to assess how much of MTV’s performance boost can be attributed to its gain in EPG prominence and how much to its increased availability. As it happens, Cartoon Network also recently (17/01/2013) moved from the L to the M+ package, but (crucially) without changing its EPG slot. The increase in Cartoon Network’s availability resulted in a doubling of its Virgin Media audience, suggesting that (as MTV’s audience more than quadrupled) at least two-thirds of MTV’s 357% performance boost on the Virgin Media platform can be attributed to its gain in EPG prominence.

For any remaining sceptics it is worth quickly mentioning one other recent example, namely that of Drama, UKTV’s latest channel, which launched in early July 2013 in slot 20 on Freeview and slot 291 (at the bottom of the Entertainment section) on Sky. Following a deal with PBS, however, Drama managed to move to slot 166 on the Sky EPG within a few weeks of its launch. This gain in Sky EPG prominence coincided with a doubling of its Share of viewing on the Sky platform, while its performance on Freeview (where it remained in slot 20) remained statistically stable.   

The underlying moral of the story (and forgive me for stating the obvious) is that whatever the item you are selling, be it a new line of perfume/clothing, a TV channel or a piece of VOD content, being prominently displayed in the shop-front will produce results.

If you would like to receive the associated research notes to Dr Farid El-Husseini’s blog posts please email him directly on: farid.el-husseini@feh-mi.com.

Posted in Content, DCMS, Drama, EPG, EPG Prominence, EPG Reshuffle, EPG Viewing Impact, Freeview, Impact Assessment, MTV, PBS, PSB, Retransmission Fees, Sky, Sky Platform, Television, TV, UKTV, Viewing, Virgin Media, VOD | Leave a comment

The Retransmission Fees Debate: Terrestrials vs. Sky

Satellite_DishesThe on-going row over retransmission fees (also often referred to as carriage fees) between Sky and the terrestrial PSBs (public service broadcasters) began when former BBC director general Mark Thompson argued that Sky should start paying for carrying PSB channels in his MacTaggart lecture in August 2010. By October the following year all of the remaining PSB broadcasters had come out in support of a retransmission fees review, with the whole issue being given an added sense of urgency by a BBC commissioned report suggesting that, if anything, retransmission fees were likely to soar rather than decline in the coming years. With budget cuts looming, and the BBC, ITV, Channel 4 and Channel 5 paying Sky annual fees of £9.9m, £8.1m, £5.0m and £1.4m respectively for carrying their channel portfolios, it is hardly surprising that this was fast becoming a major issue.

In March 2012, however, Sky made the unexpected announcement that it was cutting the BBC’s carriage fees by 40% from July 2012, and would reduce them by another 27% from 2014, with the other PSB broadcasters also receiving major carriage fee reductions. One might have expected this to result in a significant softening of the opposing views, but it soon became apparent that the terrestrials were determined to push through a no-fees scenario at the very least, with Adam Crozier (ITV’s chief executive) and John Tate (BBC director of policy and strategy) both welcoming the Sky carriage fee reductions but making it very clear that they did not go far enough. Since then the debate has intensified with Culture minister Ed Vaizey coming out in favour of the terrestrials at the Oxford Media Convention in January 2013, calling on Sky to stop charging the BBC, ITV, Channel 4 and Channel 5 retransmission fees or face potential government intervention, though he was also quick to point out that the government would not rush into “a regulatory solution” and he believed that there was “no reason the market shouldn’t be able to work out a fair and equitable solution as things stand.”

Needless to say, no such equitable solution has yet materialised, though there has been a lot of sabre rattling by both sides in the last few months. Sky has launched a vigorous defence of its position insisting that the fees it charges the terrestrials are “platform contribution charges” to cover the cost of investing in and running the Sky platform rather than “retransmission fees”, and are thus no different from the utility bills or rent that the terrestrial broadcasters have to pay as part of their normal operating costs. Sky also makes the point that as the terrestrial channel portfolios are free-to-air on the Sky platform, whereby viewers with lapsed subscriptions (or those taking its non-subscription ‘Freesat from Sky’ service) can still access these channels, they aren’t entitled to a share of its pay-tv revenues. The terrestrials, on the other hand, argue that (free-to-air or not) their channel portfolios are an integral part of Sky’s offering and account for such a large proportion of viewing on the Sky platform that many subscribers would simply choose to leave the platform if they could no longer access the terrestrial channels through their Sky boxes and EPGs. As Sky benefits significantly from carrying the terrestrial channels, it is only fair, so the argument goes, that they should pay the terrestrials rather than the other way round, with a zero carriage cost approach being the very least that should be on offer. It is also often pointed out that internationally, including in the US, it is the platform operators who pay the major networks a retransmission fee and not vice versa. The terrestrials also make the point that they are much more likely to use the money they would save (or even earn) to fund domestic productions, although Sky would argue that it too has invested heavily in UK originated content in recent years.

