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Q1 | 2019

Conviva’s State of the


Streaming TV Industry
Measuring :
3B 1T 100B
Streaming Data Events Streams
Applications per Day per Year

Conviva’s Q1 2019 report reveals new insights into market drivers and viewer behavior, as well as confirming trends highlighted
in Conviva’s 2018 Annual State of the Streaming TV Industry Report. Conviva’s findings show that while adoption of streaming
is increasing, so is the complexity of achieving the goal of seamless video delivery at scale. Maintaining a high-quality
viewer experience across content and advertising is critical as streaming TV providers look to increase viewer retention and
monetization. In addition, social media plays an increasingly important role for promotion and monetization, and as a
distribution platform in its own right. Some of the most revealing and surprising insights from Conviva’s analysis include:

• Size and pace of growth are both increasing. Viewership • Up to 47% of streaming ads are failing. As more ad
overall is up 72% year-over-year, and the rate of dollars shift to streaming, the cost and viewer
consumption has increased, growing 49% faster in Q1 engagement risks are huge. As another form of
2019 than in Q1 2018. streaming content, the quality of the entire ad
experience is paramount to success.
• Content aggregators (virtual MVPDs) like DirecTV Now,
Hulu, PlayStation Vue, and Sling saw viewership up 108% • Social media is a big opportunity for content distribution
year-over-year as compared to 60% growth for other and monetization. Increasingly viewers are engaged
services in the United States. in real-time for peak events like the Oscars, sports, and
politics across multiple channels. Cross-channel visibility
• The battle for the TV screen is not over. Amazon Fire TV and promotion maximizes exposure and engagement
captured 18.6% share of viewership, up significantly from for publishers.
11.4% share in Q1 2018 as it gains on Roku’s long-standing
lead at 42.4% share. • The highest peak concurrency in Q1 2019, the point at
which the maximum number of viewers tune in all at
• Amidst impressive growth, minimizing quality issues once, came on January 8th UTC. This peak, which was
remains top of mind for the industry with buffering (when 37.6% higher than the previous year’s Q1 peak, came as
the video pauses during playback so it can reload) seeing #2 Clemson bested #1 Alabama in the College Football
the largest improvement, down 34% year-over-year. Playoff National Championship.

Conviva is the real-time decisioning platform for optimized streaming entertainment. More than 250 industry leaders across 5
continents – including CBS, DAZN, HBO, Hulu, PlayStation™Vue, Sky, Sling TV, Turner, and Univision – rely on Conviva to maximize
their consumer engagement, deliver the quality experiences viewers expect, and drive revenue growth. With a global footprint
of 100 billion streams per year across 3 billion applications streaming on devices in 180 countries, Conviva offers streaming
providers unmatched scale for continuous video measurement, intelligence, and benchmarking across every second of every
stream on every screen.

Q1 | 2019 Conviva’s State of the Streaming TV Industry | ©2019 Conviva. All Rights Reserved | 3 |
Conviva’s data is collected using proprietary sensor technology, which is embedded directly within streaming video
applications. Conviva analyzes a trillion real-time transactions per day. In this report, the year-over-year data from Q1 2019 as
compared to Q1 2018 was normalized based on Conviva’s customer base.

For the first time, this report contains Conviva’s streaming advertising and social media insights. Data highlights new potential
failure points which are critically important as ad dollars move to streaming. Also included are insights into viewer behavior and
social platform performance for peak events that drive high-performing campaigns, as streaming TV providers increasingly
use social media to engage customers through both short-form and full-length content distribution. These new sources of data
provide a more complete view across the streaming TV ecosystem.

