Q VIDEO TRENDS REPORT Consumer Behavior Across Pay-TV, VOD, OTT, Connected Devices and Next-Gen Features

Transcription

1 Q VIDEO TRENDS REPORT Consumer Behavior Across Pay-TV, VOD, OTT, Connected Devices and Next-Gen Features

2 Introduction Over the past year, Digitalsmiths has built its expertise in gathering viewing data and preferences, interpreting and analyzing results, identifying trends, and proffering insights. Our team of developers, product management, applications engineering and other staff aim to provide customers with solutions to improve decision-making cycles and shorten time-to-market of new value streams. Vision of Enabling Customers Our vision is simple: place solutions in the hands of our customers that allow them to quickly and efficiently improve their decision making. An Invitation to Discover More In the following pages, you will find short items of analysis accompanied with commentary and supporting metrics where applicable. We hope you enjoy them and find these valuable. Contact us if you would like to further explore any of the presented data, trends or analysis. Methodologies, Causality and Correlations With any analytical methodologies used, one must be aware of the difference between causal and correlated relationships. Unless explicitly stated, the conclusions made herein are based purely on correlated analysis. Causal relationships require additional research and analysis beyond the scope of this whitepaper. Survey Demographics Survey Size: Over 3,090 Consumers Geographic Regions: United States, Canada Ages of Respondents: 18+ Years of Age This survey was conducted in Q by a leading third-party survey service. The results were analyzed by Digitalsmiths. Digitalsmiths conducts this survey on a quarterly basis and publishes a report evaluating and analyzing key trends across the Pay-TV industry. The importance of this survey is to track consumer trends over time, offering Pay-TV providers real, unbiased feedback regarding consumers behaviors, perception of the industry and views of new technology hitting the market. 1

3 Pay-TV Providers While 5.7% of respondents switched providers in the prior three months, an additional 13.6% plan to cut or change their current service or switch to an online app/service in the subsequent six months. While these percentages may seem low, multiply this by millions of subscribers and the enormity of the threat to video service providers becomes readily apparent. Add to this the large amount of respondents who are on the fence, answering maybe to leaving their current service provider, and the danger and impact of this trend further increase. In Q1 2014, dissatisfaction among respondents was at its highest, 22.2%, since we started the survey in Q And, while there was a decrease, 37.9% would still like to see their Pay-TV provider make improvements to the video discovery experience in order to retain them as a customer. Another interesting result this quarter was that the same amount of respondents, 16.2%, increased services as those, 16.3%, who decreased services resulting in what appears to be a wash, but this churn could, in fact, ultimately affect Pay-TV providers bottom lines. Additionally, 64.3% of respondents do not subscribe to revenue-generating premium channels, such as HBO, Showtime or sports packages. This represents a huge opportunity that still exists for Pay-TV providers, and the time to capitalize on it is now, before it is too late. PAY-TV PROVIDER Who is your current cable/satellite service provider? Insight Communications Company Comcast Corporation Charter Communications Bell Cablevision Systems Time Warner Cable Rogers Communications SaskTel Verizon OtherDIRECTV Cox Communications DISH Network Videotron Shaw None AT&T U-verse Bright House Networks Mediacom Communications Corporatiion Suddenlink Communications TELUS MTS Cogeco Cable While these numbers speak to cord-cutting and cord-thinning, a phenomenon Digitalsmiths refers to as cord-cheating is a continuing threat. Cord-cheating occurs when an audience uses OTT subscription services or other third-party pay-per-rental services to meet their entertainment needs. In Q1 2014, 49.1% of respondents indicated they use these OTT subscription services. It remains to be seen if, and how, Pay-TV providers will partner with OTT providers. RCN, Atlantic Broadband, Grande Communications and SuddenLink have already announced plans to allow their subscribers to access Netflix via their TiVo boxes. Will other Pay-TV providers follow suit and embrace OTT providers, or will they instead continue down their separate paths? 2

