Hollywood, Take Note: Here's What TV Viewers Really Want (Guest Column)
PwC analyst Matthew Lieberman breaks down a new study of U.S. consumers that reveals nearly three-quarters of participants would prefer to customize their pay TV package -- and many just feel confused by the overwhelming number of options.
This story first appeared in the Oct. 4 issue of The Hollywood Reporter magazine.
The new broadcast television season is beginning amid a sea change in viewing habits. Consumers can choose from unprecedented options: live TV in the home, time-shifting via DVRs, buying or renting on-demand programs, low-cost streaming services and an array of digital apps and other TV-related content. Binge viewing is gaining popularity as "cord-cutting" (or "trimming") is discussed daily. More people are using second screens on mobile devices, and still others would like TV services to provide more customized and cheaper programming choices.
In a new PricewaterhouseCoopers study of 1,008 U.S. consumers, ages 18 to 59, results of which are revealed here, nearly three-quarters said they would prefer to customize their pay TV package so they can have greater control over their entertainment choices -- and save money in the process.
For example, a 32-year-old focus group participant in Los Angeles said he would like to be able to pay per show, per episode, per season and per network. "My ideal package would be changing all the time," he said, providing "complete freedom for the busy adult." Another focus group member suggested that TV services let consumers turn off subscriptions to individual channels when they aren't showing programs of interest.
With TV in such a state of flux, companies must revisit their business models. The winners will be those that offer custom services or curate content in the most appealing ways. The U.S. remains the largest entertainment market, projected to grow from $499 billion in 2012 to $632 billion in 2017. TV subscriptions are expected to grow at a 2.2 percent rate during the next five years and TV advertising at a 4.3 percent compounded rate.
But changing viewing habits present major challenges, not only for advertisers but also for the mature subscription TV market. The four biggest U.S. cable operators lost subscribers between 2008 and 2012 to satellite providers and online services, as well as to such newer entrants as subscription VOD (Netflix) and so-called over-the-top content delivery (Apple TV).
With the number of cable households projected to decline from 57 million to 55.9 million between 2012 and 2017, increases in satellite households (from 34.6 million to 37.3 million) and digital households (from 10.1 million to 14.3 million) will drive overall growth in the U.S. pay TV market. The total number of paying households is expected to increase from 101.7 million at the end of 2012 to 108.4 million at the end of 2017.
The study reveals that many consumers feel confused by the flurry of viewing options. In focus groups, participants said they would appreciate more programming guidance from TV service providers. To engage consumers, content creators will need to get closer to them than ever before, including through social networks and apps. In the survey, 55 percent of respondents said they use a mobile device while watching TV.
Connected consumers clearly are in control. This study shows that during the next five years, an even greater portion of viewing of and interaction with TV and film content will take place on multiple screens and devices. Hollywood must adapt accordingly.
Matthew Lieberman is an analyst in the U.S. entertainment, media and communications consulting practice at PwC. Deborah Bothun leads the group.