This Media Trends report explores the current environment in which the subscription television sectors of Australia, the United Kingdom and the United States are operating.
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Media Trends Q4 2010
1. Media Trends
Issue 1 , Q4 2010
Introduction
Technology and changes in consumer The proliferation of media devices such
preference continue to shape the as internet enabled TVs, internet
media and communications connected set top boxes, streaming
landscape. While regulation and devices and TV services on iPad and
economic trends play a role in mobiles is emphasising the importance of
influencing some of the outcomes of access to content.
domestic and international media
developments, it is the dynamic nature Social TV, where an internet connected
of the industry that continues to be TV becomes a social media device, is
reflected by on-going marketplace also being reflected through
transformation. developments where EPG providers are
pioneering systems which let subscribers
In the first of a series of quarterly discover what their friends are viewing
reports on Media Trends we explore via Facebook and Twitter.
the current environment in which the
subscription television sectors of The growth of multiplatform TV formats
Australia, the United Kingdom and the continues to be recognised both in the
United States are operating. United Kingdom and Australia. The
Australian subscription television industry
Our analysis this quarter indicates that also continues to invest in multiplatform
subscription television distribution is local productions, such as Slide, which
being affected by a number of will launch in 2011.
variables including economic
conditions and changes in consumer In 2010, television remains the main ad
preference. At the same time medium in terms of share of total global
innovation is offering consumers ad spend.
greater choice of reception devices Statistics indicate that positive trends will
and content. Multiplatform continue for the Australian and
opportunities are also being utilised by international advertising markets in 2011.
industry and adding value to the
relationship with viewers. This quarterly report also highlights
domestic and international trends in TV
While difficult economic conditions in viewership, media stacking habits, online
the United Kingdom, and to a lesser video and the take-up of web enabled
extent Australia, resulted in continued devices.
growth in subscriber numbers and
profit cable television providers in the
United States have been impacted by
unprecedented declines in subscriber
numbers.
With 3DTV and TV anywhere services
being rolled out across a number of
countries there is still a level of
uncertainty in relation to consumer
interest, particularly in relation to
3DTV.
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2. Media Trends
Issue 1 , Q4 2010
STV Distribution
Current subscriber and profit margins are being USA: STV under pressure?
influenced by economic trends and changes in
viewer preference brought about by Leichtman Research Group reported the top 10
technological development. Growth in traditional cable providers lost 1.4m cable TV subscribers
subscription television take-up is being in year ending Q1 2010. Satellite operators
supported and challenged by growth in gained 1.33m subscribers and IPTV 1.78m.
alternative distribution platforms such as
broadband, satellite and IPTV.
US STV Subscribers
UK: BSkyB, Virgin Media results
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For the quarter ending 30 September 2010, Cable
BSkyB net profits rose 78.1% to £228m, mainly 0 Satellite
from broadband and telephony take-up. This
month BSkyB also passed its long term target of -2 IPTV
10m subscribers.
Annual ARPU hit a record £514, boosted by
HDTV and broadband. A 39% leap in triple-play
customers sent the total to 2.3m.
STV subscribers Q1 2009 – Q1 2010 (millions)
News Corp’s bid to take full control of BSkyB
has been referred to the European Commission SNL Kagan found total US STV subscriptions
(EC) on competition grounds. The EC and declined for the first time ever in Q2 2010. All
Ofcom will both respond in December. News operators combined lost 216,000 customers.
Corp currently has a 39.1% stake in BSkyB. However, satellite added 81,000 subscribers,
IPTV 414,000. Cable operator Time Warner may
For the same quarter, cable operator Virgin introduce lower-cost tiers to regain subscribers.
Media’s revenue grew 6.4% to £978m. It added
14,100 customers, for 4.78m total. 3.77m are TV Cord-cutting anxiety
subscribers; with 1.4m taking HD. Monthly TV
ARPU is £46.39, mobile £15.01. Triple-play There is ongoing debate in the USA about
subscribers are 62.7%, quad-play 11.5%. Virgin whether consumers are dropping STV services
will launch 100Mb broadband and TiVo in Q4. or ‘cord cutting’ in favour of on-line or over the
top (OTT) services.