4 Digitalsmiths Analytical Commentary: Canada vs US Viewers Are there cultural differences between Americans and our friends to the North? For the most part, the Q answer patterns of Canadians and Americans were closely aligned. However, we did find that Canadians spend slightly more on pay-per-rental services and watch a little more TV, most of which is consumed live. Of the survey population who answered this question, Canadian respondents spent $12 per month on pay-perview, while their American counterparts only spent $7. When comparing hours watched per day, Canadian participants averaged 3.1 hours versus the Americans 2.7 hours per day. VALUE How would you rate the level of value you are receiving from your cable/satellite service provider? If UNSATISFIED, why do you feel you re not getting enough value from your provider? (Choose all that apply.) VERY SATISFIED 19.7% SATISFIED 58% UNSATISFIED 22.2% Poor cable/satellite service Poor Internet service Bad channel selection Poor customer service Increasing fees for Internet service 30.5% 33.7% 33.7% 40.3% 42.4% Increasing fees for cable/satellite service 72.1% Other (please specify) 13.8% 3

5 PLAN TO CHANGE PROVIDERS Have you switched cable/satellite providers in the last three months? 5.7% 94.3% BILL AMOUNT How does your current cable/satellite bill compare to what you were paying 12 months ago? MORE than 12 months ago 46.3% SERVICE ADJUSTMENT Have you adjusted your level of cable/satellite service in the last 12 months? Increased/Added Services 16.2% Do you plan to change cable/satellite providers in the next six months? SAME AMOUNT 36.3% LESS than 12 months ago 17.4% Stayed the same Decreased/Removed Services 67.5% 16.3% 54.5% 31.8% 2.3% 7.5% 3.8% 31.8% 54.5% 3.8% 2.3% 7.5% NO, plan to STAY with current cable/satellite provider MAYBE YES, planning to SWITCH to an online app or rental service instead of a cable/satellite service YES, planning to CHANGE cable/satellite providers YES, planning to CUT cable/satellite service How much is your total monthly bill from your cable/satellite provider for all major services used such as TV, Internet, and phone (not including video-on-demand/movie purchases)? 22% $ % 20% 18.3% $126 - $150 $101 - $125 $76 - $ % $51 - $75 7.1% <$ % 45.8% If DECREASED, what service(s) did you cut? 3.7% 5.7% 6.9% 8.5% 11% 17.6% 4.1% New/Upgraded Equipment Internet Cut Cable/Satellite Service Totally DVR Phone Premium Sports Package(s) Premium Channels Reduced Level of Cable/Satellite Service Other (please specify) If YES, would you consider keeping your existing service if your provider released new functionality that made it easier for you to find something to watch? (For example, if you had shows recommended to you based on your interests so it is easier to find something you want to watch on TV.) 37.9% say PREMIUM CHANNELS Do you pay for any of the following premium channels? (Choose all that apply.) Starz Cinemax Sports Package(s) A Movie Channel/Network Showtime HBO None Other (please specify) 8.9% 9.1% 9.7% 13.3% 15.3% 22.1% 3.1% 64.3% If INCREASED, what service(s) did you add? Premium Sports Package(s) Phone New/Upgraded Equipment DVR Internet High Definition (HD) Premium Channels Other (please specify) 8.5% 14.5% 17.7% 21% 25.3% 27.9% 29.5% 15.2% 4

6 TV Viewing Habits 45.3% of respondents watch 1 to 3 hours of TV per day. Compared to the previous quarter, respondents watch slightly less live TV, with 52.8% watching two hours or less of live TV, accessed from their channel guide. Consistent with previous quarters, 44.8% of respondents watch less than 1 hour of recorded TV per day, and 72.2% watch 2 hours or less of recorded TV. 45.5% of respondents spend 10 minutes or more channel surfing, or scrolling through the guide, looking for something to watch. Consistent with last quarter, and the second highest since the start of the survey in Q4 2012, 30.1% of respondents are overwhelmed by the number of channels available to them. Overall consistency remains true when it comes to channels watched, with 87.2% of respondents viewing the same channels over and over. And of the channels offered to them, 80.5% watch 10 or fewer channels. On the bright side, a slight increase to 63.3% of respondents feel it is easy to find something they want to watch on TV. TREND: OVERWHELMED BY CHANNELS Watch the same channels over and over again Q Q Q Q Q Q % 88.2% 88.9% 86.2% 85.8% 86.7% Watch 10 or fewer channels Q Q Q Q Q % 80.3% 80.2% 78.9% 76.9% TV VIEWING On average, how many hours a day do you watch TV? <1 hour 6.5% 1-2 hours 2-3 hours 3-4 hours 22.1% 23.2% 18.2% 4-5 hours 10.5% 5+ hours 12.1% Not on a regular basis 7.5% 5

