Sneak Peek StreamOn Report Preview

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1 Sneak Peek StreamOn Report Preview The following is an excerpt of some pages from the 2017 StreamOn research. Should you find this preview interesting and want to discuss the results further, please contact the Research Director in charge of the project: Greg Mishkin Vice President, Tech & Telecom We hope you enjoy this preview and we look forward to hearing from you soon! 1

2 StreamOn : Understanding the Streaming Video Consumer October 2017 ISO Certified Prepared by: Market Strategies International

3 Copyright All rights reserved. Your payment for this report is for three hard copies and an electronic copy only. If you desire additional hard copies of the report, or hard copies of any sections of the report, you may purchase them separately. Reproduction of any part of this report is illegal under Federal Copyright Law (14 USC 10 et seq.) and is prohibited. Photocopying or transmission of the information in any electronic or mechanical fashion outside of the purchasing organization is strictly forbidden, unless the user has purchased an annual usage license from Market Strategies International that allows the user the capability to quote directly from the content with attribution to the firm. This report is intended exclusively for distribution within the purchasing firm. Distribution to or use by any other firm, subsidiary, affiliate, external agent or client is prohibited. Contact Market Strategies International to learn more about your redistribution/attribution options. Analysis relies on data from primary research and third-party sources deemed to be reliable. Although believed to be accurate, this information is not guaranteed. Publication date: October 2017

4 StreamOn Results Contents Situation Analysis The Streaming Landscape in 2017 Top Streaming Services Streaming Service Consumer Types Paid Service Subscribers Those Trialing or Sharing Service What Features Do People Care About? The Streaming Service of the Future Recommendations Appendix We are excited to deliver our syndicated StreamOn report, Understanding the Streaming Video Customer. This report brings together industry-leading qualitative and quantitative research, and combines the best of both custom and syndicated methods in service of advancing our understanding of streaming consumers, their needs, and their motivations. We will explore the size of the streaming market, the key players, the role of streaming the lives of consumers, specific consumer needs states, as well as the service features consumers care about the most. We hope you enjoy reviewing this report and gain a larger understanding of the streaming landscape. - The Market Strategies Team 4

5 Research Overview and Objectives This report presents results from a combined qualitative and quantitative study whose goal is to provide foundational data and insights into the over-the-top (OTT) streaming video offerings that are rapidly disrupting the traditional Pay TV landscape. This report presents results from the streaming market; findings are representative of those consumers who have experience with streaming services The study focuses on the US streaming video market: streaming features and products used in the research reflect current offerings in the United States, and consumers responding to the research are all US-based This report discusses features and products available as of 2H 2017 Phase 1: Quantitative Research 1,242 respondents interviewed via web survey, 18 minutes in length Fielded in August 2017 Data weighted on participant profile sectors, to reflect market level sizing Phase 2: Qualitative Research Eligible respondents recruited from quantitative phase Online bulletin board methodology, conducted in September 2017 Participation spanned a consecutive 5-day period, requiring ~30 minutes per day time commitment We expect this will be the first of several rounds of StreamOn research focusing on streaming services 5

6 The video world is changing rapidly and those who fail to keep ahead of the curve will be left behind Many look at today s cluttered video landscape and wonder how things changed so quickly. In reality, things have been steadily moving in this direction for more than a decade starting when Netflix began shifting its focus to streaming video on demand content rather than DVD delivery. This evolution continues today with non-traditional linear streaming video products beginning to cannibalize traditional pay TV services. YouTube brings streaming video mainstream Netflix switches its focus from DVDs to streaming movies Hulu Plus creates paid subscriptions for streaming current TV content Aereo streams local over-the-air broadcasts Live streaming television services offer live and linear programming 3/ /2017 SERVICES > 4/2005 1/2007 3/2015 2/ /2010 2/2011 3/2012 9/2007 1/2015 4/ / / / /2017 3/2017 LIVE DEVICES > The iphone revolutionizes mobility 1/2007 6/2007 4/2014 6/2014 2/2012 8/ / / /2014 The biggest sports events are 5/2008 9/2015 streamed live Inexpensive streaming devices make every TV a Smart TV 3/2010 8

