The Data-driven Video Discovery Evolution

A Parks Associates whitepaper developed for Digitalsmiths

% having les stored on m

50%

25%

The Explosion of Video Options

0%

For about 70 years, the television was the entertainment hearth. Although the distribution and consumption of TV
Source: Consumer Decision Process: 2010-2011 | satellite, and telco/IPTV providers and most changedfirst with the addition of multichannel video offerings from cable, Parks Associates

France

U.K.

Spain

Italy

Germany

recently with the introduction of features such as video-on-demandcontent for the TV stayed within well-defined categories. Television shows were television shows, and movies were movies, and networks and video service providers could count on a stable audience and revenue stream for each. As such, predicting the impact of programs on such variables as advertising revenues was relatively simple.

The Evolution of the Video-viewing Experience

STAGE 1
Broadcasters are in control

STAGE 2
Broadcasters, content owners, and multichannel providers are in control

STAGE 3
Consumers are in control

In 1964, the Beatles drew 73 million viewers to the Ed Sullivan Show

Heavy VoD users far more satis ed with their service provider

19% of consumers are interested in a TV Everywhere o ering, where they can watch TV programming on a smartphone or computer

Parks Associates

Comfort with Seeing Personalized Unit sales of connected CEincluding smartphones Advertisements Based On... and tabletswill grow from more than 640 million units in 2011 to nearly 1.8 billion by TV 2015. Internet
50% of Respondents

25%

The Data-driven Video Discovery Evolution | A Parks Associates whitepaper developed for Digitalsmiths

Time Spent on Video Consumption on the TV

(Average Hours per Week, U.S. Broadband Households)
Live TV broadcasts (84% BB HHs) Programs recorded on a PVR, DVR, or TiVo (34% BB HHs) Programs through your pay-TV, on-demand feature (41% BB HHs) Video from any other sources (Internet, etc.) (84% BB HHs) Pay-per-view programs o ered by TV service (23% BB HHs)
0 10 20

Source: Digital Video: Three Screens & Beyond | Parks Associates

Today, a plethora of video experiences and viewing devices is expanding videos role from a passive to an interactive, converged, and personalized Frequency of Video entertainment experience.

Consumption by Device

Consumers are choosing their own ways per Week, U.S.television. They employ digital video recorders and video-on(Average Hours of customizing demand services 30 time-shift their programming. They use tools such as the Slingbox or Orb Networks to watch their video to Broadband Households) in new places and from different locations. They surf the Internet while watching TV to track a fantasy football score. They connect their laptop to their high-definition display to watch Hulu on the big screen. They tap into a growing library of on-demand offerings from their game consoles. They are posting on Facebook or Twitter during Modern Family or using SMS to vote for their favorite American Idol contestant. 15 Expanded consumer choice and interaction are disruptive forces for providers, consumer electronics manufacturers, content owners, and advertisers. Time-shifted viewing via the DVR or video-on-demand in combination with video options via the Internet has created an increasingly fragmented consumer television experience. And although live television still 0 dominates viewing in a typical U.S. TV household, viewers are supplementing this experience with additional options. TV set Computer Tablet Smartphone
Source: Digital Video: Three Screens & Beyond Parks Associates

Satisfaction with Viewing Experience on Di erent Devices: TV, Computer, Tablet, Smartphone

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Ease in nding a program to watch Length of time it takes to nd a program to watch Less intrusive advertising
On a Tablet

Growth of Video-viewing Devices On a Smartphone

Not only are the options for receipt of video expanding, the number of products capable of rendering a high-quality On a Computer video experience is increasing exponentially. This phenomenon has several implications:
The potential to distract a viewer further by dividing his or her attention between a primary video-viewing device and On a TV the companion product; The erosion of video brands as consumers look not to a specific programmer but rely on general web searches to find 0% 30% 60% video; and Percentage of U.S. Consumers Rating High Satisfaction (%) A shift away from the traditional method of television search (through the electronic program guide) and toward deSource: Digital Video: vice-based search and recommendation. Three Screens & Beyond | Parks Associates

The opportunity for consumers to engage in video experiences beyond the set-top box will increase by a magnitude of about three from 2011 to 2015. Unit sales of connected consumer electronicsincluding smartphones and tabletswill grow from more than 640 million units in 2011 to nearly 1.8 billion by 2015.