7 Digitalsmiths ANALYTICAL COMMENTARY VIEWING LIVE TV On average, how much of your daily TV watching is of live TV accessed from your channel guide (not DVR d or recorded shows)? <1 hour 25.5% A deep dive into the results showed that the respondents who are watching more channels are actively engaged with, and are successfully using, their content discovery tools. When analyzing this group s answers to all the survey questions, the use of content discovery solutions was cited in 3 of the top 10 factors, more frequently than any other item. 1-2 hours 2-3 hours 3-4 hours 4-5 hours 5+ hours 5.5% 6.7% 10.9% 16.6% 27.3% Q1: Do you feel it is easy to find something you want to watch on TV? A1: Yes Q2: Do you ever type in a TV show, movie title, or topic into a search box to find something to watch in your cable/ satellite guide? A2: Yes Not on a regular basis VIEWING RECORDED TV 7.5% On average, how much of your daily TV viewing time is spent watching shows that you have recorded/dvr d? <1 hour 1-2 hours 27.4% 44.8% Q3: On average, how much time a day do you spend searching (channel surfing) or scrolling through the guide looking for something to watch? A3: Longer than the average 2-3 hours 3-4 hours 4-5 hours 5+ hours 4.4% 2.3% 1.6% 12.0% Not on a regular basis 7.5% 6

8 CHANNEL SURFING On average, how much time a day do you spend searching (channel surfing) or scrolling through the guide looking for something to watch? <10 minutes 47.1% VARIETY OF CHANNELS minutes minutes minutes minutes 60+ minutes I do not watch TV on a regular basis 1.6% 4.6% 2.7% 7.5% 10.5% 26.1% NUMBER OF CHANNELS Do you feel overwhelmed by the number of channels available to you, and listed in your guide? NO 69.9% WHAT TO WATCH YES 30.1% Do you feel you watch the same channels over and over again? 12.8% 87.2% Do you feel it is easy to find something you want to watch on TV? NO 36.7% Of the channels offered to you, how many channels do you typically watch, on average? 2.2% 3.0% 7.2% 9.2% 16.3% 10.3% 5.3% 6.6% 1.6% 18.8% 0.6% 4.6% 0.5% 0.7% 6.0% 0.3% 0.4% 0.7% 0.5% 5.3% Number of Channels How often do you know what you re going to watch when sitting down to watch TV? < 10% of the time 10% - 20% 20% - 30% 30% - 40% 40% - 50% 50% - 60% 60% - 70% 70% - 80% 80% - 90% 90% - 100% 4.9% 6.0% 5.4% 7.8% 10.9% 11.2% 9.8% 15.1% 13.2% 15.8% 7

