What is TV these days? And do consumers really care?
Transkript
What is TV these days? And do consumers really care?
Strategy Consumer behavior What is TV these days? And do consumers really care? The notion is that the internet and social media are killing old-school television. But consumer research reveals that TV is not necessarily a loser in tomorrow’s increasingly complex media consumption behavior. Understanding the multifaceted nature of TV is crucial to all players in the market. The sofa-perspective: there’s a lot more to choose from today. ▶ Television has been a fundamental part of most people’s lives since its inception. What started out as a black-and-white broadcast channel has now evolved into something that the pioneers of the medium would probably neither understand nor appreciate, at least not immediately. If we could snatch C.F. Jenkins immediately after his experimental tv broadcasts outside Washington, d.c. in and teleport him through time to the tv room of a present-day Netflix-addicted family, he would probably have to sit down and catch his breath. Although consumers still watch quite a lot of broadcast tv, sometimes choosing between several hundred tv channels, they now also consume media à la carte by downloading and streaming tv shows and mov58 • EBR #1 2012 ies, not only on their living room tv, but also on their mobile phones, tablets and laptops. EVOLVING DEFINITIONS From a technical perspective, tv is a medium for sending and receiving video – nothing more, nothing less. In the minds of consumers, however, “tv” can also be the programs they watch or even the actual television set. This should not come as a surprise, since the television set has become a standard appliance in most homes. It has, for many, become the main source of news and entertainment. According to Ericsson ConsumerLab’s tv & Video Consumer Trends report, which stemmed from research conducted in countries, with more than , respondents, no less than percent of all house- Consumer behavior Strategy holds have at least one television set, and as many as percent have at least one flatscreen tv. But the definition of tv is not fixed – neither technically nor in the eyes of consumers. What used to be a uniform, one-sizefits-all, medium is now an mixture of many different things. From a technical perspective, the old analog terrestrial broadcast tv still exists in some markets, but it has been complemented – or even replaced – by other technologies: Digital Video Broadcasting – Terrestrial/Cable/Satellite/Mobile (dvb-t/dvb-c/ dvb-s), iptv, internet streaming and downloading, to mention just a few. tv, by definition, naturally still includes traditional broadcast tv, but consumers also regard the catch-up tv available through set-top boxes or tv network internet pages as tv. Furthermore, tv also includes on-demand tv shows watched on mobile phones, tablets and laptops – the definition of tv is simply much broader than it was before. FROM TECHNOLOGY TO EXPERIENCE When asking consumers about their tv consumption, their answers revolve around content. Consumers don’t think in terms of specific technology or distribution channels. In fact, functionality demands are secondary to demands on the overall experience. For consumers, functionality is merely a means to an end. Consumers have started to expect to be able to watch what they want, when and where they want. They want full access to all content, including: 3 all tv provider services on all screens 3 all video-on-demand on all screens 3 all downloaded content on all screens 3 all online tv on all screens. Naturally this does not mean all consumers will watch all content on all screens all the time, but they want the ability to do so. The large variety of tv/video content and services available online is becoming integrated into the traditional living room setting. Consumers are connecting add-ons and settop boxes to all of their screens so that they are able to experience tv the way they want. One out of four respondents in the ConsumerLab study expressed a strong interest in being able to access all of their tv/video content on all of their personal devices. Consumers are beginning to, at least partially, abandon their traditional tv service providers and instead use on-demand, overthe-top (ott) services, thereby avoiding – for example – expensive movie channel packages. By mixing and matching different services and suppliers, they create their own individual tv/video solutions, getting the best of both worlds: a mixture of live and ondemand content. SUPER SIMPLICITY THE PARADOX OF CHOICE The drawback of these homebrewed solutions is that they add complexity for tv viewers. If each service has a unique interface, or even its own remote control and mode of access, it will become prohibitively difficult for less advanced consumers to both set up and manage. The user experience revolution brought about by the mobile internet and apps has greatly increased our expectations of new services. The ConsumerLab study revealed that it has become a basic requirement for the interface to be super-simple and intuitive. “Usability and super-simple interfaces” was ranked as one of the top three most important factors contributing to the overall tv/ video experience, and this criterion clearly influences consumers’ habits and consumption of content. An important aspect of usability is the effort it takes to do something. Forcing consumers to use several services/interfaces to access the tv/video content they want complicates things. Many video-on-demand (vod) services do not offer both old and new content, so consumers must use several services to access all of the content they want. This makes their vod usage both timeconsuming and