The Dramatic Shift in U.S. TV Viewing: A Conversation with Dr. John Morse about the Nielsen Data

Why is the number of live TV viewers dropping so significantly?

Dr John Morse is my valued partner on consulting engagements that require senior-level analysis of U.S. audience viewing habits and trends.

Channels, producers and stakeholders all rely on John’s judgement and his access to research data.

We recently interviewed him about eroding TV audiences, a situation that is rattling our billion-dollar unscripted niche.

First, here is a chart that captures the accelerating decline in U.S. viewers by age:

Total Day:  Persons Using Television (Live)
Year-Over-Year Percent Change

P2-11 P12-17 P18-34 P35-49 P50-64 P65+
 2014 vs 2013

-8%

-10% -10% -5% -3%

-1%

 Jan-Feb 2015 vs.  Jan-Feb 2014

-11%

-18% -15% -6% -5% -3%

Source:  Nielsen NPower, M-Su/6A-6A Jan-Dec by year
HUT-PUT minus DVR Playback – dual feed
  Nielsen Media Research, 2015

 

So, John, how do you explain the drop in live TV viewers?

There are three key reasons:

  1. Convenience . . . time shifting to view whenever desired.
  2. Additional viewing sources . . . mobile, computers etc.
  3. Low cost viewing platforms with minimal advertising . . . OTT (Over The Top) and online streaming

Millennials

It appears that Millennials are forsaking the multichannel environment which includes watching much less live television and migrating to OTT SVOD.  How does that pattern factor into the viewing equation?

According to a new study, 75% of Millennials have access to an OTT SVOD service and are three times as likely to have an OTT SVOD service and no multichannel subscription, while nearly half (48%) report spending more than 50% of their viewing time streaming.

In addition the number of Millennials watching traditional television took a steep dive in the past year according to research completed by MoffettNathanson.

From July 2014 to this past June, live-plus-seven-day-DVR playback ratings dropped 14% among the eleven largest broadcast and cable companies for adults 18-34.

This group includes CBS, Disney, NBCUniversal and Viacom, the latter taking the hardest hit, off 19 percent.  NBC fell by 18 percent, while Fox channels took the third-worst hit, down 17 percent.

By comparison, among adults 35-49, ratings declined just 7 percent in that time, and among all viewers over age 2, the drop was also only 7 percent.

Many younger Millennials grew up with connected devices, and these devices function quite well as their principal media channels. They don’t feel the need to watch TV on traditional TV sets.

Why are the largest declines occurring outside of primetime?

Live viewing has dropped over 12% in the past year in the 7 AM and 8 AM time slots as well as 3 AM and 4 AM.  Viewing in primetime has shown a lesser decline because the shows are more likely to be first run; are more engaging; and have a related higher length of tuning.

Devices

Why is the usage of new devices such a key component of the overall trend?

In the past two years the usage of TV-connected devices is trending up sharply led by a 50% increase in the 65+ category, 24% for people 50-64, 22% for the ages 35-49, and 24% in the 18-34 category.  This illustrates the convenience of using mobile and computers to watch videos.

What role does the emergence of social media play in determining winners and losers among TV programs?  How significant are platforms such as Facebook, Twitter and Instagram?

All the online chatter about shows serves as strong reminders to seek out and watch the shows of interest.  This seems to be more of reinforcement than a conversion tool.

Research Tools

How has media measurement evolved to track the changes in audience viewing habits?

Nielsen has historically measured TV usage in the home as well as online.

Because the national Nielsen measurement is based on a sample of 20,000 homes, the lower-rated programs/networks often have unreportable audiences with high statistical error levels.

The good news is that Nielsen is phasing in an expanded sample . . . but nowhere near the size of set top box samples.

Have any new companies appeared on the scene to provide competition for Nielsen?

In the past few years various competitors have developed alternate services to fill in the gaps left by Nielsen measurement systems.  These companies include Rentrak, comScore and TIVO Research.

However, there are challenges related to accreditation, editing rules, sample representation, and demos inferred from household composition rather than actual measurement.

Link Viewing to Buying Habits

Can the viewing patterns of programs be linked to follow up behaviors, particularly buying habits?

The “holy grail” of data fusion is the linking of a program’s exposure (including promotion or ads) to follow-up behavior (product/service purchases or others responses which may include social media discussions).

Marketers talk about “brand journeys” which involve many media touch points related to building awareness, interest, and product sampling, some bringing new users to a product category; others bring conversions from competitive brands; and others increasing volumetrics.

More

My Quick Takeaways

  • ‘Headcount reduction’ is the first solution pursued by corporate stakeholders when their industry reaches maturity or goes into decline.
  • Watch out for major layoffs and consolidation of brands by the multi-channel operators.
  • And I’ll write soon about the doubling-down of focus by U.S. channels on expansion to international markets, many of which are far from maturity.

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