Unit Sales of Connected CE Products

(Millions of Products Sold Annually, U.S.)
2,000

Millions of Units (#M)

Digital Media Receivers Connected Game Consoles Connected Blu-ray Players Smart TVs Tablets Smartphones

1,000

2011
Parks Associates

2012

2013

2014

2015

Source: Digital Video: Three Screens & Beyond | Parks Asso The Data-driven Video Discovery Evolution | A Parks Associates whitepaper developed for Digitalsmiths

Frequency of Video Consumption by Device

Already, the use of non-TV devices for video is substantial. Unit sales of smartphones and tablets will account for nearly 80% of all video-centric connected CE sales over the next five years, so their role as video viewing and interactive devices will increase significantly in that time. In addition, sales of products such as smart TVs, connected Blu-ray players, game consoles, and digital media receivers (Apple TV, Roku, etc.) will grow to more than 360 million units by 2015. These fixed consumer electronics will reshape the way in which video is accessed and viewed. The use of connected consumer electronics for video has already impacted consumer attitudes toward search, recommendations, and advertising. Consumers find content is easier and faster to locate on tablets and smartphones than on computers and televisions. Consumers favor the tactile nature of portable devices. They can easily swipe through a menu of options to select programming, rather than relying on a mouse or a remote control and series of clicks. Consumers also respond with higher satisfaction to the presentation of advertising on tablets and smartphones, where the ad load is smaller and consumers have a better chance of seeing relevant ads and can easily engage further with the ad message if so desired. The rise of portable and mobile devices as companion devices in tandem with the TV-viewing experience will forever change how consumers interact with video content, on a TV set and on other viewing devices. Second-screen activities occurring concurrent to television viewing promise new and emerging roles for mobile devices:
0 15 0 30 15 30

Consumption by Device
(Average Hours per Week, U.S. Broadband Households)

(Average Hours per Week, U.S. FrequencyHouseholds) Broadband of Video

TV set

Computer

Tablet Smartphone

Source: Digital Video: Three Screens & Beyond Parks Associates

TV set

Computer

Tablet Smartphone

Source: Digital Video: Three Screens & Beyond Parks Associates

Satisfaction with Viewing Experience on Di erent Devices: TV, Computer, Viewing Experience Satisfaction with Tablet, Smartphone
Ease in nding aerent Devices: on Di program to watch Length of time it TV, Computer,takes to nd a program to watch Tablet, Smartphone Less intrusive advertising Ease in nding a program to watch On Length of time it takes to nd a program to watch a Tablet Less intrusive advertising

On a Smartphone On a Tablet On On a a Computer Smartphone On TV On a a Computer

0% 30% 60%

Complementary information devices capable of presenting show-related information while the program is airing; Search and time-shift video-scheduling devices; Alternative remote controllers; and Social tools, used by the viewer to interact with a social network site during a programs airing.

On a TV Percentage of U.S. Consumers Rating High Satisfaction (%)

Source: Digital Video: Three Screens & Beyond | Parks Associates

0%

30%

60%

Percentage of U.S. Consumers Rating High Satisfaction (%)

www.parksassociates.com | All rights Parks Associates Source: Digital Video: Three Screens & Beyond | reserved.

Second-screen Activities While Watching TV

Tablet Owners
Search show-related information while watching TV Use app to check TV listing and schedule DVR recording Share your comments through social networks while watching TV Use app as remote control for TV or set-top box Use a TV app from your pay-TV service provider to access certain pay-TV content
0% 11% 22% 33%

Smartphone Owners

Percentage of Product Owners (U.S.)

