What motivates consumers?
Video consumption has never been more fragmented. As pay TV subscriptions continue to decline, they are replaced by a number of live and on-demand streaming options that continue to grow by the day. Viewers can use a dizzying array of services to create their own consumption “nirvana.” However, there is bound to be an upper limit on both how many different services a consumer is willing to pay for, and how much time she has in the day to consume. This leads some in the industry to believe the growth in content and platforms may not be sustainable over the long term.
Cutting through this cluttered landscape to create a relevant position with consumers requires an understanding of which consumer segments your growth goals depend on and their underlying motivations, preferences, and behaviors. Only with this view can industry players make strategic decisions that will ensure competitive advantage and deeper viewer relationships, while remaining relevant and with enough scale to survive an inevitable culling in the over-the-top (OTT) video space.
For the sixth consecutive year, our survey sought to examine some of the most pressing questions about American consumers and their relationship with video:
■ What motivational dimensions drive video consumption behavior?
■ What are the current gaps in consumers’ technological needs?
■ How will the nature of storytelling evolve, and how can you stay ahead on content?
We also developed new motivation-based video profiles to identify five distinct consumer groups in a continually changing video space.
Methodology In October 2018, PwC surveyed a sample of 2,016 people in the US, ages 18-59, with annual household incomes above $40,000. We analyzed our results against similar studies we administered in past years, and ran cluster analysis on 68 attitudinal and motivational statements. Additionally, we conducted consumer and industry insider focus groups.
The death of TV has been greatly exaggerated
Despite the rise of mobile viewing—with 38% of respondents watching video content on their mobile device several times a day—TV viewing continues to flourish:
■ More than 75% of Indulgists prefer watching live TV.
■ 65% of pay-TV watchers prefer to watch TV live, up from 53% last year.
■ 65% of consumers stream content to their TV, and Smart TV usage has almost doubled: 42% of those who watch streamed content on a TV say they use a Smart TV, up from 22% in 2017.
■ They want it all: the latest gadgets, premium services and original content.
■ Most important: they’re willing to pay for it. More than one-third of this segment spends more than $100/month on video entertainment.
■ The most committed to their pay-TV relationship, and most likely to see themselves subscribing a year—and even five years—from now.
■ Most likely to own DVDs of their favorite shows and movies, as well as go to the theater to watch movies.
■ They want access to an endless library of content anytime, anywhere, on their terms.
■ They are more likely to be cord-cutters while also subscribing to multiple services at one time.
■ This segment loves binge-watching and will go out of their way to find shows and movies they want to watch.
■ However, they would love for all of their content to be accessible in one place.
■ More than sitting back and being entertained, this segment wants to engage with content and are more likely to be gamers.
■ They consume content in abundance— especially action and comedy genres as well as foreign content—but they often share subscriptions with friends and family.
■ They look forward to the days when virtual reality (VR) will replace movies and when they can custom-design their own TV shows.
■ This segment likes posting on social media about the shows they are watching, and are the most involved in online conversations about video content as a whole.
■ This segment believes we should be reading more books and watching less TV, and are therefore picky when it comes to TV and movies.
■ They want to see more educational and diverse content, as well as have greater online security.
■ They are savvy about how they obtain and consume content: they’re the most likely to be cord-trimmers, paying less for content today than they did last year.
■ This group sees themselves as experts when it comes to finding content for free online.
■ These consumers are the “bread and butter” for pay-TV providers today and spend among the most on video content.
■ They prioritize predictability, ease and comfort of watching: they like having TV on in the background and watching live programming.
■ They are also the least likely to access video content online.
■ We expect this segment will diminish over time as accessing content online and on apps becomes even more commonplace.
The opportunity: thriving in the new video order
Understanding viewer preferences is essential to remaining relevant in the increasingly crowded video space. Based on the survey, focus group and expert panel, consider the following recommendations:
■ Know your audience and target intentionally. As our research illustrates, cord-cutting isn’t the trajectory for every consumer. In fact, demographics and income alone no longer accurately predict video consumption and purchasing behavior: lifestyle and entertainment preferences do.
Maximizing content and user experience in keeping with your target segments is essential. For example, we see improvement in the satisfaction of current pay-TV subscribers, despite continued cord-cutting. This indicates that if pay-TV were more intentional about understanding and, in turn, serving their specific target audiences, it could pay off.
■ Personalize and target content for each segment. Consumers are unique; a one-size-fits-all approach simply won’t work. As our respondents told us, each one wants something a little different. So why not give Fanatics (content obsessed) opportunities for boundless content while giving Traditionalists (lean-back consumers) a relaxed, easy viewing experience? And don’t forget your mobile viewer who is looking for content in convenient, snackable bites. Successful companies will design content, products or services with their target’s desired user experience at the core of every decision.
■ Don’t let search be a liability. Almost 90% of consumers are unsatisfied with content discovery and recommendations, which tarnishes their entire user experience. The inability to access a single source for content leaves them frustrated and annoyed. By more consistently integrating OTT platforms, distributors could provide consumers with that single, searchable source while also gleaning valuable data on customer preferences. Develop ways to better curate to support viewers in their search for new content they will enjoy.
■ Deploy AI to improve recommendations. Viewers tell us they can’t figure out what to watch next: They are overwhelmed by choice and underwhelmed by curation. Artificial intelligence can improve recommendations based on user history—but only if done intelligently. For example, consumers don’t like every show they sample, and recommendations need to be targeted to what they like. In the absence of targeted recommendations from many streaming services and pay-TV providers, television manufacturers are forging ahead with AI based recommendations.
■ Encourage second-screen engagement. Mobile viewing is on the upswing and when 5G proliferates, mobile experiences will reach new heights. Already, living room viewers are live-tweeting and chatting during their favorite shows. Rather than redistributing content on secondary platforms such as a mobile or social media channel, offer a complementary experience to maximize engagement.
■ Reinvent storytelling with branded content. Consumers are open to brands being a part of the narrative: 22% are interested in seeing their favorite brands create content, rather than just the traditional players. What’s more, they’re eager to step in and help create the story themselves. Create original content together by partnering with brands that resonate with your target’s preferences.
■ Go global. Consumers are more open to foreign-language programming than ever before. As technology overcomes language barriers with subtitles and dubbing, opportunities for global partnerships abound. Connoisseurs (culture seekers) lead other segments in their desire for global content.
■ Develop immersive experiences. According to PwC’s Global Entertainment and Media Outlook, spending on VR entertainment is slated to grow almost 40% over the next five years. Engagers (deliberate consumers), more so than any other segment, are hungry for immersive experiences. They will lead the way in incorporating cutting-edge video-consumption applications. If this segment is your target audience, consider accelerating plans for immersive offerings.