As you know, Better Software Group team is active on the digital TV market. We work with global business partners, analyze precisely market trends. Under this link you will find several thematic analyzes and reports. The analysis concludes with an important conclusion: the television slept online revolution and lost the generation of Millenials and tech geeks. It’s hard to disagree with BI Intelligence report The Future of TV 2017 that traditional TV landscape was linear. There was set time and on a set home network. TV landscape 2017 is highly different. New media sources continue to gain a larger share of watchers attention. Let’s note that other media includes time-shifted TV, TV-connected devices and al lis based on Internet and digital channels. Consumers of all targets, mainly Millenials, are watching less traditional TV. What is really worse, there is an ever evolving trend traditional TV market audiences are getting older year by year. Is TV as a service and a form of spending a time is dying? Of course not. Just traditional definitions are changing and evolving. For more and more people, especially group defined ans Millenials, TV is anything we can watch. On any mobile device like smartphone, tablet, laptop or console. Any time, any place. The new TV market is absolutely social, digital, cross-platform, multi-screen and multi-channel. I guess no one doubts, modern TV is on every device. So what is the future of this popular entertainment, information channel? Please, find below some attempts to present several perspectives.
TV and Internet connected devices
First of all, some important factors affecting the market situation. The most important of these is the Internet and the number of TV-connected devices that give us access to television and online viewing on the chosen form of the screen. More and more people own and use to stream video content to their TV set. These devices with streaming video services, provide consumers with a new method to watch video on their television sets. Nielsen conducted an analysis to determine how many U.S. homes own various devices and how data has trended over time. Over 23% of TV homes own a digital streaming device. Which brands are the most popular? Roku, Google Chromecast, Apple, Amazon Fire TV. In addition to the four brand-specific devices, nearly 11% of homes have streaming players from other brands and PC/tablets/smartphones connected to their television sets. Smart TV’s functions like multimedia are built into television sets and are connected to broadband connections, which has opened the streaming video content world to many more people than in previous years. When it comes to video game consoles, penetration has remained flat on a year-over-year basis. With 42% of homes owning a Microsoft Xbox, Nintendo Wii and Sony PlayStation. The major device brands (including older and newer generation platforms) have similar levels of household penetration.
By the end of 2020 there are forecasts to be 260 million installed devices attached to the Internet and able to deliver apps to TVs, according to the latest NPD Connected Intelligence analyze. This represents 31 percent growth in TV-connected devices over the forecast period, led by smart TVs and streaming media players. In fact, smart TVs will drive nearly half (48 percent) of installed internet-connected TV device growth through 2020, while streaming media players will contribute 31 percent of ownership growth. The TV-Connected Device Forecast looks to shed light on how new generation smart TVs and evolved streaming media boxes and sticks will shape home entertainment. According to the forecast, by 2018 household penetration of smart TVs will achieve relative parity with streaming media players as platforms delivering apps to TVs market.
Picture 1: Global Internet-connected TVs installed base (BI Intelligence, Digital TV Research)
Mobile video traffic growth
In 2016, global mobile video traffic amounted to 4,375,000 terabytes per month. Till the end of 2017 is expected to almost double to 7,225,123 TB per month, according to the Statista market research. Mobile data traffic is increasing at a huge rate. This thesis is confirmed by another market analyse. A study from Cisco confirms that by 2020, video will account for a staggering 75% of that traffic. That’s up from 55% in 2015. The statistics for North America are even higher, coming in at over 77%. Cisco’s annual Visual Networking Index forecast (VNI) states that mobile data traffic has grown 400-million-fold over the past 15 years, and the increased number of users, mobile devices, and innovations in technology are driving mobile video consumption through the roof. The study predicts that by 2020, there will be more than 11.6 billion mobile connected devices, exceeding the world’s projected population at that time (7.8 billion). That’s going to have a huge impact on video traffic. Mobile video traffic predictions look more like this:
- By 2020, over 75% of global mobile data traffic will be video content
- In U.S. video will account for 77% of total mobile data traffic by 2020
- Smartphones will account for 81% of total mobile traffic by 2020 – up from 76% in 2015
- 4G connectivity share is predicted to surpass 2G by 2018 and 3G by 2020
- By 2020, there will be 432M global WiFi hotspots – up from 64M in 2015
- 7 trillion video clips will be uploaded in 2020 – 2.5 daily video clips for every person
- Global mobile data traffic will reach 30.6 exabytes per month in 2020, up from 3.7 exabytes in 2015
- Video will represent 82% of all IP traffic in 2021, including consumer and business IP traffic, amounting to a million minutes of video transmitted through networks every second. Internet video, IP video-on-demand, videos exchanged through file sharing, video-streamed gaming, and video conferencing are factored into this estimate. Last year, video accounted for 73% of global IP traffic.
Picture 2: Mobile data traffic volume from video (BI Intelligence, Ericsson)
Mobile devices and mobile Internet penetration growth
As of February 2017, mobile devices accounted for 49.74 percent of web page views worldwide, according to the Statista market research. The Americas and Europe have the highest mobile broadband subscription penetration rate, around 78.2 percent and 76.6 percent respectively. The global average stood at nearly 50 percent in 2016. There are sevaral trends in the market, and it’s confirmed by WeAreSocial statement:
- More than half the world now uses a smartphone
- Almost two-thirds of the world’s population now has a mobile phone
- More than half of the world’s web traffic now comes from mobile phones
- More than half of all mobile connections around the world are now ‘broadband
- More than one in five of the world’s population shopped online in the past 30 days
Online video consumption is one of the most popular Internet activities worldwide. According to recent industry data, online video penetration has is near universal in a number of leading online markets with Saudi Arabia leading at a 98 percent online video usage reach as of January 2017. In 2020, the number of digital video viewers in the US is projected to surpass 232 million. The most regularly watched categories of YouTube audiences in the US were videos uploaded by people or brands. Online video viewing will rise 20% in 2017, according to Zenith’s Online Video Forecasts 2017. Global consumers will spend an average of 47.4 minutes a day viewing videos online this year, up from 39.6 minutes in 2016. This increase will be driven by a 35% increase in viewing on mobile devices (smartphones and tablets) to 28.8 minutes a day, while viewing on fixed devices (PC, laptop, smart TV) will rise by just 2% to 18.6 minutes a day.
