17 Mar 2020
Digital home viewing

Separating fact from fiction: Changing household viewing expectations

Authors

Praveen Shankar

EY UK&I Technology, Media and Telecommunications Sector Leader

Broad experience in transformation and operations, driving the 5G agenda, focused on tackling the most pressing and complex business and technology challenges in the industry.

Martyn Whistler

EY Global Media & Entertainment Lead Analyst

Keen observer of all things media and entertainment. Storyteller. Avid reader. Bluff traditionalist, impatient for the future. Fan of sports, occasionally sporty. Fan of the arts, rarely arty.

Adrian Baschnonga

EY Global Telecommunications Lead Analyst

Lead Analyst with deep sector knowledge in technology, media and telecom, gained in professional services and business intelligence environments.

17 Mar 2020
Related topics TMT Tech sector

Consumer habits have shifted

Separating fact from fiction: Changing household viewing expectations is the latest in a series of insights from EY annual research into household attitudes and habits towards technology, media and entertainment and telecommunications (TMT) products and services within the home.

The online survey of 2,500 UK consumers, conducted in October 2019, provides an insight into the evolution of today’s digital household. This report focuses on content services, highlighting how UK viewers choose, consume and pay for content. It reveals fascinating insights into the generational shifts in content consumption and what this means for content companies.

Contents:

  1. More choice means more confusion: Fragmentation of services has created frustration that operators need to address
  2. Traditional channels remain at the core:  Incumbent content services still resonate but need to work harder, or risk losing out long-term
  3. Empowering consumers: A growing mix of revenue models, gives consumers more options over how they choose to pay for content
  4. Priorities for content companies: Repositioning to be relevant to both audiences and advertisers


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Separating fact from fiction: Changing household viewing expectations

More choice means more confusion

Fragmentation of services has created frustration that operators need to address

Consumers increasingly find themselves overwhelmed by digital, with a myriad of services, technologies and use cases that are always available. It is one reason why consumers are looking to limit screen time and “digitally detox,” which is a trend that is already acute in content services.

Tracking content is now a challenge

Audiences are frustrated by how difficult it has become to keep track of their favourite content. The proliferation of different services means audiences must search across multiple platforms and channels. In 2018, 24% of viewers found it difficult to keep track of their favourite content, that number has now risen to 29%. The more concerning statistic is the level of frustration amongst younger audiences, who typically subscribe to and use a higher number of services. For the first time this figure rose to over 50% for 25–34 year olds from 40% in 2019.

The mix of content options continues to rise

At least in the short-term, the challenge for consumers and subsequently their frustration looks set to continue. The combination of robust traditional broadcast TV with the proliferation of streaming services adds, up to an overall increase in the consumption of different services.

Viewing of traditional broadcast TV remains robust with 74% of UK households tuning in often or nearly every day. It underlines how much viewers continue to see these channels as a core part of their content mix, even if total time spent on them, according to tracked audience data, is declining. At the same time, the number of consumers watching streaming services with the same regularity is on the rise, increasing from 46% to 49% of all households.

It is streaming that will fuel further growth in the number of viewing options. Currently, UK consumers use an average of 3.4 streaming services, but with a mix of new services slated for launch in 2020, that number should increase. 

The search for content relies on familiar technology

With increasing choice, content providers will need to work harder to reach audiences and reduce frustration. Already there is a raft of experimentation around recommendation engines and widespread debate about the role of TV progamme guides. Yet, among UK households the progamme guide remains firmly the most important route to content, with 44% identifying that they regularly use it. 

Other technologies such as voice search are yet to gain scale, despite the functionality becoming integral to both set-top-boxes and marketing campaigns for a number of service providers. Despite interest in voice-based search, it is only at an early stage of adoption. There is a possibility that voice is becoming a functionality that consumers simply see as synonymous with the latest technologies but are yet to embrace.