complicated. Consumer demand for super-simple content discovery and consumption will, in the long run, favor major tv and video-content players that can offer services and a wide range of content in an easy-to-use manner to all devices. The ability to also consume tv and video content off-line will be another success factor, since in the short- to medium-term perspective, internet access will not be available everywhere. Airplanes, trains, cars – as well as remote and foreign locations – will remain disconnected for many consumers. EBR #1 2012 • 59 Strategy Consumer behavior FROM BROADCAST TO CONTENT ON DEMAND For a long time, physical media – such as videocassettes, dvds and now Blu-ray Discs – have made it possible for consumers to break free from the program schedule and view recorded broadcast material as well as purchased or rented video content. This means that on-demand consumption is not really as new as we sometimes seem to think. A large part of consumers’ tv/video habits are now based on different types of timeshifted and on-demand content. No less than half of all consumers watched streamed or downloaded tv/video content more than once per week in . That is an increase by percent compared to . As on-demand content contributes to an ever-increasing percentage of daily tv/video consumption, it is becoming a basic habit. This will affect the way consumers pay for such content, and also how much they are willing to pay. As on-demand viewing becomes a basic feature, it is more likely to be considered something that should be included in basic tv fees. This will, however, pose challenges to existing players and their business models. Service providers that can costeffectively extend their broadcast offering to allow super-simple access to a wide range of on-demand content and offer a multitude of payment models and schemes will be much more likely to succeed in this new world. There are still some types of content that consumers are willing to pay extra for. Fresh and new content – such as movies will continue to elicit a higher willingness to pay. Theatrical releases direct to tv were ranked fourth in terms of tv/video functions and features consumers are most prepared to pay for. Although subscription video-on-demand (svod) services clearly appeal to many tv/ video consumers, it is also clear that many others are not prepared to pay extra for ondemand content – at least not on a regular, subscription basis. That means that to create mass-market appeal, it will be essential to combine svod services with pay-per-view content and sponsored free content that includes advertisements. Top of the list of things worth paying for, according to participants in the ConsumerLab study, is quality. Clearly, high-quality content is still worth paying extra for. FROM SOFA TO VIRTUAL SOCIALIZING Traditional TV is not necessarily a loser. 60 • EBR #1 2012 We are social creatures by nature and like to share and discuss the things we see and experience. This remains the case for most of the tv/video content we consume. The way we furnish our living rooms, with comfortable armchairs and sofas arranged around a tv, and invite people to watch – for exam- ple – sports together, is further proof of this. Content and social aspects are very much linked together and combining them adds extra value. More than percent say they use social media services – for example Facebook and Twitter – on a weekly basis while watching tv, and a quarter of the sample in the ConsumerLab study say that they are more likely to pay for tv/video content when watching it together with others, rather than watching alone. Enabling online social interaction around tv/video could therefore drive consumption and increase willingness to pay for it. Several social tv services are already available that enable consumers to discuss the things they watch – not only during, but also before and afterward. This kind of behavior will impact the way consumers explore and discover content, because we have a tendency to trust advice from friends more than advice from people we don’t know. A possible future scenario would involve content discovery through social forums. Instead of discovering content through an electronic program guide or a classic content store interface, consumers could use their social connections to help them decide what to watch – for example, using Facebook. INTEGRATING SOCIAL SERVICES WITH TV When considering expanding traditional tv by adding new services and features, we have to be careful not to interrupt or disturb the tv experience. The first attempts to integrate social services into the tv resulted in conflicts between the private nature of many of the conversations and the social/shared nature of the tv screen. A possible way of resolving this conflict would be to introduce a second screen – for example, a tablet or a mobile phone. By allowing consumers to decide whether the conversation should be private or social by switching between a big-screen tv and a smaller, separate screen, the problem is easily managed. Even though the main tv screen is by far the most-used screen, computers, smartphones and tablets are also becoming important media consumption devices. In fact, tablet owners consume much more tv/video content on their tablets than smartphone users – especially outside the home. According to the ConsumerLab study, almost percent of all tablet video consumption takes place outside the home. MOVING FROM ONE TO MANY SCREENS Restricting consumers’ access to content through different devices restricts their total tv/video experience. When purchasing Consumer behavior Strategy or subscribing to content, consumers pay for the movie or tv show itself – not for accessing it in a certain