What is TV these days? And do consumers really care?
Strategy Consumer behavior
What is TV these days?
And do consumers really care?
The notion is that the internet and social media are killing old-school television. But consumer research reveals that
TV is not necessarily a loser in tomorrow’s increasingly complex media consumption behavior. Understanding the
multifaceted nature of TV is crucial to all players in the market.
The sofa-perspective: there’s a lot more to choose from today.
▶ Television has been a fundamental part of
most people’s lives since its inception. What
started out as a black-and-white broadcast
channel has now evolved into something that
the pioneers of the medium would probably
neither understand nor appreciate, at least
not immediately. If we could snatch C.F. Jenkins immediately after his experimental tv
broadcasts outside Washington, d.c. in
and teleport him through time to the tv
room of a present-day Netflix-addicted family, he would probably have to sit down and
catch his breath.
Although consumers still watch quite a lot
of broadcast tv, sometimes choosing between several hundred tv channels, they
now also consume media à la carte by downloading and streaming tv shows and mov58 • EBR #1 2012
ies, not only on their living room tv, but also
on their mobile phones, tablets and laptops.
From a technical perspective, tv is a medium
for sending and receiving video – nothing
more, nothing less. In the minds of consumers, however, “tv” can also be the programs
they watch or even the actual television set.
This should not come as a surprise, since
the television set has become a standard appliance in most homes. It has, for many, become the main source of news and entertainment. According to Ericsson ConsumerLab’s
tv & Video Consumer Trends report,
which stemmed from research conducted in
countries, with more than , respondents, no less than percent of all house-
Consumer behavior Strategy
holds have at least one television set, and as
many as percent have at least one flatscreen tv.
But the definition of tv is not fixed – neither technically nor in the eyes of consumers. What used to be a uniform, one-sizefits-all, medium is now an mixture of many
From a technical perspective, the old analog terrestrial broadcast tv still exists in
some markets, but it has been complemented – or even replaced – by other technologies: Digital Video Broadcasting – Terrestrial/Cable/Satellite/Mobile (dvb-t/dvb-c/
dvb-s), iptv, internet streaming and downloading, to mention just a few.
tv, by definition, naturally still includes
traditional broadcast tv, but consumers also
regard the catch-up tv available through
set-top boxes or tv network internet pages
as tv. Furthermore, tv also includes
on-demand tv shows watched on mobile
phones, tablets and laptops – the definition
of tv is simply much broader than it was
FROM TECHNOLOGY TO EXPERIENCE
When asking consumers about their tv consumption, their answers revolve around content. Consumers don’t think in terms of specific technology or distribution channels. In
fact, functionality demands are secondary to
demands on the overall experience. For consumers, functionality is merely a means to
Consumers have started to expect to be
able to watch what they want, when and
where they want. They want full access to all
3 all tv provider services on all screens
3 all video-on-demand on all screens
3 all downloaded content on all screens
3 all online tv on all screens.
Naturally this does not mean all consumers will watch all content on all screens all
the time, but they want the ability to do so.
The large variety of tv/video content and
services available online is becoming integrated into the traditional living room setting.
Consumers are connecting add-ons and settop boxes to all of their screens so that they
are able to experience tv the way they want.
One out of four respondents in the ConsumerLab study expressed a strong interest
in being able to access all of their tv/video
content on all of their personal devices.
Consumers are beginning to, at least partially, abandon their traditional tv service
providers and instead use on-demand, overthe-top (ott) services, thereby avoiding –
for example – expensive movie channel
packages. By mixing and matching different
services and suppliers, they create their own
individual tv/video solutions, getting the
best of both worlds: a mixture of live and ondemand content.
SUPER SIMPLICITY THE PARADOX OF CHOICE
The drawback of these homebrewed solutions is that they add complexity for tv
viewers. If each service has a unique interface, or even its own remote control and
mode of access, it will become prohibitively difficult for less advanced consumers to
both set up and manage. The user experience revolution brought about by the mobile internet and apps has greatly increased
our expectations of new services.
The ConsumerLab study revealed that it
has become a basic requirement for the interface to be super-simple and intuitive. “Usability and super-simple interfaces” was
ranked as one of the top three most important factors contributing to the overall tv/
video experience, and this criterion clearly
influences consumers’ habits and consumption of content.
An important aspect of usability is the effort it takes to do something. Forcing consumers to use several services/interfaces to
access the tv/video content they want complicates things. Many video-on-demand
(vod) services do not offer both old and new
content, so consumers must use several services to access all of the content they want.
