Some new research from Altman Vilandrie & Co. and Peanut Labs came out yesterday that showed Americans increasingly watching Internet television, with the number of viewers doubling from a year ago.
As you would expect, much of the growth was among younger viewers. Only 42 percent of 18-34 year olds watch linear TV compared to 60 percent of those 35 years old and older; and twice as many (16 percent) watch a full episode of broadcast TV on the Internet daily. Overall, 10 percent of those surveyed said they watched an episode of broadcast TV online, up from 5 percent in 2009.
I talked with AV&C Director Jonathan Hurd yesterday about the results and he said that, surprisingly, cord cutting was hardly an issue among the 1,000 survey respondents, with only 3 percent of 18-34 year olds saying they had cancelled their service. But, he said, some 25 percent had "seriously considered it." That 25 percent, he said, sounds an ominous note for pay-TV operators, who may be holding onto them as subscribers only because of "high-value programming" like major sporting events being unavailable over the top.
"They have no sense of brand affinity" to pay-TV operators, he said. And he believed there was a strong possibility that they could become cord cutters in the years to come as more over-the-top content became available. "I don't see complete cord cutting necessarily accelerating," he said. "I see it as more of an erosion of the subscriber base over time. I think on-demand purchasing will become a more important part, a major part, of user experience."
Hurd said he believes over-the-top delivery adoptions will continue to benefit from that erosion, and will actually drive it as users look for easier ways to get to the content they want quickly and easily. With the plethora of new access points for OTT content, Boxee, Roku and the like, and the impending arrival of Google TV and a reinvented Apple (or iTV), the process of getting on-demand quality content is going to become simpler. Hurd, for example, said he's an Apple TV user, choosing it because of its ease of use and because it makes browsing for content enjoyable.
That's something he says IPTV operators can use as a potential differentiator from their cable competition.
"Cable doesn't really handle on-demand well; it takes a long time, gives you limited opportunities and choices for browsing and is very narrow," he said. IPTV, on the other hand, allows users more flexibility, and is suited to bringing more content over the top and giving users access to the Internet, which has become a hot button for many of them, a true must-have feature.
Other advantages for IPTV: possible bundle flexibility and features like whole-home DVR. "IPTV does have greater flexibility and more offerings, like the U-verse whole home DVR, that may not be available in other technologies," he said.
Pay-TV operators also may have an advantage because they can deliver 3D programming. Hurd said 3D is a target that's quickly coming into focus, with some 57 percent of the 1,000 respondents saying they'd already had a 3D experience, although it most likely was in a movie theater. Nevertheless, "people who have seen 3D really find it to be a compelling and different experience and they want it," he said.
So, is IPTV going to be able to stand against the eventual swell of cord cutting that's coming down the road? So far, it appears it may have the edge. New figures from research firm SNL Kagan (see this story) show that AT&T and Verizon added 414,000 subscribers in the second quarter while the cable industry lost some 711,000--it's worst quarter ever.-Jim