Americans watch more video than ever before, says Nielsen

November 25, 2008

This is one of the predictions of OmniVideo — with more ways to watch video, people will end up watching more. I have gone on record saying that the average adult will watch five hours of video a day in 2012, a 25% over the four hours people watch today.

It turns out my prediction may come true sooner than that, especially when you consider this piece today from Meg James at the LA Times. In it, Nielsen reveals that in the third quarter of 2008, the average adult watched 4.5 hours of TV a day. Now, admittedly, this was the quarter in which the Olympics happened, and yes, it was the run up to an unprecedented election, so TV viewing naturally rose higher than it would have been otherwise. But we should expect that once the dust from the election settles, TV viewing won’t revert to 4 hours a day, but will likely stay closer to 4.25 hours, continuing its climb to a stable 5 hours a day by 2012. In other words, I stand by my prediction, and am pleased to see that there’s already evidence that we’re willing to watch more than the record levels we already watch.

This is significantly more than we watched a decade ago. Given that the average TV home hase more than two people in it, the typical home has a television on for 8 hours and 18 minutes a day, up from 7 hours and 15 minutes a decade ago. This will only rise as people have more DVRs and more Internet-connected devices like the Netflix Player by Roku which give us more control over our viewing habits.

Yes, we are addicted to video and I’ll be measuring our addiction over the coming weeks with some blog posts about addiction. Get ready to face your demons. Or not — one of my hypotheses is that increased video viewing is not actually pathological. Sure, a few addicts will go overboard, but most of us are getting real value from video: we’re observing social norms, collecting news, receiving physiological stimulation, emotional expression, relaxation and distraction. We need these things. 

What do you get out of video?

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Blockbuster’s Jim Keyes promises set top box

November 7, 2008

If you’re a faithful reader of this blog you know that just last week in Dallas I had Jim Keyes, CEO of Blockbuster on stage at our Forrester consumer forum. He gave a great speech with amazing detail. But one of the things he was clear on was this: Blockbuster wasn’t going to do a set top box this year. I pressed him on this in Q&A and he said that consumers weren’t ready for it — it was a case of “getting ahead of our headlights” to quote his exact colorful speech.

It appears that set top box question has been reopened. In a conference call with Wall St yesterday, Keyes said that a set top box would indeed be out by year-end.

Either Jim was playing hard to get last week on stage, or, rather, Blockbuster has seen the aggressive announcements from Netflix in the past two weeks and concluded that it cannot afford to let Netflix get too far ahead in this race.

If that’s his thinking, then I agree. We actually urged this kind of thinking back in our July report on the future of the set-top box. We said then that most of these boxes were doomed, but that they were important to invest in anyway. We wrote:

Even following our suggestions, the best that the most successful of these players will do in the short run is to sell 2 million boxes. Our money is on the Netflix/Roku box, as it has the fewest barriers to adoption and sufficient functionality to appeal to consumers’ desires — especially if it rapidly evolves to include more content and additional services. Without modifications to create more appeal and overcome major barriers, we expect the others will all fight to surpass a million — and most will do far worse. For those that do eclipse a million, is it enough to get the foothold they’re shooting for? Yes. But their mistake is in thinking that the foothold that matters is the device’s penetration. It’s not. It’s actually the penetration of the video service that the device features, as the ideal scenario for future take-up is one in which a viewer has a content subscription that is accessible from multiple devices.
source: Competitive Product Ranking: Picking a Winning Set-Top Box, 17 July 2008. 

That’s the key. It’s getting the Blockbuster service into people’s homes, much the way Netflix is doing with its multitude of announcements. So even if Jim didn’t tell us the whole truth, we’ll still approve of where he’s headed. Of course, we have no details on how he’ll do it. If he follows through on the subscription model he hinted at on stage, that will be intriguing. Stay tuned.


What do you want from the TV of the future: Internet? 3D?

November 7, 2008

Very interesting piece posted on Dealerscope this week authored by the Senior Director of Market Research for CEA, Tim Herbert. It’s based on a survey the CEA did about future TV tech. Very interesting results. Let’s start with the obvious first:

Click on image to see bigger version

Click on image to see bigger version

We do surveys like this as well and I’m going to give you the benefit of years of experience on this one. Here’s what people really want from their next TV: bigger and louder. Yep, it’s that simple. When they say better picture quality, they don’t mean 1080p (though that’s what they’ll buy because it’s quickly dominating the shelves at Best Buy). They just mean big and bright and loud.

Top on the list was energy efficiency. Let’s be honest about what this means — people are supposed to say that. But they won’t pay extra for a TV that saves energy. Next. The really interesting things they asked about were connectivity related: wireless connectivity with DVD players, ability to connect family photos, and internet connectivity. 

