FYIFYIF R E E Y E A R - R O U N D I N S I G H T S

The New Max for TV

FUTURE OF VIDEO #3 SEPTEMBER 2013

–2– FYI: The New Max for TV

Ipsos MediaCT, © 2013

Introduction

At Ipsos MediaCT, we believe that understanding the consumer is the key to understanding the future. As experts in the convergence of Content and Technology (the “CT” in our name), we are leveraging core research capabilities to help partners in these fields reach strategic decisions and monitor consequences of those decisions. Our goal is to deliver actionable insights based on a mix of attitudinal and behavioral consumer data. Beyond these insights, Ipsos MediaCT takes a consultative approach with our partners and excels in anticipating audience/consumer trends that impact consumption or purchase behavior thus providing a competitive advantage to our partners. Ipsos MediaCT has aggressively built one of the most diverse and savvy research teams made of digital media and technology experts to compliment our award winning television department, all of whom have years of experience tackling the challenges of clients from various subsectors of the video ecosystem. Without further ado, we are proud to share with you a sample of these insights in our third in a series of papers on the future of video.

The Authors

Gavin Bridge – Gavin has been with Ipsos MediaCT since 2010 and quickly became a valued member of the Television Insights group. Working out of the New York City office, Gavin manages the TV Dailies product for the East Coast and has introduced innovative ways of looking at the data to benefit both internal analysis and clients. Prior to joining Ipsos, Gavin worked at Kantar Health’s Health Sciences Practice division as a Project Analyst. He spent three years working in London, first with Business Development Research Consultants as a Research Executive, then as a Senior Research Executive at Opinion Research Corporation.

–3– FYI: The New Max for TV

Ipsos MediaCT, © 2013

It may seem like we are focusing on Netflix a lot recently, but currently, they are one of the most active in setting the groundwork for revolutionizing television. In addition to developing new marketing models for their own content and contributing to the growth and success of mature shows such as Breaking Bad, Netflix Max may point the way to how we will all one day consume TV content.

Netflix Max, currently available only on the PlayStation 3’s Netflix app, is a service that takes the content recommendation algorithms that Netflix built its name on to a whole different level. For those not familiar with the service, when a user selects Max, a guide (Max) begins to speak and asks for one of three genre types to be selected. Once this is done, the user is presented with ten shows within that genre and asked to rate them if they have seen them, say they aren’t interested if that is the case, or simply to watch one. If one goes through all that without selecting one, based on the ratings given and shows ignored, then Max selects a show and narrates a synopsis of it for you.

This is a whole new level of interactivity with the user, and when coupled with other recent innovations such as the addition of profiles for separate users, it opens up a host of possibilities for the TV world. In the short-term this could be particularly so for the new online services from Sony1. and Intel2. rumored to be launching by the end of the year, but in the medium – to long-term this could be a revolutionary concept for all TV networks.

Imagine a world where your TV knows the shows that you watch with your partner, and the ones you watch individually (let’s say Grey’s Anatomy is one that you like, American Horror Story is a passion of your partner, and House of Cards is a shared like). You are bored, and several new shows have come out recently, but you don’t know what to watch. You press a button on your remote and, based on your profile, your Smart TV automatically selects a show that behaviorally you are most likely to want to watch, and narrates a quick overview of the show, focusing on areas that it knows that you are most likely to respond positively to. Given the recent news that Sony has come to an agreement with Viacom to include its networks on its new online service3., this is the kind of innovation that could create a USP currently missing from the market.

Fast forward to a few more years in the future to a scenario where we can select individual network apps on our smart TVs. Ignoring the hows and whys of this came into play, imagine the possibilities this would unlock. Fans of a particular network could launch the app and say that they wanted to watch a new show from the network. Using their profile information, the app already knows the shows the individual watches, which shows are their favorites and even the individual episodes watched. Using this information, the app is then able to either find an episode of a show that has not been watched from the current season, or recommend a new show to try based on the user preferences.

