While this may not be the sort of consultation report that gets many people within our industry excited, it does highlight that in the highly fragmented UK television market the value of EPG prominence as a means of improving channel performance is now generally recognised. Our Ofcom study, for example, suggests that even a leading channel like ITV1 would suffer a negative audience impact from losing its prominent (page 1) EPG slot, while Channel 5 stands to lose a sizable proportion (over 20%) of its audience if it were to move to the bottom of the Entertainment sections of all the principal EPGs.

The relative impact of EPG prominence is even more dramatic for smaller channels, with a good recent example being MTV’s move from the top of the Music section to the middle of the 3rd page of the Entertainment section of the Sky EPG (a rise of 150 channel ranks) as part of the major Sky EPG reshuffle on 01/02/2011. While having the first (gatekeeper) slot in any of the thematic channel genre sections of an EPG where viewers can filter by channel genre is preferable to being further down a given genre section, there can be little doubt that the prime real-estate of any EPG is the upper third of the Entertainment section. The impact on MTV’s audience was certainly dramatic, with its share of viewing on the satellite platform rising by 148% (for further details see my blog from April last year). Unsurprisingly, prominent slots on the 2nd and 3rd pages of the Sky EPG (that became available as part of the last major Sky EPG reshuffle in February 2011) were therefore reputed to have sold for as much as £3.5m over 5 years.

In view of this significant relationship between EPG prominence and channel performance, a key and potentially also controversial issue is the fact that EPG prominence is both a valuable commercial commodity for channel operators, as well as an effective legislative tool for increasing the viewing to (and hence promoting) certain types of content. Indeed, at a recent Oxford Media Convention, Ed Vaizey was quoted by the Guardian as saying that: “… many channels not currently defined as public service broadcasters invest in UK content that could fall within the traditional definition of public service content – obvious examples are news, current affairs, children’s television documentaries and quality drama. So we need to look at whether the prominence rules could be used to reward those who invest in that kind of content.”

The Government’s drive for a local TV service in the UK has certainly begun to establish a precedent for using EPG prominence as a means of promoting channels by adding them to the list of PSB channels that are due ‘appropriate prominence’ on EPGs under section 310 of the Communications Act 2003. In the case of local TV this is not proving particularly controversial, as the overall competitive impact of a local TV service is likely to be small. A more comprehensive effort to promote PSB or UK originated content by adding further channels to the list of PSBs, or implementing more prescriptive legislation tying EPG prominence to the volume of UK originated content being broadcast, is likely to prove far more controversial and difficult to implement.

Nevertheless, this is by no means a new concept, and as part of Discovery’s response to Ofcom’s second PSB review in late 2008, they commissioned Attentional to both assess the viewing impact of Sky EPG prominence, and demonstrate that Discovery provides a significant amount of unique reach to types of factual content not always well catered for by the terrestrial PSB broadcasters. While this did not ultimately result in Discovery being moved from the Documentaries section to a prominent slot in the Entertainment section of the Sky EPG, it is interesting to note that the concept of potentially rewarding channels with more prominent EPG slots based on the public service value of their content is gaining at least some political traction. As for the recent move of Sky Arts 1 and 2 from the Lifestyle and Culture section to prominent positions in the Entertainment section of the Sky EPG, I will leave it to my readers to speculate about the likely motivations behind this reshuffle.

One particular problem that the leading UK television broadcasters have been facing is that they have found it increasingly difficult to attract and retain younger viewers, and this is likely to be true in many other developed countries. A rapidly ageing audience means that there is growing pressure on the main broadcasters to target the harder to reach and higher value younger demographics, but this raises the tricky question of what factors are likely to improve a show’s performance with younger viewers without alienating the bulk of the older audience, thus making the difference between a successful niche offering and a true mass appeal hit programme. Not so very long ago, we tried to answer this question for UK originated crime drama.

The starting point for our analysis was Attentional’s proprietary Microgenre® system, which is a genre coding system designed to aid analysis by providing a finer level of detail than is possible using standard BARB genres. As well as the Microgenres®, our coding team also regularly adds metadata which identifies production companies, country of origin and whether a transmission is a first run or a repeat.  We were thus able to quickly assemble a sample database covering 64 major UK originated drama series going out over 832 first-run peak-time transmissions.