So, what is one to make of these polarised positions and what is the final outcome likely to be? Regulatory measures aside, much will of course depend on the clout each side has, and with this in mind it is interesting to note that despite Sky’s relatively recent concessions the terrestrials (most notably the BBC) have remained bullish in their calls for retransmission fees to be scrapped altogether, with this position often being presented as the bare minimum they would find acceptable. Is this confidence justified? Looking at the performance of the 5 main terrestrial PSB channels (BBC1, BBC2, ITV, Channel 4 and Channel 5) on the Sky platform since 2003, one would certainly have to say that it is.

The combined Individuals 4+ Share of the 5 main terrestrial PSB Channels on the Sky platform grew consistently year-on-year from 36.7 in 2003 to 43.5 in 2010, an increase of 6.8 Share points (up 18.5%). The growing dominance of the terrestrial PSBs on the Sky platform over the 2003 to 2010 period is even more apparent when we include the viewing to their spin-off channels (i.e. BBC3, ITV2, E4, 5*, BBC4, etc.), with the combined Individuals 4+ Sky platform Share of the main PSB’s and their spin-off channels (referred to from here on as the terrestrial PSB channel portfolios) rising from 44.2 in 2003 to 56.4 in 2010, an increase of 12.2 Share points (up 27.6%).

This was of course a time when the terrestrial PSBs were under great pressure, with the accelerating pace of the digital switchover threatening to rapidly erode their dominant Share of the UK television market, as ever more viewers switched from an analogue terrestrial environment (where the 5 main terrestrial PSBs were the only available channels) to a digital multichannel one, where the choice ran from a few dozen to hundreds of channels. Their strategy was to fight back by launching more digital spin-off channels and commissioning more compelling and engaging content, designed to help win back viewers in an environment of ever increasing choice. The strategy paid off and largely mitigated the negative impact of the digital switchover on their channel portfolios across the UK television market as a whole, and in an already fragmented environment like the Sky platform actually resulted in the substantial growth in Share over the 2003 to 2010 period noted above.

Faced with this growing dominance of the main PSBs and their free-to-air spin-off channels on the Sky platform, it was only a matter of time before Sky fought back with a strategy designed to drive viewers back to its pay-tv channel services. On the 1st of February 2011 it launched Sky Atlantic as part of a major Sky EPG reshuffle that was specifically designed to put pay-tv channels in more prominent EPG slots, including Sky’s recently acquired Virgin Media channels of which Living (re-branded as Sky Living) was moved into a slot on the first page of the Sky EPG. This was followed in June 2011 by the announcement it would increase spending on original UK television programming to £600m a year over the next three years – an increase of more than 50%. Unsurprisingly, 2011 therefore also marked the first year that the Share of the terrestrial PSB channel portfolios actually fell (by 0.5%, down 0.3 Share points to 56.1) on the Sky platform, after having grown consistently at a CAGR of 3.5% since 2003. There was a further decline in Share in 2012 (down 0.6 Share points to 55.5, a fall of 1.1%), despite the fact that the BBC would have benefitted significantly from the London Olympics, though a significant part of that gain would have come at the expense of the other PSBs. Looking at Jan-to-May 2013, however, there is clear evidence that this recent downward trend in the Share of the terrestrial PSB channel portfolios on the Sky platform is petering out, with the Jan-to-May 2013 Share of 55.0 only being 0.2% lower than the Jan-to-May 2012 Share of 55.1.

Despite making some modest inroads, it would therefore be true to say that Sky has been unable to dislodge the terrestrial PSBs from their dominant position on the Sky platform, with their channel portfolios currently still accounting for well over half (55%) of Sky platform viewing. With the government also coming out in support of retransmission fees for the terrestrial PSBs being scrapped, one would have to give them the edge in this row eventually being settled in their favour, though one should also never rule Sky out when it comes to standing their ground. Whatever the outcome, the underlying drive by both Sky and the terrestrials to retain their market positions by investing in innovative new content and technologies will continue to benefit consumers, with the UK television market remaining one of the most innovative and advanced in the world.

If you would like to receive the associated research notes to Dr Farid El-Husseini’s blog posts please email him directly on: farid.el-husseini@feh-mi.com.

Posted in BBC1, BBC2, carriage fees, Channel 4, Channel 5, Content, Digital Switchover, EPG, EPG Prominence, EPG Reshuffle, ITV, London Olympics, PSB, PSB Content, Retransmission Fees, Sky, Sky Platform, Spin-off Channels, Television, Terrestrial PSB Channels, TV, TV Scheduling, Viewing | Leave a comment

Ad-Skipping Drama: House versus Downton

Ad-skippingIn my last research note I compared the levels of live versus timeshifted viewing for medical drama House, going out on Sky1, and period drama Downton Abbey, going out on ITV1 (now of course rebranded to just ITV). With a later weekday slot, a more niche audience and a pay-tv broadcast (where PVR/DVR penetration is significantly higher), one would certainly have expected House to have a much lower proportion of live viewers than Downton, with its earlier Sunday slot, broader demographic appeal and free-to-air broadcast. Nevertheless, with Downton averaging a live audience level of 75%, the fact that on average only 25% of the consolidated audience of the premier UK showings of the final season of House was live, did come as a surprise.