9 Video On Demand and Over-the-Top Trends Consistent with Q3 and Q4 2013, 72.3% of the Q respondents ordered zero movies from their Pay-TV provider. However, there was a slight increase to 23.1% of respondents who order 1 to 3 VOD rentals each month, and for the sixth quarter in a row, the largest group orders 1 movie per month. On a related note, there was a small, but concerning dip to 46.9% of respondents who feel it is easy to find a movie they will enjoy in their Pay-TV provider s VOD catalog. Cord-cheating, a phenomenon we began tracking in Q2 2013, refers to the trend by consumers to seek on-demand video content from third-party and OTT services as an alternative to traditional Pay-TV providers. The cord-cheating phenomenon spans a variety of delivery models, including streaming subscription services such as Netflix and pay-per-rental services like Redbox kiosks. According to Q survey results, there is an increase in those using monthly subscription services, with a whopping 49.1% of respondents stating they use Netflix, Hulu and others. Of those respondents leveraging these services, 56.7% spend between $6 and $11 per month. This is a growing population who is potentially eating away at the VOD profits for Pay-TV Providers. Another level of competition for the Pay-TV providers is the pay-per-rental services such as Redbox kiosks (at retail stores), Amazon and itunes. According to survey results, 27.9% of respondents leverage these services, and 48.0% spend between $3 and $11 per month. The important question is why are respondents leveraging these services? For the fourth quarter in a row, convenience was the top reason, followed by cheaper cost, and the ability to watch certain TV shows and whole seasons or the popular viewing behavior referred to as binge viewing. It is important to note that a large portion, 29.7%, said they use these services because it is easier to find what they are seeking. VOD PURCHASES PER MONTH How many VOD purchases does your household make on average, each month? (Movies purchased from on-demand stations provided by your cable/satellite provider. Does NOT include Netflix, Redbox, itunes, etc.) VOD CATALOG Do you feel it s easy to find a movie you will enjoy in the VOD catalog provided by your cable/satellite provider? 23.4% % 25.7% ZERO NOT EASY Q Q Q Q % 24.5% 72.3% 26.2% 8

10 Digitalsmiths ANALYTICAL COMMENTARY We were intrigued and sought to understand the difference between someone who purchases 1 or 2 titles per month, versus those who do not. Our conclusion: for those who made 1 or 2 VOD purchases per month, discovery is easy and personalized. These people are actively engaged in MSO-supplied content discovery, and also third-party apps, including social media applications. In this analysis, the message was strong: 6 of the top 10 responses related to high quality, personalized discovery and app use. Here are the six questions and their responses: Q1: Do you feel it s easy to find a movie you will enjoy in the video-on-demand catalog provided by your cable/satellite provider (accessed from your guide)? A1: Yes Q2: Does your cable/satellite provider make recommendations of TV shows and movies to you based on your interests, past viewing habits, etc. (personalized to you)? A2: Yes Q3: Do you have any of the following Content Discovery apps downloaded on your ipad/tablet and/or smartphone? (Choose all that apply.) A3: Yes, I have at least one Q4: How often do you use your cable/satellite provider s app on a weekly basis? A4: Daily Q5: On average, how much time a day do you spend searching (channel surfing) or scrolling through the guide looking for something to watch? A5: Higher than average Q6: How often do you use these social TV apps? A6: Higher than average Netflix users, in this survey at least, tended to be younger, and consume less TV content (2.5 hours versus 3.0 hours). Hulu subscriptions were highly correlated to Netflix use as well, and overall the group of Netflix users cited the desire to watch specific episodes and entire seasons. 9

11 MONTHLY SUBSCRIPTION SERVICES Do you use any of these monthly subscription services for movies or TVs? (Choose all that apply.) Blockbuster Redbox Instant (not kiosk) Hulu/Hulu Plus Amazon Prime (free movies) Netflix None Other 0.6% 2.3% 1.7% 8.6% 14.5% PAY-PER-RENTAL SERVICES 42.6% 50.9% How much do you spend each month on subscription services (Netflix, Hulu, Blockbuster, Redbox Instant)? $1 - $2 2.8% $3 - $5 2.1% $6 - $8 37.5% $9 - $ % $12 - $14 6.8% $15 - $17 7.9% $18 - $20 6.2% $21 - $24 2.6% $25 - $27 1.1% $28 - $30 1.2% $ % Occasionally 11.1% WHY USE OTT SERVICES Why do you use these 3rd-party rental and/ or monthly subscription services like Amazon, itunes, Netflix, VUDU, CinemaNow, Blockbuster, Redbox, YouTube? (Choose all that apply.) Ability to watch on smartphone No cable/satellite services Ability to watch on ipad/tablet Easier to find what you re looking for 12.9% 14.2% 23.1% 29.7% Do you rent from any of these pay-per-rental services including purchases ONLY on Amazon, Best Buy s CinemaNow, itunes, Redbox kiosks, VUDU? (Choose all that apply.) Best Buy s CinemaNow VUDU YouTube (paid) itunes Amazon Redbox Kiosks None Other 0.8% 1.4% 1.5% 1.1% 6.4% 9.1% 15.6% 72.1% How much do you spend per month renting movies from these pay-per-rental services? $1 - $2 14.7% $3 - $5 24.6% $6 - $8 14.0% $9 - $11 9.4% $12 - $14 6.9% $15 - $17 3.4% $18 - $20 3.8% $21 - $24 1.3% $25 - $27 0.3% $28 - $30 1.0% $ % Occasionally 19.3% Better selection Ability to watch certain TV shows & whole seasons Cheaper Convenience Other 36.4% 42.7% 48.1% 59% 5.0% 10

