Tuesday, July 8, 2008

Online Video Complements, Not Replaces, TV; DVDs Still Being Copied

A new study conducted by The Nielsen Company shows that online video serves as a great complement to traditional TV, rather than threatening to replace it.

When asking U.S. consumers what sorts of video they watch online, many cited things like a TV show's new episode previews (38%), behind-the-scenes video clips (27%), bloopers (22%), and deleted scenes (20%). (I wish I knew of networks that offered bloopers and deleted scenes online; if such content is available, it really should be advertised more!)

Of consumers that do watch full TV show episodes online, the majority (82%) said that it was only because they missed the actual airing on TV. What's more, a whopping 87% said they viewed the show from the TV network's own Website; not some third-party piracy site like many would like us to believe. (Naturally, this study hails from the U.S., since online video offering through TV networks in Canada is relatively scarce).

If this is the case, why aren't more networks (especially in Canada) offering their programming online as a supplement to the TV versions? The answer is likely due to fear that online videos will steer viewers away from standard TV. I'd argue (and the study also reinforces) that this certainly isn't the case: each means represents a very different experience. I can't imagine opting to watch a show online instead of via TV for any viable reason other than that I can't access the show by TV at that particular time.

What's more, the Nielsen study discovered that most consumers prefer the Web for short videos, like movie trailers (53%), user-generated videos (45%), music videos and general news segments (37%), comedy programs (31%), and sports clips (31%).

"This analysis shows a continuing strong appetite for watching television the traditional way even as viewers begin to extend their viewing to the personal computer." said Susan Whiting, Executive Vice President, The Nielsen Company.

With that said, Nielsen also found that interest in things like HD programming and on-demand TV have also increased. 20% of the respondents who subscribe to HD channels say they watch HD programming "every time" they watch TV; while awareness of free on-demand TV jumped from just 49% in 2005 to 71% in 2007. Customers interested in jumping on the flat-panel HDTV bandwagon rose from 18% in 2005 to 28% in 2007.

A small portion of consumers is also exploring additional ways of viewing video content: 6% watch video via compatible mobile phones and 5% via other portable video players. Of those who own a video-capable iPod, 16% say they watch videos two to three times a month on the portable device. However, we certainly have a long way to go in this area: 35% of iPod Video owners have never watched a video on the player!

Interestingly, just as I was writing this, another study appeared in my inbox that reveals consumers are actively making copies of pre-recorded DVDs. The study, conducted by Futuresource Consulting, found that one-third of respondents from both the U.S. and the U.K. admitted to making a DVD copy in the past 6 months. The most likely culprits: 18-24-year-old males; and the most likely methods include copying via a DVD player and recorder, or using PC burning software. As for what they're coopying, it's, no surprise, new release movie titles.

Making a back-up copy of one's own purchased movie should, in my eyes, be permitted. But the study claims that a "significant portion" of copying is done with borrowed or rented movies. One argument many have made against the "lost revenues" argument from illegal copying is that the consumer likely would not have purchased a legitimate copy of the film anyway. However, Futuresource's study discovered that 77% of respondents in the U.S. and 63% in the U.K. said they would, in fact, have purchased legal copies of most of the movies in question had they not been able to make the copy.

One thing's clear from all of this information: consumers really are interested in video content every which way they can get it. Perhaps in making more video accessible in more ways, this will help curb piracy altogether; and satisfy consumer craving for vast amounts of media consumption.

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fung0 said...

You say in your post that "77% of respondents in the U.S. and 63% in the U.K... would, in fact, have purchased legal copies of most of the movies in question." (My emphasis.)

In fact, according to the PDF summary of the FutureSource report, less than 50% of the respondents to the study's rather loaded question answered "all" or "most." A larger number of respondents said "some" or "a few." Both terms are surprisingly vague, and the latter in particular could easily be taken to mean the same as "almost none;" almost 40% of UK respondents flatly said "none."

More importantly, it should be noted that all this material comes not from independent academic research, but from a study sponsored by Macrovision, purveyors of DVD copy-protection, and hence a company with not just an axe to grind but a product to sell. Indicating that perhaps the numbers could be taken with just a teensy grain of salt. (I'd suggest about a 500-kilo sack, but then I'm a cynical, suspicious type of person.)

Marketnews - Christine Persaud said...

Hi fungo,

Indeed, you are correct in that 77%and 63% represents people that would purchase, at the very least, "a few" of the DVDs. With that said, even if I were to take the numbers that make up those who said "all", "most", and "some" of the DVDs and eliminate those who only indicated a "few" (which you feel could be taken to mean pretty much none), the numbers still equate to 63% in the U.S. and 45% in the U.K. Either way, it still indicates that about half of the consumers would have spent some money otherwise.

While I do agree with your point about study sponsorship, I'd argue that EVERY survey, report, and data research should be taken with a grain of salt. This isn't to say that they aren't accurate, but things will, in most cases, be swayed to work in favour of one side over another. A good survey conductor would never pose a loaded question (nor would a good lawyer!) I definitely don't find the question: "If you had not been able to copy, would you have purchased?" loaded at all. If anything, I'd think respondents would be more inclined to say "no" so they didn't look bad! So the fact that half said yes in some fashion is quite surprising to me.

Either way, the point is that people DO burn DVDs, and it's likely that at least some of these people would have purchased a legitimate copy if the option for the illegal one wasn't available.

Thanks for your studious comments!

fung0 said...

"Either way, it still indicates that about half of the consumers would have spent some money otherwise." Perhaps... if you accept the survey at face value. However, I would additionally point out that those who said they would have purchased "all" of what they downloaded are very likely also those who downloaded one movie; whereas those who downloaded 500 movies probably would have purchased none, or very nearly so. Thus, even without contradicting the survey in any way it's really quite likely that the bulk of the downloading does not equate to lost sales.

What's more, there are many other numbers out there. For example, here's an alternative view:


Although the source clearly has its own particular bias (which it makes no effort to conceal, unlike Macrovision, which was not mentioned in the press releases), the figures cited are the MPAA's own. And the question needs answering: If lost sales are so significant, why are they not being reflected in the bottom line?

In any case, this question of lost revenues seems a particularly fruitless one. As you say, people do burn DVDs. And I think it's become abundantly clear that they're never going to stop. Perverting our entire copyright structure and arresting half the world's population wouldn't stop the copying. The only rational response is to move on and consider new business models and a new legal framework that better reflect consumer attitudes. In a truly competitive market, that would already have happened.

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