Emerging Growth Opportunities for Connected TV and Advertisers DECEMBER 2012
Executive Summary In August 2012, YuMe released in-depth consumer research providing a detailed look at the existing Connected TV ecosystem, including the when, where, why and how of Connected TV consumers and use. Following on the heels of this comprehensive study, YuMe now enhances these findings with a look at where the Connected TV marketplace is headed, including the following: • insight into the rapidly growing acceptance and use of Smart TV and Connected TV devices • d etails about the next wave of adopters • a nalysis that shows how this dynamic new media environment is gaining strength through both an expanding population of users and greater use among existing users Updated insights relevant to advertisers show how the Connected TV marketplace will continue to grow in value as a complement to traditional video advertising environments. Connected TV users and intenders alike view online Connected TV video content as an enhancement to their current video viewing options rather than an outright replacement. These early and early majority adopters continue to be avid media users across all platforms. And the members of this universe continue to skew young, male and diverse, resulting in a marketplace that represents an important opportunity to reach a concentration of valuable and sometimes elusive consumer groups.
Methodology YuMe again engaged Frank N. Magid Associates to develop and integrate custom lines of questioning into Magid’s 2012 Video Entertainment study that provides insight into the next wave of growth in Connected TV adoption and use. Connected TV is defined as not only Smart TVs featuring direct connections to the Internet but also as sets integrated with Internet-connected game consoles, Blu-ray players and video streaming devices such as Apple TV and Roku. The findings presented in this report are based on a survey conducted November 9 through 15, 2012 among 1,500 U.S. consumers ages 12 and older. The final sample of consumers is representative of the U.S. population in gender, age and ethnic background and is reflective of the geographic distribution of U.S. consumers. Respondents were recruited and interviewed online using a high-quality online sample provider.
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Key Findings Connected TV use grows significantly: Year-after-year growth in Connected TV for video viewing use jumps from 30 to 35% in the past year. Growth is driven evenly by the adoption of Smart TV sets as well as by additional consumers integrating Internet-connected devices with their TV sets. In all, 47% say that they have connected a TV to the Internet or an Internet-connected device for the purpose of viewing some type of content online. Additional rapid growth to come: Notable growth potential in Smart TV adoption emerges based on a combination of record interest in new TVs in 2012 and strong interest in TV-Internet connectivity through both Smart TV and Connected TV device adoption. Smart TV sets are high on TV shoppers’ list: Smart TV shoppers, compared to existing Smart TV users, place a high value on video streaming, but as intenders, place less value on non-video related activities. Compelling opportunities exist to introduce new Smart TV owners to the full suite of Internet-based onscreen activities based on this gap between shopper anticipation and existing Smart TV owner behavior. Connected TV content satisfaction exceeds that of On Demand: Connected TV users are generally satisfied with the video content they find on the Internet to fuel their online viewing, and they are actually more satisfied with the movies and TV shows they find online than they are with the viewing options found on Video On Demand offerings from cable and satellite providers. As a result, the momentum for growth in Internet to TV-based video viewing is also significant. Voice activation could drive stronger Smart TV use: A significant proportion indicates that use of a voice-activated remote control would drive them to use their Smart TVs more often. Connected TV adoption barriers can be easily overcome: The most significant barrier to Connected TV use is lack of knowledge — among those who have not connected a TV to the Internet, one-third (representing about 20% of all consumers) say they simply don’t know how to go about making these connections. More difficult to overcome — another third indicate that they are satisfied with their existing viewing options and therefore do not see a need for this connection. Communication is also needed to introduce them to the robust, high-quality set of content options now available to consumers on the Internet. Two-screen TV use proliferates across vast majority of TV viewers: Two-screen TV use is common among three-quarters of consumers. While the majority of two-screen use is driven by computer users for activities unrelated to their TV viewing, those using smartphones and tablets while watching TV are much more likely to use the devices for activities that do relate to their viewing.
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Connected TV Viewing Grows Significantly
42% 35% 30%
Connected TV
2012
7%
2013 (estimate)
11%
2011
2013 (estimate)
2012
19%
2011
In 2012, we see an additional 5% of consumers connecting a TV to the Internet for the purposes of viewing Internet content. In addition to strong growth in Smart TV adoption, we also see more consumers connecting TVs to the Internet via game consoles, Blu-ray players and streaming set-tops. While Connected TV growth continues to be led by young male consumers ages 18 to 34, a solid portion of the new growth comes from those under 18 and those 35 to 44 as well.
