U.S. Digital Video 2014 Inaugural Report - CMO.adobe.com · ADOBE DIGITAL INDEX | U.S. Digital Video Benchmark 2014 Inaugural Report Online video 3 Key insights 4 Device share of

U.S. Digital Video 2014 Inaugural Report Adobe Digital Index

Table of contents

The mobile tidal wave that we have witnessed over the last decade has opened up unimaginable opportunities for consumers to access an ever increasing supply of video content. Fueled by the mobile revolution, the idea of streaming content wherever and whenever has given rise to a shift in consumer behavior that is beginning to come full circle and is forcing producers to make around the clock programming available on non-mobile devices like the desktop and the living room TV. The TV industry has responded to this mobile trend and developed a way to feed consumers the content they want through TV Everywhere (authenticated video streaming of Premium content). Dating back to around 2005, the idea of TV Everywhere has taken a while to go from a technology only enjoyed by innovators and visionaries to being consumed by the early adopter crowd. "e progression of this product has picked up a lot of steam in 2014 and in 2015 we expect that TV Everywhere should cross the chasm into the early majority stage. "ere is a lot of opportunity with this technology and it is up to its providers to align TV Everywhere services in a way that will keep viewers engaged a!er they have made the effort to sign up for and consume the service.

ADOBE DIGITAL INDEX | U.S. Digital Video Benchmark 2014 Inaugural Report

Online video 3 Key insights

4 Device share of video starts

5 Projected share of online video starts by device type

6 Smartphone online video completion rate

7 Average video view time per view

TV Everywhere 8 Share of authenticated video by access type

9 Share of authenticated video by device type

10 Share of authenticated video by access type and genre

11 Authenticated video growth by share of access type

12 Pay-TV share of active quarterly viewers

13 Viewing and viewership aggregate 14 Video viewing frequency growth by access type

15 Monthly unique visitors by genre

Appendix 16 Predictions

17 Methodology

18 Glossary

19 Tables

20 Tables

Key insights Online Video

• Mobile device video viewing will overtake desktop viewing by Q4 2016.• "e larger screen iPhone gives smart phone video completion rates a boost.• Time spent viewing on a tablet is 2x longer than on a smart phone; desktop viewing is 14x longer than a smart phone.

TV Everywhere

• Apple TV and other OTT devices are taking a bite out of iOS share of video starts.• 2014 was the year that TV-E was picked up by the early adopters; in 2015 it could “Cross the Chasm” to the early majority

stage.• New viewers continue to turn to TV-E to watch movies.

3 ADOBE DIGITAL INDEX | U.S. Digital Video Benchmark 2014 Inaugural Report

ONLINE VIDEO

Device share of online video starts

Market share of online video consumption continues to be carved out by mobile devices, such as smartphones and tablets. In 2014, over 26% of online video views were on a mobile device—a share increase of 63% YOY.

!e "ndings:

• Video viewing on smartphones is continuing to gain popularity, with 75% YOYshare growth.

• Tablet share growth of online video viewing did not keep up with smartphoneshare growth, but is still up 50% YOY to 12% of online video starts.

!e opportunity

Mobile devices are becoming much more relevant in online video consumption, with close to one-third of video starts occurring on a mobile device. Developers need to be prepared to offer an array of options that cater to multiple platforms and an increasing buffet of screen sizes.


ONLINE VIDEO

Projected share of online video starts by device type With content becoming more mobile-device friendly, mobile connection speeds continuing to improve, and a host of new mobile devices coming onto the market, the possibility of the mobile device replacing the desktop as the primary viewing platform is becoming more realistic.

!e "ndings:

• Share of mobile video viewing went from 6% in Q1 2012 to 27% in Q4 2014.

• Mobile video is expected to surpass desktop video viewing by the end of Q4 2016.

!e opportunity

Online video content creators and producers need to shi! their creation strategies to focus on a mobile centric viewer. Beginning the creative process with these viewers in mind will increase view rates and engagement levels.


ONLINE VIDEO

Smart phone online video completion rate We are seeing more devices come to market that make web browsing and online video viewing an increasingly user-friendly process. Larger screen devices, like the new iPhone 6 and 6+, provide a platform that is more conducive to online video viewing.