To this database we then added an extra layer of coding, covering 8 headline factors that we believed might be potential drivers of crime drama viewing preferences, with a particular emphasis on highlighting the different tastes of older and younger viewers. The 8 headline factors were: Period (i.e. post or pre-1990), Location (i.e. rural or urban), Crime-Solving Technique (i.e. deduction, forensics, etc.), Ensemble (i.e. ensemble or single protagonist/duo), Type of Protagonist (i.e. uniform police, civilians, criminals, etc.), Gender of Protagonist (i.e. male, female or a mix), Age of Protagonist (over 35 or under 35 or mixed) and Tone (i.e. using a scale from 1 – light, being light-hearted, to 5 – dark, being edgy and brooding), with the different options under each factor heading being the categorical variables (27 in total) that would form the basis of our statistical analysis. Further details are given in Table 1 below.

Table1: Categorical Variables Tested in UK Crime Drama Performance AnalysisSource: Attentional          (Please click on chart for an enlarged view)

Using our 27 categorical variables we then conducted a regression based ANOVA analysis to determine which of these had a statistically significant performance impact for both older and younger viewers. The results of our analysis are summarised in Table 2 below. Of the 27 variables we tested, only 11 had a statistically significant impact on performance. For the Period we found that older viewers preferred dramas with a pre-1990 (‘period’) setting, while younger viewers were indifferent. With the Location, older viewers also preferred a rural setting, while younger viewers were again indifferent. With the Crime solving technique, older viewers were generally indifferent except that they did show a preference for forensics based crime dramas, and this was also something that younger viewers liked. However, in contrast to older viewers, younger viewers had an aversion to traditional deduction based crime dramas, and also showed a preference for more unorthodox approaches where the protagonists use special skills, or solving the crime is not the main purpose of the story. Younger viewers also had a preference for both criminal and female protagonists, and were much more likely to watch dramas with a very edgy and brooding Tone. Older viewers, on the other hand, generally disliked crime dramas with female or criminal protagonists, and also had an aversion to younger protagonists. As for Tone, light-hearted would seem to work better for older viewers.

Table 2: ANOVA Analysis of Factors Driving UK Crime Drama PerformanceSource: Attentional/BARB          (Please click on chart for an enlarged view)

While one would certainly expect some divergence, what is most surprising is just how different the crime drama preferences of younger viewers are to those of their older counterparts. Every statistically significant result among younger viewers was one where older viewers were either indifferent or had the opposite preference, and vice versa. In a nutshell, traditional crime dramas appeal to older viewers, while unorthodox ones appeal to the young, and what the ANOVA analysis shows is just how extreme this age-related polarisation of crime drama preferences actually is. This highlights a fundamental problem facing television broadcasters in developed countries: reconciling the conflicting preferences of youth versus age in an environment of increasing choice.

The challenge for the future will therefore be to identify those crime drama elements that are likely to have a strong appeal for both older and younger viewers, and on that note it is worth taking a brief look at one of the recent crime drama success stories, and how this measures up to the statistically significant performance driving factors we have identified above.

I am, of course, talking about BBC1’s Sherlock, which has been a remarkable success despite a mere six episodes having been broadcast between July 2010 and January 2012.

The setting of Sherlock is neither period nor rural, both of which appeal to older viewers, but the strong association with the original Victorian Sherlock and a certain period feel to the new Sherlock’s Baker Street home, would seem to at least partially tick the ‘period’ boxes. As for crime solving techniques, there is a strong forensics element which appeals to both older and younger viewers, and while Sherlock’s deductive approach to solving crime could potentially put off younger viewers, this is likely to be counteracted by his special skills (he’s a socially challenged crime solving genius!) which are likely to appeal to younger viewers. It is also worth noting that although Sherlock is a good guy in the sense that he solves crimes, and this would appeal to older viewers, he is also very morally ambivalent, if not entirely amoral, thus appealing to the preference for unorthodox and even criminal protagonists among younger viewers. The Tone is also rather dark and brooding, though not extremely so, again striking the balance between what is likely to appeal to both young and old.

