Live TV Viewing Is Flat, DVR Viewing Is Up Slightly, And Online Viewing Is Still Tiny, Contrary To What You May Otherwise Have Heard

Categories: 1-Featured,TV Business,TV Ratings Reference

Written By

September 10th, 2013

retro tv television

If you spend too much time listening to some people you'd think nobody watches TV anymore, they all watch online, and TV viewing is dead.

For those folks, actual data is often inconvenient, like the numbers in this research note from Brian Wieser at Pivotal Research:

BOTTOM LINE: Yesterday, Nielsen published its "Cross-Platform" report for 2Q13. TV continues to hold up well - and dominate - among all audience groups, as it remains the broadest reaching medium with the greatest amount of inventory tonnage. The data illustrates why traditional TV will continue to be the primary beneficiary of ad budget allocations for large brands. This is favorable for companies under our coverage including CBS, Viacom and Discovery, but also highlights that Facebook and Google will need to focus on non-TV budgets to generate the growth that many investors expect from their online video initiatives.

Nielsen's Cross-Platform reports are key tools in assessing media consumption trends, as their processes reflect input from many of the industry's best researchers and decades of experience of stratifying their samples. The Cross-Platform report data is more meaningful than the ratings data much of the industry focuses on because this report is based upon more forms of TV consumption, including local and national viewing. By contrast, the NTR sample which most observers look at weekly or monthly is part of an incomplete sample for those looking to assess broader viewing trends. The Cross-Platform data does have limits, such as the exclusion of consumption on connected TVs and tablets. It is also limited by small sample sizes which mean that smaller audience groups may have large standard errors, leaving some room for interpretation of many of the figures produced in these reports. Historical comparisons may also be challenged by processing errors or other methodological changes.

Key points from our analysis of Nielsen's latest Cross-Platform report include the following:

·         Total time with "traditional" (i.e. live-only) TV was flat year-over-year, per person. We calculate nearly 11 billion person-hours of time-shifted viewing (i.e. via DVRs or VOD) during 2Q13. This amounted to 8.6% of TV viewing in the quarter up from 8.0% in the year-ago period. However, we calculate 114 billion person-hours of live TV viewing hours occurred during 2Q13, slightly higher than in 2Q12, meaning that in absolute numbers traditional TV held up despite a higher share of time-shifted viewing. We note these figures incorporate Nielsen's population estimates (which were flat year over year, vs. US Census Bureau estimates of 1% growth year-over-year).

·         Viewing of TV by kids 2-11 was flat per-person during 2Q13, although down in aggregate year-over-year largely because of Nielsen's reduced population estimates. During the 2011-2012 broadcast season, Nielsen incorporated an estimated population of 41.2 million kids 2-11, but during the 2012-13 season reduced that estimate by 4%. This has the effect of depressing reported kids' viewing levels to a notable degree, although the effect will rebound as Nielsen's population estimates will generally converge with those of the US Census Bureau.

·         Online video viewing reported by Nielsen equated to 2.3% of total TV viewing among the whole population, although unmeasured tablet viewing should add significantly to this amount. Among the population who actually watch online video content, the equivalent of 4.4% of viewing was reported to have occurred via online video. Among kids 2-11 only, the 1.7% of total viewing occurred via online video, with 3.1% of viewing among the sub-set that actually watched online video during the quarter. Historical data was characterized as not trend-able due to a processing error which rendered 2Q12 as inflated. However, we also note that these figures are likely understated given the absence of inclusion of tablets (although with only 27 million households - or around a quarter of the total - in possession of tablets as of 2Q13, our guess is that at best online video viewing might be double the stated figure).

·         Traditional TV remains relatively broadly popular, while online video and internet use in general remains concentrated among relatively smaller groups of the population. Nielsen's data indicates once again that while there is some concentration among TV viewers. The 16% of the population not on the internet paired with the 17% heaviest consumers of TV - one third of the population, in total - account for 64% of TV viewing. However, virtually the entire population continues to watch significant volumes of traditional TV (even the lightest 17% of TV viewers continue to watch 8x more traditional TV than they watch online video). Concentration among use in other media is much worse, and light users are very light users. For example, the 10% of the population which are the heaviest users of online video account for 84% of total online video viewing. Including the next 10% heaviest users, we can identify 20% of the population as accounting for 94% of online video consumption. Similarly, we can identify that less than 25% of the population account for nearly 90% of time spent with the internet more broadly.

As has long been the case, the data included in Nielsen's report highlights the nature of traditional TV as the medium best able to satisfy reach and frequency-based media goals against broad populations. This is important to note as web-based media owners such as Google, Facebook and others position themselves as capable of capturing traditional TV budgets. While there will always be certain marketers who look at the market through different lenses, or alternately get comfortable with the hybrid measurement processes and workflows that allow them to budget for and execute against video in a relatively holistic manner, our view is that these efforts will account for a small minority of video-based ad spending for the foreseeable future. Instead, we continue to believe that online video will primarily capture share from budgets which would otherwise be directed towards traditional premium display advertising (including conventional display inventory which would otherwise be sold by portals such as Yahoo, AOL and MSN).

FULL REPORT INCLUDING DISCLOSURES CAN BE FOUND HERE: TV Update 9-10-13.pdf 

 
  • Oliver

    Isn’t there a huge conflict of interest from Nielsen given that they make almost all their money from traditional TV?

    I’m sure YouTube and Netflix, who make all their money from online viewers, would feel differently.