THE FUTURE 72% 73% 74%


OF TV VIEWERSHIP Rate of
growth is

49% 55%
Overall, streaming viewership was up 72.4% year-over-year
FASTER
in Q1 2019, consistent with past reports and trends we’ve
been tracking for overall growth of the industry. Viewership in
is not only up year-over-year, but the rate of growth has Q1 2019
than
increased, with viewing hours growing 49% faster in Q1 Q1 2018
2019 than in Q1 2018. That doesn’t change the fact that the
internet wasn’t built for video. As streaming TV viewership
grows, and devices increase and fragment, the complexity
of delivering this massive scale at linear TV quality has
intensified. Overall Mobile PC Connected TV

Growth of Viewing Hours YoY


YoY Q1 2018 vs. Q1 2019

US vMVPDs 108%
US Publishers 60%

PEAKS AND VALLEYS


Peak concurrency, the point at which the maximum number of viewers tune in all at once, also increased with the highest peak
in Q1 2019 37.6% higher than the previous year’s peak. Interestingly, despite major events including the Super Bowl and March
Madness, this year’s Q1 peak was reached on January 8th, during the College Football Playoff National Championship as
Clemson took on Alabama.

Even more impressive than that single peak, the average daily peak was 76.1% higher than the same period last year, which
illustrates that concurrent demand peaks are consistently higher. Notably, while this puts a significant strain on delivery
services, quality metrics have continued to improve during this time period. This indicates that streaming TV providers and the
industry ecosystem are keeping up with demand, even during the highest volume periods.

Q1 | 2019 Conviva’s State of the Streaming TV Industry | ©2019 Conviva. All Rights Reserved | 4 |
ASCENT OF AGGREGATED CONTENT PROVIDERS
Growth among virtual multichannel video programming
distributors (virtual MVPDs) like DirecTV Now, Hulu, vMVPD Buffering Rate

PlayStation Vue, and Sling continues to outpace the field, vs. 0.26%
with viewership up 107.7% as compared to 59.6% growth for PUBLISHER
0.7%
other services in United States. Virtual MVPDs also continue Q1 2019
to best other services in terms of quality, although the gap
Picture Quality (Bitrate)
is closing slightly. Other services in the United States made
5.1 Mbps
significant improvements in video start time from 5.95
seconds in Q1 2018 to 4.28 seconds in Q1 2019 - in line with 4.5 Mbps
virtual MVPDs at 4.21 seconds. Nevertheless, virtual MVPDs
continue to outperform other services when looking at other Video Start Failures
quality metrics including buffering at 0.26% as compared 0.68%
to 0.70%, picture quality 5.1 Mbps as compared to 4.5 Mbps,
1.88%
and video start failures at 0.68% as compared to 1.88%.

It is interesting to note that virtual MVPDs focus on distributing content via connected TV with many offering free or discounted
connected TV devices as part of their promotional offers. As would be expected, consumption for virtual MVPDs over-indexes on
connected TV devices at 73.0% of all viewership as compared to 43.1% for other services in Q1 2019. While connected TV generally
outperforms mobile and PC in terms of quality delivered, virtual MVPDs still outperformed other services even accounting for the
additional viewership via virtual MVPDs on connected TV. However, encouraging viewership on connected TV devices through
promotions or further investment in connected TV applications may be beneficial for other streaming services as they focus on
improving the viewer’s experience.

CONTINGENT ON QUALITY
Global Quality
YoY Q1 2018 vs. Q1 2019 Buffering
34% Picture
17% Video Start
35% Start
8% Global Quality
Rate Quality Failures Time
Improved Better Fewer Faster YoY Q1 2018 vs. Q1 2019 Buffering
Rate

There are literally millions of potential issue combinations that can impact the quality of the viewer’s experience and require
continued industry-wide infrastructure improvements. However, amidst skyrocketing demand, streaming providers have
consistently delivered increasingly strong overall quality.

Among the quality metrics streaming TV providers and consumers care about most, buffering (when the video pauses during
playback so it can reload) saw the largest improvement, down 33.9% year-over-year to 0.50%. Picture quality, as measured by
bitrate, was also drastically improved 17.4% to 4.7 Mbps in Q1 2019. The rate of failures and start time both improved in Q1 2019
with 1.57% of videos failing to start representing an improvement of 34.8%, while time for the video to start decreased 7.8% to
4.2 seconds. Conviva has been measuring the quality trend for more than a decade, and it is clear consumers have become
increasingly sophisticated and impatient. With billions of eyeballs up for grabs, improving viewer experience will continue to be
critically important.