Australia: AUSTAR, FOXTEL results
SNL Kagan argues that low housing formation
For the quarter ending 30 September 2010, and high unemployment caused cable
AUSTAR’s TV subscribers grew by 14,771 to subscribers to fall, not OTT competition. Yet,
761,919. MyStar subscribers rose to 180,998 Convergence Consulting forecasts cord-cutting
(29% of residential subscribers). Revenue grew homes will grow to 1.6m by end 2011.Analysts
to $180.1m, a 6% increase on Q3 2009. at investment bank Credit Suisse predicted
Apple TV and Netflix OTT services will replace
FOXTEL’s earnings (EBITDA)for the year to 30 cable for young consumers.
June 2010 grew by 17.5% to $477m.Profit
Before Tax grew to $160m. Subscriber numbers Netflix and cable operators are competing via
grew to 1.632M and ARPU rose sharply from the windows and prices. Netflix is paying
take up of FOXTEL iQand HD TV services. Paramount, Lionsgate and MGM almost $1bn
over five years for online streaming rights to
first-run movies ahead of cable. While
Cable operators are in talks with studios Sony,
Warners and Disney for a trial to show films
soon after cinema release, at $30 per viewing.
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3. Media Trends
Issue 1 , Q4 2010
3D and TV Everywhere
In the United States American research by FOXTEL OnDemand includes 30 live streamed
CTAM (Cable & Telecommunications TV channels, catch-up programming from the
Association for Marketing) found consumers channels at no extra cost and On-demand TV
expect to pay an extra $20 monthly to get 3D shows and movies rentals.
STV, but still need convincing of the benefits.
FOXTEL also recently started rolling out
Sky launched Europe’s first dedicated 3D services via Microsoft Xbox 360 consoles.
channel on 1 October, 2010 and FOXTEL will
launch Australia’s first 3D channel in November The AUSTAR Anywhere service also enables
this year. Australian subscribers the ability to view
programming on up to two PCs per AUSTAR
In the US Time Warner and Comcast are account at no extra cost. It provides a content
currently trialling a TV Everywhere video internet download and streaming service with hundreds
service. of hours of premium content from 38 channels,
plus the online-only sports channels ESPN360
In Australia, FOXTEL On Demand currently and Setanta-i.
uses broadband Internet to deliver content to
TVs via its 780,000 iQ set-top boxes.
Innovations
Convergence is altering the once distinct Google is partnering with Sony for TV sets and
television and online environments. New and Logitech for set-top boxes. The boxes are
planned internet connected TVs; set top devices available at retail and subsidised to DISH
such as Apple TV, Google TV, the Telstra T- satellite TV subscribers. Google TV emphasises
Box, IPTV services and online streaming are its comprehensive video search. It also has a
offering consumers greater choice. The PC-style browser, accessing the whole Web.
proliferation of media devices is in turn Sites from partners including TBS, CNN and
emphasising the importance of access to Cartoon Network have been redesigned for TV
content. viewing. HBO is making its content available.
Connected TV Internationally, seven of the 10 major TV
manufacturers are selling sets that use the
Consumer electronics manufacturers, Yahoo Connected TV platform. Samsung is
technology giants and STV operators are budgeting $70m to market its connected TV
competing and partnering in a race to connect apps.
the home television set to the Internet. At stake
is the opportunity to offer consumers next- In Australia, the Telstra T-Box offers movie
generation television services: video-on- rental and Unmetered BigPond Internet TV.
demand, information and social networking. AUSTAR owner Liberty Global is rolling out
connected TV in its European cable systems.