!e "ndings:

• In the quarter in which the larger screened iPhones were released to consumers,there was a 7% QOQ increase in the amount of online videos that were viewed atleast until the halfway point of the content.

!e opportunity

"e platform online video viewers use to consume content has a measurable effect on their viewing behaviors. Understanding that devices alter behavior can prepare marketers to adjust advertisement offerings to be more in-line with those behaviors.


ONLINE VIDEO

Average video view time per view In addition to promoting higher completion rates, larger-screen devices also facilitate more time spent per video view.

!e "ndings:

• In Q4 2014 the average time spent viewing a video on media & entertainment sites via smartphones was 22 seconds—up 24% QOQ.

• In Q4 2014, the average time spent viewing media & entertainment video content on desktop computers was 5:49—16 times longer than on a smartphone.

!e opportunity

Mobile devices still present challenges to video viewing. O!en, links designed to automatically launch and start videos are accidentally clicked, which produces undesirable metrics like high bounce rates and low viewing time per video start. "ese links o!en irritate consumers who become more annoyed with the advertising that is embedded in these video launches. Developers who are able to design layouts that reduce accidental clicks will provide an experience that is much more pleasant for users, and will drive be$er metrics for advertisers.


As TV Everywhere gains popularity, the consumer choice in digital platforms used to deliver authenticated content to viewers continues to become more evenly distributed.

!e "ndings:

• Access types, such as Apple TV, Roku, and other OTT devices, are taking share of authenticatedvideos away from the iOS access type; Gaming Console & OTT share up 50% YOY and iOS sharedown 21% YOY.

• Browser share of authenticated videos is up 20% YOY and comprises one quarter of allauthenticated TV Everywhere videos.

Insight

TV Everywhere viewers were once referred to as cord cu!ers, using the service to take their different forms of content on the go and stream it through a mobile device. It now appears as if that behavior is coming full circle, and viewers are returning to the living room. In fact, when it comes to watching TV Everywhere content, 16% of viewers have traded in the mobile device for a more-enhanced living room experience. Rather than just watching content through the set top box, these viewers are watching through TV Everywhere apps and are enjoying a more-enriched interactive viewing experience.

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TV EVERYWHERE

Share of authenticated videos by access type


When it comes to authentication, iOS devices are still the dominant players in the TV Everywhere space. In fact almost 1/3 of all authentications in Q4 2014 occurred on an iPad.

!e "ndings:

• iPad is the most popular device for streaming TV-E content, with 29% share ofauthenticated video starts in Q4 2014; Roku is most popular OTT device.

• Although Apple devices have roughly a 10% share of the overall desktop space, theyretain a 40% share of desktop video authentications.

!e opportunity

As the Gaming Console & OTT space continues to grow, key devices like Roku, Apple TV, and Smart TV’s are being more-heavily utilized. Programmers who develop their TV Everywhere apps to run uniquely on those devices and who optimize their apps to be efficient and engaging on those devices will stand out above their peers, and will gain higher levels of viewership.

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TV EVERYWHERE

Share of authenticated video by device type


TV EVERYWHERE

Share of authenticated videos by genre

When looking at the share of authenticated videos on a more granular, genre level, we see that the distribution of authenticated videos differs greatly when compared to the overall TV Everywhere space.

!e "ndings:

• With only 7% of sports authenticated content viewed through a gaming console or OTT device, TVEverywhere viewers are less likely to watch sports programming in the living room, compared toother types of programming, such as movies—14% of which are played through a gaming consoleor OTT device.

• TV Everywhere movie viewing is more common on an Android device, compared to the rest of theindustry; Android share of authenticated movies was 27% in Q4 2014, compared to an industry-wide15% share of all authenticated videos.

!e opportunity

Knowing the access type consumers use to view different genres, and the changes between those genres can prepare developers to support speci&c access types in preparation of upcoming events that may be speci&cally associated with a particular genre.


TV EVERYWHERE

Authenticated video growth by share of access type 2014 drove a substantial amount of broad-based authenticated video viewing growth in the TV Everywhere space. We saw that in 2014, marquee sporting events pushed viewers over the hurdle of se$ing up the service, and paved the way for viewers to browse other forms of content.

!e "ndings:

• Over the last 24 months, authenticated video growth is up a remarkable467%.