Q1 | 2019 Conviva’s State of the Streaming TV Industry | ©2019 Conviva. All Rights Reserved | 5 |
IF AN AD DOESN’T PLAY PROPERLY, IT’S GAME OVER
In the world of streaming, ads are just another form of content
that depends heavily on user experience quality for its success.
Before publishers and brands worry about ad effectiveness
and inventory monetization, data shows that the first order
AD DELAYS CAUSE of business is to ensure ads are13.6%
delivered at the broadcast-
CONTENT ABANDONMENT level quality viewers expect. While much media attention has
been placed on the fact that streaming can offer increased
personalization through addressable ads (when different
E 13.6% viewers see different ads while watching the same program),
DONMENT the industry is getting ahead of itself trying to treat streaming
advertising like traditional advertising.

Looking at ad quality, Conviva identified 11 ad failure points across the ad delivery chain. Some examples include up to 6
second delays caused by wrapper ads, up to 8% failure from incorrect ad media rendition, up to 12% empty ad response,
and up to 7% VPAID errors. As advertisers begin to dig into what defines quality of ads, there are granular, time-based quality
measurement metrics unique to streaming ads necessary to capture the extent of start failures and delays, buffering, and
playback errors. Taking the cumulative impact of all of these factors into account, Conviva determined up to 47% of ad
attempts, across ad request, decisioning and selection, ad creative delivery, and creative playback may not make it to the
viewers’ screens as intended.

THE EFFECT OF POOR QUALITY ON VIEWER ENGAGEMENT


Quality of the experience and viewer retention are linked.
Buffering and delays are some of the most irksome The Effect of Buffering on Engagement
quality issues for consumers. Buffering heavily impacts As the viewer experience improves, engagement
and therefore revenue increases.
the bottom line as viewers increasingly check out as
buffering increases. It’s no wonder that streaming TV
PLAY DURATION/ENGAGEMENT (MINUTES)
providers have focused on improving this quality metric,
which is down nearly 34% year-over-year. Even a small
0-0.4 29.8
improvement can mean a significant increase in play 0.4-0.6 Q1 2019 .50% 26.2
duration. 0.6-0.8 Q1 2018 .75% 23.6
REBUFFERING RATIO (%)

0.8-1 21.4
Similar to the known trend of users abandoning content
due to quality issues, after just a five second delay in
1-2 18.9
ad playback, 13.6% of the audience stops watching. 2-3 19.1
In addition to streaming TV providers and advertisers 3-4 11.3
missing out on exposure of that ad when the viewer 4-5 9.8 Buffering has
abandons, the effect is amplified across subsequent 5-10 7.6 consistently improved,
ad breaks which the viewer will never see. While there is
10-50 4.2 with 34% less
significant potential in streaming TV for personalization year-over-year in Q1
with addressable ads, the fundamentals have frequently
50-100 0.7
been ignored.

Q1 | 2019 Conviva’s State of the Streaming TV Industry | ©2019 Conviva. All Rights Reserved | 6 |
Ad-supported services, which continue to see an exponential increase in streaming content consumption, are geared up for
advertisers to follow suit and make their own shifts to streaming. Subscription-only offerings have become less common as a
number of the industry’s leading streaming TV providers have adopted hybrid business models with tiered pricing including
both subscription-based, premium ad-free content and free ad-supported options. With ad-supported content used as a
funnel to lead customer acquisition, this entry point becomes crucial.

The continued testing of different models we see throughout the industry is indicative of the complexity of the market, with the
winning strategy still up for grabs. We’ve seen that the leaders consistently have a focus on extensive intelligence for both their
subscription and ad-based offerings to optimize the customer experience and maximize return on investment. In the coming
year, as competition mounts and consumer dollars are increasingly spread thin across platforms, quality of the entire viewing
experience will be an important factor in retaining and monetizing viewers.