Broadcast TV

74 %

of UK households use broadcast TV often or nearly every day, remaining robust from 2018

Streaming

49%

of UK households use streaming services often or nearly every day, up from 46% in 2018

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Separating fact from fiction: Changing household viewing expectations

Traditional channels remain at the core

Incumbent content services still resonate but need to work harder or risk losing out long-term

Despite increasing levels of competition, viewers are still tuning into traditional, core content services. They associate these services with particular content, which includes both highly competitive and expensive to produce genres such as drama, alongside content that is largely unavailable on other services such as current affairs. For traditional channels, the challenge is to convince viewers that they can continue to compete on both quality as well as the range of content choices. 

Audiences are tuning into traditional channels

Perhaps counterintuitively, there is a resurgence in the perceived importance of traditional content services. For the first time, less than half of households (48%) agreed that they spend more time on the internet rather than watching traditional TV — a figure which has continued to decline. At the same time, viewership of traditional channels is on the rise. Currently 56% of households claim to mainly watch TV progammes on traditional channels, another year-on-year increase. This self-reported data hints at a growing appreciation for traditional TV among audiences. It may be at odds with the overall trend in viewing volume on these channels, as captured by audience measurement, but it does reflect rising perceptions of the value that these channels hold in the overall mix of content options.

Traditional channels benefit from the diversity of content

Among the different content options available, it is traditional broadcast channels that are the preferred destination for all major genres. It reflects both the quality and breadth of their offering but also highlights how streaming services are associated with specific genres. 

The major strengths of traditional TV channels are in genres such as news and current affairs, drama (particularly British) and documentaries. In contrast, the strengths of streaming operators are in US drama and films, where they are closer, but not yet on a par with traditional channels.

Presently, there is evidence of streaming providers attempting to diversify their portfolio into other content genres, particularly in documentaries but also sports and potentially current affairs. The level of ambition remains to be seen, as does the competitive response of incumbents. 

Streaming services lead on quality for younger audiences 

Traditional channels may appreciate the growing perceptions around their relative importance in the content mix, as well as being associated with a wide range of content.

However, they are losing ground in perceptions of quality. Big budget investments by streaming companies into drama production — reportedly costing in excess of £10million per episode — have driven a perception of a higher quality offering. While traditional channels still win with older audiences, they are losing the quality debate with younger audiences. Forty-one percent of those in the 18–24 age range see streaming services providing the best progammes and it is almost at parity in the 25–34 age range — 37% vs 35% — albeit just in favour of traditional channels.

I believe the following channels/services show the best progammes (% respondents agree)

  18 - 24 years 25 - 34 years 35 - 44 years 45 - 54 years 55 - 65 years 66+ years
Traditional channel groups1 37% 37% 46% 59% 64% 75%
Streaming services2 41% 35% 23% 15% 9% 4%
Other 20% 27% 30% 26% 26% 21%

1 Includes channels owned and operated by Public Service Broadcasters: BBC, ITV, Channel4 and Five

2 Includes Netflix, Amazon Prime and Apple+

* Due to rounding, annual totals may not add up to 100.

 

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Separating fact from fiction: Changing household viewing expectations

Empowering consumers

A growing mix of revenue models gives consumers more options over how they choose to pay for content

As business models continue to evolve, content providers are experimenting with a mix of revenue options, continuously searching for a sustainable balance between paid for services and advertising. However, consumers are making more informed choices about where they see value and what they are prepared to pay for. Companies need to work harder to convince consumers of the value in different models.

Cord cutting could soon be a reality

We have seen a sharp rise in the number of households that claim streaming services represent better value than more traditional pay-TV. For the first time, over 50% of households see more value in streaming, a marked increase on 44% in 2018. For younger age groups, between 25–34 years old, 72% of consumers believe they get better value from streaming. So far the number of households cancelling their pay-TV subscriptions in favour of building their own bundle of streaming services, so-called “cord-cutting,” has been relatively limited but momentum could be about to increase.

