A report from a British consultant predicts that viewing of linear television channels will drop by 15% over the next six years. Broadcast advertising revenues will fall but will largely be replaced by video-on-demand advertising, with viewing on demand rising to four times current levels. Aggregated services will address increasingly promiscuous consumer behaviour that threatens traditional television viewing.
The report is based on ethnographic qualitative research across twenty households and quantitative research across 600 video on demand users in the United Kingdom.
It identifies three types of viewing behaviour that it terms monogamous, polygamous and promiscuous. The former represents loyalty to broadcast channels and services and forms around 70% of current video on demand viewing behaviour, while polygamous and promiscuous behaviour are marked by heavy use of unauthorised video sources.
One way to slow the rise in illicit distribution and to meet emerging consumer demands, the report suggests, is through aggregated catch up, archive and movie services online and direct to the television.
If such services launch, it forecasts a fourfold rise in video on demand viewing on television and computers.
It predicts a decline in linear television advertising revenues of at least 10%, which seems a conservative estimate. On the other hand, it forecasts a rise in revenues from video on demand advertising and subscription to compensate, which has yet to be demonstrated.
If such services do not launch, unauthorised distribution will rise and the revenues and viewing share of terrestrial broadcasters will decline significantly, threatening the sustainability of some existing broadcasters.
The report proposes that video on demand will increasingly be seen as a ‘layer’ of services and devices, rather than sites, destinations or channels. It says it is vital that video on demand services reflect online features such as social networking, embedding, recommendations, feeds and automatic downloads.
Open partnerships are required to meet the emerging demands of consumers, the report recommends. Services that limit consumers to only one or two video on demand offerings do not match the increasing demands for choice and aggregated programming, and will tend to be unsuccessful and unprofitable.
Video On-Demand: Behaviour, challenges and future directions by Dr Steve Smith is published by the Coda Research Consultancy.