way. ott content distributors are flourishing because they allow consumers seamless access to all of their songs, movies and tv series across all of their internet-enabled devices. Apps, internet access, online shopping, chatting and video telephony are transforming the traditional tv screen into a multipurpose device. The shift from being a passive, one-way channel to also allowing interaction is enabling not only new services and features, but also new business opportunities. tv, one of the largest windows for consumer advertising, is now becoming interactive. Advertising on an interactive, multipurpose screen will generate higher clickthrough rates, as the advertising and point of purchase are combined. More personalized advertising will increase click-through rates even further, and also increase consumer acceptance of advertising. The risk is that consumers might revolt against this increased interactivity, because of their previously passive tv consumption experience – but again, the introduction of a second screen could be what is needed to offset that risk. If the interactivity is managed through a connected tablet or even a smartphone, the big-screen experience can remain more or less intact. POWER OF THE REMOTE CONTROL This brings us to another challenge – the remote control. It was more or less designed for one purpose: basic control of media on the screen – or, more colloquially, channel surfing. As the tv experience becomes interactive and flexible, the remote needs to keep up. A flexible and multipurpose tv screen requires a flexible and multipurpose interface by which to control it – it needs a new remote. A lot of consumers are frustrated with existing remotes, longing for something that offers tailor-made navigation. The solution is, however, close at hand: the touchscreen devices that many consumers already have in their hands. Several tv service providers across the globe already offer downloadable apps for both tablets and smartphones, enabling their customers to interact and remotely control various aspects of the tv experience. As these solutions become more powerful and complete, consumers might soon be able to toss away the old remote control altogether, and welcome a truly interactive tv experience. GLOBALIZATION OF MEDIA The internet is truly accelerating the pace of globalization. Anything that works against the globalization trend is not in line with the consumer mindset. “Windowing,” as in delaying the release of certain content for some consumers or offering content only through certain exclusive channels, is frustrating to consumers – not least because it makes it much harder for affected consumers to participate in online discussions about that content. Some argue that consumers don’t turn to piracy just out of cheapness or bad will, but instead as a reaction to the windowing issue and a lack of competitive legal alternatives. Comparing the level of piracy in the us, with its many reasonably priced legal offerings, to that of Spain and other countries seems to add weight to that theory. Consumers will no doubt use, and pay for, products and services that provide them with the best value for their investment – whether this is measured in money, time or effort, or the benefits are improved status, entertainment or content. Improving the quality of legal solutions is the best way forward. CONCLUSIONS The tv industry is clearly migrating toward the internet: 3 user-friendly and cost-effective technical solutions give consumers access to internet content across devices, including the main tv, pcs, mobile devices and tablets 3 high-quality content is becoming more easily available online 3 consumers are increasingly consuming tv and video online. So far, this migration has followed a steady path that is evolutionary, rather than revolutionary. But it will nevertheless have a profound impact on the industry. Consumer interest and willingness to pay for live content will likely remain high, but some traditional tv network services, like pay-tv movie channels, will face an uncertain destiny, due to competition from the new internet players. The tv industry already enjoys a fairly strong position online. Many tv networks offer online access to their own tv content for catchup purposes. Above all, amongst the “old” tv industry players, the major rights holders are most likely to benefit from the globalization trend. The current media rights model based on exclusive, “windowed” availability will fail to deliver enough consumer value. By embracing new opportunities, as well as consumers’ needs and expectations, rather than obstructing them, television will remain a core video service also in the future. ● AUTHOR ▶ ANDERS ERLANDSSON is a Senior Advisor at Ericsson ConsumerLab engaged in analyzing consumer behavior, attitudes and trends that help Ericsson develop strategies that generate revenue and improve the customer experience. He joined Ericsson in 1991 and has worked extensively with consumer insights in areas such as social media, privacy and integrity, rich communication and TV/media. He holds an MSc in Industrial Engineering and Management from Linköping Institute of Technology, Sweden. ([email protected]) AUTHOR ▶ NIKLAS RÖNNBLOM is an Advisor at Ericsson ConsumerLab, working with consumer behavior and trends. His areas of research include smartphones, app culture, fixed and mobile broadband, the connected home and, recently, TV and video consumption. Understanding how all kinds of technology fit into the everyday life of consumers is the ultimate aim of this work. He holds an MSc from KTH Royal Institute of Technology in Stockholm, Sweden. ([email protected]) EBR #1 2012 • 61
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