Smart TV
Additional Rapid Growth To Come Consumer interest in television sets is reaching historic highs as they have more and more ways to benefit from TV set technology. First we see that record numbers of consumers indicate that they have replaced their primary TV in the past year:
The Proportion Of Consumers Reporting A Primary TV Purchase In The Past Year Grows To Highest Level In This Study’s Lifetime 2002
10
2003
10
2004
10
2005
10
2006
10
2007
10
2008 2009 2010 2011 2012
0%
13 11 12 14 15 20%
40%
60%
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And 2012 findings also reveal that a record number of consumers expect to purchase a new TV set in the next year. The market for new televisions dropped significantly in the recent recession to a low of 33% of consumers in 2009. In 2011 this market grew again to 40% of consumers and this year significantly exceeds that with 45% of consumers saying that they expect to purchase a new television in the next 12 months.
Plans To Purchase New TV Sets Grows Significantly Since Recession Plans To Purchase New TV Sets Grows Significantly Since Recession
In 2012, 45% Of Respondents Say That They Expect To Purchase A TV In The Next Twelve Months 23 23 25 28 23 26 28
Expect to replace primary TV in the next year
2002, N=1,158 2004, N=1,251 34
Expect to purchase a TV for any other room in the home in the next year
2006, N=1,241 2008, N=1,254
20 19 19 21 19
2009, N=1,373 2010, N=1,208 2011, N=1,505 2012, N=1,500 25 30 37
0%
2
20%
40%
60%
80%
100%
Q.5 When do you expect you or someone in your household will purchase a new television set to replace the primary television set in your home? Q.6 When do you expect you or someone in your household will purchase a new television set for ANY other location in your home?
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These strong purchase expectations are significantly driven by the plummeting cost of flat-panel HDTV sets and was clearly demonstrated when Wal-Mart announced on Black Friday that, by 9 a.m., they had already sold 1.8 million TVs. While HD displays continue to be a priority for nearly all TV shoppers, the desire for Internet connectivity with that new TV has grown rapidly to nearly three-quarters of all TV shoppers and far exceeds interest in 3D TV.
Smart TVSmart Purchase Intentions Intentions Continue ToContinue Grow, Continuing Exceed TV Purchase To Grow,ToContinuing To Intentions For 3D TVs Exceed Intentions For 3-D Continue TVs Smart TV Purchase Intentions To Grow, Continuing To Exceed Intentions For 3-D TVs TV Models TV Shoppers Are Considering TV Models TV Shoppers Are Considering
89 89
Considering HD
91
91
Considering HD
92
92 67
49
Considering 3D
49
Considering 3D
67 57
57 Considering a Smart TV
66
Considering a Smart TV
73 0% 0%
3
2010, N=418, 34% of sample
2011, N=613, of sample 2010, N=418, 34% of40% sample 66 2011, N=613, 2012, N=679, of sample 40% of34% sample 2012, N=679, 34% of sample 73
20% 20%
40% 40%
60% 60%
80% 80%
100% 100%
3
Q.60 You mentioned earlier that you are planning to purchase a new television in the next year. How likely is it that this new television set will be each of the following? Q.60 You mentioned earlier that you are planning to purchase a new television in the next year. How likely is it that this new television set will be each of the following?
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Breaking down the strength of these purchase intentions, of those who expect to purchase a new TV, a third indicate that they are extremely likely to purchase a Smart TV in the next six months, representing 8% of all consumers. Added to the existing base of 11% of households with a Smart TV, we could easily see Smart TV adoption nearing 20% of homes in the next year.
Anticipated Growth In The Smart TV Market Anticipated Growth In The Smart TV Market Anticipated Growth In The Smart TV Market 99% own a TV 99% own a TV
45% expect to buy a new TV 8% are 45% expect very likely to purchase buy atonew TV a Smart TV 8% are very likely to purchase a Smart TV
Current Smart TV owners, compared to TV owners in general, are: • Current More likely to beTV male Smart owners, compared • to More to be – 34 are: TV likely owners in 25 general, • •Similar in ethnic More likely to bebackground male • More likely to be 25 – 34 • Similar in ethnic background
11% own a Smart TV 11% own a Smart TV
of homes with a Smart TV in 2013 of homes with a Smart TV in 2013
Smart TV intenders, compared to current Smart TV owners, are: •Smart Still more male than compared female TV intenders, to •current More age diverse with more Smart TV owners, are: –24 andmale 35 – than 44 year olds •18 Still more female •• Much ethnically More more age diverse withdiverse more 18 –24 and 35 – 44 year olds • Much more ethnically diverse
As revealed in earlier research, Connected TV users represent some of the most difficult-to-reach U.S. demographics in traditional media, with young men more likely to be using Smart TVs. Looking ahead, demographics for those expecting to purchase a Smart TV also continue to be more male than female compared to current users and are also more ethnically diverse. The Connected TV universe will continue to be an attractive environment for advertisers looking to reach some of these more elusive media consumers. Of course, Internet-Connected TV use is not solely reliant on use of a Smart TV. We also see significant numbers of consumers who are either planning to integrate existing Internet-connected devices in the home with a TV set, or who are planning to purchase these types of devices with the intention of making a TV-to-Internet connection. Meaningful proportions of consumers continue to emerge as showing interest in taking advantage of what the Internet has to offer via their television screens.
