Brett Sappington, Director of Research, Parks Associates
While the TV reigns supreme in the U.S. as the primary video platform, the PC plays a significant and growing role in video consumption in Western Europe. In most markets, broadband users watch 5+ hours of PC video per week.
Parks Associates' Digital Video: Three Screens and Beyond found broadband households in Germany, Spain, and Italy spend as much time watching video on a PC as on a TV. In Spain and Italy in particular, PC video consumption exceeds 10 hours per week.
Viewers in the U.K. and France continue to favor the TV, but these markets also have more options in viewing video on a TV screen. Nearly 50% of U.K. broadband homes have three or more CE devices that connect to a TV, far more than the next highest country surveyed (France, 36%). French consumers access online TV content through a wide variety of sources but primarily use Canalplay for movies, either directly or via the AlloCiné site.
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PREFERENCES AND CHURN
Overall a substantial portion of the European broadband population prefers watching video on PCs over TVs, which is a worrisome trend for service providers. Our data suggest Internet video consumption on the PC is a significant catalyst to "cord cutting" and "cord shaving," stronger even than Internet video consumption on the TV.
"Cord Shavers" '• consumers who downgrade their pay-TV services and supplement with over-the-top (OTT) sources
"Cord Cutters" '• consumers who cancel their pay-TV services in favor of over-the-top (OTT) sources
Of course the actual number of defectors remains low; however, the growing penetration of connected devices will increase the risk and affect the competitive ecosystem of the video industry. Already 30-40% of broadband households in Western Europe have a connected CE platform, skewing heavily toward younger (18-24) households.
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TV EVERYWHERE: SERVICE OVER CONTENT
Given the potential for churn, pay-TV operators are moving quickly to meet this challenge. They are developing and deploying value-added features such as remote DVR programming, multiroom DVR, and multiscreen content services to boost customer satisfaction and neutralize thoughts of service defection.
Strategically pressing towards a more integrated, multidevice experience defends against "cord cutting" and "cord shaving."
Multiscreen services offer consumers a benefit that they cannot get on their own through over-the-top providers and with content that is more current and compelling than others can offer. This strategy also allows service providers to re-formulate, creating elastic TV services that align with the trend of the multidevice household.
Recent innovations to leverage smartphones and tablets as complements to the TV experience provide unique functionality that appeals to consumers' growing appetite for concurrent TV use with these platforms. By extending programming to computers, smartphones, and tablet computers, operators create services that are adaptable to the demands of different regions.
STARTING SIMPLE
Overall, consumer demand exists for TV Everywhere-type services although balancing the demand against the rollout costs for such a service is a tricky proposition. However, a number of today's consumers want a basic package rather than one with highly sophisticated features. Incremental improvement to a TV Everywhere basic package is a smart way to grow, allowing subscribers to experience the service and consider premium options.
In the long term, operators and technology providers will create a symbiotic relationship between mobile/portable devices and the primary video screen in the household. The smaller device will serve as a companion to the TV, displaying interactive features to promote specific content or complement what is already on the primary screen.
