altman vilandrie & co. 2013 consumer video research excerpts

2013 Consumer Video Research Excerpts for VideoNuze

21 November 2013

21 November 2013 2 Confidential – Do Not Reproduce

Altman Vilandrie & Company

AV&Co. is the leading strategy firm focused on the Telecom, Media, and Tech sectors

Countries where AV&Co./Solon

has assisted clients

Background

Founded in 2002 in Boston

Led by 8 Directors and 8 Principals

80+ consultants in North America

Additional 40 consultants in Europe operating

as Solon Management Consulting

Value Proposition

Telecom, Media, & Technology (TMT) focus

results in better advice and speed

Fact-based, highly analytical, and

economics-based approach

Serve corporate and private equity clients

London Budapest New York

City Boston Munich

San

Francisco

Locations


AV&Co.’s 2013 Video Survey explores the transformation of consumer behavior in TV

show and movie watching

2013 AV&Co./Research Now Video Survey – Methodology and Approach

• Web survey conducted in

July, 2013—similar to

surveys done in summers

of 2010-2012

• Conducted in partnership

with Research Now, an

online panel provider

• Sample of 2,548

respondents (~500 in each

of 5 age bands) who are

video-decision makers for

their household

Survey Background

• Paid-TV subscribership – cord-cutters, cord-nevers,

cord shavers

• Online video usage – paid, ad-based, pirated

• Devices used to control and watch video

• Mobile viewing – location, devices, and rationale

• Interest in a la carte channel offers

• Attitudes toward live viewing, prerecorded shows, and

genres

• Multitasking and binge-watching

• TV Everywhere – awareness, usage, preferences

• Interest in an “add-on” service depending on brand,

price, content, live channels, and device availability

• Impact of Netflix offer and pricing scenarios

Sample Areas Explored


Online Viewing Adoption

Internet TV show/movie viewing is growing across all ages; younger consumers watch

online video more frequently, but older consumers had a large increase in 2013

How often do you watch TV shows/movies on the internet?

(% responding at least weekly)

Base: All respondents

Source: 2011, 2012 and 2013 AV&Co./Research Now Surveys; AV&Co. Analysis

62% 60%

45%

33%

24%

75% 72%

54%

37%

26%

81% 80%

68%

51%

36%

18-24 25-34 35-44 45-54 55+

2011

2012

2013

Age


53%

43%

39%

34%

30%

28%

24%

15%

14%

I can watch on my own timetable

I can easily get TV shows I want to watch

It saves me money overall

I can watch everywhere I go

I can get TV shows and movies I can't get anywhereelse

It lets me watch TV in rooms different from where theprimary household TV is located

It is easier to use than Pay-Per-View or Video-on-Demand services from a cable provider

It has a better recommendation system

The user interface is better than the cable TV

Drivers of Paid Online Video Adoption

Why do you use a paid internet video service?

(% selecting each option)

Viewing flexibility is a main driver of internet video service subscriptions, but almost

40% of online video subscribers report saving money as a motivating factor

Base: Respondents who use at least one paid internet video service

Source: 2013 AV&Co./Research Now Survey; AV&Co. Analysis


Paid Internet Viewing by Source

Do you watch TV shows and/or movies on these paid online video services

on a weekly basis?

(% of respondents who watch online video at least weekly)

Base: Respondents who watch online video at least weekly


Netflix dominates online video-watching among consumers who watch online video at

least weekly

Paid Online Video Service

76%

35% 33% 32% 32%

Netflix Instant HBO GO Hulu Plus Amazon Prime Paid on demandvideo services


Growth in multichannel video subscribers has not kept pace with TV household growth;

~4% of households are “new” non-subscribers who have emerged in the past 5 years

Multichannel TV Subscribers

Source: SNL Kagan, AV&Co. Analysis

98.9 101.7

11.1 11.9

4.4

2008 2013

Occupied TV Households

(millions)

110.0

118.0 “New” Non-Subscribers

“Traditional” Non-Subscribers

(held at 10%)

Multichannel TV

Subscribers 90%

10% 10%

86%

4%

Use antenna, watch DVDs only,

don’t care about video, etc.

Cable, Satellite, or Telco TV

• Historically, 90% of

occupied TV

households

subscribed to

multichannel TV

• Subscribers are now

at 86%— incremental

4% are “new” non-

subscribers


0.4%

1.5% 1.3%

3.4%

1.7%

4.9%

"True" Cord-Nevers "True" Cord-Cutter

Of non-subscribing households who “care about video,” the majority use online video at

least weekly

Multichannel TV Subscribers

* Range based on margin of error of survey

Source: 2012 and 2013 AV&Co./Research Now Surveys; AV&Co. Analysis

Other cord-cutters and

cord-nevers don’t watch

online video weekly (1.9%

of occupied TV households)

Composition of Multichannel TV Non-Subscribers Who “Care About Video”

(% of occupied TV households)

1.7%

4.9%

4.7% of occupied

TV households are

non-subscribers

who watch online

video at least

weekly

(never subscribed,

but care about video)

5.6-7.6%* of TV households are true cord-cutters or cord-nevers (care about video but who watch

video through other means); ~4-5% are driven at least partially by emergence of internet video

The number of cord-cutters and cord-nevers was approximately the same as in last year’s survey

(former subscribers who

care about video)


Price and value are the main reasons cord-cutters cancelled their subscriptions;

availability of internet video is the third largest driver

Cord-Cutters’ Reasons for Unsubscribing

Base: Cord-cutters who watch video through other means


To what extent were each of the following important in your decision to

"cut the cord", i.e., stop subscribing to a cable service?

