Row, Row, Row Your Content, Gently Down the Stream: Insights into Viewing on Multiple Platforms

It’s not news that the consumption of TV and movie content is evolving as consumers gain more options to control what they watch, when they watch it, and on what device they watch it. Rentrak classifies these new options as all being “On Demand” viewing. In this blog, I’ll focus on some interesting factoids floating along the On Demand stream.

First off, let’s describe this new landscape (in other words what’s the jargon mean?):

Over the Top or OTT
Refers to delivery of video over the Internet without the involvement of an operator like a cable, satellite or telco company in the distribution of the content. Examples include Netflix, Hulu, and Amazon Prime. Let’s break this out in more detail in terms of how consumers pay for the content (if at all directly).

Over the Top Subscription Video on Demand or OTT SVOD
Consumers pay a recurring subscription fee for theatrical or television content streamed over the Internet from providers like Amazon Prime, Hulu Plus and Netflix. Some providers supplement that content with advertising as well, like Hulu Plus.

Over the Top Ad-Supported Video on Demand or OTT AVOD
Companies like Hulu, YouTube, Crackle and others offer content streamed over the Internet on an ad-supported basis (i.e. at no charge to viewers).

Internet Video on Demand or iVOD
Viewers pay specific rental fees to be able to view movies over the Internet from digital retailers like Amazon Instant Video, Google Play, iTunes, PlayStation Store, Xbox Video, and Vudu. A base subscription fee is not required and the movie is usually available for 24 to 48 hours. Due to the low price on a per-episode basis, TV content is no longer made available via iVOD, only on EST (see below). There is no advertising on iVOD.

Electronic Sell-Through or EST
This is where a person pays a fee to “own” a specific movie or TV show, either for perpetual access via the cloud for streaming on Internet-connected devices, or for downloading to a local device (e.g. a PC, game console, or mobile device) for storage and access without need for an Internet connection. The major digital retailers here are also Amazon, Google Play, iTunes, PlayStation, Xbox and Vudu, with both Comcast and Verizon offering EST among multichannel video programming distributors. No advertising is in this content, though upgraded offerings through certain digital retailers like iTunes may include menus, trailers, and bonus content to add value and replicate the DVD/Blu-ray Disc viewing experience.

Operator-based On Demand or “Cable Video on Demand” or cVOD
Here is where On Demand started. It is cable, satellite or telco operators providing their subscribers with access to content. To confuse the issue even more, there are three types of cVOD:

  • Subscription Video on Demand or SVOD
    When customers subscribe to pay TV services like HBO, Showtime or Starz, often the operators will offer the ability to watch these channels’ movies or TV series On Demand. There is no paid advertising, but there may be program promotions.
  • Transactional on Demand or TOD
    This is renting a movie (even Adult!) or special event (WrestleMania!) from an operator for a fee. There is no paid advertising, but there may be program promotions.
  • Free on Demand or FOD
    This is broadcast and cable networks putting up their traditional TV shows. There are also networks that just exist On Demand. Almost all these programs contain advertising (a subject I have looked at in the past and will look at again).

So how do these translate into dollars and cents? The chart below shows consumer spending on these options in 2013 and 2014. I exclude OTT AVOD, SVOD and FOD as those do not require direct out-of-pocket payments from consumers, but gain revenue through advertising or as a by-product of the level of subscription a viewer has with the operator.

Consumer Spending 2013 vs. 2014 - On Demand

Over the Top Subscription Video on Demand (OTT SVOD) grew by 27 percent from 2013 to 2014 to over four billion dollars. Electronic Sell-Through (EST) grew by 31 percent to almost two billion dollars, Internet Video on Demand or iVOD grew by only 1 percent to almost one billion and Transactional on Demand (TOD) fell 15 percent to approximately one billion. In total, the paid On Demand marketplace went up 16 percent, growing to $7.5 billion in 2014 from $6.5 billion in 2013.

Another way to look at the same data is the share of spending as shown in the pie chart below. In 2014, the share of spending for OTT SVOD was 53 percent up from 49 percent. Clearly many consumers are streaming towards the shores of OTT subscriptions. However, as we mentioned in the last blog, “traditional” TV, while impacted, has only lost 4 percent of its overall viewership.

Share of Marketplace - On Demand 2014

One fun factoid to close this out: As every parent of a child knows, Disney’s “Frozen” was the number one most digitally purchased and rented movie last year.

A much more in-depth look can be found in Rentrak’s forthcoming “State of VOD: Trend Report.” For more information on that report please contact Rentrak’s OnDemand Client Services team at ode_clientservices@rentrak.com or 866.333.6212. (If you’re a Rentrak client, please reach out to your Account Manager.)

In case you don’t know, I am Bruce Goerlich, Chief Research Officer at Rentrak, the global standard in movie measurement and your TV Everywhere measurement and research company. I have been in the research end of the marketing business for more than 30 years primarily on the ad agency side, with my last stint prior to Rentrak in the role of President, Strategic Resources Zenith Optimedia North America. Somewhere along the way I morphed from young Turk to old fogey. Now that I have grey hair and am horizontally-challenged, I can speak with some authority on advertising and research issues – which I will do from time-to-time on this blog.

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