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Interest In Connecting A TV To The Internet Video Game Consoles Will Continue To Top The List Of InternetConnected Devices Integrated With A TV Screen Currently connected to a TV
Blu-ray disc player
Video Game Console
Internet-connected set-top
Currently connected to a TV and the Internet
Interested in connecting or purchasing to connect
33%
19%
14%
57%
32%
14%
9%
11%
9%
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Connected TV Use Is Diverse Earlier findings regarding Connected TV use revealed that existing Connected TV users are engaging in a wide variety of Internet-related activities that are not limited solely to video streaming. In comparing current Smart TV use to the anticipated behavior among Smart TV intenders, we see a much stronger focus on video streaming, with smaller groups looking forward to Smart TV uses for activities such as social networking, emailing, gaming, etc. This gap in anticipation and actual behavior provides compelling opportunities for Internet brands and content creators, in conjunction with advertisers and sponsors, to help new Smart TV owners discover the full range of on-screen benefits their new TV purchase will bring once the purchase is made and the set comes into the home.
Smart TV Shoppers Are Initially Focused On Long-Form Video Streaming Benefits Features Smart TV Owners Use Weekly Smart TV Owners: Features In Use Weekly Smart TV Shoppers: Anticipated Feature Use
57 56
Movies streaming from the Internet
55 54
TV shows streaming from the Internet Music listening channels or apps
48
31
Short videos from sites such as YouTube
45
35
Social networking such as Facebook or Twitter
44
30
Email
44
35
Music videos
42
29
News or information websites
40
26
38 34
Online games Shopping or e-commerce
24
Photos shared on the Internet
24
0%
20%
36 35
Smart TV Users, N=163 Smart TV Shoppers, N=491
40%
60%
80%
100%
Q.39.6 You indicated that you own a Smart TV or internet connected TV. How often do you do each of the following, online, on your Smart TV? 65.7 Which of the following do you, or anyone in your household, look forward to doing on a Smart TV that connects directly to the Internet using Wi-fi or a wired connection?
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Control and Free Content Drive Connected TV Use The dominant anticipated benefit of Connected TV use is the prospect of total control over viewing options in any context. Even with pay television’s proliferation of niche digital networks and On Demand viewing, the familiarity and ease of Internet navigation and search create a strong expectation for a fully customized viewing experience from the Internet. Prospective Connected TV viewers also anticipate access to greater supplies of free content and the ability to reduce costs related to DVD rentals and purchases.
Control and The Potential For Free Content Drive Interest In Connected TV Viewing
Anticipated Of Streaming TV Shows And Movies TV Screen Anticipated BenefitsBenefits Of Streaming TV Shows And Movies To ATo TVA Screen I could watch whatever I want, whenever I want
42
I could find TV shows and movies to watch for free
34
I would have a greater variety of movies to choose from
24
I could watch an entire season of a TV show I wanted to watch
22
I would have a greater variety of TV shows to choose from
20
I could downgrade my cable/satellite subscription to a less expensive package
15
I would rent fewer DVDs
13
I could drop my cable/satellite subscription
13
I would purchase fewer DVDs
12 25
None of these 0%
20%
40%
60%
80%
100%
Q.39.4 Please select the top benefits you would expect if you could watch full length TV shows or movies from the internet on a television set.
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Further reinforcing the expectation for access to free content via Connected TVs, those streaming any type of long-form content show a strong preference for free, ad-supported content over subscription and pay-per-play viewing solutions.