Here’s the problem with asking about Internet connectivity (and I’m sure Tim knows this, I’m not implying he doesn’t). People don’t know what that means. Perhaps if you spell it out for them: “Hey, you could watch Hulu on your TV” the number would go up by 10 or 20 percentage points (which would put it in the top 3, I suspect).

Personally, my bet for the feature we’ll see most on the TV in the next 3-5 years is Internet connectivity. I’ll even predict that in 2012, 40% of all TVs sold will have connectivity built in. It will become so critical to TV makers that by then it will be standard equipment. Not only to deliver services but to upgrade firmware as needed. More on that later.

My favorite graph from this study was this one:

click on image to see bigger version

click on image to see bigger version

The question of 3D TV has been hovering over the market for a few years now. I saw 3D displays at CES this year and I think they are absolutely fun and enjoyable — to watch one or two movies a year. But as for buying one for the living room, the tech isn’t there yet. Overall, you can see that people don’t do a lot of thinking about what kind of technology should be in their TVs in the future. One that CEA missed was a mirrored screen so that a flatscreen TV can be an attractive mirror when not in use. That will be more important to people than they could say in a survey.


As Netflix rises, Roku drafts nicely behind

November 3, 2008

Every time I turn around, it seems Netflix is announcing something new. These past few weeks my little fingers have typed furiously to keep up with Netflix, which I will now refer as the company formerly known as the DVD-by-mail company. Two weeks ago, I wrote about Samsung adding Netflix to some of its Blu-ray players. Then there was the announcement that Netflix had finally enabled streaming on the Mac (okay, okay, Intel-based Macs, but still). Then there was the revelation that said company would provide HD streaming on the Xbox 360 and other devices. Finally, I posted just last Thursday that Netflix was partnering with TiVo to expand its streaming to yet another device. (Convenience note: you can mouseover these links to see the text of the page without actually clicking on them)

Just remembering typing it all inflames my carpal tunnel. Now that I’ve had some time to think this through, I’m still impressed with Netflix. But wait a minute. In all this, there’s one definite winner behind all the announcements: Roku.

btw, this is not an ad, this is just the most attractive picture I found on the website: I don't get paid anything if you click on this and order

Yes, I’m talking about the maker of the $99 streaming video box that in my back-of-the-envelope estimations has probably sold more than 50,000 units in the six months since its launch. This is the box that I proclaimed the winner in the over-the-top set-top-box shootout I wrote in July. But secretly, after writing that report, I started to fear for the box’s survival in a world where Netflix is off enabling every other device you’re thinking of buying this holiday season.

Then the recession hit. Follow my logic here: you hear that Microsoft Xbox 360 Live members can stream Netflix to their TV sets. That sounds cool enough to try, you are one of nearly 9 million Netflix subscribers aftera ll, but then you add up the additional costs — $199 for the low-end Xbox 360 Arcade plus a $7.99 a month subscription. Add that up for a year and you have $295. (Of course, the plan from Microsoft is that you already own an Xbox and this motivates you to sign up for the Xbox 360 Live Gold Membership, but just humor me.)

So you then hear that select Blu-ray players from Samsung and LG now allow for Netflix streaming. You were considering a Blu-ray player anyway, so you look into these and find they retail for $349 to $399. Then you hear that TiVo will offer Netflix, but you have to get the $299 TiVo HD at a minimum, not to mention the monthly service charges. You’re starting to feel daunted, so you go to Netflix.com and see all these options on one page so you can figure out which one is best for you.

You find the Netflix Ready Devices page, which shows you all of these options, and what do you see? Roku listed at the top, at a nice $99 price. Oh, and by the way, it’s the only one that comes with built-in wireless connectivity for those who don’t have ethernet in the living room. Especially in a recession, the Roku seems like a low-risk option.

I shared this line of logic with Tim Twerdahl, VP of Consumer Products at Roku, an ex-Netflix guy on Friday. I could practically hear the smile on his face over the phone as he agreed with my logic. Then he confirmed it: “Our sales are up dramatically in October.” And that in a recession.

Of course, the point of all the other boxes is that they do other things, not just Netflix. The Xbox does games, TiVo does DVR, the other guys do Blu-ray. When I shared this concern with Tim, he responded very confidently that I should stay tuned. What I have long been calling the Netflix/Roku box will soon shrug off the Netflix moniker by adding other premium content. This will only drive up sales on this box even more. Soon it will outsell the Roku Soundbridge home audio device that never really got past 100,000 users in four years of selling. There’s a business in this box; Roku is here to stay.


Happy Birthday, Hulu.com! I knew you’d make it

October 29, 2008

It’s not really a birthday party, since this is only the anniversary of Hulu.com’s beta launch. Which is all the more amazing considering how far it has grown in a year — when half of that year was conducted in private beta. Since its official launch in March, Hulu can now boast that in September nearly 150 million videos were streamed.