12 Connected Devices TABLET & SMARTPHONE OWNERS Do you own an ipad/tablet, or a Smartphone? (Choose all that apply.) TV viewing has evolved significantly and continues to rapidly expand to include a growing number of devices. It is important to monitor adoption, as well as the types of video content viewing on the various devices. The Q survey results show a positive increase to 76% of respondents who own a smartphone and/or an ipad/tablet. YES, I own an ipad/tablet YES, I own a smartphone NO, I do not own either device 48% 63.6% 24% CONNECTED DEVICES GAMING CONSOLES Do you have any of the following connected devices (Wi-Fi enabled devices)? (Choose all that apply.) Do you own any of the following gaming stations? (Choose all that apply.) 7.7% 0.5% 2.3% 5.0% 6.1% 0.6% 8.8% 0.6% 11.9% 65.6% 2.5% Apple TV Boxee TV Google TV Google Chromecast Roku Streaming Player Roku Streaming Stick Smart TV TiVo Roamio/TiVo Roamio Plus Wi-Fi-enabled Blu-ray Player None Other 29.1% 3.1% 21.1% 3.8% 21.3% 49.1% 2.4% Nintendo Wii Nintendo Wii U Sony PS, PS2, PS3 Sony PSP Xbox 360 None Other On average, how many movie/tv show purchases do you make each month from your gaming device? 4.4% 2.3% 1.5% 0.5% 0.3% 0.4% 0.1% 0% 0.5% 83.1% 7% Number of Purchases 11

13 Digitalsmiths ANALYTICAL COMMENTARY One item we thought interesting to investigate was to identify any patterns that could be correlated to the number of hours watched on smartphone or tablet devices. First, we found that, by and large, higher consumption on a smartphone correlated quite strongly with higher consumption on a tablet: we did not see any meaningful difference between the two. One interesting item we did find: people who consume larger amounts of content on their smartphone and/or tablet are likely to be spending money on pay-per-rental services. Video viewing on a smartphone is slightly down this quarter. However, 36.2% of smartphone owners are viewing video content on their phones at some point in a given week, with the bulk of the audience viewing content less than 1 hour per week. Sixty-three percent of the video content consumed on an ipad/tablet falls into three main categories: movies, news, and episodic reruns or previous seasons of TV shows. Video viewing on the ipad/tablet is also slightly down; however, 74.7% of owners still view video content at some point in a given week. Going a step further, 51.2% of ipad owners watch content less than 2 hours a week. Connected devices as a whole are transforming the way video content can be consumed. No longer is it just the TV, but video is available on nearly any consumer device today. For example, half of respondents, 50.9%, own a gaming console that supports video viewing. However, while ownership is high, only 17% of respondents are making video purchases on gaming consoles. A new trend facing the video industry is streaming devices. Amazon recently launched its Fire TV product, and Roku launched Streaming Stick. But how are these being adopted by consumers? Thirty-four percent of respondents own a streaming device in their home. The most popular of these connected devices includes Wi-Fi enabled Blu-ray players, Smart TVs and Apple TV. Pay-TV providers need to watch this new competition facing them, and it is a stat we will continue to watch over time. 12