In the USA, Apple and Google are head-to-head
with rival devices and philosophies. The Apple However, there are major challenges in clinching
TV mini set-top box provides TV shows and deals for broadcasters’ content. Google TV is
movie rentals from iTunes and Netflix. It does blocked from the Web sites of US broadcasters
not access websites nor so far include the ABC, CBS and NBC.
software applications (apps) for interactive
services that made the iPhone and iPad so Google TV’s lead product manager Rishi
successful. Chandra said Google TV is “a platform” and
broadcasters could use a service like YouTube
to monetise content, with ad revenue share.
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Issue 1 , Q4 2010
Social TV
One significant consequence of connecting TV STV operators are also recognising the
sets to the Internet is the television becomes an importance of social relationships in
online social device (social TV). recommending content to boost VOD buy rates
and encourage people to take higher tier
Consumers can access social networks such as packages.
Facebook and Twitter via the TV set. Many
viewers, particularly in younger demographics,
already use them via laptops or mobiles to share EPG providers, such as News Corp’s NDS, are
opinions about what they are watching on TV, pioneering systems which let subscribers
especially in relation to music video and sports discover what their friends are viewing, via
events. Facebook or Twitter.
Facebook is reportedly in talks with US TV
networks “at least in research mode for social
TV.”
New Developments in Programming
Broadcasters are supporting new television FOXTEL’s FOX8 will air multiplatform drama
formats that make the most of multiplatform Slide in 2011. The 10 x 60 minute series is
opportunities to engage audiences. budgeted at more than $1m per episode and
follows five Brisbane teens as they “smash their
New transmedia TV formats and extensions are way into Adulthood.”
emerging across a range of genres, often with
viewer participation via social media. The 2010 I Love Food Awards run by LifeStyle
FOOD channel received 100,000 online votes
Multiplatform TV formats from the public across 26 dining categories.
Votes were compiled into Australia's largest
In the UK, Channel 4 docu soap-reality hybrid people's choice Eat Out Guide.
Seven Days invites viewers to give the show’s
participants advice about their dilemmas via New TV services on iPad and mobile
sharing “thoughts” (ie comments) with them on
the show’s site. STV operators and broadcasters are launching
innovative new services on the iPad, other tablet
MTV’s Being Victor blends social media and PCs and mobile devices.
Web drama to let viewers discuss serious issues
relevant to a teen audience. The show has been FOXTEL has launched its TV Guide on the iPad.
growing its audience via an in-character blog The free app lets users search program listings,
and tweets. set program reminders and remote record
shows to the FOXTEL iQ set-top box. Since its
Venerable soap Coronation Street launched its December 2009 iPhone debut, the app has been
social networking game Corrie Nation on downloaded 200,000 times.
Facebook and ITV.com as the show celebrated
50 years on air. Seven of the top 10 US STV providers are
building tablet apps offering subscribers TV
Facebook is increasingly also the first choice for shows and movies.
TV show promotion. ITV debuted this year’s
promo video for The X Factor on the show’s Satellite operator DirecTV plans to offer NFL
The BBC has also commissioned season three games on iPad for $50 on top of the $300
of its EastEnders derived teen Web drama E20. season TV subscription.
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5. Media Trends
Issue 1 , Q4 2010
Original content is key
Rival DISH Network will let subscribers view
DVR recordings on iPad. Broadband and IPTV This importance of content has been highlighted
provider Verizon has prototyped a live TV throughout this report.
service for iPad and other mobile devices.
Local production of content is well supported by
Australian audiences are being offered Australian subscription platforms and channels,
multiplatform original Australian made which invested over $541m in Australian content
programming via subscription television. in 2009.
Spirited, the comedy-drama about life and love
Provider Verizon has prototyped a live TV after death, became the #1 and #3 time-shifted
service for iPad and other mobile devices. show on W. A second season has been
commissioned for next year.
The HBO Go service will provide 800 hours of
programming to subscribers’ iPads, at no extra 2011 will also see the premiere on Showcase of
cost. more locally-produced drama, with Cloudstreet.