On the whole then, according to our preference driving factors, Sherlock measures up very well as a show that is likely to appeal to both young and old, and it has the mass audience success to prove it. The only criticism would be that the BBC has only managed to make 6 episodes of such a winning format.

As can be seen in the chart below, there was a consistent decline in average daily viewing levels between 2003 and 2006, with the average person in the UK watching 8 minutes less television per day in 2006 than they did in 2003. This led to a considerable amount of speculation about how television was in terminal decline, with the internet (even before the advent of long-form internet based VOD services) being seen as a serious competitor for our limited time. PVRs, like Sky+, were also predicted to increase the amount of time people spent watching content outside the 7-day catch-up window, thus further reducing the amount of measured TV viewing.

Average Daily Minutes of Live and Timeshifted Television Viewing for Individuals 4+ in UK Homes           (2003-2011)Source: BARB/Attentional        (Please click on chart for an enlarged view)

What happened next therefore came as a surprise to many in the industry, with viewing levels rising consistently between 2006 and 2010. While this has been partially driven by the growth in time- shifted (i.e. catch-up) viewing with the proliferation of PVRs and other TV connected devices (not to mention the more accurate measurement of underlying viewing levels as a result of the 2010 BARB panel change), it is also noteworthy how stable and resilient live viewing has been. Live viewing in 2011 has, however, declined from its 2010 peak, though it remains slightly above its 2003 level. Furthermore, if one includes catch-up viewing the overall level of television viewing has remained stable at around 242 minutes per person per day between 2010 and 2011, and this is despite the growing competition from on-line VOD services, the catch-up element of which isn’t currently BARB measured when viewed on PCs, laptops, tablets and smartphones.

So, what of the future? Well, before I get to that, it is worth pointing out that I was in a similar position back in 2007 when I was developing a UK channel performance forecasting model (through to 2012) based around the digital switchover and other likely technological changes. The first part of the model, based on the digital switchover, was relatively straightforward. The digital switchover was driving viewers onto multichannel platforms where they had much more choice (with Freeview, in particular, being helped by the spate of digital channel launches in the mid noughties), and watched more television as a result. This was particularly true for older viewers, and there were growing signs that, as they began converting to digital television en masse, this would counteract the underlying decline in the viewing levels of younger viewers, resulting in an overall rise in television viewing  through to the final digital switchover in 2012.

 We had also done research on the impact of PVRs, and here again there was no indication that this would result in an overall decline in viewing levels. Most difficult of all, however, was to predict what would happen with younger viewers in view of the growing competition from the internet. What struck me most at the time was how the strong internet presence and exposure of certain youth focused shows, most notably Channel 4’s Skins, was tying viewers into the brand and, rather than being a distraction, was actually driving up audiences. As can be seen in the chart below, there was little direct evidence of this in the underlying viewing trends for 16-34s, with 2007 marking another overall downturn in the average daily minutes of television viewing among 16-34s. Nevertheless, based on the available evidence of a possible complementarity between the new technologies and traditional television, we opted for what was considered a very optimistic forecast at the time and suggested that TV viewing levels among 16-34s would level out and possibly even recover between 2007 and 2012. This was very different to what most commentators were saying at the time and caused considerable interest in the press, and, as it turns out, we were right!

Average Daily Minutes of Live and Timeshifted Television Viewing for Adults 16-34 in UK Homes           (2003-2011)Source: BARB/Attentional          (Please click on chart for an enlarged view)

Moving on to the next five years, it is more likely than not that viewing levels have now peaked. The digital switchover is nearly complete, and at 242 minutes per person per day we are, on average, already spending just over 25% of our waking hours (assuming we average 8 hours sleep a day) in front of the television watching live or timeshifted (i.e. catch-up) TV content, and it is worth keeping in mind that this does not include such well-established activities as using the TV to play video games and watch DVDs or VOD/recorded content that doesn’t qualify as catch-up.