14 VIDEO CONTENT ON IPADS/TABLETS Do you watch any of the following video content on your ipad/tablet? (Choose all that apply.) 5.4% Sporting Events 6.0% Live TV Shows 11.4% Sports Clips 19.4% Reruns/Previous Seasons of TV Shows 20.1% News 21.2% TV Show Previews, Movie Previews 24.3% Movies VIDEO CONTENT ON SMARTPHONES Do you watch any of the following video content on your smartphone? (Choose all that apply.) 3.8% Sporting Events 4.1% Live TV Shows 9.8% Reruns/Previous Seasons of TV Shows 12.7% Sports Clips 13.1% TV Show Previews, Movie Previews 13.2% Movies 14.4% News On average per week, how often do you watch TV shows, movies, or video content on your ipad/tablet? On average per week, how often do you watch TV shows, movies, or video content on your smartphone? 9.1% 16.3% 18.3% 11.1% 4.6% 3.1% 4.7% 22.9% 19.7% 8.3% 3.0% 1.9% 1.2% 2.1% 32.9% 40.9% 0 Rarely < Number of Hours 0 Rarely < Number of Hours 13

15 TV Everywhere At the highest level since the start of the survey in Q4 2012, 37.2% of respondents said their Pay-TV provider offers an app to watch video on an ipad/tablet or smartphone. Additionally, the big unknown factor seems to be the lowest over previous quarters, with 49.9% of respondents stating they are unsure whether their provider offers a TV Everywhere App. While awareness could be higher and there is room for improvement, the positive growth is promising for Pay-TV providers that have invested heavily in developing these second screen experiences. While awareness is seeing positive increases, overall adoption is struggling a bit, with only 21.4% of respondents stating they have their Pay-TV provider s app downloaded on their smartphone or ipad/tablet. In addition, 60% said they rarely or never use their TV Everywhere App after download. APP ON YOUR TABLET Does your cable/satellite provider offer an app(s) that allows you to watch TV/movies on devices such as a smartphone or an ipad/tablet? If YES, how often do you use your cable/satellite provider s app (days per week)? DON T KNOW YES 37.2% 49.9% NO 12.9% Do you have your cable/satellite service provider s app downloaded on your ipad/tablet or smartphone? 11.8% 21.4% 66.8% > % 1.4% 5% 4.2% 6.3% 7.9% 9.1% 15.8% 44.2% 14

16 Third-Party Apps: The Most Popular and Most Used With hundreds of thousands of apps available today for connected devices and thousands designed specifically for viewing and discovering video content, the questions are threefold. Which are the most popular, are these being used once downloaded, and how are these apps differentiated? Digitalsmiths divides these into three categories: Social TV Apps, TV Network Apps and Content Discovery Apps. Social TV Apps Of respondents, 14.2% have downloaded one or more Social TV App(s), with Shazam being the most popular by far. And of these 14.2%, the largest population of 22.7% use it only one or two days a week and 57.2% rarely or never use it. Do you have any of the following Social TV Apps downloaded on your ipad/tablet? (Choose all that apply.) 0.4% 1.2% 1.1% 0.6% 0.4% 11.2% 1.4% 0.7% 85.8% 0.7% Blowfish BuddyTV GetGlue IntoNow Miso Shazam Viggle Zeebox None Other How often do you use these Social TV Apps (days per week)? > % 2.4% 5.3% 3.8% 5.3% 9.4% 13.3% 8.8% 48.4% 15

17 TV Network Apps Of the survey respondents, 30.6% have downloaded one or more TV Network App(s), with ABC being the most downloaded, followed by NBC, CBS and Watch ESPN. Of the respondents who have downloaded these app(s), 25.9% use them one to two days a week, 11.3% use them daily, and the largest audience of all rarely or never use them once downloaded. Content Discovery Apps Only 9.2% of respondents have downloaded one or more Content Discovery App(s), with TV Guide being the top application for the fifth quarter in a row. However, once downloaded, these apps are used far more than Social TV and TV Network Apps: 71.7% use them at some point throughout the week and 24.3% use them four to five days a week. Do you have any of the following TV Network Apps downloaded on your tablet? (Choose all that apply.) 7.7% 2.1% 2.8% 3.6% 3.6% 5.6% 3.1% 2.6% 3.0% 4.0% 2.3% 4.5% 5.2% 1.9% 5.7% 3.1% 2.8% 1.6% 2.5% 5.5% 69.4% 3.4% ABC ABC Family A&E BBC CBC CBS Discovery Channel Disney FOX FOX News FOX Sports Hulu HBOGo MSNBC NBC NBC Sports Showtime The CW Turner (CNN, TNT, CN, TBS, etc.) WatchESPN None Other Do you have any of the following Content Discovery Apps downloaded on your tablet? (Choose all that apply.) 0.4% 0.3% 0.8% 1.2% 0.8% 1.0% 0.6% 0.6% 0.5% 0.3% 3.6% 93.8% 0.2% Are You Watching This?! Boxfish Clicker Connect TV Fanhattan i.tv LocateTV NextGuide Peel Thuuz TV Guide None Other How often do you use these TV Network Apps (days per week)? > 10 How often do you use these Content Discovery Apps (days per week)? > % 3.7% 5.2% 11.3% 8.0% 4.6% 11.3% 6.1% 14.6% 11.5% 8.8% 9.5% 9.5% 6.1% 10.8% 15.5% 22.3% 39.5% 16

