Interpreting Some New Data on Video Consumption

I did a blog earlier about the impact of smartphones on the mobile opportunity and also the way the devices have changed our culture, particularly for the young.  Nielson has released some interesting data on video behavior that relates to smartphone and online video use, and I want to recap what the report shows.

There’s no question that online video is exploding in popularity, but it’s proven difficult to say just what that means for video overall, meaning to predict what will happen to traditional channelized entertainment over time.  Some past surveys have suggested that people haven’t really shifted from TV, simply supplemented it, and others seem to show that people are substituting online entertainment for TV even if the TV is on.

One reason it’s difficult to get consensus on this is that the surveys often target different segments of the overall market, making their conclusions hard to reconcile.  That’s where the current Nielson material may help.  One interesting aspect of the most recent report (for 3Q16) is the data on device use for working mothers versus at-home mothers.  The “family dimension” of TV viewing has been noted in the past—people’s dependence on TV grows once they start a family.  Women are the foundation of family life in most homes, and they are also the adult group most directly impacted by youth behavior.  If video habits socialize, there’s no easier path than from teen to mother.

Let’s start with what the survey targets can do, meaning what devices they have available to them.  Across the dozen entertainment-related devices surveyed, there was never more than a 2% difference in device use depending on whether a woman worked or stayed at home.  This, combined with other data on things like smartphone adoption overall, suggests that people’s entertainment tools are defined more by their peers than by anything else.  That’s an incredibly interesting, perhaps revolutionary fact for those who want to understand the future of online video versus channelized TV.

In the past as in the present, the Nielson data doesn’t show any significant dip in TV viewership, though the use of online video has been rising significantly.  Their interpretation, and mine, is that what’s happening is not a shift from traditional TV viewing to online, but rather an increased use of mobile devices to deliver entertainment in video form at times when traditional TV isn’t available.  Obviously, this would play to the TV networks, stations, and marketers, but a similar view has been expressed by other research, including the financial industry.

So people are watching smartphones when they can’t watch TV, right?  It’s also been widely believed that TV viewing was more likely to be associated with “family time”, meaning that if you were at home with the family you likely watched TV.  Further, if you had children under the teen years, you were more likely to watch it.  On the surface, the Nielson data threatens these assumptions because it shows that for mothers at least, being in the home versus in the workforce isn’t changing their appliance ownership levels much at all.  Thus, even if we didn’t see a dramatic difference in TV versus online today, the seeds to create one are sown by the devices both groups have available.

There’s more.  Other Nielson data shows that the time spent per device between at-home and at-work moms isn’t as different as it has been in the past.  It’s not surprising that at-home moms spend more time with entertainment, but the difference in TV viewing is only about an hour a week (more for at-home moms) and for smartphones about the same.  Stay-at-home moms spend more time proximate to the TV and so spend more time using it in some way (broadcast viewing, DVR, game system, online-to-TV) than working mothers.

It appears, again from both the Nielson data and other surveys, that social media is the primary driver of smartphone adoption and use.  Across the broad market, the dominant device used for social media is the smartphone, which accounts for about 2/3rds of total usage.  But here again the differences between social-media usage in at-home mothers versus working mothers is minimal, with at-home moms using slightly more social media in all categories except (interestingly) tablets, where working mom social media usage on the device was almost double that of the at-home moms.  The smartphone isn’t being driven by being at home versus at work, nor is social media interaction dependent on that metric.  Everyone, it seems, likes continuous social contact, and it’s this craving that puts the instrument of online video in everyone’s hands.

Moving to the broad market “everyone”, Nielson shows that TV viewing, PC internet use, listening to the radio, and similar entertainment activities showed no significant shifts over the last two years.  The same is true with the use of tablets.  In contrast, smartphone use grew significantly, from a total-market average of 58 minutes per day to 2.2 hours per day in 3Q16.  This, to me is the second very significant data point because it shows that what’s dominating changes in consumer entertainment behavior isn’t the “best” device for the experience but the best for convenience of use.  People entertain themselves with what’s with them all day, every day.

What age group dominates video viewing on smartphones?  It’s not the teens according to Nielson, it’s the up-and-coming adults, 25-34 years old.  The 35-49 age group is a close second.  This is the third very significant data point in the broadcast-TV-versus-online discussion.  It shows that it isn’t children who are most likely to step beyond traditional TV, it’s young adults.

So where does all this data lead?  First, if you combine it with overall smartphone penetration globally, it shows that if the smartphone is the instrument of reengineering behavior, then we’re already equipped.  In advanced economies, smartphone penetration equals or exceeds that of the US.  In emerging economies, where the greatest growth in smartphone adoption is found, we’re likely to get to similar penetration rates within five years.  Smartphone adoption is also fairly consistent across racial and economic divisions in most markets.  They’re here.

The second point is that full exploitation of smartphones has not yet been reached except for the teen demographic group in advanced economies.  Even the market group that has the most teen contact—at-home moms—we don’t see the same social media or video behavior we see from that supersaturated teen segment.  However, socialization is happening.

The third point is that the greatest point of socialization in content viewing isn’t the teen group at all, but young adults.  Some data beyond Nielson suggests that it’s actually males in the 25-34 age group, which led one Street analyst to describe it to me as being “bromance driven”, meaning male socialization.  However, I also think it may be because this segment of the market is the most physically mobile, and thus more likely to be dependent on mobile-device-delivered entertainment.

We have the instrument of online entertainment already almost universally deployed.  We have social-media interactions that can suggest viewing options and promote online video.  We have evidence of socialization of dependence on online video, not only within an age group but between age groups, through normal intergenerational contacts.  The question is whether these forces will combine to make online video the dominant media play.

Here I think the key data point is the percentage of time-shifted TV viewing.  Nielson shows us that about 60% of viewers use time-shifted video, which says that video consumers are decisively rejecting the “what’s on?” paradigm of the past, at least some of the time.  But so far, only about 15% of viewing hours are spent on time-shifted programming, and smartphone video in the home accounts for far less.  To me, what this says is that the smartphone social-behavioral shift in video has already had its greatest impact, filling in time when normal viewing isn’t possible.  I can’t yet find convincing data to show it’s really displacing TV, but for sure it’s prevented TV viewing hours from growing.

Perhaps the most significant interpretation of all this data is that mobile video is going to be a major issue for the mobile operators.  We can already see that M&A in the media space seems to be favoring the creation of vertical partnerships between ISPs and content companies.  If video availability (and immunity from data-plan costs) becomes a major selling point for mobile services, operators are going to have to respond, and that is IMHO going to make mobile video the big target for things like 5G.