Access To Free, Advertiser Supported Content Is The Preferred Access To Free, Advertiser Supported Content Is The Preferred Currency For Viewing Across All Internet-Connected Screens Currency For Viewing Across All Internet-Connected Screens For free, with 15- to 30-second commercials integrated into the content For a monthly subscription fee, without commercials integrated into the content For a fee for each video, program or movie I watch, without commercials integrated into the content
On a tablet screen
59
22
19
On a mobile device screen such as a smartphone or an iPod Touch
58
22
19
On a laptop or computer screen
58
24
19
Streaming on a TV screen connected to the Internet 0%
20%
18
27
54
40%
60%
80%
100%
Q.35 .4 In which of the following ways do you prefer watching TV shows, and movies streaming from the Internet on each of the following screens?
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Strong Satisfaction Drives Growth In Connected TV Use Among those who are currently engaged in Connected TV use, experiences with streaming TV shows and movies online are driving not only a high level of satisfaction but also strong momentum for future streaming content use. Not only are nearly two-thirds of these viewers very satisfied with their TV show and movie viewing options for Internet-to-TV viewing, but a meaningful proportion indicates that they will spend more time with the medium in the near future than they spend now. It is also important to note that both the rate of satisfaction and the projected future use for MVPD provided On Demand viewing options fall significantly below the rate of satisfaction for long-form content available on the Internet and intended future use. This further demonstrated the growing attachment among consumers for Internet-based viewing options.
Online Movie Viewing: Online Viewing Drives Better Satisfaction Online Movie Viewing: Online Viewing And A Higher Rate Of Future Use Drives Better Satisfaction And A Higher Rate Of Future Use
61%
Satisfied with movie selections online
50%
Satisfied with On Demand movie selections
Net +14 pts Will watch movie online more often in next 6 months
Net +3 pts Will watch movie On Demand more often in next 6 months
Online TV Show Viewing: Online Viewing Drives Better Online TV Show Viewing: Online Viewing Drives Better Satisfaction AHigher Higher Rate Of Future Use SatisfactionAnd And A Rate Of Future Use
62%
Satisfied with TV show selections online
50%
Satisfied with On Demand TV show selections
Net +17 pts Will watch TV shows online more often in next 6 months
Net -1 pt Will watch TV shows On Demand more often in next 6 months
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The result of this high degree of satisfaction with content and viewing experience adds up to significant projected growth in use, especially among Smart TV viewers. An impressive six in ten Smart TV users indicate they will be viewing more often on their Smart TV in the next six months compared to current use. Other TV connection devices are also projected to be in greater use in coming months.
Satisfaction With Connected TV Viewing Promises Significant Satisfaction With Connected TV Viewing Promises Significant Growth In Future Use Use Growth In Future More often
Your Smart TV
About the same
41
59
Blu-ray player
38
Game console
37
Internet video device
37
0%
20%
Net anticipated growth
Less often
+59
6
56
9
53
40%
60%
+28
11
52
80%
+32
+26
100%
Q.37.2 How often do you expect to use each of the following to watch TV shows and movies 6 months from now, compared to how often you are using each device now?
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New Navigation Solutions Can Also Drive Increased Use While the top device for Smart TV navigation is the custom remote control that is provided with the set, new navigation options are emerging designed to enable more fluid use of the on-screen menus and online navigation. While gesture control has been positioned as a frontrunner in this effort to provide greater ease-of-use, greater numbers of Smart TV users indicate that a voice-activated remote is the better non-traditional navigational tool among a number of potential options including smart mobile apps and gesture control. Nearly a third indicate that they would use their Smart TV for websites, long-form video content and more often with the availability of a voice-activated remote. Those engaged in the Smart and Connected TV marketplace can anticipate further growth in the time viewers spend with Connected TV as more voice- activated navigation options become available in this space.
Online Movie Viewing: Online Viewing Drives Better Satisfaction And A Higher Rate Of Future Use
Smart TV remote
Voice-activated remote Wireless mouse
Wireless keyboard Smartphone app
Tablet app
Gesture control
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Promoting Future Adoption For those online who have yet to make arrangements for Connected TV in their homes, barriers to adoption are a mix of satisfaction with their current viewing options, along with a lack of knowledge on how to go about connecting a TV set to the Internet, how to handle inputs and how to find content. Bringing additional consumers to the Connected TV universe will require an effort to promote the value of the content and viewing experience the medium enables, along with education regarding the simple, straightforward and increasingly less expensive ways in which consumers can make the TV Internet connection. As these efforts are made in the marketplace, online programmers and Lack advertisers Satisfaction With Existing Viewing Options, And of alike should continue Awareness Connection Options Lead Reasons to see expansion in theOf number of households engaging in Connected TVFor use.Concerns
About TV Streaming
Anticipated Concerns Regarding Streaming TV Shows And Movies To A TV Screen
Anticipated Concerns Regarding Streaming TV Shows And Movies To A TV Screen 30 31 29
I do not know how to go about connecting a TV set to a computer I get all the TV shows and movies I need through my cable or satellite service
26 23
It would be too complicated to switch between the different devices connected to my TV (DVR, DVR, cable/satellite, etc)
23 24 24
I wouldn't know where to find the TV shows or movies that I like on the Internet The video quality wouldn't be good enough It would take too long for a TV show or movie to start playing
18 19 17 15
21 21
11 14 14
None of these 0%
30
2010, N=730
29 20%
2011, N=1,066
35 33 40%
2012, N=978 60%
80%
100%
Q.39.5 Please select the statements that best describe your concerns about viewing video from the internet on a television set.