• 8 quarters ago, in the early stages of the product, iOS viewing was thepredominant way to consume TV Everywhere, with share ofauthenticated videos reaching approximately 80%.

11

Insight

Although major sporting events were the catalyst behind the impressive two-year growth of authenticated videos, we are seeing a broad-based increase in viewership across multiple forms of content.


TV EVERYWHERE

Pay-TV share of active quarterly TV Everywhere viewers Over the last two years, TV Everywhere has continued to a$ract new viewers to its content, and keep those viewers actively returning quarter a!er quarter.

!e "ndings:

• 12.5% of Pay-TV subscribers were actively viewing TV Everywhere content inQ4 2014—up almost 3x from 4.4% in Q1 2013.

• Q1 2014 kicked off the year of major worldwide sporting events, and saw theshare of active quarterly viewers jump 45% to 12.5% of Pay-TV subscribers.

Insight

"e last quarter of 2014 did not have any major sporting event to li! up the share of active quarterly viewers, yet it still remained robust, indicating that viewers are viewing more than just sports. "e fact that 2014 saw an average of 11.6% active viewership suggests that TV Everywhere is only a few quarters away from crossing the chasm and becoming a technology not used only by the “early adopters”, but by the “early majority” as well.


TV EVERYWHERE

Viewing and viewership aggregate Convincing users to set up a TV Everywhere account is a bit of a hurdle. MVPD companies want customers who have cleared that hurdle to frequently return, and to actively engage with the content housed on the platform.

!e "ndings:

• In 2014 TV Everywhere consumers logged 2.1 billion authenticated videos—up 266% YOY.

• On average, over 13 million viewers logged in at least once per quarter in 2014 to watch TVEverywhere content, which was a 2x increase over 2013.

Insight

From an aggregate perspective, the frequency with which viewers are logging in and engaging with premium subscription gated content is growing rapidly. "is behavior is a primary reason why TV Everywhere is becoming more mainstream. To make it sustainable, developers need to provide deeper value to TV Everywhere, including a way for audiences to interact with the content they are watching.


TV EVERYWHERE

Video viewing frequency growth by access type

TV Everywhere consumers are watching content more frequently than they were a year ago.

!e "ndings:

• "e average monthly number of authenticated videos per visitor hasincreased 13% YOY to 6.8 in Q4 2014.

• Android app access type viewing frequency is 65% higher than it was ayear ago.

!e opportunity:

Viewer behavior is changing from casual, to a binge-consumption approach, leading to viewers streaming multiple episodes in one session. Content providers need to be aware of this shi! in the viewing habits of consumers, and should develop a content strategy that caters to those evolving behaviors.


TV EVERYWHERE

Monthly unique visitors by genre Not all content is created equal. Differing genres of content exhibit differing levels of viewing frequency.

!e "ndings:

• "ere are more than 3x as many TV Everywhere viewers watching sports thanthere are viewers watching movies.

• We are seeing sports viewers spill over into other types of content, such as movies,and broadcast and cable (episodic) programming.

Insight:

For TV Everywhere to remain a viable technology, programmers need to capitalize on this spillover from sporting events, and retain viewers with other forms of content.


ADOBE DIGITAL INDEX

Predictions • New devices, stronger connections, and content optimized for multiple platforms will drive mobile to

overtake desktop video viewing by Q4 2016.• TV Everywhere active viewership will reach 18% by the end of 2015, even without major sporting events;

this will be driven by broader adoption of auto-authentication, social logins, and proactive marketingcampaigns from MVPDs.

• "e biggest MVPDs will follow Comcast’s lead and provide be$er TV-E experiences with their ownofferings.

• Broadcasters and cable nets will follow NBC’s lead and create new monetization opportunities by makingmore of their back catalogs available as AVOD content via TV Everywhere

• "e combined AT&T-DirecTV entity will roll out a slimmed-down, IP-delivered bundle to compete head-to-head with Sling TV and Net(ix

• Chromecast, Roku, Apple TV and gaming consoles will push Gaming Console & OTT devices share of TVEverywhere above 20% in 2015.


ADOBE DIGITAL INDEX

Methodology "is report is based on consumer video viewing in 2013 and 2014. It consists of the aggregated and anonymous data from media and entertainment sites gathered from Adobe Analytics and Adobe Primetime.