TV’s TRIUMPH
Streaming viewership is up across the board. Consumption on connected TV devices continues to grow the fastest of any
device at 74.3% year-over-year to account for 56.1% of all viewership in Q1 2019. Connected TVs also delivered the biggest
improvements in quality with 60.1% less buffering, 20.6% better picture quality, and 42.7% less video start failures year-over-
year. Among mobile devices, up 72.5% in Q1 2019 as compared to the same period the previous year, Android saw the biggest
growth at 92.2%. For iOS devices, iPhone was up 59.8% and even iPads saw an increase of 33.1% year-over-year. Despite the
significant growth, mobile has merely maintained their share from the year previous with 23% of all viewership. Mobile also saw
modest quality improvements with buffering down 12.1%, picture quality improving 7.5%, and 21.6% fewer video start failures
year-over-year. PCs continue to lag, growing 54.5% overall, but losing share from 15.5% a year ago to 13.9% in Q1 2019. In quality
they are also lagging but saw 18.5% less buffering, 19.3% improvement in picture quality, and 48.3% less video start failures
year-over-year.

19%
21%
YoY Q1 2018 vs. Q1 2019
8%

10%
5% %
60
19%
Mobile
23%
PC BITRATE
Mobile

IMPROVEMENT 6%
Connected TV Other
by Device TVs SHARE OF
Others 7% 56%
Connected
VIEWING HOURS
BUFFERING BY DEVICE
IMPROVEMENT
by Device
TV
14%
PC

7%
Others
42%

1% 10%
12%
19%

Q1 | 2019 Conviva’s State of the Streaming TV Industry | ©2019 Conviva. All Rights Reserved | 7 |
BATTLE FOR THE TV
Roku maintains its lead among connected TV devices with 42.4% of all connected TV viewership in Q1 2019, only a slight
increase from the 40.9% commanded during the same period last year. Amazon Fire TV continues to challenge, up 185.0% in
minutes and capturing 18.6% share, up significantly from 11.4% share in Q1 2018. Roku and Amazon Fire TV provide consistently
good experiences and continue to improve over time. Buffering for Roku and Amazon Fire TV decreased by 72.6% and 61.1%
respectively while picture quality increased 16.9% and 15.1% respectively.

Apple TV also saw significant growth, up 113.3% year-over-year. In Q1 2019 it accounted for 10% of total connected TV minutes
consumed, an increase from 8.2% the previous year. Apple TV also continues to impress with a strong focus on the viewer
experience. This includes the industry’s shortest video start time at 2.25 seconds versus 4.65 sec across all connected TVs and
highest bitrate at 7.1 Mbps as compared to the 5.4 Mbps for the connected TV category. A notable mention goes to Xbox with
best-in-category buffering at only 0.13% compared to 0.21% for all connected TV devices.

MINUTES PER PLAY = HOW LONG THEY STAY


Historically, connected TV devices captured viewers for the long haul with the most minutes viewed per play. While still true, in
Q1 2019, this was down 6.7% year-over-year to 28.7 minutes. For connected TV devices, the decrease in minutes per play is most
likely due to changes in the user interface that allow increased channel browsing behavior, especially for live content, as viewers
flip through the channels before deciding on their preferred program. Conversely, minutes per play was up 5.6% on mobile
devices to 12.2 minutes, driven by increased live content viewing which typically results in longer viewing time.

THE DEMAND FOR ON DEMAND CONTENT


In terms of content type, video on demand continues to grow slightly faster than live viewership with a 76.4% increase year-
over-year. Video on demand now accounts for 62.8% of all consumption, up from 61.4% the year prior. This is primarily driven
by connected TVs and PCs as 61.7% of content viewed on connected TV devices is video on demand, while PCs tally 57.1% video
on demand viewership. Both devices saw increases year-over-year in the share of video on demand versus live content, up from
60.7% and 43.8% respectively.