18 Next-Generation Features: Search, Recommendations and Discovery FINDING SOMETHING TO WATCH How often do you get frustrated when trying to find something to watch on TV? 9.2% Do you ever have trouble finding something to watch that multiple members of your household will enjoy? 9.5% The TV industry is changing, and new technologies are putting pressure on Pay-TV providers to offer better, more user-friendly services. As the personalized video discovery leader in North America, Digitalsmiths pays close attention to the perception and adoption of key features, including search, recommendations, mood, social, sports discovery and more. Of survey respondents, 63.6% always or sometimes get frustrated when trying to find something to watch on TV. In addition, 70.4% always or sometimes have trouble when attempting to find something for multiple members of the household. On a positive note, there was a slight decrease in frustration quarter-over-quarter, showing that efforts to improve the subscriber experience may be paying off. 54.4% 26.2% 10.3% 60.9% 28.2% 1.4% 17

19 Search Consistent with Q results, 44.2% of respondents stated they type in a TV show, movie title, or topic into a search box to find something to watch. But an even more impressive stat is 84.9% of those using the search functionality offered by their Pay-TV provider said the results are accurate. While an entire audience cannot be expected to adopt one feature, it is important to pay close attention to the reasons for low adoption in order to gain further traction among this group. The answers that should merit the most attention include: 21.0% do not know how to use the search feature 20.1% feel search takes too much time 19.7% said search is not offered by their Pay-TV provider The positive news is the slight decrease in those who answered search is not offered by my Pay-TV provider and I do not know how to use the search feature. While 2014 is the year Pay-TV providers will be focusing on search features, these two answers demonstrate the traction being made within the Pay-TV audience. SEARCH Do you ever type in a TV show, movie title, or topic into a search box to find something to watch in your cable/satellite guide? YES 44.2% If NO, why don t you use the search functionality offered to you? (Choose all that apply.) I only watch a few channels, so no need to search I am not interested in searching for TV Shows/Movies N/A 0.6% If YES, do you feel the search results are accurate? 84.9% 15.1% 22.4% NO 55.2% 34.2% I do not know how to use the search feature Takes too much time Search is not offered by my cable/satellite provider 21.0% 20.1% 19.7% Other 5.3% 18

20 Recommendations Though a small percentage of respondents, 15.8% said their Pay-TV provider offers recommendations, 50.5% would like these recommendations to be based on their preferences and viewing interests. Similar to search, the positive news is that the accuracy of recommendations seems to be strong, with 92.8% of respondents stating their recommendations are always or sometimes accurate. It is important to monitor the accuracy, because it will be a key factor in encouraging or deterring consumers from using this functionality. Digitalsmiths ANALYTICAL COMMENTARY TREND: RECOMMENDATIONS Does your provider make recommendations of TV shows and movies to you? Q Q Q Q Q Q % 17.1% 15.1% 16.2% 8.1% 7% It is not surprising that Digitalsmiths would identify personalization as a key part of the content discovery process. But we wanted to investigate this further and determine if it has any bearing on the customers overall satisfaction rate. The results we found confirmed our beliefs: those who benefit from personalized recommendations are much more satisfied with their cable service. People with personalized recommendations responded with a Satisfied or Very Satisfied 90% of the time. For those without personalized recommendations, that percentage dropped to 75%. RECOMMENDATIONS Would you like your channel guide to show you what s on/available based on your preferences/viewing interests first? I do not have cable/satellite service, but this feature WOULD persuade me into adding cable/satellite service again 1.7% YES 50.5% NO 43.6% 4.2% I do not have cable/satellite service, and this feature WOULD NOT persuade me into adding cable/satellite service again Does your cable/satellite provider make recommendations of TV shows and movies to you based on your interests, past viewing habits, etc. (personalized to you)? 78.3% SAY NO If YES, do you feel the recommendations are accurate/relevant? If NO, would you like to have TV shows and movies recommended to you (and personalized to your likings)? 35.9% 64.1% 9.9% 82.9% 7.1% 19