If BARB succeeds in its current endeavour to measure and add the time we spend watching catch-up through PCs, laptops and possibly even tablets and smartphones to the television viewing total, then there may be scope for a little bit more growth. That being said, a more likely scenario is that we have reached the limit of the extent to which timeshifted viewing acts as a complement to live viewing, and as timeshifted viewing continues to grow we will see a sharper decline in live viewing levels (of which there is already evidence in the 2011 data). There is also likely to be more downward pressure on television viewing overall (i.e. live and timeshifted combined) as the opportunities to watch TV content outside the 7-day catch-up window, as well as VOD films and material from broadcasters’ archives, continues to grow. The overall result will be a moderate decline in overall television viewing levels over the next 5 years. The available evidence also suggests that there is currently a limit to the extent to which we are prepared to reduce our live viewing levels, and while live viewing levels are likely to continue to fall over the next 5 years, we envisage them levelling out at between 80% to 85% of total television viewing for Individuals 4+, and between 70% and 80% of total television viewing for 16-34s.

Overall there is currently no evidence that a game-changing paradigm shift is imminent, and while the next five years will be challenging for the industry, it is a picture of gradual transition rather than catastrophic change, with many broadcasters being well placed to take advantage of all the existing opportunities that the technological revolution has to offer.

As for the year ahead, one of the more interesting developments is likely to be how pay-tv operators like Sky and Virgin will react to counter the threat from YouView with its powerful proposition of a Freeview HD+ box that also brings you free online catch-up through your TV set.

Coming back to the issue of ad skipping, the question that is inevitably asked is just how much ad skipping takes place during time-shifted viewing sessions, and how does this compare to the amount of ad avoidance (by switching channels, for examples) that is likely to take place during live viewing sessions.

A good way to get an idea of the likely magnitudes involved is through a case study, and for the UK there can be few better recent examples than the hit ITV1 drama Downton Abbey. Among the different types of TV content, dramas are of course one of the most likely to be recorded and hence time-shifted, though for hits like Downton Abbey there is also a considerable incentive to watch them live and be part of the inevitable social buzz that surrounds the live broadcast stream.

Taking the first run (on 30/10/2011) of episode 7 of the second series of Downton Abbey as a typical example, this averaged around 9.3 million live viewers, with a further 3 million viewers catching-up over the following 7 days, bringing the total consolidated audience to approximately 12.3 million viewers. With around 24% of the consolidated audience being time-shifted there is obviously considerable scope for fast forwarding over the ads, and as can be seen in the chart below, which shows the minute-by-minute audience of the aforementioned episode, most of the time-shifted viewers did just that.

The 4 ad breaks are marked by very clear downturns in both the live and time-shifted viewing streams, but whereas the downturns in the live viewing stream are small, with only around 6% of viewers switching channel (or going to the loo, etc., where BARB panel members are diligent enough to unregister their presence for the short time they’re away from the television), around 80% of viewers fast forward over the ad breaks in the time-shifted viewing stream. Overall this means that the average Downton Abbey ad break minute got around 24% fewer viewers than the average Downton Abbey programme minute, and it could well be argued that this represents a loss of many millions of pounds in potential advertising revenue over the full run of the series.

Such a rather pessimistic interpretation, on the other hand, may well be missing the point. The evidence to date suggests that our time-shifted viewing has until now been more of a complement than a substitute for our live viewing, and if the ability to readily time-shift our television viewing were suddenly taken away there is no guarantee that we would substitute all the time we currently spend watching time-shifted television for live television. In fact, by not being able to easily catch-up on missed episodes, some viewers, who may well have watched at least one or two live episodes of Downton Abbey, could be dissuaded from committing to the series at all.

Time-Shifted versus Live Minute-by-Minute Audience for Downton Abbey on ITV1 (30/10/2011)

Source: BARB/Attentional                              (Please click on Chart for an enlarged view)

One way to do this is to look at the platforms on which we choose to watch our television. This is different from the more common approach of looking at television consumption based on homes classified by the reception type of their primary television sets, as platform level viewing looks at the viewing on a given television set and so reflects the fact that even in homes that have cable or Sky on their primary TV sets, a significant proportion of viewing (around 14% according to BARB) will still be on secondary TV sets, which are now predominantly Freeview.