(% of cord-cutters responding “important” and “very important”)

66%

53%

50%

42%

35%

31%

29%

27%

25%

I could no longer afford Cable TV

Cable TV was a poor value

Internet Video was enough for my needs

It was difficult to find good programs and/ormovies on cable TV

Basic Antenna Cable was enough for my needs

I didn't care about live TV (e.g., sports and news)

I didn't care about seeing TV shows as soon asthey were released

My cable TV Provider had poor service

I didn’t have enough time to watch shows or movies


74%

66%

59%

28%

19%

Live news is important to me

I want to watch TV shows as soon asthey are available

Live sports are important to me

I'm open to cancelling cable, but othersin my household want it

My internet connection is too slow forvideo

Current cable subscribers value access to live news and sports, as well as the ability to

watch new television shows as soon as they are available

Reasons for Maintaining a Cable TV Subscription

Base: Current cable TV subscribers


Why do you choose to subscribe to cable TV instead of relying only on internet

video for shows, movies, and other television programs?

(% of cable subscribers who agree with statements)

55+

Watching TV shows

when they become

available is especially

important to younger

cable subscribers

Age

76%

62%

Under 35

35+


Even with growing online alternatives, the level of TV watching during normal broadcast

time is roughly the same as in 2010

Broadcast TV Watching

How often do you watch shows on TV during their normal broadcast time?

(% viewing at least weekly)

Base: All Respondents

Source: 2010 and 2013 AV&Co./Research Now Survey; AV&Co. Analysis

65%

73%

80%

89% 85%

60%

72%

80% 84%

87%

18-24 25-34 35-44 45-54 55+

2010 2013

Age


Non-Subscriber Future Plans

What is the likelihood that you or your household will subscribe to cable TV

service five years from now?

(% of non-subscribers that responded “likely” or “very likely”)


36% of non-subscribers expect to subscribe to cable within 5 years, including almost

half of subscribers under 35

53%

46%

32% 33%

27%

18-24 25-34 35-44 45-54 55+

Age


9% 12% 7% 2% 1%

24% 29%

26%

14% 9%

18% 22%

16%

11% 8%

43%

51% 51%

36% 32%

18-24 25-34 35-44 45-54 55+

Tablet video consumption has more than doubled since 2011, driven by increased tablet

ownership; increased usage, especially among older consumers, has also contributed

TV Show/Movie Viewing on Tablets

How often do you watch TV shows and movies on a tablet?



Source: 2011 & 2013 AV&Co./Research Now Survey; AV&Co. Analysis

Age

Tablet

Ownership 2011

2013

Watch TV shows

and movies on

tablet weekly 2011

2013


Smartphone TV show and movie watching nearly tripled from 2011 to 2013, driven

primarily by increased usage but also from growth in ownership

TV Show/Movie Viewing on Smartphones

How often do you watch TV shows and movies on a smartphone?




11% 13% 5%

3% 0%

28% 32%

20%

9% 4%

41%

48% 47% 43%

30%

66%

73%

68%

56%

40%

18-24 25-34 35-44 45-54 55+

Age

2011

2013

2011

2013

Watch TV shows

and movies on

smartphone weekly

Smartphone

Ownership


TV Everywhere Awareness by Age

TV Everywhere awareness has increased slightly over the past year, but younger

consumers are still more aware than older consumers

Does your cable TV subscription include access to TV Everywhere?

(% of subscribers with access to TV Everywhere)

Base: Cable TV subscribers with access to TV Everywhere


50% 47%

35% 33% 24%

19% 21%

29% 36% 42%

32% 32% 37% 31% 34%

18-24 25-34 35-44 45-54 55+

2012

Yes Yes

No

Don’t

Know

Age


68% 70% 79%

85% 89%

32% 30% 21%

15% 11%

18-24 25-34 35-44 45-54 55+

A single app from

your cable TV

provider that gives

you access to all the

shows from channels

you subscribe to

82% of consumers prefer a single TV Everywhere app over separate apps for each

channel; younger consumers are more open to separate apps than older consumers

TV Everywhere App Preferences

If you were using TV Everywhere on your devices, which of these options would be

better for you?

(% of all cable subscribers)

Base: Cable TV subscribers


A separate app for

each channel you

subscribe to, each

giving you access to

TV shows from that

specific channel

Age

altman vilandrie & co. 2013 consumer video research excerpts

Technology

normal broadcast time

occupied tv households

tv show movie viewing

cable tv provider

watch online video

watch tv shows

tv shows

watch shows