Catch-up Killed the Video-on-Demand Star?
A recent PVR study caught my eye and got me thinking. Actual Customer Behaviour, in conjunction with London Business School, conducted an 18 months study in a number of homes with personal video recorders, video-on-demand and online video services. The study was conducted for a consortium including Ofcom, the BBC, Channel 4, BT Vision and Microsoft, among others. What particularly interested me was the observation that the availability of an archive of programmes in the personal video recorder reduced the appetite for true video-on-demand. I believe Virgin Media claim that the availability of iPlayer shifted their customers’ viewing habits to circa 40% catch-up. I also thought about my family’s viewing behaviour – check broadcast to see if anything is worth watching, if not check the PVR for unwatched recorded programmes, if not check Sky Anytime for catch-up content, if not check our DVD/Blue-ray collection for anything appealing and if not look at Sky box office for pay-as-you-go VoD. We seldom make it to the box office option – maybe once every other month – and if we do then we only pay for an HD version. If we also had the ability to watch free OTT content on our TV then that would make a paid event even rarer. So a number of things to contemplate:
1) Is the availability of catch-up TV (iPlayer, Hulu, TV.com) enough to satisfy the vast majority of viewer’s TV needs and…
2) If so, will future IPTV business models primarily be license fee/advertising/sponsorship/product placement driven and…
3) Does this put the balance of IPTV content power firmly in the hands of these super-aggregators of quality, catch-up TV?
I think the answer to question 1) is almost certainly yes. Many, many households are happy with just a broadcast service and adding a catch-up facility alongside would probably deliver 80% of the value-add from a broadband-to-the-TV connection. The interesting aspect is whether the remaining 20% of value – delivered through VoD or games or applets – warrants the additional complexity of delivery. A simple Canvas-style box offering DVB/T broadcast channels and catch-up TV would undoubtedly hit the spot for 8 out of 10 viewers so what value investing in the rest? Present all that catch-up as a backward and forward EPG then the service becomes easy to find and use. Add an option to accelerate forward content (pay a little extra to see Top Gear earlier than the transmission) and you have a real winner. And yes I know we all get very excited about the bleeding edge opportunities like TV widgets and T-commerce but my blog audience is definitely not representative of Joe Public and I do wonder if the mass-market will ever give a damn.
An affirmative to Question 2) would require IPTV service providers to acquire new skills and technologies to survive in such a brave new world. In my previous blog entries, I have been banging on about the need to understand a consumer’s consumption habits so that they can be effectively ‘retailed’ to. Unless commercial messages are contextual, current and compelling then they will not break-through and therefore not command the revenues required to make a service providers’ business model work. I don’t dismiss the possibility of additional movie rental purchases or e-commerce revenues or applet sales but these may well be small in comparison. In this new world targeting, data mining, meta-tagging and profiling technologies become the super stars. This could also be a great opportunity for outsourcing – agencies that specialise in doing the difficult matching and thrive on scale. Think DoubleClick for the TV.
Probably most interesting is the answer to question 3). Traditionally the power has rested with the linear broadcast provider for subscription TV services and with the movie studios for VoD movies. The former are now striving for, and in some cases achieving, direct relationships with consumers by in effect competing with their existing channels whilst the latter have been working hard to avoid disrupting the status quo by strictly maintaining release windows. In a catch-up dominated IPTV world, both models will have to change.
It could be that broadcasters combine linear and catch-up packages, brand them completely and pay service providers purely to distribute the content. The service provider falls back to the role of dumb carrier and monetises the network. The broadcaster fronts customer acquisition activity by leveraging their media reach and the service providers offer installation help, guaranteed quality or discounted triple-play bundles. Maybe not an ideal scenario for the service provider but it does allow them to ‘revert to type’ and leverage core skills. The broadcaster gets to exploit its ‘content is king’ position but will always have an uneasy alliance with the distributor. And both need to decide how the set-top box is funded. Is it a universal product which can subscribe to multiple broadcaster services or a tethered offering? Here lies the real opportunity of a Freeview/Canvas-like product, the consumer buys the box and as long as the OTT content is only ‘gatekeeped’ by the consumer then many different content providers could compete for that customer’s loyalty. Sounds like the PC to me – one platform, many services.
The studios have another challenge – ensuring that their VoD delivered movies are promoted. In my BT Vision days, we looked upon blockbuster movies as a marketing expense as the minimum guarantees and revenue shares demanded by the studios make them a loss leader. Now in a world where catch-up is the compelling proposition then the movies need an edge and that for me is achieved by shrinking the release windows. This would maximise the promotion ‘halo’ effect from a film launch. Today if I see a movie on VoD, I can hardly remember its theatrical release unless it is a Harry Potter title or similar. I also believe that broadcasters may well choose to mash-up with film aggregators, like Netflix or Lovefilm, and not bother to contract the movie rights direct – unless that broadcaster owns a studio of course.
So are we entering a ‘catch-up’ centric IPTV world and moving away from the traditional VoD centric model? I would argue so but I know that you all have your own views…
Andrew Burke's Hardcore IPTV Blog 
like your comments, however, I do foresee that IPTV operators have something unique to offer compared to other distributor, e.g. enablers for a better TV experience including improved navigation, interactivity/enhancements to video content, cross platform (mob/pc/IPTV) services, blending of communication/social networking and TV, enablers for personal and interactive advertising (that can be offered as enablers to companies that will sell the inventory)….