As can be seen in the chart below, looking at TV-set-based platform viewing shows just how dramatic and consistent the growth in Freeview viewing has been, rising from 2.5% of viewing in 2003 to just over 42.2% in 2011. As one would expect, this growth has been largely at the expense of Analogue Terrestrial viewing, which has declined from over 60.4% of viewing in 2003 to 3.8% in 2011. Cable, on the other hand, has remained remarkably stable at around 13% of viewing, and (undoubtedly helped by Virgin Media’s improved offering) has even made moderate gains in recent years with 13.7% of viewing in 2011. The real pay-tv success story, however, has clearly been Sky, which has managed to grow from 24.3% of viewing in 2003 to nearly 37.7% in 2011. Nevertheless, Sky has struggled to improve its platform viewing share in recent years, and in 2011 viewing on Freeview sets exceeded that on Sky sets for the first time.

Proportion of Total Television Viewing by TV Set based Platform (2003-2011)

Source: BARB/Attentional (please click on image for an enlarged view)

Unlike Freeview, Sky hasn’t really benefited from the conversion of secondary sets, and competition from the growing number of minor players (most notably Freesat – the free satellite offering from the BBC and ITV) is also likely to be taking its toll. Does this mean Sky platform viewing has peaked? Time will tell, but there can be little doubt that Sky will continue actively to promote an ever growing slate of pay-tv offerings, both to tempt Freeview viewers and to reduce the churn of its own subscribers to rival platforms.

A key concern for Sky, of course, is the strength of the Freeview offering. In 2010, for example, approximately 60% of viewing on the Sky platform was to channels that were also available on Freeview. True to form, Sky has therefore been actively promoting and improving its pay-tv offering, most notably with the launch of Sky Atlantic and a comprehensive reshuffle of its EPG, designed to promote all the key pay-tv brands going out on the Sky platform.

Has it worked? Well, looking at the first 9 months of 2011, the proportion of viewing on the Sky platforms going to channels that are also available on Freeview has fallen to around 58%. Good news for Sky so far, but we need to wait for the Christmas viewing surge (which tends to favour the terrestrial channels) before we can really talk about a significant underlying trend.

This will also have a bearing on the likely clash between Sky and the PSB channels over retransmissions fees, an issue which has just started to receive significant coverage in the press. With everyone cutting costs, the BBC and other PSB broadcasters have started to argue that it isn’t fair for them to pay significant retransmission fees to Sky, as the continuing popularity of their channels on the Sky platform means they are crucial to maintaining the attractiveness of Sky’s pay-tv offering. To put it another way, the BBC would argue that, even if it stopped paying retransmission fees to Sky for carrying BBC1, as the most watched channel on the Sky platform it is unlikely that Sky would risk alienating its subscriber base by dropping BBC1 from its channel list.

It would appear that we are therefore a long way off the kind of pure on-demand (‘create your own schedule’) viewing environment that many commentators have been predicting ever since the arrival of the first internet based VOD services. However, the launch of connected TVs and the imminent arrival of services such as YouView that will bring internet based VOD services to the now ubiquitous flat screen TV sets in our living rooms, are now being heralded as the new game changers.

While it would be unwise to underestimate the impact of any new technology, particularly in the long run, there may well be some evidence from another technological innovation that can help us make robust predictions about the short- to medium-term impact of bringing VOD services to our television sets.

It was not that long ago when PVRs (i.e. Sky+, Freeview+, etc.) were being heralded as the new game changers, with many television executives at the time spending sleepless nights worrying about the possible negative impact of such a revolutionary new technology on mass advertising funded linear TV business models. A common nightmare scenario was that with the ability to easily record entire series at the touch of a button, as well as to pause, rewind and fast-forward live television, there was every possibility that live viewing would collapse, with most viewing being timeshifted (i.e. recorded playback).  As a result, there was a genuine fear in the industry that the proliferation of the new PVR technology would result in an ‘ad skipping’ epidemic, with ever more people fast-forwarding over adverts and costing commercial channel operators millions of pounds in lost advertising revenues.

There was certainly enough concern among UK broadcasters that, when PVR take-up started to accelerate, it was not long before BARB announced that it would be measuring PVR play-back and including this in the UK viewing figures from the autumn of 2005. This made the UK one of the first markets in the world to measure PVR playback viewing and include this as part of the final ‘consolidated’ viewing figures, provided it was watched within 7-days of the original broadcast (the same as with other recorded viewing through the then still dominant VCRs).

