Losing a binge-watcher could cost an OTT provider $29, report says

Looks like Netflix (NASDAQ: NFLX) has got it right when it asks, "Are you still watching?" after two to three episodes of a single series have streamed. The majority of binge-watchers, 87 percent, can handle viewing just three or fewer shows in one sitting. But keeping those viewers coming back is becoming increasingly important to content providers' bottom lines.

What's more, the number of consumers who identify themselves as binge-watchers has dramatically increased, with an estimated global audience of 115 million bingers. "This is not a millennial thing, this is a fundamental shift in usage patterns," a new report from multiscreen vendor Conviva reads.

The finding is one of several in Conviva's report, which takes a look at the value of a binge-watching audience and how content creators can leverage that knowledge to get the best return on the cost of a movie or show. Conviva surveyed 750 consumers in the key 26-34 age demographic in mid-2015 to compile its results.

Conviva binge-watching study 2015

Among viewers surveyed, 41% will watch one TV series in a single sitting. (Source: "Binge-Watching: The New Currency of Video Economics," July 2015)

For online video service providers, pay-TV providers and content owners and distributors, over-the-top viewers are becoming much more valuable. Conviva gave a wide estimate of the value of each online viewer as between 25 cents (the marginal price of a single international TV show view) and $3.50 (the marginal price of a movie or TV episode download).

That's a pretty huge difference, but the estimate represents Conviva's look at the various viewing and purchasing behaviors of the online video audience. And it gives an idea of what each viewer could potentially be worth to the online video industry. For example, a viewer who streams an episode of Game of Thrones may then stream the rest of the season and, ideally, purchase a download or DVD set. That is, if they can wait almost a year for GoT's latest season to be released, but that's another problem, right?

"Binge-watchers represent dedicated consumers," said Hui Zhang, CEO of Conviva, in a release. "As the line between OTT consumption and content creation blurs due to shifting viewing models, publishers need to ensure they're building long-term value with viewers."

There is where the real moneymaking potential of OTT lies, according to Conviva: keeping the consumer watching. In line with other surveys around OTT streaming, quality matters to viewers--both in streaming quality, where they have a low tolerance for buffering events (33 percent would abandon a show "immediately" if the streaming quality is bad), and in content quality. Only 11 percent of binge-watchers in the study said they would replace an old series they love with a new one. Only 22 percent of all viewers surveyed would wait for a new episode to become available.

Conviva viewer frustration

25 percent of viewers will go elsewhere to find an episode of a series they want to watch. (Source: "Binge-Watching: The New Currency of Video Economics," July 2015)

When a viewer can't find an episode, he or she may wander off to another streaming service--and Conviva said there is a 29 percent chance they may not come back at all. "Potential loss from that one individual alone could be as high as $100 (25 episodes @ $3, plus a DVD @$25)," the report said.

So, making sure viewers can find and stream their favorite series is essential to a content provider's bottom line. The financial risk, Conviva estimated, of not having an episode available or offering an alternative episode they don't like is $29 when factored against the $100 potential cost.  "If a show has an audience of a million, that's a $29M risk; for a hit like GoT, with some 10 million viewers, that's a risk that cannot be taken."

For more:
- see the release

Related articles:
Multiscreen viewing reaches 'all-time high,' but mobile growth is splintering measurement
Ooyala: Smartphone, tablet OTT viewing jumps 114% since last year
Buffering time decreases 12.4 percent, but online video viewers losing patience

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