7 Situational Analysis of Pay Television TRADITIONAL PAY TELEVISION STREAMING VIDEO ON DEMAND LIVE STREAMING TELEVISION Provider examples Strengths DVR, latest programming, news, sports, TV+broadband double play offerings Vast content offerings, easy install, inexpensive, no contract, binge-watching ability, unlimited footprint DVR (some), latest Programming, news, sports, inexpensive, no contract, easy install, unlimited footprint Weaknesses Lengthy install, expensive, contracts, poor reputation, limited footprint, commercials, cost Older programming, no live news or sports, and everything is not in one place New to market (technical glitches), some locals unavailable, no DVR (some) Opportunities Leverage existing content provider relationships to offer own Linear OTT, market strengths over OTT (News/Sports over SVOD, Reliability over Linear OTT), Pay TV/SVOD cross content searching Partner with Traditional Pay TV and Linear OTT providers to offer services concurrent, perhaps including bundling products Partner with own broadband (DTV Now) or other provider to bundle products, partner with SVOD to bundle, SVOD/Linear OTT cross content searching Threats Linear OTT substitution for less, cord cutters, content available elsewhere, rising programming costs VOD offerings of Linear providers giving similar experience Bundling of Traditional Pay TV with Broadband, lack of consistent experience across platforms 9

8 Nearly three-quarters of US adults have used a paid streaming service. Total Market Sizing n=3,260 73% Have used a paid streaming service 27% Have never used a paid streaming service 44% of those who have never used a paid streaming service can be considered out of the category: they haven t ever used a service and they are unaware of any video streaming services. Streaming Service Usage Types n=1,242 Total Paying/Paid for Streaming Service 82% Stream only 42% Stream + Trial 19% All 3 15% Total Trialing a Streaming Service: 44% Trial only 7% 44% Trial + Share 3% Stream + Share 6% Share only 8% Total Sharing a Streaming Service 32% 11

9 Why consumers stream: Video is more than just a commodity, it facilitates meeting social and emotional needs. Entertainment Streaming video provides entertainment whether it is all encompassing or used as background noise while doing mundane tasks. Many state it is fun, engaging, amusement, innovating, a guilty pleasure, and intriguing. Therapy Many stream while they try to relax, escape reality, and reduce stress. They mention streaming video allows them to find content that connects with them, inspires, lifts their mood, pumps adrenaline, and makes them laugh. Family Activity Streaming video allows for families to sit down and spend time together. It brings them closer together allowing them to learn, relax, and be entertained together giving them a routine and something to do together. I really look forward to the end of the day after work, school, homework, chores, children, and just relax and let my mind go with the flow and enjoy a program. My favorite of all is programming without commercials. 48% often watch streaming video with others Education and Adventure 22% frequently talk on social media about what they re watching Discovering new places, cultures and vicarious adventures lead many to stream. It allows them to stay current with pop culture, learn about things they are either curious and / or passionate about. Convenience and Choice Many stream because it is in their control. It is convenient and allows them to stream what they want, when they want and how they want. It allows them to binge watch, pause shows and fast forward intros with no ads. M7. While streaming video how often do you...? n=1,242 63% often watch alone 13

10 Current device offerings are meeting the needs of streamers. On average 2.6 devices are used for video streaming Most Used Devices Used for Video Streaming Computer Smartphone Smart TV Tablet All video streamers, n=1,240 Gaming console Streaming media player Streaming sticks 65% 45% 41% 34% 31% 25% 17% 91% of those with a Smart TV use their Smart TV for streaming. 60% PlayStation 66% Roku 59% Amazon Fire TV stick 56% Xbox 25% Apple TV 39% Google Chromecast 15% Wii U 23% Amazon Fire TV 19% Roku stick Consumers all have multiple screens for watching video: TVs (1.1) average number of devices per respondent / Smart TVs (0.7) Typically multiple TVs within the home Tablets (0.9) / Computers (1.5) Smartphones (1.3) But the viewing screen can be too small Gaming Platforms (0.9) Xbox, PlayStation, Wii In many circumstances, consumers are using multiple screens to do two separate tasks at the same time: Watching video programming on their TV or tablet while engaging in social media, sending texts, s, playing games, and internet surfing on their phone or tablet Usually the second activity is not related to the TV programming that they re watching. They are generally not looking up things about the program, or interacting with others about it while they re watching - they re doing separate, unrelated tasks Multiple streaming abilities is desirable: it allows for multiple users to be streaming simultaneously at different locations. M8 / M8_NUM. Which devices have you used to watch your streaming services? M8A. Which types of gaming consoles do you use with your streaming services? M8B. Which types of streaming sticks do you use with your streaming services? M8C. Which types of streaming media players do you use with your streaming services? D6. What devices do you have personally, and currently use? / D7. How many of each do you currently have and use? 14