The mini-series of Tim Winton’s iconic novel is
Other broadcasters are launching apps that shot in Perth and stars Stephen Curry and Essie
work in sync with live TV: the CBS sports app Davies.
brings real-time American football stats to iPads
The Samsung Galaxy tablet will compete with
the iPad/iTunes offering. It will have TV shows
and movies from NBC, Universal, MTV,
Paramount and Warners.
Advertising
Research indicates a positive outlook for the Australian TV 2011 ad growth
international advertising market and Australian
TV advertising in 2011. • Media buyer Mitchell Communication
Group predicts the FTA ad market will grow
Worldwide ad spend growing 6% and TV ad rates rise by 5%
• Mediabrands predicts the combined FTA
• Nielsen research found worldwide ad spend and STV market will grow 4.3%
continues to rise in first half 2010
• It grew globally year-on-year 12.8%, in the Online measurement
USA 3.8% and in Australia 8%
• Globally, television grew 15.8% and remains • The Interactive Advertising Bureau (IAB) is
the main ad medium with 62% share of total tendering for a new online media audience
global ad spend, a 1% increase measurement system
• The initiative is supported by a media
research group formed by major Australian
advertisers to improve media measurement
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6. Media Trends
Issue 1 , Q4 2010
Definitions and Stats
Essential terminology and need-to-know data.
Key terms Over-the-top (OTT) video: TV shows and
movies delivered to homes via broadband
ARPU: Average revenue per user Internet instead of STV
Cord-cutting: US cable TV subscribers Quad play: Voice, video, broadband, wireless
cancelling subscriptions (sometimes preferring
online or connected TV video) Triple play: Voice, video and broadband
Media stacking: simultaneous use of multiple TV Everywhere: initiatives to enable STV
electronic media (eg watching TV and using the subscribers to view programming via a range
Internet) ofdevices, such as PCs, game consoles and
Internet-connected TVs
TV viewership and technology trends Inability to multitask is a barrier to 3DTV
• CTAM study of viewers finds that 89%
Australia – primetime viewing in mainland believe multitasking is best suited for
capitals regular, non-3D viewing.
• OzTAM people meters: total viewing of
prime time TV: up 3% on 2009. Web-to-TV video content revenue will reach
• Viewing by 16-to-39s up 7%. $17bn in 2014
• However, viewing of main FTAs (ABC, SBS, • In-Stat forecasts 57m US homes will be
Seven, Nine, TEN) down 6% as viewers viewing full-length online content on their
migrate to new FTA digital channels. TVs in 2014, with associated revenue
• STV up 1% and for viewers 16-39 up 11%. reaching $17bn.
Media stacking prevalent amongst younger Apple TV has only three of the top 25 US TV
UK viewers shows
• Survey of 2,000 UK consumers • At launch, Apple TV offers just three of the
commissioned by social media agency top 25 broadcast TV shows (Desperate
Diffusion. Housewives, Glee and Grey’s Anatomy).
• "Media stacking" is prevalent among 18-
24s, with 76% responding that they Apple iPad now in 3.6% of US homes
"regularly" browse the Internet while • The Q2 2010 Nielsen Home Technology
watching TV. Report finds fast penetration for the iPad,
• 58% use online or mobile services while which launched on April 3, 2010 and was
watching TV programmes. added to the Report’s survey in May.
• 40% of women and 29% of men ages 18-24
mostly use social networking sites such as TV set is no longer a “necessity” for US
Twitter and Facebook while watching TV. consumers
• 2010 Pew study finds only 42% of
US 18-34s keep moving to online and time- Americans believe a television set is a
shifted video "necessity," down from 64% in 2006.
• Market researcher Morpace: Viewing by
American 18-34s continues moving from Digital replaces analogue in UK homes
broadcast television towards online and • Institution of Engineering and Technology
time-shifted video. survey: A typical British home has six web-
• Only 41% of their viewing time is spent enabled devices, compared to one in 2000.
watching live TV versus time-shifted and Vinyl, film and video tape are all dying out.
online content.
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