Content Providers Need to Weigh OTT Service Opportunities, NPD Says

Forty percent of U.S. broadband homes have a TV that’s connected to the Internet, leaving six in 10 families that, if they wanted to “re-watch” or view the first episode of Breaking Bad at a time other than last Sunday’s debut on AMC, are “relegated to broadcast re-runs” or left to “huddle around a computer or tablet,” said John Buffone, director, devices, NPD Connected Intelligence. “No Internet connection on the TV means no Netflix,” Buffone said in a blog post citing the changes digital services are bringing to programming strategies. Broadband channels such as Netflix give content providers new ways to engage audiences, and content licensing and programming decisions need to factor in the share of the audience with over-the-top (OTT) options on TV, he said.

Buffone noted that popular shows returning this fall with new seasons -- including HBO’s Boardwalk Empire, FX’s Sons of Anarchy and AMC’s Breaking Bad -- offer networks the chance to capture a different viewership through digital services. Some will turn to digital services to see programs from earlier seasons for the first time before catching up this season, and some returning viewers will go to digital services for a refresher before the new season begins, he said.

As networks develop television apps, “it’s critical for them to know how much of their audience is reachable on the TV,” Buffone said. It will also be important to keep tabs on the connected devices consumers are using to access content on TV, he said. As of now family networks and premium movie channel subscribers are more likely to connect their TVs to the Internet, and networks reaching those viewers are able to “capture more of their audience through over-the-top services on the TV,” he said.

A network’s audience is “no longer only reached through broadcast, syndication, and DVR,” Buffone said. Digital services add an “entirely new dimension” to TV, allowing content providers to “develop, grow and engage” an audience, he said. AMC, with the hottest show on TV at the moment, comes in at 16 on NPD’s viewer ranking of OTT networks, leaving 15 other networks that can “capture more of their viewers through over-the-top programming on the TV,” he said.

NPD’s ranking of the top 10 networks with the highest rate of viewers who own a TV that’s connected to the Internet: Nickelodeon, Nick Jr. and Teen Nick; all MTV networks; Cartoon Network; Disney Channel and Disney Jr.; Cinemax; Comedy Central; HBO; Nick at Nite; Showtime and ABC Family. For ranking purposes, a connected TV could be connected directly via Wi-Fi or Ethernet or through another device, it said.

Families are using video game consoles more than any other device to connect their TVs to the Internet, NPD said, with programming from networks including Nickelodeon, Cartoon Network, Disney Channel, and ABC Family geared to households with children. Homes with children under age 18 are 63 percent more likely than the general Internet population to have a TV that is connected to the Internet through a video game console, and 29 percent of U.S. Internet homes have a game console that’s connected to the Internet, Buffone said. He expects that statistic to hold through 2015.

While networks are beginning to develop their own apps for smart TVs, the leading digital video services used on the TV continue to be content aggregation services including Netflix, YouTube, Hulu and Amazon Instant/Prime Video. Network services such as HBO Go still rank lower on the list, Buffone said.

The study was conducted during the second quarter of 2013 with more than 5,000 U.S. consumers 18 and older, NPD said.