Steve Koenig, director of industry analysis at the Consumer Electronics Association, talks about the future of TV viewing in light of the CEA’s recent viewing habits study. “Consumers continue to crave video of all forms, including broadcast TV. The way they consume video may have shifted in recent years, but they’re still watching. Local news is one of the things American stations do best. That’s an opportunity to push that local content over the Web, using various apps and platforms. If consumers can find that content online, they can watch on their schedule and on the device of their choosing.”
Recently, the Consumer Electronics Association published The Evolving Video Landscape, a comprehensive Web-based survey of the video viewing habits of more than 1,000 U.S. adults. Naturally, this CEA study focuses not so much on what consumers are watching, but when, where and especially on which devices they’re using.
Veteran tech analyst Steve Koenig, CEA’s director of industry analysis, says the study contains both good news and some caveats for broadcasters. “Consumers continue to crave video of all forms, including broadcast TV. The way they consume video may have shifted in recent years, but they’re still watching. Broadcasters should meet this demand by providing content in a variety of forms across a variety of platforms.”
Of course, the devil is in the details, and the study provides broadcasters with much to ponder:
- Despite growing options, most consumers watch video at home (98% do so.) About two-thirds of that home viewing is done on a television set, whether HDTV (44% of the time) or an analog set (18%.) Laptop and desktop computers account for another 30%, leaving only 8% of viewing for smartphones and tablets.
- For broadcasters, complacency is not an option — 63% of respondents report watching some sort of internet content; 38% say they’re watching more internet video than a year ago. Of those people, 57% choose “convenience” as their main reason for doing so. The internet content accessed most often? Regular TV shows (42%) and movies (41%).
- TV sets are now a Trojan Horse, delivering competing services alongside traditional shows. Consumers now use their TVs to listen to music (34%), talk radio (21%) and web surfing and social media (each 14%.)
Koenig and his CEA colleagues are still debating the deeper meaning of these and other data points. But some future trends have already emerged, as Koenig reveals to Contributing Editor Arthur Greenwald in this edited transcript:
With so much publicity for iPads, smartphones and digital services, were you surprised that so many consumers still primarily watch traditional TV shows on their home TV sets?
When people say are going to “watch TV,” they are still generally focused on the couch in the living room, if you will, and their primary display screen. But we also see consumers watching more content on a PC, tablet or handset, as well as more over-the-top services. But as great as Netflix, Vudu and Hulu are, they’re not comprehensive. So we see a continued attachment to physical media — DVDs, Blu-ray, even VHS tapes. People are really picking and choosing a mashup of content sources, which is reflected in a mashup of devices used to consume that content.
Other studies have shown that consumers choose the “best available screen” in terms of picture and sound quality. One of the things that jumps out in your study is that many viewers now postpone watching until that better screen is handy.
Yes that’s true. Just the preponderance of DVRs out there, plus catch-up TV content on the various services makes it easy to shift viewing times — unless you’re keen on watching a live sports event (out of your home) for example. So TV is still the centerpiece of technology in American households and I don’t see that changing in the foreseeable future.
Your study suggests that laptops and tablets and smartphones are being used less often to watch primary content than as a second screen to check the Web or email while watching a larger TV.
All kinds of viewership is going to increase on these alternative screens, primarily because consumers are all on the go and have shown they really want access to the content they care about, anytime and anywhere. If they’re traveling, they want to watch programs on their tablet or computer or check the latest sports clips on their smart phone. But our research shows that the No. 1 place that people use tablets is in the home — as a personal display in the bedroom, for example, instead of a TV.
But your study also suggests that may be changing. For example, when you ask consumers about their next video device, smartphones lead the shopping list at 38%, then televisions at 34% followed closely by tablets at 33%. What do those sales projections tell you about where video viewing is headed?
Well, the tablet is the fastest-growing product in the history of the technology industry. Sales for DVD players, Blu-ray, HDTVs all ramped up very quickly, but tablet sales are just orders of magnitude above these. Today, there’s a tablet in about one in five U.S. households. Remember, the original iPad first shipped in April of 2010. So in just two years the market penetration has climbed to 22%. And our projections are that that’s going to reach the 50% mark within five years, if not within four.