This makes their vod usage both timeconsuming and complicated.
Consumer demand for super-simple content discovery and consumption will, in the
long run, favor major tv and video-content
players that can offer services and a wide
range of content in an easy-to-use manner
to all devices.
The ability to also consume tv and video
content off-line will be another success factor, since in the short- to medium-term perspective, internet access will not be available
everywhere. Airplanes, trains, cars – as well
as remote and foreign locations – will remain
disconnected for many consumers.
EBR #1 2012 • 59
Strategy Consumer behavior
FROM BROADCAST TO CONTENT ON DEMAND
For a long time, physical media – such as
videocassettes, dvds and now Blu-ray Discs
– have made it possible for consumers to
break free from the program schedule and
view recorded broadcast material as well as
purchased or rented video content. This
means that on-demand consumption is not
really as new as we sometimes seem to think.
A large part of consumers’ tv/video habits are now based on different types of timeshifted and on-demand content. No less than
half of all consumers watched streamed or
downloaded tv/video content more than
once per week in . That is an increase
by percent compared to .
As on-demand content contributes to an
ever-increasing percentage of daily tv/video consumption, it is becoming a basic habit. This will affect the way consumers pay for
such content, and also how much they are
willing to pay. As on-demand viewing becomes a basic feature, it is more likely to be
considered something that should be included in basic tv fees. This will, however, pose
challenges to existing players and their business models. Service providers that can costeffectively extend their broadcast offering to
allow super-simple access to a wide range of
on-demand content and offer a multitude of
payment models and schemes will be much
more likely to succeed in this new world.
There are still some types of content that
consumers are willing to pay extra for. Fresh
and new content – such as movies will
continue to elicit a higher willingness to
pay. Theatrical releases direct to tv were
ranked fourth in terms of tv/video functions
and features consumers are most prepared
to pay for.
Although subscription video-on-demand
(svod) services clearly appeal to many tv/
video consumers, it is also clear that many
others are not prepared to pay extra for ondemand content – at least not on a regular,
subscription basis. That means that to create mass-market appeal, it will be essential
to combine svod services with pay-per-view
content and sponsored free content that includes advertisements.
Top of the list of things worth paying for,
according to participants in the ConsumerLab study, is quality. Clearly, high-quality
content is still worth paying extra for.
FROM SOFA TO VIRTUAL SOCIALIZING
Traditional TV is not necessarily a loser.
60 • EBR #1 2012
We are social creatures by nature and like to
share and discuss the things we see and experience. This remains the case for most of
the tv/video content we consume. The way
we furnish our living rooms, with comfortable armchairs and sofas arranged around a
tv, and invite people to watch – for exam-
ple – sports together, is further proof of this.
Content and social aspects are very much
linked together and combining them adds
extra value. More than percent say they
use social media services – for example Facebook and Twitter – on a weekly basis while
watching tv, and a quarter of the sample in
the ConsumerLab study say that they are
more likely to pay for tv/video content when
watching it together with others, rather than
Enabling online social interaction around
tv/video could therefore drive consumption
and increase willingness to pay for it. Several social tv services are already available that
enable consumers to discuss the things they
watch – not only during, but also before and
This kind of behavior will impact the way
consumers explore and discover content, because we have a tendency to trust advice
from friends more than advice from people
we don’t know.
A possible future scenario would involve
content discovery through social forums. Instead of discovering content through an electronic program guide or a classic content
store interface, consumers could use their
social connections to help them decide what
to watch – for example, using Facebook.
INTEGRATING SOCIAL SERVICES WITH TV
When considering expanding traditional tv
by adding new services and features, we have
to be careful not to interrupt or disturb the
tv experience. The first attempts to integrate social services into the tv resulted in
conflicts between the private nature of many
of the conversations and the social/shared
nature of the tv screen.
A possible way of resolving this conflict
would be to introduce a second screen – for
example, a tablet or a mobile phone. By allowing consumers to decide whether the
conversation should be private or social by
switching between a big-screen tv and a
smaller, separate screen, the problem is easily managed.
Even though the main tv screen is by far
the most-used screen, computers, smartphones and tablets are also becoming important media consumption devices. In fact,
tablet owners consume much more tv/video content on their tablets than smartphone
users – especially outside the home. According to the ConsumerLab study, almost
percent of all tablet video consumption
takes place outside the home.