11 Different needs lead to streaming consumers with unique purchase behaviors. Complementers Pay for a Streaming Service AND pay for Traditional Pay TV The largest consumer type, these are individuals who add streaming services to their suite of existing entertainment services. They either currently pay or have paid in the past for a streaming service, but without downgrading or cancelling another TV or video service as a result. They may have trialed or shared services as well. Supplementers Testers Supplementers Pay for a Streaming Service AND either Canceled or Downgraded their Traditional Pay TV Individuals who replace existing entertainment services with streaming services. They either currently pay or have paid in the past for a streaming service, and downgraded or cancelled another TV or video service as a result. They may also have experience trialing or sharing services. 29% Streaming Consumer Types n=1,242 19% Testers (trialers/sharers) Do NOT pay for Streaming Service but have used or are currently using it Individuals who have trialed or shared a subscription service with someone else, but never paid for a streaming service themselves. Those who have only trialed a service are demographically and behaviorally different from those who have only shared a subscription service. 53% Complementers 23

12 Netflix has the strongest customer experience of the top three providers. Primary Streaming Service Performance Rating -Top 2 Box % Overall Ratings - Top 2 Box % Quality 89% Reliability 87% Satisfaction 86% % Total Total All Video Streamers n= 1, Price Streaming quality 87% Sound quality 87% Equipment 81% Video flow 81% Multiple device quality 80% Interface 78% Video play back 77% Intermittent loss of service 70% I've been with Netflix for years. The price has only gone up once, minimally, and they notified us well ahead of time. Even if I had cable, I would still have Netflix, they have the best selection and it comes in clearly with no excess buffering or pausing. Amazon Prime has always been our top choice when streaming. It has the best quality and reliable. It always has specials where we can get movies for free or low cost with a huge selection that the whole family loves. Hulu. I have never had issues with accessing Hulu the way that I have with Amazon. Although Prime issues are rare, I would say issues with Hulu just don't happen, in my experience. I have tried them all and Netflix has the best interface by far and is organized well. There is still room for improvement but they are way ahead of the other guys! I trust Netflix and Amazon Prime the most to consistently deliver top quality of the content that I want to watch when I want to watch it. Hulu. It is consistent, offers broad content and price is awesome! Netflix, Hulu, and Amazon. I have used these services the most over the years and their service has only gotten better and better without costing more money. Q1_x. How would you rate [Primary Streaming Service Service] for overall with regards to? [Scale: 1-5] Q7_x. How would you rate [Primary Video Streaming Service]'s performance with regard to...? [Scale: 1-5] 34

13 Live streaming television is less important to consumers than content or navigation, but may still have a place in the ideal streaming service. Live stream TV features, such as real-time viewing and access to sports or local programs, don t produce the same lift in reach that comes from improved navigation and expanded content. The qualitative expectations around live streaming may be partly content-related: some of today s attraction to live streaming stems from the gaps in streaming service content, including the delay between air dates of network programs and their release dates on current services. This may explain the relatively low boost in reach associated with realtime/live viewing. As usage patterns change many are becoming accustomed to watching time shifted TV, but the shift needs to be brief. If streaming providers figure out how to solve for that, live-streaming needs may change. 100% 0% 40% Base Streaming Service Price Point: $10 4% +Local Programming 3% +Real-Time/Live Viewing 2% +Sports Programming 48% Total Live Streaming TV Package Ideal Streaming Service Reach (65%) I think it will be a basic feature for these services to offer live TV programming. I think they are trying to get cable customers away from that service and perhaps some of those are holding on because of the live access such as myself. About the only other thing I see, is [streaming providers] finding a way to "live stream" sports or news and if so, that might put an end to network television. [Trialing YouTube TV] I checked to see what's on the channels. [It s] like TV pretty much.i might recommend it to others if they miss the TV experience; but my friends don't watch TV anymore, [they stream]. I probably won t subscribe to it...my streaming routine has changed. 42

14 Sneak Peek StreamOn Report Preview The preceding was an excerpt of some pages from the 2017 StreamOn research. We hope that you found this preview interesting. Should you want to discuss the results further, please contact the Research Director in charge of the project: Greg Mishkin Vice President, Tech & Telecom We hope you enjoyed this preview and we look forward to hearing from you soon! 53