Sample information includes: • 191 billion total online video starts• 2.67 billion TV Everywhere authentications (temporary plays and authenticated plays)• 250+ different sites and apps in the United States and Canada acting as access points for TV Everywhere

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©2014 Adobe Systems Incorporated. All rights reserved. Adobe and the Adobe logo are either registered trademarks or trademarks of Adobe Systems Incorporated in the United States and/or other countries. Apple TV is a trademark of Apple, Inc. registered in the U.S. and other countries. Android is a trademark of Google Inc. All other trademarks are the property of their respective owners.


ADOBE DIGITAL INDEX

Glossary • Online video start−Any browser-based, unauthenticated video start.• Video view rate −Website video starts per website visit.• Video completion rate −"e percentage of videos that reach certain milestones in a video

(example: “25 milestone” is viewing 25% of the video).• Authenticated video−Video content that requires credentials from multichannel video

programming distributor (MVPD).• Active quarterly viewer−Viewer who authenticates at least once per quarter• Monthly unique visitors−Total number of unique visitors per month.• Access type

– Browser includes Chrome, IE, Firefox, and Safari on both computers and mobile devices.– iOS app is an app on any Apple mobile device.– Android app is a TVE app on any Android mobile device.– Gaming console and OTT includes Xbox, PS4, Apple TV, Roku, and similar devices.

• TV Everywhere video viewing frequency −Authenticated video starts per monthly unique visitor.


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ADOBE DIGITAL INDEX

Tables Projected Share of Online Video Starts by Device Type

1/1/12 2/1/12 3/1/12 4/1/12 5/1/12 6/1/12 7/1/12 8/1/12 9/1/12 10/1/12 11/1/12 12/1/12 Desktop 94% 93% 93% 92% 92% 92% 90% 91% 90% 89% 88% 83% Mobile 5% 6% 7% 7% 7% 8% 9% 8% 10% 11% 11% 16%

Online Video Completion Rate by Device Type Video Start 25% Complete 50% Complete 75% Complete 100% Complete

Q4 2014 100% 52% 44% 16% 11% Q3 2014 100% 50% 41% 15% 10%

Projected Share of Online Video Starts by Device Type 1/1/13 2/1/13 3/1/13 4/1/13 5/1/13 6/1/13 7/1/13 8/1/13 9/1/13 10/1/13 11/1/13 12/1/13

Desktop 85% 85% 86% 85% 85% 83% 83% 81% 81% 81% 80% 78% Mobile 14% 14% 14% 15% 14% 16% 16% 18% 18% 18% 20% 21%


Desktop 77% 76% 75% 76% 75% 75% 73% 72% 73% 74% 72% 71% Mobile 22% 23% 24% 23% 24% 25% 26% 27% 27% 26% 27% 29%


Desktop 69% 69% 68% 67% 66% 64% 63% 62% 62% 60% 60% 59% Mobile 31% 31% 32% 33% 34% 35% 36% 37% 37% 39% 40% 41%


Desktop 57% 57% 57% 55% 54% 54% 53% 51% 51% 50% 49% 48% Mobile 42% 43% 42% 44% 45% 46% 47% 49% 48% 49% 50% 51%


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ADOBE DIGITAL INDEX

Tables TV Everywhere Video Growth by Share of Access Type

1/1/13 2/1/13 3/1/13 5/1/13 5/1/13 6/1/13 7/1/13 8/1/13 9/1/13 10/1/13 11/1/13 12/1/13 Total 100% 94% 127% 80% 68% 75% 97% 171% 169% 172% 197% 180%

TV Everywhere Video Growth by Share of Access Type 1/1/14 2/1/14 3/1/14 5/1/14 5/1/14 6/1/14 7/1/14 8/1/14 9/1/14 10/1/14 11/1/14 12/1/14

Total 231% 249% 349% 312% 301% 309% 403% 470% 437% 491% 587% 567%


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U.S. Digital Video 2014 Inaugural Report - CMO.adobe.com · ADOBE DIGITAL INDEX | U.S. Digital Video Benchmark 2014 Inaugural Report Online video 3 Key insights 4 Device share of