The State of Media and Entertainment Streaming 2016
The key word to describe the evolution of the media landscape over the past year is "fragmentation." 2015 saw both the fragmentation of audiences, with more content being viewed on a more diverse array of devices at different times, and the fragmentation of user experiences, as audiences continued to adopt multiple content platforms.
Clear evidence of audience fragmentation came in the form of the diminishing audience for live content and in significant changes in the ways the audience was consuming content.
Viewers Moving Away From Live
One of the key indicators for the change in audience viewing habits was the significant drop in live audience figures for several of U.K. television's Saturday night staples. ITV's The X Factor, which at its peak in 2010 had 14 million live viewers, had episodes in November 2015 that managed to attract an average audience of only 5.6 million live viewers. The trend was not restricted to commercial television, however, as one of the BBC's biggest shows, Doctor Who, suffered a similar decline in ratings on Saturday night, dipping as low as 3.7 million live viewers, compared to 7 million at its peak.
The overnight ratings alone only tell part of the story. There are millions of viewers who watch later via catch-up services, recordings on their set-top boxes, or on catch-up channels. In the case of both these programmes, if you take into account catch-up figures, the total audience jumps by an average of almost 2 million. This still points to a significant drop in total viewership, and a change in ratings methodology might be the reason why.
The ratings system used by the U.K.'s Broadcasters' Audience Research Board (BARB), which surveys 5,000 British homes 24/7, seems not to be taking into account the way content is being consumed. The BARB ratings only count the views on catch-up services via a TV—not on tablets or other devices. So the question is, how many viewers are these figures simply missing?
Further data suggests the average volume of live TV viewing has fallen to 193 minutes per person per day,down 12 minutes from 2014 and 30 minutes from its peak in 2010. As expected, time-shifting as a whole, including both recorded viewing and 7-day VoD catchup, has grown to make up about 12% of viewing and now represents almost a quarter of TV watched by those aged 25 to 34.
The idea that viewing habits are undergoing a fundamental change is nothing new, but the shift away from live viewing is reaching a tipping point. Broadcasters, advertisers, and producers are hurrying to adapt to the fragmentation of platforms and devices and to find commercial models that work on all platforms in all eventualities.
Most interesting is that television networks seem to be struggling to create programming that must be viewed live. The only programme in the U.K. that seems to buck the declining viewership trend is the BBC's Strictly Come Dancing, which pulls in an average of about 8.4 million viewers when it airs live on Saturdays, but only adds a million viewers in the 7 days after broadcast. This suggests that a deeper audience engagement helps make programmes "essential" live viewing; they must be seen live, or otherwise they'll be spoiled by social media.
Obviously dramas such as Doctor Who and entertainment shows such as The X Factor have somehow lost this spoiler factor, and must now struggle to regain it.
It's not just the fragmentation of the audience across devices and the move to on-demand we must consider, but also the degree of platform fragmentation, particularly when there are signs of the number of platforms reaching saturation point. When does a wealth of choice become simply a glut of options? An indicator of this potential saturation occurred when the BBC iPlayer saw its slowest ever growth, as viewer figures increased by just 3.5% year-on-year for the first half of 2015. In the previous 12 months (2013–2014), the growth was more than 15% In fact, March 2015 saw the first month-on-month fall since the launch of the iPlayer service in 2007, with TV-only viewers down 7% to 230 million. This seems to be mainly due to an increase in viewer choice in the market and the possibility that iPlayer has reached its zenith of audience attraction.
VOD Services on The Rise
Consultancy firm IHS estimates that about 5% of total global TV revenue (including public TV and broadcast advertising revenues) is attributable to online video services. From 2009 to 2014, global pay TV revenues increased at a compound annual growth rate of 7.3% and are expected to continue to grow over the next 5 years. So there is still plenty of growth in the pay TV market. But how have the online catch-up services performed, and why are they now inhibiting the iPlayer's growth?
The three main paid-for, online-only catch-up/VOD services—Netflix, Amazon Prime Video, and Now TV—continue to show varying degrees of growth. Ofcom, the telecom regulator in the U.K., suggests Netflix had 4.4 million subscribers (16% of total households in the U.K.) by Q1 2015, up from 2.8 million in Q1 2014, an increase of more than 57%.
After dipping close to the 1 million mark in the first quarter of 2015, Amazon Prime Video spent the year consolidating its position and had 1.2 million (4% of households) at year's end, suggesting the service is again on the rise.
Netflix and Amazon sit atop the cord-cutting throne. Do Disney, Apple, or any other challengers have what it takes to compete?
Social streaming is on the rise, the BBC diversifies its output, and leading subscription services Amazon and Netflix grow in international markets.