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Two-Screen TV Viewing While Connected TV use expands into more and more homes, two-screen TV use is even more widely practiced, driven by the widespread adoption of laptops, mobile phones and tablets. In looking at the entire TV-viewing universe, we see that, in all, 76% of consumers say that they have used one of these devices while watching TV, while 55% say that they use two screens simultaneously at least half or more often when they are watching TV. While those with mobile phones and tablets are engaged in more diverse activities while watching, computer simultaneous use far outweighs other device use simply due to theProportion broader adoption of computers. Large Of Device Users Are Using Them While Watching TV Devices Used At Least Some Of The Time While Watching TV Based on all consumers ages 12+
Devices Used At Least Some Of The Time While Watching TV Use computerwhile while Use aacomputer watching watching TVTV Use a cell or smartphone while Use a cell or smartphone while watching TV watching TV Use while Useaa tablet tablet while watching TV watching TV
65%
72% of laptop owners
49%
73% of smartphone users
24%
69% of tablet users Q.13.10 How often are you watching TV on a TV set and . .
While productivity activities such as email, shopping and bills as well as social networking dominate multitasking use, those using smartphones and tablets are more likely to engage in activities directly related to the programs they are viewing, reinforcing the fact that the most significant related use cases are found among those with smart mobile devices.
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Multitasking Is Dominated By Activities Unrelated To The Content Airing On TV Multitaskers Are Doing While Watching TV What Multitaskers Are What Doing While Watching TV Based on those who use each device while watching TV Reading and writing email Using Facebook 36 39 36 39 41 43
Checking on or reading news Shopping
57 59 55 57 60 56
31 34 29 27 34 28
Banking/paying bills Texting or chatting with others about the program I'm watching Watching video Chatting with others about topics unrelated to what I'm watching Listening to music Checking sports scores Using Twitter Looking for information about the program or movie I'm watching on TV
12
Looking for information about an ad I see on TV Work related to school Reading comments about what I'm watching on TV Work related to my job Posting comments about what I'm watching on TV 6 8
Playing along with the program
5
Using my device as a remote control
5
Playing along with a commercial that airs
22 26 25 22 25 24 21 20 22 21 25 24 19 25 23 16 18 20 18 19
13 16 17 11 16 16 11 15 14 10 14 12 10
7 8
Laptop Users, N=924 Smartphone Users, N=582
7 8 6 3 5 2 1 1
Other None of these
0%
Tablet Users, N=459
20%
40%
60%
80%
100%
Q.13.11 When you are using another device while watching TV on a TV set, what are you typically doing on the device? Select all that apply.
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Conclusion As the economy slowly improves and consumers return to their bullish attitudes around TV and Internetrelated electronics, the movement to connect TVs to the Internet continues to gain steam. And as demonstrated by the satisfaction with and future intentions around streaming content from the Internet to the TV screen, growth in the Connected TV space will come from both additional adoption of Connected TV devices as well as increased use of the platform. The combination of strong engagement and attractive demographics, now and among future adopters, continue to position the Connected TV ecosystem as an important element of an advertiser’s messaging mix.
About YuMe YuMe is a leading independent provider of digital video brand advertising solutions. Its proprietary data-science driven technologies and large audience footprint drive inventory monetization and enable advertisers to reach targeted, brand receptive audiences across a wide range of Internet-connected devices. Designed to serve the specific needs of brand advertising, YuMe’s technology platform simplifies the complexities associated with delivering effective digital video advertising campaigns in today’s highly-fragmented market. YuMe is a privately held company headquartered in Redwood City, CA with European headquarters in London and eight additional offices worldwide. The company is backed by Accel Partners, BV Capital, DAG Ventures, Intel Capital, Khosla Ventures, Menlo Ventures, Samsung Ventures, Translink Capital and WestSummit Capital. Contact us to learn how you can best monetize your video assets.
[email protected]
yume.com
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