As a much higher proportion of adverts are skipped in timeshifted viewing streams, the obvious follow-on question is what impact this is likely to have on ad-break viewing levels, and one can certainly get a good idea by analysing the minute-by-minute live versus timeshifted audience of an episode from each of the drama series in question.This is also a rather topical issue with Fox and other major US broadcasters currently embroiled in a legal battle with Dish Network over its ‘Hopper’ DVR service, which, rather than just giving viewers the usual ability to skip adverts by fast-forwarding them, actually has a dedicated ‘AutoHop’ ad-skipping feature.

Starting with House, and focusing on the UK premier showing of the final episode (Thursday, 24/05/2012, 22:00-22:56) on Sky1, which at 37% got the highest proportion of live viewers for the series, we find a stark contrast between the viewing levels of ad-break minutes in the live versus timeshifted viewing streams. It is true that the 3 centre ad-breaks are marked by clear downturns in both the live and timeshifted viewing streams, but whereas the downturns in the live viewing stream are small, with only around 6% of viewers switching channel (or putting the kettle on, etc., where BARB panel members are diligent enough to unregister their presence for the short time they’re away from the television), around 83% of viewers fast-forward over the ad-breaks in the timeshifted viewing stream. Overall, with over two-thirds of viewing being timeshifted (and it must be remembered that this was even higher for the other first-run episodes) this means that at best the average ad-break minute in the premier showings of House got significantly less than half the viewers (only 44%) of the average programme minute.

It is a similar story for Downton Abbey, where the 5 centre ad-breaks of the series 3 finale (Sunday, 04/11/2012, 21:02 – 22:29) on ITV are marked by clear downturns in both the live and time-shifted viewing streams. As one would expect, the downturns in the live viewing stream are small, with only around 4% of viewers switching channel or leaving the room during the ad-breaks, but this rises to around 75% of viewers skipping the ad-breaks in the timeshifted viewing stream. The main difference with House, however, is that a much higher proportion of the Downton audience watched live, with the overall impact being that the average Downton Abbey ad-break minute still managed to get over three-quarters (i.e. 79%) of the average Downton Abbey programme minute audience.

So, does this mean that the traditional TV spot advertising model is under threat with millions of pounds in potential advertising revenue being lost as viewers make increasing use of timeshifting technologies to skip over the adverts? While it is good to err on the side of caution, and many broadcasters have indeed been aiming to diversify their income streams and reduce their reliance of spot advertising, the TV advertising market has remained strong despite the economic slowdown, and it is likely that, despite all the challenges and stiff competition from other media, television will continue to deliver the high levels of exposure that advertisers desire and find difficult to obtain from any other source. There is a reason why so many online-only businesses choose to advertise on television!

For a start, as discussed in one of my previous notes, all the evidence to date suggests that we are not likely to move much beyond the 20% to 25% mark when it comes to the proportion of our total TV viewing that we choose to timeshift over the next 10 years. As we saw with House, this can of course be much higher for specific programmes, though it must be kept in mind that some of our timeshifted viewing will be in addition to, rather than a substitute for, our live viewing, thus partially mitigating any associated loss in advertising revenues. It must also be kept in mind that a decline in the overall volume of commercial impacts does not necessarily imply a reduction in total TV advertising revenues. It can be argued that, like with any other commodity, depending on how reactive prices are to changes in the quantity being supplied, it is possible that a reduction in the total volume of commercial impacts could actually result in a proportionally higher increase in price (cost per thousand), thus potentially resulting in an increase, rather than a decrease, in total TV advertising revenues. Indeed, a relatively recent study commissioned by Ofcom suggests that this might actually be the case (see report), and although this has proved somewhat controversial (see supplementary report), most experts would at least agree that the TV advertising market has proven itself to be resilient during both economically and technologically challenging times.

The true economic impact of ad-skipping is likely to be more subtle. Sky for example, with its primary reliance on subscription revenues can readily afford to schedule a valuable first-run showing of a key asset like House in a slot that is unlikely to optimise its live audience levels. As long as plenty of people watch the show, whether live or timeshifted, Sky benefits from the exposure this gives to its pay-tv platform, and in the event House did very well in terms of its consolidated audience figures, with the vast majority choosing to timeshift their viewing. When it comes to a free-to-air broadcaster/channel, however, with a much heavier reliance on spot advertising revenues, effective scheduling and promotion (including social media) to optimise the live viewing levels of any key first-run assets is likely to become much more important. As the high levels of ad-skipping in our House case study demonstrate, getting it wrong could prove to be a rather costly mistake to make for any broadcaster relying on advertising rather than subscription revenues as their primary source of income.

If you would like to receive the associated research notes to Dr Farid El-Husseini’s blog posts please email him directly on: farid.el-husseini@feh-mi.com.

Posted in Ad-Skipping, Advertising Revenue, Adverts, AutoHop, BARB, Dish Network, Downton Abbey, Drama, DVR, fast-forward, Fox, Future TV, Hopper DVR, House, ITV, Live TV, Ofcom, PVR, Sky, Social Media, Television, Timeshifted TV, Timeshifting, TV, TV Scheduling, Viewing | Leave a comment