At the time we were inundated with requests from broadcasters and advertisers (many from outside the UK) who were keen to assess the impact of the new technology and, as part of our analysis at the time, we were certainly able to establish that acquiring a PVR resulted in a significant increase in timeshifted viewing and that, as expected, ad skipping was much higher in timeshifted than in live viewing sessions.

This new evidence therefore didn’t rule out the possibility of a nightmare scenario, but one of the crucial pieces of evidence we uncovered was that, even though timeshifting in homes with PVRs was more than 10 times as high as in homes without the new technology, around 85% of television viewing in PVR homes remained live.  At the time, this was based on a relatively small sample of ‘early adopters’, with an estimated 5.1% of Individuals 4+ in the UK living in PVR homes by the middle of 2006. However, as can be seen in the chart below, the proportion of live viewing in homes with PVRs has remained remarkably stable, at around 85% over the last 6 years.

Proportion of Live versus Timeshifted viewing by Individuals 4+ in UK homes with PVRs (2006-2011)Source: BARB/Attentional                              (Please click on Chart for an enlarged view)

Over this period the number of Individuals in PVR homes has risen from around 5% to 60% of the UK population, making this a mainstream technology; and yet, despite the ease with which we can now timeshift our viewing, it would seem that, given the choice, we still prefer to consume the vast majority of our television as live viewing.

There is also evidence to suggest that our timeshifted viewing has until now been more of a complement than a substitute for our live viewing. It is an established fact that the total amount of television (live and timeshifted combined) we are watching has been rising since 2006. As can be seen in the chart below, this seems to have been driven by a combination of a steady rise in our timeshifted viewing, without any persistent compensating decline in our live viewing, which has remained relatively stable over the last 6 years. The rise in live viewing in 2010 may be partially attributed to the BARB panel change, and while there has been a small drop in live viewing in the first 6 months of 2011 relative to 2010 as a whole, it is too early to talk of any significant underlying trends.

That being said, it would certainly be naïve to think that the hours of live viewing we consume each day will not eventually begin to decline as ever more technologies become available that allow us to readily access on-demand content through catch-up TV and library-based services on our main television sets. Nevertheless, the most pertinent lesson from the impact of the proliferation of PVRs is that there continues to be a strong demand for live viewing, and that there seems to be a limit to the extent to which consumers want to create their own on-demand schedules. Major sports, entertainment and news events are, of course, best watched live, and will continue to be so in the future. However, even putting aside such ‘best watched live’ content, it would seem that very often we just want to be entertained without putting too much thought into our viewing choices, and live viewing is still the simplest way to do that.

Average Daily Minutes of Live versus Timeshifted viewing for Individuals 4+ in all UK homes (2006-2011)Source: BARB/Attentional                              (Please click of Chart for an enlarged view)

To help my clients understand what is going on, I have developed a methodology that aligns internet TV and video viewing with conventional TV by using comparable measures, like hours of viewing. This is to shed more insight on the question lots of people are thinking about: will TV viewing migrate to the Internet? And, if so, when?

Take the UK as an example. Reports of strong growth, with so many millions of download requests on the BBC iPlayer or 4OD for key shows, need to be judged in the light of Arqiva announcing the closure of its online video service, SeeSaw, less than a year and a half after its public launch.

There has also been much talk about how YouView will be a game changer by providing easy access to internet video and free catch-up TV VOD services through people’s television sets, though this has now been delayed until 2012.

So, what are the key facts about the consumption of internet video to date? Let us, again, take the UK as an example. As part of a major project we are currently undertaking for the European Commission we have been able to come up with some preliminary answers. (We will be reporting on other countries later.)

Using comScore’s data on the hours of internet video consumed through PCs and laptops, we find that in the last 15 months (to March-2011) the volume of internet video consumption in the UK (as measured by Viewer Hours) has not shown any significant underlying growth trends, remaining relatively stable at just over 550 million Viewer Hours per month.

