On Demand Summit 2016: Hope For Ad-Supported TV

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New York -- Presenting an overview of changing viewer trends in the multichannel universe, Magna Global's Brian Hughes said certain trends in over-the-top viewing are encouraging for providers that rely on ads for their businesses, competing against ad-free video behemoths such as Netflix and Amazon Video. 

"I think a lot of people, even young people, accept the idea that nothing is free,” Hughes, who is senior vice president, Audience Intelligence & Strategy, at Magna, told questioner Bruce Benson of FTI Consulting at the On Demand conference today. Most of Hulu's subscribers, it would appear, accept ads in order to pay a lower monthly fee for their subscriptions, Hughes noted. CBS All Access also has a pricing structure that offers subscribers a lower-cost version that includes ads. Hughes said Magna is keeping a close eye on both services, noting that the CBS service's pushing back the launch of the new Star Trek: Discovery series was "a bummer."

Viewing trend charts Hughes displayed showed clear trends toward on-demand viewing growing at the expense of live TV. Even live events and sports, "the bastion of linear TV in this changing world," are being affected by viewers who expect to watch what they want when they want to. The live audience for the MTV Video Music Awards, he said, declined by 51% from 2014 to 2016 among persons ages 12-14, he said, but streamed views of the VMAs in that period have surged. For MTV, the live-stream views on PC and mobile are up 461%; Facebook streams of the event rose 704% and Twitter views rose 190%, according to Magna charts he presented, sourced from Nielsen and MTV.

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The VMAs draw a younger-skewing audience, Hughes noted. Similar trends are in play for the Olympic Games, though, too. Live viewing was down on NBC for the recent Rio games versus London four years ago. But live streaming of the Rio games hit 2.7 million minutes, surpassing the 2.6 billion minutes drawn by the prior record holder, the 2014 FIFA World Cup.  

Hughes showed Cisco research that indicated by 2020 video will account for 82% of consumer internet traffic globally -- and noted an interesting aspect is that 26% of that traffic will be delivered to TV sets.

Other statistical nuggets:

  • By 2020, about 43% of time spent watching video will come via streaming (as opposed to live TV) for adults ages 18-34, up from about one-third of the time in 2014. 
  • In early 2016, subscription VOD services surpassed digital video recording playback as the preferred method of on-demand consumption, vs. a 49%-41% split in favor of the DVR in 2014, per Magna estimates.
  • By 2020, households termed as "cord cutters" should reach around 9 million, from about 2 million in 2014 -- but "cord nevers" will remain an even bigger group, rising to about 26 million households from about 19 million in 2014.  

On Demand is an annual conference produced by NewBay Media's Multichannel News and Broadcasting & Cable.

Kent Gibbons

Kent has been a journalist, writer and editor at Multichannel News since 1994 and with Broadcasting+Cable since 2010. He is a good point of contact for anything editorial at the publications and for Nexttv.com. Before joining Multichannel News he had been a newspaper reporter with publications including The Washington Times, The Poughkeepsie (N.Y.) Journal and North County News.