The technology of television has hard-wired the viewing habits of successive generations of Americans. Boomers brought their broadcast event mentality to the launch of cable. Gen Xers, who came of age in a cable and video-rental world, expected greater depth and breadth of programming. Having been on-demand viewers from a life of VCRs, DVDs and DVRs, millennials are fluent timeshifters. Today, mobilized by on-demand technlogies and digital viewing on computers and iPads, influential younger generations have altered the cable landscape again.
They still watch TV, just not necessarily on a TV. And they watch it when they want it and where they want it.
In fact, just over 40 percent of adults between 18 and 24 watch TV programs at their scheduled broadcast time, according to a recent survey by Altman Vilandrie & Co., a boutique management consulting firm. The “appointed time” viewing rate for this segment had been 65 percent the prior year.
While it’s old news that younger viewers don’t differentiate between cable and broadcast television, nowadays, younger viewers often don’t differentiate between traditional and timeshifted viewing either. And while they may have grown up around a family TV, they no longer see a difference between “on-TV” viewing and “online” viewing.
So what does TV viewing look like for a typical 21-year-old? It’s complicated. He watches scripted series, but may catch up with them a couple of years after they’re broadcast by watching them on Netflix. She has a favorite sitcom, but might see just a 3-minute scene on her smartphone. Their home still has cable, but they try to keep costs in check by shaving the cord and watching premium series via iTunes. He likes his favorites on Facebook. She tweets with her friends about what she’s watching or uses a social TV app to chat.
According to Nielsen, the 25-to-34 demo spends about 28 hours each week watching traditional TV, compared to 41 hours from those aged 50 to 65 and 32.47 hours for all U.S. viewers. Given the rapid shift in viewing technology, it’s unlikely that traditional TV viewing time will rise. Of course, that raises the question: What excactly is traditional TV today?
“If you want to know the future of consuming video, just go to a dorm room,” says Brad Adgate, SVP, research director at Horizon Media. “The next generation won’t be able to tell the difference between Hulu, Netflix and a television network. It’s all one platform. They want content on demand and where they are. You look into the future and it’s mobile—getting content on a tablet or smartphone.”
In its State of the Media report summarizing 2011 data, Nielsen reported a nearly 23 percent increase over the past year in the number of U.S. households that receive only basic broadcast television but pay for broadband Internet service. Granted, that number only represents 5 percent of TV-watching homes, but it’s a clear indication of a trend.
Last year, for the first time in 20 years, the number of homes in the U.S. with television sets dropped—in part because of tech-savvy young consumers who forgo TVs in favor of watching content on their computers, tablets or mobile devices. Forget about cord-cutting. These are people who never paid for TV—or even owned a television—in the first place. They’re accustomed to watching their favorite shows on Hulu, Netflix, YouTube and other online video platforms.
The challenge of the multiscreen
For this technology-enabled generation, traditional TV is not the group experience of sitting in the den with family and friends. Some shows may get watched this way, but others are seen from the DVR, from on-demand or on a tablet. That’s hard to reconcile in the traditional TV ad model.
Anxious to attract viewers, particularly young ones, cable networks are getting creative in their efforts to bridge the gap between on-air and online and to give consumers a multi-platform experience worth paying for.
“Cable networks are taking the lead in terms of using digital media and social media to reinforce the cable programming,” says Adgate.
For example, Bravo, for the latest season of Top Chef, used multi-platform storytelling to drive the franchise, launching an original Web series Top Chef: Last Chance Kitchen, as well as a fan favorite contest and an active social media campaign. The result? More than 8 million live streams of the Web series. According to Bravo, 26 percent of those watching Top Chef on-air had also watched Last Chance Kitchen online.
Cable channels are also extending on-air brands into games, apps and other content that may deepen engagement with the show. Bravo plans to launch a new Facebook app, The Real Housewives: The Game, to run concurrently with the fifth season of The Real Housewives of New York City. Similarly, AMC had success with The Walking Dead Social Game, which allowed viewers to enter the world of the zombie show, “meet” their favorite characters and recruit friends.
This kind of social gaming extension can both attract gamers to a show and strengthen fan involvement and loyalty. Children’s cable networks have been doing this for years—Nickelodeon and Cartoon Network, for instance, have long engaged their viewers online via games. But gamification of adult-focused content is taking off as more and more people use their smartphones and computers to interact with the shows they watch.
