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News

News

From Internet Video Consumers, a Call for Content

Jan 14, 2013

These days, professionally produced video can be accessed through a dizzying array of hardware and delivery choices. But which concerns are top of mind for typical video consumers?

To better understand the dramatic changes in the consumption of professionally produced video, Cisco IBSG surveyed 1,152 U.S. broadband consumers between the ages of 13 and 75+ in March 2012. The overall goal of the survey was to understand how consumers watch video: their habits, preferences, and the devices they most prefer.

Our core findings revealed that for consumers of professionally produced video, content remains king. When asked “What would encourage you to watch/obtain more professionally produced online video?” the two top responses were content-related: “more free video content” and “broader availability/range of video.”

Availability of content on more devices, TV-based viewing, ease of use, social experience, and other factors were all rated much lower. However, as the result of consumers’ preference for free content over more content (a 2-to-1 ratio), greater availability of fee-based (subscription or transaction) content would increase consumption for only 23 percent of consumers, while greater availability of free content would impact 46 percent.

An almost equally large number of consumers would increase their viewing if videos were made available on TVs (21 percent) or through easier-to-use devices (18 percent).

Consumers, however, are realistic; they know that not all of their preferred content will be available for free. In the last two years, the greatest increase in consumption of professionally produced video content occurred on subscription-based sites, and 40 percent of consumers expect to increase their consumption of content using a subscription-based model. This is only 1 percent lower than the expected increase of consumption from ad-supported aggregator sites (41 percent).

As data from Hulu and Netflix have already shown, TV series are more popular than movies. What is interesting, however, is the extent to which consumers prefer TV shows. While 42 percent of consumers in our study watch TV shows online daily, only 12 percent watch movies online daily.

At the same time, that difference starts diminishing if we look at all consumers who view video at least on a monthly basis: 83 percent for TV shows and 74 percent for movies. By producing original series instead of movies, Netflix, Hulu, and other online content providers are making the right choice to further drive the popularity and stickiness of these services.

In general, these habits don’t vary much by device. One exception is mobile devices, where short videos and music videos clearly dominate. This is in contrast to the general online video growth trends, which have been relatively flat in terms of the number of videos watched, while the length of video viewing has been increasing. This interest in short videos on mobile devices points to a significant opportunity in short videos of various genres targeted at a rapidly increasing mobile base.

According to Nielsen, the number of U.S. mobile subscribers watching video on mobile phones grew by 24 percent between the second quarter of 2011 and the second quarter of 2012. With mobile and tablet audiences growing at such a high rate, the opportunity is significant.

The increase in CPM (cost per mille, or cost per 1,000 impressions) combined with an expanding audience’s interest in ad-supported content creates a sizable opportunity for media companies. Consequently, media companies should increase their focus on mobile consumers.

Developing “webisodes” specifically targeted at tablets and mobile phones, and based on existing TV shows, will greatly complement consumers’ interests in those shows, increasing brand awareness while developing greater intimacy with the show and characters. This can be done through extension of the story (a typical current approach), but should also involve creating shorts from outtakes or by offering behind-the-scenes looks at how an episode was produced.

Overall, consumers have aggressively adopted online video services and show no signs of reversing course. Because they often control various elements of the customer experience, all players in the video value chain will need to understand the specific drivers of video consumption, including business models and devices.

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