When consumers were asked specifically if they would be willing to cancel their pay-TV subscription in favour solely of online streaming services, 35% of households admitted it was a consideration. For those aged 25–34, the number who expressed a willingness to build their own bundle rose significantly to 61%.

Redefining the role of advertising

Good news for traditional broadcasters is that viewer appetite for accepting advertising as part of their broadcast experience has continued to increase in recent years, with 40% now stating that they are more willing to put up with adverts on broadcast television than around streaming progammes. Of course, conversely, this reinforces the message to streaming services that viewers expect a more seamless and less disruptive experience; either ad-free, or better management of ad loads and with improved targeting and the use of more engaging and creative formats.

For streaming services, there is a growing proportion of customers willing to pay to avoid advertising altogether. A year-on-year increase reveals 24% of households state their willingness to pay a premium to have streamed, catch-up services without advertising. Of those aged 25–34, typically heavier users of streaming services, once again they over index on their willingness to pay, with 49% stating a willingness to do so.

Whether a broadcast channel or streaming service, their ability to compete for advertising with hyper targeted, online platforms, from social media to search, is dependent on their ability to offer advertisers meaningful insights into audiences. Significant investment in data collection, analysis and relevant ad tech has been made in recent years by both broadcast and streaming services. 

The challenge remains to convince audiences to share their data. While they understand that sharing data enhances the relevance of advertising and therefore enhances their overall experience, there remains a hesitation. Across all households, only 23% are willing to share personal data in return for relevant, targeted advertising. What is encouraging, is the willingness of younger audiences, who are happy to share data. It is more than double the average at 48% for 25–34 year olds.

I am willing to share my personal data in return for adverts that are relevant to me (% respondents agree)

18 - 24 years 25 - 34 years 35 - 44 years 45 - 54 years 55 - 65 years 66+ years
36% 48% 38% 15% 5% 3%

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Separating fact from fiction: Changing household viewing expectations

Priorities for content companies

Repositioning to be relevant to both audiences and advertiser

With the further proliferation of content services and platforms, the survey highlights the priorities and challenges that content companies need to address to remain competitive. Consumers will gravitate to the services that offer the best mix of content wrapped in a seamless user experience, and advertisers will naturally follow.  If content companies are to achieve sustainable growth and long-term relevance, they need a strategy, culture and processes that understands where consumers are heading.

Summary

Repositioning to be relevant to both audiences and advertisers is crucial.  Here are three critical steps content companies should take to meet their consumers changing expectations.

Relentless focus on reducing customer complexity 

Despite escalating investment in content and user experience, many consumers are turned off by the complexity of choices currently available to them. Content services that create solutions to alleviate these pain points will benefit from enhanced perceptions of value and trust.

Accelerate reinvention to remain relevant

Research shows how much traditional channels remain an important part of the overall content mix, but the stakes are getting higher. They need bigger and bolder innovation strategies that are built on their current strengths but not constrained by them. Without clear action, they will quickly lose ground as competitive dynamics shift.

Make your consumers part of the solution

To maximise the advertising opportunities, content companies need to educate consumers about the value of their data. This will enable the sharing of greater amounts of data and enable a wider suite of options for advertisers. Revenue grows and the user experience improves.

About this article

Authors

Praveen Shankar

EY UK&I Technology, Media and Telecommunications Sector Leader

Broad experience in transformation and operations, driving the 5G agenda, focused on tackling the most pressing and complex business and technology challenges in the industry.

Martyn Whistler

EY Global Media & Entertainment Lead Analyst

Keen observer of all things media and entertainment. Storyteller. Avid reader. Bluff traditionalist, impatient for the future. Fan of sports, occasionally sporty. Fan of the arts, rarely arty.

Adrian Baschnonga

EY Global Telecommunications Lead Analyst

Lead Analyst with deep sector knowledge in technology, media and telecom, gained in professional services and business intelligence environments.

Related topics TMT Tech sector