Rgs
Henrik
good blog on the state of content availability. What if… instead of hoping that subscribers navigate to VoD, that content was pushed to the STB and shown prominently in the EPG? Since in your own experience consumers check what is on the HDD before going out and trying to find whats on VoD, the content is there waiting for them. Protections around content lifespan are certainly available. In addition there could be revenue models around local goods and services tied to ‘dinner and a movie’ at home. Lots of possibilities if the content is made easier and quicker to get to, and the SP could monetize the extended storage.
Good point Bill – we use Sky Anytime a lot in our household where Sky pushes content over DVB/S to the local hard drive and it is accesses through a dedicated area in the EPG. Sezmi (www.sezmi.com) is doing much the same in the US where they are using a ‘dark’ ATSC channel to carousel transmit programmes that are picked up by the stb depending on a consumption-driven intelligent agent. I believe there is a similar product in the German market.
Very much enjoyed your comments – particularly regarding the backward/forward and fast forward options.
In terms of the future of tv we may need to consider the laptop in the lounge as being very much part of the future viewing experience and as such increasingly (albeit with hot housing) we found in our future tv study (1-3-9 longitudinal media lab tht the PVR was used less for catch up and more for archive since much of the catch up was on the laptop viewed by one viewer (often whilst tv on with others in room). With such choice it would be difficult for most families to reach agreement on what to watch! In truth we find that LIVE invariably wins out, albeit sometimes delayed and that VoD on the 9foot (on the PVR set) is rarely viewed. Viewers usually reach some degree of compromise from what’s on live or on the PVR and the dissenter that may not agree may prefer to watch privately on the laptop.
One question regarding your point on Virgin and i- player – (I don’t have access to their figures) and the claim of 40% catch up since intro of i-player – Q: Does this refer to all PVR main sets alone or is is it refering to PVR main Virgin+ Tv’s AND Virgin on Demand (non PVR) in other rooms in the house? Any further detail on this would be interesting.
Regarding your other blogger Bill, we (ACB) have worked on some designs on the epg where VoD content is prompted alongside live, as ever needs more research. These designs raised another – to what extent does BT Vision, Virgin, Sky have access to knowledge of their customers recorded content or repeat series watched live. Does this determine what Sky anytime delivers for example or is it more random?
I agree with your comment on movie release dates, but as we all know the hollywood movie companies are slow moving juggernauts when it comes to change. Offering at home VOD movies that werent far behind cinema release dates at reasonable prices would in my opinion do a lot to stamp out copyright infringement. How many families out there are guilty of watching a bad quality downloaded movie. Most in their eagerness to watch the latest release will put up with quite bad quality. The VOD movies would most certainly rule the roost in most living rooms if the release dates were shortened. Im sure most would be willing to wait a couple of weeks and maybe pay a slight premium in price to watch a recent release movie. Im sure that as far as ad placement goes if a run of advertisements were placed at the beginning of these rapid release movies similar to the cinema (pearl & Dean) then revenue could be increased quite easily. Most people are not interested in movies which are on VOD a couple of months down the line, and easily available pirated DVD’s are killing this market. I believe this would offer the hollywood studio’s a really good way of hitting back at the pirates, but would they ever do it?
Andrew, interesting comments and an interesting thread. I do agree with Bill’s sentiment. Much of consumer behaviour is I suspect driven by how content from various available sources is presented to users today. You comment about your family’s behaviour of “going to live before going to anytime before going to planner and then box office”. Our family viewing works in pretty much the same way. But what was also intersting was how that behaviour changed when Sky introduced their new HD menu. Previously, as you know there was a need to move “up” out of the linear menu to the home menu before coming back down into anytime or the PVR. As a result we needed to be desperate before we went hunting for something to watch on those services. The new HD menu integrates those three areas at the same level and in the same menu structure enabling us to jump sideways from one service to another with a single button push. That improvement in simplicity of access has increased significantly our anytime and pvr viewing. Apply the same principle to VoD – integrate feature VoD programing within the existing linear schedule, provide simple one push buttons to move to watch additional programs in a series, offer ad free viewing for a price, and you have the opportunity to change viewer behaviour, to change the nature of the TV proposition. I would agree that VoD revenues are unlikely to be a significant proportion of total revenues when so much FTA exists, but I do believe paid for content can offer useful incremental revenue. Creativity in presentation, and perhaps a detailed sideways look at how Apple is changing the mobile industry, may well change how we interact with our TV.
It was an interesting observation that Mike Grant has made regarding the EPG developments that Sky have made with their HD service and it will come as no surprise that this is just part of their on-going R&D activities in this area. I would hope their further improvement in EPG would specifically address a more user friendly search option.
The results of the home research that Andrew Burke did and was backed up by the other bloggers would surely change in time if an EPG could search live, VoD, catch-up and IPTV archives in a Google like way, and sort out any pay-for-view issues in a seamless and cost effective way.
In our house the living room TV is still managed in a democratic way but we are all driven away from watching anything if the next two hours view on the Sky planner hasn’t grabbed our attention. Maybe it is a case of poor EPG is driving us to watch IPTV on our laptops. However this is far from a great user experience, as bandwidth availability is throttled at peak evening slots and if BT and the other ISP’s have their way we will soon be charged extra for the bandwidth this uses.
Addressing all those issues along with a new EPG that is searchable across all content offerings and rapped up in a new STB is surely the next step.
It will also be interesting to see what comes of the BBC/BT/ ITV et al, joint venture ‘project Canvas’, with their mission to produce a VOD IPTV standard on STB. The consortium want to create “new generation of subscription-free devices, carrying free to air channels and a huge selection of on demand TV services like iPlayer and ITV Player”. In theory, that could open the door to other platforms like Joost, Babelgum and Vuze being available on the same living room TV set.
Whilst catch-up might be killing the video star, it’s the one box solution that would surely keep them all alive and kicking?