MOVING FROM ONE TO MANY SCREENS
Restricting consumers’ access to content
through different devices restricts their total tv/video experience. When purchasing
Consumer behavior Strategy
or subscribing to content, consumers pay for
the movie or tv show itself – not for accessing it in a certain way. ott content distributors are flourishing because they allow consumers seamless access to all of their songs,
movies and tv series across all of their
Apps, internet access, online shopping,
chatting and video telephony are transforming the traditional tv screen into a multipurpose device. The shift from being a passive,
one-way channel to also allowing interaction
is enabling not only new services and features,
but also new business opportunities. tv, one
of the largest windows for consumer advertising, is now becoming interactive.
Advertising on an interactive, multipurpose screen will generate higher clickthrough rates, as the advertising and point of
purchase are combined. More personalized
advertising will increase click-through rates
even further, and also increase consumer acceptance of advertising.
The risk is that consumers might revolt
against this increased interactivity, because
of their previously passive tv consumption
experience – but again, the introduction of a
second screen could be what is needed to offset that risk. If the interactivity is managed
through a connected tablet or even a smartphone, the big-screen experience can remain
more or less intact.
POWER OF THE REMOTE CONTROL
This brings us to another challenge – the remote control. It was more or less designed
for one purpose: basic control of media on
the screen – or, more colloquially, channel
surfing. As the tv experience becomes interactive and flexible, the remote needs to
keep up. A flexible and multipurpose tv
screen requires a flexible and multipurpose
interface by which to control it – it needs a
new remote. A lot of consumers are frustrated with existing remotes, longing for something that offers tailor-made navigation. The
solution is, however, close at hand: the
touchscreen devices that many consumers
already have in their hands.
Several tv service providers across the
globe already offer downloadable apps for
both tablets and smartphones, enabling their
customers to interact and remotely control
various aspects of the tv experience. As these
solutions become more powerful and complete, consumers might soon be able to toss
away the old remote control altogether, and
welcome a truly interactive tv experience.
GLOBALIZATION OF MEDIA
The internet is truly accelerating the pace of
globalization. Anything that works against
the globalization trend is not in line with the
consumer mindset. “Windowing,” as in delaying the release of certain content for some
consumers or offering content only through
certain exclusive channels, is frustrating to
consumers – not least because it makes it
much harder for affected consumers to
participate in online discussions about that
Some argue that consumers don’t turn to
piracy just out of cheapness or bad will, but
instead as a reaction to the windowing issue
and a lack of competitive legal alternatives.
Comparing the level of piracy in the us, with
its many reasonably priced legal offerings,
to that of Spain and other countries seems
to add weight to that theory. Consumers will
no doubt use, and pay for, products and services that provide them with the best value
for their investment – whether this is measured in money, time or effort, or the benefits are improved status, entertainment or
content. Improving the quality of legal solutions is the best way forward.
The tv industry is clearly migrating toward
3 user-friendly and cost-effective technical
solutions give consumers access to internet content across devices, including the
main tv, pcs, mobile devices and tablets
3 high-quality content is becoming more
easily available online
3 consumers are increasingly consuming tv
and video online.
So far, this migration has followed a steady
path that is evolutionary, rather than revolutionary. But it will nevertheless have a profound impact on the industry. Consumer interest and willingness to pay for live content
will likely remain high, but some traditional
tv network services, like pay-tv movie channels, will face an uncertain destiny, due to
competition from the new internet players.
The tv industry already enjoys a fairly strong
position online. Many tv networks offer online access to their own tv content for catchup purposes. Above all, amongst the “old”
tv industry players, the major rights holders
are most likely to benefit from the globalization trend.
The current media rights model based on
exclusive, “windowed” availability will fail to
deliver enough consumer value. By embracing new opportunities, as well as consumers’
needs and expectations, rather than obstructing them, television will remain a core video
service also in the future. ●
▶ ANDERS ERLANDSSON is a Senior Advisor
at Ericsson ConsumerLab engaged in analyzing consumer behavior,
attitudes and trends
that help Ericsson develop strategies that generate revenue and improve the customer experience. He joined Ericsson in 1991 and has worked
extensively with consumer insights in areas such
as social media, privacy and integrity, rich communication and TV/media. He holds an MSc in
Industrial Engineering and Management from
Linköping Institute of Technology, Sweden.
▶ NIKLAS RÖNNBLOM
is an Advisor at Ericsson
with consumer behavior and trends. His areas
of research include
smartphones, app culture, fixed and mobile
broadband, the connected home and, recently,
TV and video consumption. Understanding how
all kinds of technology fit into the everyday life
of consumers is the ultimate aim of this work. He
holds an MSc from KTH Royal Institute of Technology in Stockholm, Sweden.
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