But oddly enough, a top-of-the-line iPad can cost more than a discounted big screen HDTV.
Right. You wonder how some of these manufacturers are making any money, even though they go to great lengths to keep those TV boxes moving through the channel. In some ways the industry has painted itself into a corner [by teaching] consumers to expect that price to be lower and lower every year. That’s why I have said the TV manufacturers have been addicted to growth. But reality is starting to set in and they realize that this is just not sustainable.
This year at CES the TV manufacturers were trying to reverse that trend by showcasing premium models with new features at a higher price. Besides 3D capability, Samsung and LG were offering “SmartTV” with voice-controlled program guides and special apps with proprietary video content.
Yes, and we have been seeing that almost yearly. Connected TV and Samsung’s SmartTV are great examples. Consumers demand more than “me too” services. In addition to voice recognition and gesture control, I’m also excited about TVs with built-in video conferencing or Skype. I think those are convincing value-added features that might be enough to get consumers to buy.
But I think the next really big upgrade cycle is probably coming in the back half of this decade: namely OLED and 4K screens. (Editor’s note: Organic Light Emitting Diodes and screens with 4,000 horizontal pixels vs. 1,080 for HDTV.)
For starters, OLED is the best technology that we have today for displaying content. Compared to a plasma screen, it’s a big leap in contrast ratio and energy efficiency. It will cost only pennies per year to run. It’s also much thinner and lighter, so a huge screen can be hung on a wall like a portrait [instead of requiring a special mounting frame].
And on those larger OLED screens, you’re going to need that 4K resolution to keep the clarity and picture quality [equivalent to] what we have today with 1080p on a 50- or 55-inch set. Of course, broadcasters and others may say “Oh please, we’re just now settling in with 1080p and HD and you want us to re-engineer our studios and trucks again?”
So you think when consumers see the better picture and lower energy costs, they’ll be willing to pay more?
Yes, when you combine them with improvements like connected SmartTV and voice or gesture control. I don’t think any of those things by themselves will be enough to match the massive sales we saw in the last decade with flat panel and HD upgrades. But when you combine a better picture with those features at an attractive price point, that’s when you reach the critical mass for a compelling upgrade cycle.
This may be an unfair question, but if Apple does indeed introduce an AppleTV, what do you think will set it apart?
Well, Steve Jobs said [to biographer Walter Isaacson] that he’d “cracked the code” to making a TV that’s really simple to use. If it’s a real product, I would expect the main focus to be connected services and Internet content from Apple’s iTunes ecosystem instead of broadcast TV.
I think it will also have a DTV tuner to give it extra appeal. I think it will let you transfer content seamlessly from your iPhone or iPad and use those devices interactively as a second screen. I think the little AppleTV set-top box that’s available now established a beachhead in the living room. Apple can build all those features plus a whole bunch of extras into one elegant set.
Speaking of set-top boxes, do you think products like Roku or Boxee or Slingbox will continue to be stand-alone devices, or will their functions become a chip or application within the screen itself?
They will be absorbed. Since the start of the digital age, there’s been an ongoing combination of devices and features into fewer platforms. In the analog age we had single-purpose devices like VCRs and turntables. Now we use a handful of versatile devices on a daily basis. I call this process C.E.-volution. The C.E. stands for consumer electronics. This is more than convergence. It’s how changes in technology affect business models, including which products live or die.
And do those changes extend to how consumers will watch video?
What we’re witnessing here in the history of consumer electronics is the beginning of homogeneity between devices and locations. In the home, on the go, wherever you are, whatever you’re doing, you will have a similar experience with increasingly natural interfaces controlled by touch, gesture and voice. And content, information and communication are also becoming more seamless. This is the decade when homogeneity will occur.
So if you’re the general manager of a television station, what dangers or opportunities does this study reveal?
Well clearly the dangers are that fewer and fewer people might tune in via the old methods. But the opportunities are to engage consumers where they are and increasingly that’s on the Web. Local news is one of the things American stations do best. That’s an opportunity to push that local content over the Web, using various apps and platforms. If consumers can find that content online, they can watch on their schedule and on the device of their choosing.