Source: Consumers and Cloud Media | Parks Associates

The Case for Data-driven Video Discovery

Video Consumption Attitudes and Behaviors
The variety of choices for consumers in both video content and viewing devices presents challenges to service providers, consumer electronics manufacturers, can content owners. Among the chief questions they must answer: I often end up watching whatever I and nd that looks interesting How do we maintain our value and prominence as primary distribution channels when consumers have multiple options I often channel surf or look for interesting videos to for viewing content? watch online
At a time when consumers are selecting it is free I watch a lot of video from the Internet becausecomplementary viewing and information experiences while watching video, how do we provide these experiences while maintaining our brand? I often watch the online videos that someone has If consumers are tuning out recommended to me messages, how do we make the ads more relevant and valuable to traditional advertising consumers and advertisers? I watch video to kill time

(Percentage of U.S. Broadband Households)

I watch For media stakeholders, migrating viewers to enhanced video search and recommendation capabilities that are agnostic to video when Im waiting for somebody or something both product and content source is a critical component in addressing the challenges of a widely fragmented audience. The I watch many shows because my friends or family wanted ability to provide enhanced personalization through search and recommendation features is essential to improving viewer to see them engagement (i.e., the time a viewer spends on a particular site). These tools aid the customer in finding relevant content and 0% 20% 40%
can present ads during viewing that the consumer finds meaningful rather than intrusive.
Source: Digital Video: Three Screens & Beyond | Parks Associates

Source: Consumers and Cloud Media | Parks Associates The Data-driven Video Discovery Evolution | A Parks Associates whitepaper developed for Digitalsmiths

Video Consumption Attitudes and Behaviors

(Percentage of U.S. Broadband Households)
I often end up watching whatever I can nd that looks interesting I often channel surf or look for interesting videos to watch online I watch a lot of video from the Internet because it is free I often watch the online videos that someone has recommended to me I watch video to kill time I watch video when Im waiting for somebody or something I watch many shows because my friends or family wanted to see them
0% 20% 40%

Source: Digital Video: Three Screens & Beyond | Parks Associates

An effective video search and recommendation solution will include the following elements:
The ability to evolve as it learns more about a viewers The solution needs to work on multiple devices in tastes and habits over time: Viewer habits change as conSatisfaction with Viewing a seamless and consistent manner. For example, the Experience on Di erent Devices: sumers age, marry, and have children. As tastes for programsystem must deliver a consistent experience regardless TV, Computer,of the various mobile operating systems, screen sizes, Tablet, Smartphone ming change, so too should recommendation solutions, ensuring that the most-meaningful content is suggested. and resolution capabilities on which the video displays. Ease in nding a program to watch Length of time Also, to nd a program to watch The capability to evolve recommendations by blending it takes the solution needs to account forand tie seamlessly toexisting operator-deployed services. A good Less intrusive more than one user profile: The solution needs to be aware advertising example of this are the many remote DVR services availof the context in which video viewing is taking place. Is the able today. An effective search and recommendation viewer watching alone, a Tablet family present? The way On or is the solution will enhance this experience but not needlessly in which the solution adjusts its suggestions based on a add additional steps in enabling one-touch recording. complete blending of all of the user profiles is important. Further, although mobile devices will drive many of the On a Smartphone The use of multiple resources to generate a recommenuse cases today, the solution needs to account for and be dation: The recommendation solution needs to rely on capable of rendering search and recommendation results multiple resources, such as metadata with show or actor from fixed consumer electronics such as game consoles, On a Computer information. Although this alone is effective in guiding a smart TVs, Blu-ray players, and alternative set-top boxes. viewer to genres or preferred programs, a holistic solution accounts for multiple sources of information, such as user-generated ratings. On a TV
0% 30%
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60%
7

Percentage of U.S. Consumers Rating High Satisfaction (%)

Source: Digital Video: Three Screens & Beyond | Parks Associates

For a service provider or content owner, there are distinct benefits to using a The Evolution of the Video-viewing Experience data-driven video search and recommendation solution:

STAGE Personalization: The STAGE 3recommendation solution Enhanced Search STAGE 1 and Recommendation: In this non-linear 2 search and
world of video choice, consumers are often scanning for con-

Broadcasters, is occurring. Is the search and recommendation occurring tent that looks interesting and open to enhanced search and content Broadcasters are Consumers are owners, and multichannel in control in control recommendation tools to guide them in their video-viewing in on behalf of just one user profile (solo viewing) or with the providers are control
options. Consumer behavior around video viewing doesnt reflect a passive sit-back experience but one where the consumer is an active participant in choosing what to watch. Engagement: The ability of a content owner or service provider to keep a viewer tied into the content for a longer period of time generates opportunities for new content choices and advertising inventory. entire family? How does it account for the individual taste of one viewer versus a combination of tastes, preferences, and the desire by parents to implement parental controls? New Advertising Inventory: By creating a new category of personalized content, the right solution opens up new advertising inventory opportunities to increase incremental

must be able to assess the context in which video viewing

revenues. Moving beyond traditional ad placements, the 19% of consumers are interested in a TV EveryIn 1964, the Beatles ability to develop sponsorships and relevant ad messagHeavy conCalls to Action: drew 73 million In presenting consumers with relevantVoD users far where o ering, where more satis eding through consumer profiles increases the value proposiwith they can watch TV viewers to the tent, service providers have a significantly higher chance of provider their service tion for brand advertisers. A high percentage of consumers programming on a Ed Sullivan Show driving the consumer to making choices for services such as smartphone or computer are receptive to receiving personalized TV and Internet ads video-on-demand or to start watching a newly discovered based on their viewing habits, product preference, gender, televisionseries.Associates Parks The service provider benefits from higher and age. transactional revenues for VoD, and content creators benefit from a larger audience size.

Comfort with Seeing Personalized Advertisements Based On...

50% % of Respondents

TV

Internet

25%

0%

Your TV viewing habits

The products & services youre shopping for

Your gender

Your age

Your level of education

Source: Consumers and Cloud Media | Parks Associates

The Data-driven Video Discovery Evolution | A Parks Associates whitepaper developed for Digitalsmiths

An Introduction to Digitalsmiths Seamless Discovery

The explosion of video content and entertainment options has created an ever-expanding consumer demand for more intuitive and intelligent search and recommendation tools. Next-generation solutions, such as Digitalsmiths Seamless Discovery, address this need with powerful new approaches and, in the process, provide the first true discovery experiences for individual viewers across the screens and devices they prefer.

For service providers, CE manufacturers, content owners, and advertisers, greater personalization and reliability have deep and immediate benefits:
For consumers, the results are dramatically increased levels of accuracy and personalization in terms of content and entertainment recommended based on their individual preferences, viewing habits, and even the likes of their social peer groups. They can enjoy more of the content they appreciate and be served up video and entertainment options that more instantly engage them without the time, effort, and low satisfaction levels traditionally associated with video search processes or tools. For service providers, consumer electronic manufacturers, and content owners, the personally relevant recommendations of Seamless Discovery usher in a new era of control and opportunity. The accuracy and immediacy of the recommendations to each individual represent a fundamental shift to their business opportunities as a whole, as Seamless Discovery creates clearer pathways to growing audience, increasing engagement time and reclaiming viewer loyalty. For advertisers, the ability for Seamless Discovery to attract and, in essence, glue consumers closer to content delivers the reliability and accountability of viewership needed to expand their targeted advertising initiatives.

Contributed by Digitalsmiths

The data-driven video search and recommendation approach of Digitalsmiths Seamless Discovery also ensures that over time the accuracy, relevance, and value to viewers and media stakeholders will only increase. As more data and data sources are continually converged into a user profile, the viewer sees even more engaging content matches and suggested entertainment options. The fluid integration of multiple data sources and the ability of these to quickly blend together immediately and effortlessly become a critical point of difference in how the solution continues to drive accurate recommendations and build consumer confidence and engagement.The broad choices of video content across a highly fragmented viewing device environment have elevated the need and urgency for content owners and creators and service providers to offer a more holistic and reliable search and recommendation approach in order to maintain greater value and control in the marketplace.

www.parksassociates.com | All rights reserved.