21 Mood Discovery We continue to see that respondents want to discover content in different ways at different times. One type of discovery not many have access to is Mood Discovery finding content based on the mood you are currently in or the one you would like to be in. Slightly down from Q survey results, but still significant, 51.6% of respondents would like the ability to find something to watch based on one s current mood. MOOD Would you like the ability to find something to watch based on the mood you re in? Social Discovery According to a January 2014 Business Insider article, social is now the top Internet activity: Americans spend an average of 37 minutes daily on social media, a higher time-spend than any other major Internet activity, including . Social-mobile rules: 60% or so of social media time is spent not on desktop computers but on smartphones and tablets. 1 While social media is a popular medium for consumers today, how are they leveraging networks such as Twitter and Facebook for video content? TREND: WATCHING DUE TO SOCIAL MEDIA BUZZ Q Q Q Q Q Q SOCIAL BUZZ Do you post about what you re watching on social networks such as Twitter, Facebook, etc.? 74.5% SAY NO Do you ever choose to watch a TV show or movie because of all the buzz it s getting on Facebook, Twitter, and other social networks? I do not have cable/ satellite service, but this feature WOULD persuade me into adding cable/ satellite service again YES 51.6% 2.1% NO 3.5% 42.9% I do not have cable/ satellite service, and this feature WOULD NOT persuade me into adding cable/satellite service again 29.3% 28.7% 30.8% 22.2% 18.6% 19.8% Only 13.2% of respondents post about what they are watching on social media sites. However, a higher audience of 29.3% choose to watch a TV show or movie based on the social buzz it is receiving. Therefore, while social media sharing of what people are viewing is low, when they do post what they are watching or programming they like, it influences a strong percentage of other viewers. DON T USE SOCIAL MEDIA YES 12.1% 29.3% NO 58.5% 1 Adler, Emily. Social Media Engagement: The Surprising Facts About How Much Time People Spend On The Major Social Networks. Business Insider. Business Insider, Inc, 05 Jan Web. 02 May

22 Sports Discovery Sports programming is one of the most popular categories of video content viewed today, and it is also one of the most expensive assets for Pay-TV providers. As a category, sports is one of the highest metadata-heavy pieces of content, including scores, team stats, schedules, playoffs, and more. And since 32.4% of respondents have trouble finding their favorite sports teams or events, it is important to have a deep understanding of the complexities around sports discovery. SPORTS Do you have trouble finding your favorite sports teams games, or do you ever miss sporting events because it s on a channel that is far down in your channel guide? 3.2% 29.2% 54.0% Click here to learn more about Digitalsmiths Seamless Discovery platform. 13.6% About Digitalsmiths Digitalsmiths, a wholly-owned subsidiary of TiVo Inc. (NASDAQ: TIVO), provides an industry leading video discovery platform, offering personalized search, recommendations, social discovery, mood discovery, sports discovery and a business console for all connected devices. Built for service providers, content providers and consumer electronics manufacturers, Digitalsmiths Seamless Discovery enables personalized discovery experiences that instantly connect consumers to the most relevant movies, TV shows and live events available, at any time, on any screen. The company is guided by the belief that consumers should not have to work to find relevant content the content should find them. To learn more visit Digitalsmiths, 2014, All rights reserved. 21