Share of Viewing Hours Video on Demand Live Video Minutes per Play
YoY Q1 2018 vs. Q1 2019

64% 36%
2019

11/16
Minutes
71% 29%
2018

MOBILE

57% 43%
2019

10/28
Minutes
44% 56%
2018

PC

62% 38%
2019

25/39
Minutes
61% 39%
2018

CONNECTED TV

Q1 | 2019 Conviva’s State of the Streaming TV Industry | ©2019 Conviva. All Rights Reserved | 8 |
Live content also saw significant 66.2% growth in consumption. Live continues to be important, especially for mobile, as
live viewing grew to account for 36.3% of mobile minutes versus 29.4% a year ago. Live viewing also leads in length of time
commanded per play and increased its lead to 27.5 minutes in Q1 2019, up from 26.9 during the same period in 2018. In contrast,
video on demand only saw 16.2 minutes per play in Q1 2019, down slightly from the 16.3 minutes per play in Q1 2018.

Interestingly, both connected TV and mobile devices saw the time for the video to start take slightly longer in Q1 2019 which
may be attributable to, and an acceptable tradeoff for, the slightly better overall experience. Video start time for connected TV
increased by 5.3% while for mobile that number was 2.9% year-over-year. For both device categories, the increase in start time
was tied to video on demand content which saw an increase of 9.3% vs a decrease of 5.8% for live content for connected TVs
while mobile video on demand was up 4% and mobile live was only up 0.7% year-over-year.

WHEN STAKES (AND VIEWERSHIP)


ARE THE HIGHEST
Previously viewed as only a haven of short-form, or consumer-generated content (like cat videos), social media has become
an increasingly relevant channel where streaming TV providers can publish premium, full-length streaming content. The
most social media-savvy streaming TV providers are increasingly using social to test-market, determine what resonates to
build better content, promote their catalog, monetize with branded content on social, and to acquire audiences. This plays
particularly well with the up-to-the-second nature of live sports, news, and entertainment which consumers are increasingly
trusting to streaming.

SOCIAL PLATFORM POTENTIAL


Social platforms allow providers to reach, and most importantly, monetize audiences previously unattainable. Understanding
how to reach potential audiences, what platforms enable the widest or most targeted reach, and where potential monetization
opportunities exist is critical in ensuring success on social media. Looking at the performance of six streaming events in Q1 2019,
there were indicators that certain content performs better on certain platforms.

For the Golden Globes, Instagram provided highest views per video as fashion plus entertainment is a winning combo for
Instagram, while political content tends to underperform on the platform. Oscars also had a strong performance on Instagram,
but performed best on Facebook and YouTube which emphasize longer-form content. For sports, Super Bowl performed best
on YouTube with the highest view percentage of any of the events at 57%. However, in general, sports did not have a strong

Golden Cohen Mueller


Globes Oscars Hearing Report
Fashion + entertainment Entertainment resulted Top 10 news accounts Report saw high
is a winning Instagram in the most views per on FB Live saw 9.7M live engagement for FB,
combo with most views video on FB streaming video views especially popular with
and engagement females 65+

Q1 | 2019 Conviva’s State of the Streaming TV Industry | ©2019 Conviva. All Rights Reserved | 9 |
performance on YouTube. Basketball is known to perform well on Twitter, and March Madness was no exception, generating
over 2x the engagements per post as the Super Bowl. For news, the Michael Cohen hearing was hugely popular on Facebook
Live as the top 10 news accounts streaming the hearing on Facebook Live saw 9.7M live streaming video views. By comparison,
the top 10 news accounts streaming the Cohen hearing on YouTube saw 1.7M live streaming video views, while streaming TV
viewership on live news networks spiked 39% during the live-streamed testimony. Facebook saw high engagement for coverage
of the Mueller Report in Q1 2019, with an especially interesting fact that females over 65 years of age were the biggest consumers
of this content.