2017 will be the peak year of fixed-device video. Global consumers will spend an average of 19 minutes a day viewing. Viewing on smart TVs continues to rise, but not rapidly enough to compensate for the decline in viewing on desktops and laptops. Consumers just shift their attention to mobile devices. According to the Zenith’s team of analysts viewing on fixed devices to shrink 1% in 2018 and 2% in 2019. Mobile video viewing – averaging 29 minutes a day this year – will grow 25% in 2018 and 29% in 2019, driven by the spread of mobile devices, improved displays and faster mobile data connections. By 2019, mobile devices will account for 72% of all online video viewing, up from 61% this year.
Picture 3: Devices in US households by penetration (BI Intelligence, Nielsen)
You should pay attention to the changing landscape in the area of mobile content (application) and dynamic growth of the video category. A video that includes the digital tv category is much more popular than the social networking area. For the last few years, Netflix and premium video streaming services were viewed as potential disruptors to traditional pay-TV. This characterization is a better fit with Netflix’s investments in original content. This strategy should still lead to subscriber and engagement growth as primary consumption channels shift. However, with limited libraries, premium subscription services will find it difficult to replace the existing TV paradigm by themselves. Balance of power will shift in the coming years thanks to the growth of short-form and live video on platforms like YouTube, Facebook or even Snapchat.
Picture 4: Mobile traffic by application (BI Intelligence, Ericsson Mobility Report)
Mobile video streaming
According to research by mobile app analytics firm AppAnnie, in several European markets both the number of users on video streaming apps, as well as the data usage skyrocketed. Ericsson’s most recent mobility report seems to concur, as their forecast is that as much of 70 percent of mobile data traffic will be video in 2021. That’s a compound annual growth rate (CAGR) of 55% from 2016. Younger generations are already massively consuming video content through mobile devices and it’s not limited to short-form content like 5 minute YouTube clips: 62% of 18 to 24-year olds reported watching TV on their mobile devices. Furthermore, the hours per week they spend watching these videos is approaching that of free online video platforms like YouTube, Vine and Twitch. Together, the time spent on social and free video already eclipses the time spent on traditional cable- and satellite TV according to the Knect365.
Live streams and mobile video makes the connection with other media such as television more compelling. Since mobile is location-sensitive, advertisers are learning that combining the small screen with larger screens to target specific messages provides a higher return on ad spend. Mobile could become the catalyst to increase linear TV ad spend based on behavior. Videology has seen a 273% increase in spending on linear TV advertising campaigns and an 840% increase in the number of linear TV impressions available to be bought and sold programmatically. Netflix and Amazon TV, two of the most popular providers for videos on demand, are already providing video streaming in 4K and a large number of other broadcasters are following in their footsteps. The largest video platform available, YouTube, is also distributing 4K videos, so this trend is definitely not going anywhere anytime soon. According to the Hub Research only 13 % people say that favourite or preffered network brands are a bif factor in their desicion about what to watch on the screen. Less than half can identify the original network of a show or movie that aired on the SVOD channel. As PCMAG says, streaming services started as an add-on to DVD and digital download offerings with a trickle of second-run movies and TV shows. But speedier internet connections, an abundance of dedicated streaming video devices, and an explosion of mobile video has allowed services like Netflix and Amazon to bulk up streaming libraries, invest millions in original content, and give traditional pay TV providers a run for their money. You, as a consumer, don’t need special, dedicated equipment for watching video streaming services. You just need smartphone, tablet o rany any other mobile device Internet-connected.
Picture 5: Mobile consumer preferences (PWC Videoquake)
Social networks video channels
Globally, 47.4 minutes of online video is watched daily in 2017. It’s a 20% year-over-year increase, driven primarily by mobile. Viewing times will reach 28.8 minutes per day, a 35% increase from 2016. As we can notice in DreamGrow content report, in 2017 social media has become the crucial part of digital communications strategies. Social media delivers measurable results in sales, leads, and branding. It also enables to reach a large number of people at a low cost. The world of social media networks is dynamic and in constant change. Visual and video content is more than 40 times more likely to get shared on social media than other types of content, according to the HubSpot market research. That’s why there are 1.5 billion logged-in Youtube monthly active users visiting the website at least once a month. Social networking statistics are amazing. Just look (by WordStream):
- 82% of Twitter users watch video content on Twitter
- YouTube has over a billion users, almost one-third of total internet users.
- 45% of people watch more than an hour of Facebook or YouTube videos a week.
- More than 500 million hours of videosare watched on YouTube each day.
- More video content is uploaded in 30 days than the major television networks have created in 30 years
- 87% of online marketers use video content
- Internet video traffic is 69% of all global consumer Internet traffic in 2017
The reason why these major social networks are optimizing their platforms, as we can find in Ama.org market analyse, is because the majority of search traffic will be a result of video content, and future marketing projects will include high spending on digital. While social is expected to grow significantly, video ad types will boom 184% from $9.9 billion to $28 billion in ad spend – making them the fastest growing ad type.
Picture 6: Video content on social networks channels (BI Intelligence)
Source: AppAnnie, BI Intelligence, Ericsson, HubSpot, Nielsen, WeAreSocial, Zenith.
Cover picture: InGage