An Introduction to Digitalsmiths Seamless Discovery

The promise of a true discovery experience that can deliver accurate and personalized recommendations has been long viewed as a future ideal. Media stakeholders have envisioned the many possibilities for their end users and bottom lines through such a solution even though they have not seen, until now, the technology platform to clearly deliver them. With the arrival of Digitalsmiths Seamless Discovery, these perspectives will quickly shift as service providers, consumer electronics manufacturers, and content owners analyze and deploy this next-generation search and recommendation solution. The search and recommendation space is cluttered, confusing, and filled with a variety of technology options and

Contributed by Digitalsmiths

alternatives. These conditions will no doubt increase as the industry is well aware of the business opportunity at hand. However, clarification will arise in the months ahead as Seamless Discovery defines a standard for the search and recommendation experience to which other solutions will be compared.

The differentiation of the Digitalsmiths Seamless Discovery approach is evident in the following key factors:
Personally relevant and accurate results: Digitalsmiths Seamless Discovery has the ability to blend the profiles and attributes of the individual viewer(s) and the respective viewing context at that moment and creates unprecedented personalized recommendation accuracy and relevance. Deeper content connections: Digitalsmiths Seamless Discovery integrates more diverse and distinct data points from both the respective pool of media options and the particular individual seeking content to generate matches that are more immediate and meaningful. The solution has proven that service providers, connected device manufacturers, and content owners are able to connect and engage the viewer more quickly and over longer periods of time. The ability to reclaim and repurpose viewer engagement: Digitalsmiths Seamless Discovery provides game-changing tools for service providers, connected device manufacturers, and content owners seeking to monetize their video assets and leverage them to reverse brand or viewing erosionwhether this is through higher transactional revenues from VoD, increased advertising inventories and tactical marketing opportunities, or greater consumer satisfaction and loyalty for the source of the entertainment and viewing recommendations.

Throughout time, major technology leaps have opened the way to new eras of discovery, whether it is more highly graphical electronic program guides or links to social networking. This historical trend has reasserted itself once again with the introduction of Digitalsmiths Seamless Discovery. It is expected to create higher satisfaction and enjoyment for media consumers along with a period of much greater control and reliable returns for businesses providing those media experiences.

10

The Data-driven Video Discovery Evolution | A Parks Associates whitepaper developed for Digitalsmiths

About The Author

ABOUT DIGITALSMITHS
Digitalsmiths is the technology leader in the rapidly growing segment of video search and recommendation. Digitalsmiths Seamless Discovery, has revolutionized the accuracy and ease with which end-users find relevant, personalized entertainment across multiple channels and devices. Digitalsmiths has become a competitive edge and trusted resource for customers such as Warner Bros, Paramount, Technicolor, Turner, the NBA and NASCAR. www.digitalsmiths.com

ABOUT PARKS ASSOCIATES

Parks Associates is an internationally recognized market research and consulting company specializing in emerging consumer technology products and services. Founded in 1986, Parks Associates creates research capital for companies ranging from Fortune 500 to small start-ups through market reports, primary studies, consumer research, custom research, workshops, executive conferences, and annual service subscriptions. The companys expertise includes new media, digital entertainment and gaming, home networks, Internet and television services, digital health, mobile applications and services, consumer electronics, energy management, and home control systems and security. www.parksassociates.com | 972.490.1113 | [email protected]

Attribution:

Authored by Kurt Scherf Published by Parks Associates 2011 Parks Associates Dallas, Texas All rights reserved. No part of this book may be reproduced, in any form or by any means, without permission in writing from the publisher. Printed in the United States of America.

Disclaimer:

Parks Associates has made every reasonable effort to ensure that all information in this report is correct. We assume no responsibility for any inadvertent errors.

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