This is phenomenal, it’s precisely the year-end target I had for Hulu in December. Now I have to ratchet that up to 200 million. To go from 0 to 200 in under a year is remarkable. Consider that in its best months, Comcast VOD streams 300 million video views. That’s a big number. Hulu will be at the level some time next year. Without having to invest in VOD servers the way Comcast did.

That’s right, folks, Hulu is here to stay. And <bashfully> I have to admit I called it. A year ago today, I published a report called Online Video Syndicator Hulu.com Overperforms At Beta Launch. I said:

Today Hulu.com, the NBC Universal and News Corp. online video joint venture, launched a private beta test that beats our expectations of what the company would achieve. It syndicates video, enables sharing, and does it all with top-notch content and a design flare reminiscent of Apple. If Hulu can keep expenses down, the company stands as a threat to competing online TV companies like Joost, as well as old-line cable companies and telco TV entrants.

Specificallly to cable companies, I warned:

itemCable companies and telco TV providers can begin the fear watch. By delivering a solution that advertisers want, syndication partners are happy to implement, and consumers will easily lap up, Hulu has assembled an experience directly comparable to that offered by cablecos and telco TV companies. Think about it: You have first-run TV shows, classic TV reruns, and movies from the back catalog. All you need is a pay-per-view option for new releases, and you might as well call Cox Communications, Time Warner Cable, or any of the rest and cancel your TV subscription while simultaneously opting for the fastest Internet connection they can possibly offer. That tells us what Hulu will offer next.

The warning is only stronger now as Hulu has even more content than it had back then and even more advertisers lining up to pay a premium on a CPM basis to participate. I hate to say I told you so…

Ironically, Comcast is a beneficiary of the Hulu experience since Hulu is the engine behind most of the content available at Fancast.com, Comcast’s online TV portal play. 

What about you? Are you a Hulu.com junkie yet? Are you doing just TV or have you browsed any of the hundreds of movies? I’m hooked on both. I’ve watched over 3 hours of video just on Hulu this week alone. That puts me squarely in the most engaged online viewer category and I have Hulu to blame.


Web stream of my speech at the Forrester Consumer Forum

October 28, 2008

Imagine my surprise to find out that one of the bloggers on the front row of the Forrester Forum streamed my keynote speech live. You can see the archive of the stream here. It begins with Carrie Johnson’s kickoff to the forum and then at about minute 11, she introduces my keynote. It’s not the best quality image or audio, but if you’re really interested in the speech, here it is in its glory.

Vodpod videos no longer available.

more about “Watch the stream of my speech at the …“, posted with vodpod


More on Blu-ray in a recession – forecast down 25%

October 23, 2008

According to this article from Jacqueline Emigh at BetaNews, Parks Associates (technically a competitor, but a respectable one so I’ll give them their props) has reduced its forecast for standalone Blu-ray players this year to to 4.3 million globally or 2.2 million in the US.

This comes as I’ve been writing about Blu-ray prices falling to $199 for the first time and the economy’s effect on home video overall. First of all, I’ll say that Forrester has never produced a forecast for standalone Blu-ray players so I’m not in a position to comment on the specific number, however it is interesting to note that this new forecast puts the Parks number in line with the Jupiter Research number from earlier this year. (Jupiter Research, as you may know, was a competitor until just a few months ago, we now are one family, which is great as they are some smart folks.) Jupiter had predicted approximately 3 million total Blu-ray homes in the US by the end of this year, on top of just under 1 million last year, which comes out to something north of 2 million in sales this year. So the new Parks numbers line up with the Jupiter numbers. I’m inclined to believe both. (It is important to note that both these numbers are far short of the projections Blu-ray manufacturers are working from.)

The most interesting question is whether PS3 will now have a more cannibalistic effect on standalone Blu-ray sales or less of one. 

The thinking goes like this: PS3s used to be the cheapest way to get a Blu-ray player, and it also happened to play games. However, now that Blu-ray standalone players are so cheap, that is no longer the case. Is it possible that people will postpone PS3 purchases in favor of a $199 Blu-ray player, thinking they can upgrade to the PS3 when the economy improves? or will they instead go from standalone players, spend a few extra bucks to get a PS3, and pat themselves on the back for getting a system that can do gaming and video?

I doubt either will occur, actually. Instead, people in the market for the PS3 will still get one, possibly with fewer accessories, but they weren’t in the market for a standalone player anyway so the effect is not cannibalistic. People in the market for a standalone Blu-ray player will do one of two things: either move downmarket to a $199 or $229 model or just postpone the purchase for next year, assuming that prices will only go lower. In the meantime, the upconverting DVD player they bought last year for $50 will do them just fine.

What are you going to do? Did you plan to buy a Blu-ray player or PS3? What will you do now?