The implications of this could totally revolutionize our viewing behavior. If show distribution remains on a similar pattern, with scheduled weekly new episodes released in a set time-slot (Wednesdays at 9pm, for instance), the very concept of a lead-in could be altered. Instead of having one show follow a hit show in the hope of capturing some of the audience, networks could schedule two or three and have the algorithms select the one that would resonate best for the viewer. This doesn’t have to be network specific either – to maintain full exposure, the algorithms could be expanded to include all of the parent company’s networks, so that even if there is nothing that interests you from Network A, Networks B and C do have some shows that fit your tastes.

–4– FYI: The New Max for TV

Ipsos MediaCT, © 2013

All of this sounds very interesting, of course, but how far away are we from this being a reality? À la carte viewing exists only for specialist packages such as sports or foreign language currently, despite the recent suggestion from Time Warner Cable to CBS that they offer their networks on this basis4.,and Senator John McCain introducing legislation for a la carte cable for consumers5.. In one high profile recent example of pressure in this area, HBO has faced large amounts of pressure to release HBO Go as a separate paying app for those without a cable subscription6., however the premium giant maintains this is not in its interest (one other premium network is rumored to be considering this option though). The most obvious hurdle that exists to this, broadband access aside, is the agreements between MSOs and networks over TV Everywhere apps - currently, very few of the network apps out there offer full access across every MSO. For this potential future to be a reality, networks and MSOs will need to come to agreements on TV Everywhere, after all, even today, this is what consumers want.

The next thing that needs to happen is for the number of consumers with Smart TVs or connected devices to increase. Currently, TV Dailies data points to 14% of all TV viewers 13-64 (defined as those who watch primetime TV at least twice a week) owning a Smart TV, with ownership of the following connected devices as follows:

Once ownership of capable devices increases, the step beyond that will be for viewing attitudes to change. Among those with a definite intent in watching the new shows this summer, the vast majority intended not to watch via streaming methods (6% of all aware of shows with high level intent said they would watch via digital means such as a computer, laptop or mobile device, and this did not vary on average among scripted and unscripted shows). But this is most likely due to lack of availability to do so on current TVs, save purchasing the series via iTunes, Amazon Instant Video or Vudu to stream to a TV. As Netflix has proven though, in the words of the whispering cornfield in Field of Dreams, if you build it, they will come, and so it is very likely that once a network experiments in this world, these figures will rise.

This is certainly not something that will happen overnight, but we already know that MSOs, such as Cablevision7., are preparing for the changing world of TV8., and so it is likely that within the next five-to-ten years that the world Netflix Max has given us a glimpse of becomes a reality.

1. http://online.wsj.com/article/SB10001424127887324823804579014901418093422.html2. http://online.wsj.com/article/SB10001424127887324170004578636181260905830.html3. http://blogs.wsj.com/corporate-intelligence/2013/08/15/sonys-streaming-cable-tv-deal-first-of-its-kind-but-not-the-last/4. http://www.adweek.com/news/television/la-carte-worst-idea-anyone-has-ever-had-1518145. http://www.thewrap.com/qa-john-mccain-makes-the-case-for-a-la-carte-cable/6. http://www.deadline.com/2013/05/hbo-go-without-cable-not-yet-says-time-warner-chief/7. http://online.wsj.com/article/SB10001424127887323420604578647961424594702.html8. http://blogs.wsj.com/corporate-intelligence/2013/08/05/why-cablevisions-chief-is-going-with-the-flow-on-streaming-video/

10%

20%

30%

40%

50%

60%

54%Videogame

consoles

33%Tablets

18%Internet

TV devices

–5– FYI: The New Max for TV

Ipsos MediaCT, © 2013

For more information on how Ipsos MediaCT can help your business prepare for the future of video, please contact:

Gavin BridgeDirector of Media InsightsIpsos MediaCTgavin.bridge@ipsos.com

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