Don’t Change That Channel!
Roku announced its first quarter of financial results as a public company earlier this month, and the market loved it. Streaming video hours were up 58% year-on-year, with platform (i.e., advertising) revenue up an impressive 137% over the same period. Clearly, the Roku platform has become “sticky” –- these days the Holy Grail for just about every digital media company. But where does stickiness come from, how has it evolved, and what does it mean for the future of TV?
A few thoughts…
1. Stickiness Is A Function Of Viewer Inertia
Newton’s first law of motion states that an object in motion will continue in motion unless and until an unbalanced force acts it upon. He called this concept inertia.
With apologies to Sir Isaac, I would posit a parallel law of media viewing inertia:
A viewer on a media platform (or service) will continue on that platform unless and until acted upon by a force that draws them somewhere else.
The concept of a media platform (or service) should here be construed as broadly as possible. Both individual apps (like YouTube or Netflix) and device platforms (like Roku or Apple TV) can function in this capacity. In traditional linear TV, this inertia existed at the level of individual channels (i.e., the major broadcasters), as well at the level of TV as a whole, which brings us to our second point.
2. Viewer Inertia Has Largely Moved From Linear (Time-Based) To Visual (Screen-Based)
Linear viewing inertia feels more like Newtonian physics. Traditional TV viewers watching a given channel (e.g., NBC) will tend to keep watching that channel unless something causes them to switch to another one. In the old days, this allowed NBC to turn shows like A Different World into ratings hits purely by virtue of broadcasting them right after an existing hit like The Cosby Show. (It was a different time). This illustrates classic viewer inertia.
Today’s screen-based inertia is a bit different. The default first-up input for a growing number of TV viewers is not a live linear pay-TV service but a secondary platform like Roku. This creates viewing inertia, in that the observer will tend to watch something on Roku rather than another platform –- that is, unless and until something intervenes and pushes them back over to another device.
In the early days of Roku and other streaming set-top boxes, viewing inertia ran in the opposite direction. People had “Input 1” set to their traditional pay-TV set-top box, with Roku and other devices confined to less important inputs (somewhere behind the DVR or Blu-ray player). That meant Roku had to overcome tremendous inertia to convince viewers it was worth taking the time to switch inputs and deal with a different interface. This had long been a major headwind to increasing Roku use. As evidenced by recent numbers, however, that headwind is now a tailwind, with a growing number of Roku viewers proving very loyal to the platform.
Similarly, a Roku user may be in the habit of always clicking on HBO Go from the home screen of that same Roku. Inertia says that viewer is likely to watch something on HBO, unless something intervenes and pushes them to another service.
As a third and final example, an HBO viewer who is working their way through every season and episode of Game of Thrones will tend to watch that show unless and until they finish or something else intervenes. Binge viewing today has become one of the strongest instances of viewer inertia. It takes a lot to distract a viewer who is intent on finishing (or getting caught up with) a favorite show.
Importantly, all three of the above examples (platform, app, and show) constitute screen-based viewer inertia, not traditional time-based inertia. The viewer has a certain path (i.e., user journey) through the overall experience of watching TV, and once on a path they tend to stick to it, which brings us to our third point.
3. The Number Of Video Platforms With Viewing Inertia Has Mushroomed
As viewing options have multiplied, one would think that viewer inertia would diminish and people would constantly switch between platforms and services. Not necessarily. Yes, it is true that a fragmented market means by definition that people experiment with more devices, services, apps, and viewing platforms than ever before. However, real world behavior (as measured both quantitatively and anecdotally) suggests viewer inertia is alive and well, this time a product of the paradox of choice.
Take, for example, children and YouTube. All evidence suggests that YouTube is enormously sticky with respect to the kid viewing audience. This is true both for the service as a whole, as well as particular genres of content (i.e., Minecraft and other gamer videos). The presence of thousands of other places these children could watch video has little or no effect on what they view.
Twitch seems to have created similar inertia within the e-sports gaming community. The average Twitch viewer watches multiple hours per day, indicating an extremely high level of viewer inertia within an extremely niche video platform.
For my own part, I must confess that, at least during basketball season, NBA League Pass is capable of generating a whole lot of viewing inertia. If my beloved Minnesota Timberwolves (or the soap opera worthy Cleveland Cavaliers) are on the schedule, League Pass generally becomes my default option, regardless of all the other video viewing options that exist.
Today’s video viewer is not a free floating electron. Like electrons, viewers tend to seek out an attractive nucleus —- a favored device, app, service, or show. Once there, they tend to stick with it. The value of variety, it seems, is not without its limits. As famously noted, the fact that some choice is good doesn’t necessarily mean that more choice is better. In a world of seemingly infinite choice and personalization, we nonetheless gravitate toward our favorites.
Stick with TDG and stay ahead of the curve.
Joel Espelien is a Senior Advisor for TDG and serves as an advisor and Board Member to the video ecosystem and technology companies. He lives near Seattle, WA.