The most interesting takeaway from the various events, is that while not all platforms are equal, and some extrapolations
can be made about which type of content performs best by platform, the major key to success is real-time identification and
promotion across platforms.

PREMIERE VIEWING EXPERIENCES


Increasingly, viewers are engaged with streaming events across multiple channels. Looking at March Madness, NCAA
excelled at improving social engagement with official NCAA March Madness social accounts up 94% in engagements across
Facebook, Twitter, and Instagram, and the tournament also saw huge growth in streaming. Viewership was up throughout the
tournament netting 65% increase in the first week, 108% in the second week, and overall up 67% in streaming via publishers and
virtual MVPDs. Growth was largely led by connected TVs, up 90% and accounting for 50% share, up from 44% share in 2018.
As with overall viewership, Roku was in the lead capturing 42% share of viewership on connected TV devices followed by Fire
TV with 24% share and Apple TV with 13% share. Mobile and PC both dropped in share to 24% from 29% and to 21% from 25%
respectively the year prior.

Super Bowl LIII will not be remembered for the entertainment value or traditional TV ratings, but as yet another win for
streaming TV as American consumers trusted the height of their sporting entertainment to streaming, with
viewership up 157% from the previous year’s match. As with March Madness, this was led by connected TVs
which saw 200% growth in viewership to capture 63% of share, up from 54% share the year prior. Among
connected TV devices, Amazon’s Fire TV won big with football fans capturing 36% share
of connected TV viewing, followed by Roku at 31% and Xbox at 12%. Mobile dropped in
share to 21% from 39% the year prior, with PC picking up from 5% in 2018 to 12% in 2019.

157%
UP
Super Bowl
Among Super Bowl viewers on
social media, YouTube average
percentage viewed was highest
67%
at 57% UP

March Madness Super Bowl


Streaming viewership was Streaming viewership was
up 67% overall, led by a up 157% overall, led by a
March Madness
90% increase on connected 200% increase on connected
Basketball performed on Twitter
TVs which captured 50% TVs which accounted for
where March Madness saw 2x
engagement vs. Super Bowl share of viewers 63% share of viewers

Q1 | 2019 Conviva’s State of the Streaming TV Industry | ©2019 Conviva. All Rights Reserved | 10 |
With these TV-scale live events taxing the infrastructure of the internet, streaming TV providers continue to invest in
preparations, redundancies, and real-time data intelligence to ensure that the quality of live streaming continues to improve.

CLOSING THOUGHTS
2019 will be a hallmark year for the streaming industry, as heavyweight players like Disney, Apple, and WarnerMedia enter an
increasingly crowded field including established leaders Hulu, Netflix, and Amazon. As linear TV players and tech giants look to
leverage their content as a competitive advantage in the streaming industry, they will also have to grapple with considerations
unique to streaming. Compelling content will bring viewers to the service, but the quality of the viewing experience across the
full stream is a vital component to acquire, retain, and monetize viewers. The battle for streaming market share is not a zero-
sum game, but services will have to deliver an excellent experience in order to command a premium in the increasingly crowded
streaming landscape.

ABOUT CONVIVA
Conviva is the real-time decisioning platform for optimized streaming entertainment. More than 250 industry leaders across
5 continents – including CBS, DAZN, HBO, Hulu, PlayStation™Vue, Sky, Sling TV, Turner, and Univision – rely on Conviva to
maximize their consumer engagement, deliver the quality experiences viewers expect, and drive revenue growth. With a global
footprint of 100 billion streams per year across 3 billion applications streaming on devices, Conviva offers streaming providers
unmatched scale for continuous video measurement, intelligence, and benchmarking across every second of every stream on
every screen. The company is privately held and headquartered in Silicon Valley, California, with offices around the world. For
more information on Conviva, please visit www.conviva.com.

Q1 | 2019 Conviva’s State of the Streaming TV Industry | ©2019 Conviva. All Rights Reserved | 11 |
www.conviva.com