Internet Video Viewer Hours Have Been Flat Over the Last 15 Months Source: comScore/Attentional          (Please click on Chart for an enlarged view)

This tells us that total internet video consumption through PC’s and laptops is currently stable rather than growing – or at least growing only very slowly.

But what does 550 million Viewer Hours mean in a currency that everyone can understand? In a nut shell, the average person in the UK spends 19 minutes per day watching internet videos on PCs and laptops. How does this compare to television? According to BARB data the average person in the UK spends 3 hours and 45 minutes per day watching live television, and a further 18 minutes watching recorded (time-shifted) TV content played back within 7 days of the live transmission (mostly on PVR devices like Sky+, or Freeview+, etc.). That’s 19 minutes watching audiovisual content on the Internet against 243 minutes watching conventional TV.

And what are people watching on the internet? By focusing on the top 25 internet properties (ranked by Viewer Hours) reported by comScore, and categorising these according to broad headline types, it is possible to get an idea. Of the video viewing on these internet properties, 57% was to sites that featured pornographic video content, 37.8% was on sites featuring video clips and user generated content, and only 4.2% was on sites featuring TV Catch-up and other long-form VOD content, with the remaining 1.1% going to music video sites.

And Most Internet Video Viewing is Pornography

Source: comScore/Attentional          (Please click on Chart for an enlarged view)

Assuming that these proportions for the top 25 internet properties apply to Total Internet Video consumption in 2010 (after all, the top 25 internet properties accounted for 81.3% of Total Internet Video Viewer Hours), we find that the average person in the UK currently spends 11 minutes per day watching porn videos on the internet, 7.3 minutes per day watching clips and user generated content, 0.8 minutes (48 seconds) per day watching internet based TV Catch-up and other long-form VOD content and 0.2 minutes (12 seconds) watching on dedicated music video sites.

Conventional television clearly remains the key player in delivering audiovisual entertainment to the UK public, but despite the relatively small scale of current long-form internet video consumption it is important to recognise that the internet remains a paradigm changing medium for the screen industries. What is important is to accurately gauge the nature and pace of change, and this is where we feel our data driven approach and growing level of expertise will be of most use to anyone who is looking to invest in online content distribution.

Please click on chart for enlarged viewSource: BARB/Attentional

With estimates suggesting that scrapping CRR could add between add £45m-£55m to ITV’s revenue,  there was significant disappointment at ITV last year when, after a formal review process that dragged on for nearly two-and-a-half years, and a recommendation by Ofcom that there were grounds for CRR to be axed, the Competition Commission ruled that CRR should be retained virtually unchanged, with only the marginal concession that it would now include ITV1+1 and ITV1HD, thus slightly mitigating the underlying decline in ITV1’s SOCI.  In the end there are likely to have been too many voices in the industry calling for ITV’s continued restraint. Even with a SOCI of 27.3% in 2010, ITV1 is still twice as large as the next biggest commercial channel, CH4, with an Adults SOCI of 13.7% if one includes CH4+1. When one includes ITVs digital channels and GMTV (which aren’t covered by CRR), it is also clear that ITV’s channel portfolio still supplies around 40% of the UK’s Commercial Impacts for Adults, with the success of ITV’s digital channels mitigating the impact of market fragmentation.

Please click on chart for enlarged viewSource: BARB/Attentional

Faced with such strong conflicting interests, it is hardly surprising that Jeremy Hunt hasn’t delivered on the suggestion he made to the Financial Times as shadow culture secretary back in March 2010, where he was quoted as saying: “we think CRR is wrong and we would want to get it removed as soon as possible.” It has all been subsumed into the growing list of issues to be addressed as part of the new Communications Bill. As part of its current review of the television advertising market Ofcom has also made it clear that it would be unlikely to make specific recommendation on CRR, as the review covers the overall trading mechanism of which CRR is just one of many parts. If there is enough cause for concern about how UK television advertising is traded, Ofcom will then refer the matter to the Competition Commission at which point CRR is likely to be one of the issues to be addressed as part of any suggested reforms.