  • tjw

    Bill,

    Can you help me figure something out with the Cross-Platform Reports? In the appendix, Nielsen defines “Traditional TV” as

    “On Traditional TV includes Live usage plus any playback viewing within the measurement period. … On Traditional TV reach includes those viewing at least one minute within the measurement period. This includes Live viewing plus any playback within the measurement period. First Quarter 2013 Television data is based on the following measurement interval: 12/31/12-03/31/13.”

    The way I interpret this is that anybody watching DVR playback of a program aired during this period by the end of this period is considered “Traditional TV.” So if a program airs on January 1st and I watch it on March 30th, that’s “Traditional TV” but if I record a program on March 30th and watch it on April 1st that’s “DVR playback.”

    Am I wrong? It seems like Pivotal is using a different interpretation, which is what I used to think too, but I can’t justify that interpretation with the reports.

    Am I missing something? Is the “measurement period” they talk about different from the “measurement interval”?

  • http://tvbythenumbers.com Bill Gorman

    “Isn’t there a huge conflict of interest from Nielsen given that they make almost all their money from traditional TV?”

    I’m pretty sure Nielsen makes less than half its revenue from TV measurement. They measure lots of other things.

    As for conflict of interest, they measure (or at least report) what people pay them to measure.

  • http://tvbythenumbers.com Bill Gorman

    “Am I missing something? Is the “measurement period” they talk about different from the “measurement interval”?”

    I am pretty sure measurement period refers to Live, Live+Same Day, Live+3 Day, Live+7 Day, etc.

    And measurement interval would be weekly, monthly, quarterly, annually.

  • DanaK

    Oliver, if Netflix were more transparent about their numbers, we might be able to compare, but they don’t release that information. I do suspect that based on everything I’ve seen, TV viewing is still huge and online viewing is small, but growing. DVR use is growing, but isn’t much more than 50% of viewing at the moment. So things are on the cusp of huge changes, but not just there quite yet.

  • tjw

    @Bill,

    Okay, thanks. I thought I was going crazy.

  • http://tvbythenumbers.com Bill Gorman

    “DVR use is growing, but isn’t much more than 50% of viewing at the moment.”

    No. As the report notes, DVR viewing is 8.6% of ALL viewing.

    However, a subset that we see regularly, like scripted, broadcast primetime, new episodes, adults 18-49, DVR viewing is already over 50% for many shows.

  • Percysowner

    This actually doesn’t surprise me that much. Before I had a DVR I did a lot of viewing using my VHS to record shows. Basically, my viewing habits stayed the same, only the technology changed. I suspect that people who taped shows to watch later were the ones who moved to DVRs and then were able to DVR 2 shows at one time instead of one. People who watched live, continued to watch live.

  • DanaK

    I would assume older people watch live the most, but after using VCRs and DVRs to record shows for at least the last 20 years, it drives me crazy to watch any of my shows live these days. And I can record more than 1 program at once, so I can’t imagine what those folks only watching 1 channel are missing.

  • halloween

    is netflix thur gaming machines and bluray players even counted here ?

  • Mike

    DanaK

    For those of us on a tight budget, it boils down to the choice of having the DVR or feeding our children. With the rising costs of cable and satellite, it is just enough to have TV to watch much less all the frills that go along with it sometimes.

    Personally when you have food on the table you don’t mind watching 1 channel at a time.

  • tjw

    @halloween,

    No, because Netflix doesn’t pay Nielsen to collect their data. Also, Netflix doesn’t air commercials, so it’d be pointless to have Nielsen data.

  • shogun

    And, this is why you should never listen to posts about how Netflix is a game changer and networks are dying outside of this site. Everyone else is delusional. Granted, there are quite a few delusional people on this site as well, but it is a much lower percentage.

  • justin

    This doesn’t surprise me. As much as people like to think majority of viewers watch their shows via online it’s not nearly as many as it probably seems.

    Personally I DVR everything and have for about the last 5 years. I only watch live TV for major events. Overall, I don’t see online viewing/DVR taking over live TV for at least another decade or so, maybe before.

  • shogun

    @Halloween and Oliver.

    Netflix collects their own viewership information in pretty much the same way Youtube does. The fact that they won’t release that info tells you all you need to know about how much they are actually changing the TV model. Even HBO occasionally release total viewers info.

  • Igwell

    we can identify 20% of the population as accounting for 94% of online video consumption

    If these are mostly teens who don’t change these habits, then that’s how “the game” changes.

  • tjw

    @lgwell,

    That 20% still watches almost nine times more television on TV (including DVR) than they watch online.

  • Steve A

    But ratings consistently go down every year across the board. I wonder if they counted illegal downloading. Most ppl still use traditional tv, but with skyrocketing cable bills, online a la carte viewing are the future.

  • Martin

    There are still many obstacles that online viewing face: on average the internet connections around the globe are still too slow and the faster ones still too expensive.

    And then there’s the fact that watchcing network tv is free, while Netflix isn’t. And on top of that, it’s not enough to pay for Netflix – you’ll still have to subscribe to several other streaming services to get a wider selection, since no streaming service offers all tv shows in one package like a normal tv set does.

    To be honest, online streaming is far too expensive (subscription fee, internet connection etc) at the moment for the huge masses to move from ad-supported network and cable tv to subscription based streaming services, which don’t even necessarily offer the most recent material.

  • http://tvbythenumbers.com Bill Gorman

    “But ratings consistently go down every year across the board.”

    Wrong.

    Broadcast primetime viewing has been declining for ~30 years.

    But most of that decline has been soaked up by cable network viewing which has been increasing for ~30 years.

    Total TV viewing in the US has been flat to very slowly growing for a very long time.

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