Building an on-demand audience
On-demand viewing, via cable VOD or off-net services like Netflix, Hulu or iTunes, is also being used as a way to deepen engagement with shows. It also provides the opportunity for “catch-up” viewing, allowing latecomers to get involved with a series even if they missed early episodes or early seasons. For instance, leading up to the premiere of the fifth season of Mad Men, AMC encouraged viewers to watch earlier seasons on various platforms. In fact, many of these shows are seeing increases in “live” viewership for later seasons as new viewers get caught up.
Consider the growth of the audience for AMC’s Breaking Bad. The fourth season of the show boasted the series’ highest rated season to date, a clear example of a show gaining traction over time. Not coincidentally, the biggest gain was among younger viewers, with an increase of 42 percent among adults 18 to 34 compared to the previous season—the audience segment most likely to view the series via non-broadcast channels.
Similarly, social viewing or social TV integration—using a second screen such a computer or digital device while watching TV—is also being used to drive engagement and slow down timeshifting. When fans are texting, Tweeting, posting on Facebook and using social TV apps such as GetGlue, they don’t want to miss out on the real-time chatter. It’s a form of peer-pressure marketing.
“It’s nice to have loyal fans chatting and creating buzz about a show online. I don’t know if there’s a ratings correlation, but it helps to increase engagement,” says Francois Lee, SVP, group client director, MediaVest.
It’s not just youth-oriented channels like MTV—which has used “second screen” apps for shows such as Jersey Shore. TLC, for instance, will launch an online-only event for What Not to Wear that allows fans to vote on a guest’s makeover. Fans will be able to get fashion tips and show alerts on their mobile devices. And TNT is promoting its rebooted version of Dallas mostly via social media, including featuring a timeline of J.R. Ewing’s life on its Facebook page.
How prevalent is the second screen? About 40 percent of smartphone and tablet owners in the U.S. used their devices daily last year while watching TV, according to Nielsen. Undoubtedly, some of those were checking e-mails during commercial breaks. Still, 42 percent were logged on to social networks such as Facebook and Twitter.
“One of the biggest things is concurrent use in different media, multi-platform use,” says Tim Brooks, television historian and former cable executive. “Recent information seems to suggest that it’s not necessarily distracting. In fact, it could be additive. If someone is watching a show and tweets a friend, that’s promotion.”
Acknowledging that viewing habits have changed, Nielsen is working with GroupM to develop a new measurement service that will integrate media planning and measurement across various platforms. “Our advertiser clients increasingly recognize that traditional advertising and online video advertising must work together,” says Rino Scanzoni, chief negotiating officer of GroupM.
Original online video: Friend or foe?
Meanwhile, just as cable execs worry about the increasing hold of cross-platform services like Netflix, Amazon and Hulu Plus, those services are tiptoeing into the original programming business—a reminder that content is still king.
Hulu, still mostly a site for catching up on recent broadcast shows, now has several original series, including Battleground, a political sitcom, and A Day in the Life, a reality show from documentary director Morgan Spurlock.
Netflix, which has about 21.7 million streaming subscribers in the U.S.—or one in four households that have broadband—recently premiered, Lilyhammer, a show from Norway, and plans to introduce House of Cards, an original drama, later this year. Netflix also plans to debut Hemlock Grove, an original horror series to subscribers early next year. Plus, as Bluth family fans could quickly tell you, Netflix already indicated it will revive the cult comedy Arrested Development in early 2013.
Amazon, meanwhile, has been hiring creative execs to develop programming and original content through its Amazon Studios initiative. Pilots and series could be popping up soon.
Despite the seemingly imminent threats posed by competing screens, the cable market is still relatively robust. More than 90 percent of TV-watching households still pay for a cable subscription, even if a growing number of them are augmenting their viewing with online programming.
Sure, almost 145 million people watch video online in the U.S., compared to about 290 million who watch traditional TV. But if you drill deeper into the numbers, it’s clear that Americans still love their TVs—they spend an average of 32 hours and 47 minutes a week watching traditional TV compared to only 27 minutes a week watching video online.
“The online video marketplace is more fragmented so you see a lot more options. As TVs become more connected, there will be a lot more video options,” says MediaVest’s Lee. “As marketers, we welcome this trend. The more options the better. We look to target the audience no matter what screen they’re watching video on.”