Needless to say, this is likely to take years, and it is therefore no surprise that when asked about CRR at a recent BSAC interview, Adam Crozier (ITV’s CEO) said that he didn’t talk about it anymore as there was no realistic chance of any imminent change and there was nothing ITV could do about it. He then nevertheless went on to describe in some detail how CRR was leading to significant market distortions, whereby longstanding CRR protected customers were in some instances paying as little as half that of what a new customer might expect to pay.

While there is no prospect of CRR being axed in the immediate future, it remains a significant bugbear for ITV, and it is likely that ITV executives will continue to push for its removal at every possible opportunity, just as those protected by it are likely to call for it to be retained.

In view of the fact that such prominent slots on the Sky EPG were reputed to have sold for as much as £3.5m over 5 years, there was much speculation in the press about the likely impact of this gain in EPG prominence on MTV’s performance. The early indications were certainly very positive and it has been widely quoted in the press that MTV’s Individuals 4+ Share of viewing increased by around 80% between Jan and Feb 2011. This figure, however, is for MTV’s performance across all platforms, but it only moved up the EPG on Sky, with its EPG slot on Virgin Media remaining unchanged. It is also important to consider that multichannel viewing is highly volatile (significant fluctuations are not uncommon), and this is before we consider the impact of any likely scheduling changes that may have coincided with the Sky EPG reshuffle.

Based on many years of EPG change impact modelling experience, we have developed a statistical modelling technique to overcome these confounding factors. This looks for a statistically significant step-change (Structural Breaks) in a channel’s daily Share time-series in the 6 weeks before versus the 6 weeks after an EPG reshuffle, while also accounting for any underlying performance time-trends. As an additional safeguard we also use the channel’s performance on a platform where it hasn’t been subject to an EPG change as a reference benchmark, as this is the best way of identifying any additional factors (like scheduling changes) that may account for variations in performance.

Using this approach shows that MTV’s Share of viewing on the Satellite platform actually increased by 148% as a result of its gain in EPG prominence, while it was down nearly 20% on Cable where it didn’t benefit from a rise up the Virgin Media EPG, suggesting that the benefit from MTV‘s gain in prominence on the Sky EPG may have been even higher. The charts below tell the story, please click on them to see enlarged versions.

  Source: Attentional/BARB

  Source: Attentional/BARB

The first decade of the 21^st century has been one of constant innovations in the way we can consume television content. PVR’s (like Sky+) giving us the ability to easily record our favourite shows and to pause and rewind live television, the growing proliferation of HD TV and the ability to   watch our favourite shows on the internet (either on  free catch-up VOD service, or through one of a growing number of pay sites) to name just a few. Connected TVs with the ability to bring these internet services to our main television sets in the living room are now also a reality, and it is no surprise that most of these new technologies are seen as serious threats to the traditional television industry. But what are the facts?

A few years ago it was impossible to attend a new media conference without the bulk of the speakers and delegates predicting the imminent demise of traditional television. The consensus seemed to be that TV was going on-demand and on line (or that at the very least ad-skipping through heavy PVR use would soon decimate the TV spots advertising industry), and the demise of traditional TV was just around the corner. ‘The tipping point is nigh’ was the universal cry.

I always felt that this was very premature and based on our modelling work at the time there was strong evidence to suggest that many of these new technologies would be complements rather than  substitutes for traditional television consumption. Back in early 2008 we were, in fact, one of the first consultancies to predict that total television viewing in the UK would rise. Our forecast at the time was unusual enough to feature in the Guardian, and television viewing in the UK has indeed grown constantly over the last 3 years, reaching a record high in 2010.

The same is true of some of the supporting technologies like electronic programme guides (EPGs) on which many of us now regularly rely to find what programmes and channels we want to watch and record. This is one of our key areas of expertise, and there is ample evidence demonstrating the importance of EPG position to channel performance. At a recent conference, however, a senior technological expert was likening EPG’s to something out of the Victorian age with little if any current relevance, and yet in the recent Sky EPG reshuffle some channel operators reportedly paid as much as £3.5m to get one of the coveted top EPG slots, and prominent EPG positioning has also been identified as one of the key elements in securing the success of the Local TV venture being pushed forward by the Government.

All this being said, it never pays to underestimate the impact or importance of technological change, the key is to take an evidence led approach to distinguish the red herrings from the game changers.