Conviva’s Q2 2019 State of Streaming report reveals new insights into industry shifts and viewer behavior, as well as further exploration into trends highlighted in previous reports. Streaming recorded triple-digit increases in year-over-year viewing, with marked improvements in quality. 2019 is the year of industry consolidations, transitions, and additions of highly anticipated new entrants poised to compete for market share. As competition mounts for streaming providers, imperative to their success will be visibility and actionability upon every aspect of the viewer experience including consumption and quality of content and ads, as well as the influence of social media. In Q2 2019, key takeaways Conviva measured include:
- Explosive Viewing Growth: Streaming viewing hours more than doubled with 130% growth year-over-year overall. The industry also achieved significant quality improvements including 42% less buffering.
- Hottest Streaming Markets: While major markets dominate overall streaming consumption in the United States, Dallas, Atlanta, and Phoenix are the top 3 cities when consumption is normalized by population. An even bigger surprise: tech hubs of Boston, New York, and San Francisco lag significantly.
- Streaming Ad Crisis: Ad buffering is the silent engagement killer. The difference between a viewer making it past the 5% mark in the stream or not is the difference between 0.40% and 1.59% ad buffering on average – a small difference with a critical impact
- Time to Retire the 30-Second Ad?: Streaming ad length still averaged 24.87 seconds in Q2 despite dramatic drops in audience with 20+ second ads. For pre-roll, only 19.0% left during 10 second spots versus 32.6% for ads 20+ seconds. At mid-roll, that delta increased: 29.1% for 10 second ads and 50%+ for ads of 10-20 or 20+ seconds.
- Device Wars Rage: The connected TV category led in growth, up 143%. This was largely driven by Roku with 173% growth and an overall 43% share of connected TV viewing. Amazon Fire TV was up 145% in viewing with an 18% share. Apple TV was up 129% to account for 10% share.
- Live Bests Video-on-Demand in Quality: The hyper focus on getting it right for live streaming resulted in 13.9% less buffering and 25.6% faster start time than on-demand content, with near equal average picture quality
- Video Rules Social Engagement: Facebook and YouTube saw 15% more videos posted as news media led with the largest growth in average total video views, up 197% year-over-year. Entertainment led in growth of views per video, up 99%
Conviva is the real-time decisioning platform for optimized streaming media. More than 250 industry leaders – 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. Conviva’s data is collected using proprietary sensor technology, which is embedded directly within streaming video applications measuring across content and ads to analyze more than a trillion real-time transactions per day for its customers. In this report, the year-over-year data from Q2 2019 as compared to Q2 2018 was normalized based on Conviva’s customer base.
THE HEIGHT OF STREAMING
Despite critics’ insistence that market saturation is imminent, overall growth of streaming consumption has continued to increase. The number of viewing hours more than doubled between Q2 2018 and Q2 2019, with gains of 130% overall. This growth was led by connected TV viewing, as TV posted 28.8 minutes of watch time per play for a massive 143% year-over-year increase in viewing hours. While the onthe-go nature of mobile viewership means those devices command fewer minutes per play – just 12 in Q2 2019 – mobile viewing still grew more than 2x with viewing hours up 109% as compared to the previous year. While PCs have generally fallen out of favor for streaming in relation to connected TVs and mobile devices, they captured 15.1 minutes per play and still grew significantly for a 75% increase in viewing hours. In addition to the overall growth in viewing, peak concurrent plays (PCP), the real-time height of simultaneous active viewers at any given second, broke records four times over in Q2 2019. The progressive record-breaking moments were recorded on April 15, April 29, May 13, and May 20 (all dates reflect UTC). These peaks coincided with streaming content that inspired fear of missing out, near-real-time global viewing, including the final season a global cultural phenomenon dramatic series. The Q2 2019 record high was 67% larger than Q2 2018’s peak during the group stage of the World Cup, which was itself 118% larger than the Q2 2017 peak. To meet and exceed viewer expectations with seamless, high-quality streaming experiences at peak demand is a non-trivial achievement that reinforces just how much every second of every stream matters. Compelling content is only part of the equation. To deliver at this scale requires visibility and control as well as granular viewer intelligence for streaming providers and the entire ecosystem. Their focus and the ability to execute is evident in the quality improvements Conviva’s customers achieved across the board in Q2, even during the highest volume periods.
STREAMING IN THE STATES
It’s no surprise that major markets dominate overall streaming consumption in the United States. At number one in sheer tally of United States viewing, the hours New York watched in Q2 are equivalent to every person who has ever finished the New York City Marathon watching every single episode of Friends – more than twice over. However, when total consumption is normalized based on population size the results are eye-opening. Once the playing field between the top 15 markets was leveled, New York, while 1st in total consumption, ranked 14th in consumption when normalized by population alongside fellow tech-centric markets of San Francisco in 13th and Boston in dead last of the top 15 markets. Conversely, Dallas, which ranked behind New York and Los Angeles as a top 3 market in terms of total consumption, claimed the title as top market for streaming with consumption 44% higher than would be expected for its population size. Atlanta, 5th in overall consumption, over-indexed by 32% to take second, while Phoenix, 8th in overall consumption over-indexed by 23% to take the silver for top streaming markets. All of the top 15 markets saw triple-digit increase in viewing hours. These ranged from the 170% growth Minneapolis/Saint Paul tallied as it leapfrogged the Seattle, Boston, and Orlando markets in overall consumption, to 120% growth netted by the San Francisco metro which saw the largest drop in overall consumption as it was overtaken by Philadelphia, Phoenix, and Houston. Even at number 10 in overall consumption in the United States, the San Francisco metro racked up Q2 hours in excess of those if every visitor to Alcatraz last year watched every single episode of Game of Thrones.
THE AGE OF ADVERTISING
As the increase in consumption shows, viewers are making the transition to streaming, and ad dollars are slowly following suit. The challenge with ads for streaming is that they are different from and predicated on a much more complex delivery system than ads for linear TV or for digital display (like a banner on a website). Looking at ad quality, still prevalent are the 11 ad failure points Conviva identified across the ad delivery chain. These result in as high as 47% of expected ad opportunities unfilled because of tech failures which include start failures and delays, buffering, and playback errors that result in missed ad exposure and dollars. Failures are amplified and particularly impactful considering the multiplier effect across subsequent ad breaks if a viewer tunes out due to a poor ad experience. In 2019, with new platforms vying for consumer dollars, focus on the entirety of the viewing experience will be an important factor in continued retention and monetization of viewers.
STREAMING AD CRISIS
Ad buffering is the silent engagement killer, and has long been a blind spot for streaming providers left to wonder why their audience abandoned during an ad. When content or ads are viewed in isolation, it’s easy to miss the big picture. Visibility throughout the stream, from pre-roll on to completion, reveals buffering is a continuous threat to engagement. In Q2, for viewers who didn’t even make it through 5% of their content, pre-roll ads tallied an average rebuffering ratio of 1.59%. When a viewer did make it past that 5% threshold, an indication they are engaged with the content, pre-roll ad buffering was 0.40% on average. Even a seemingly small decrease in average pre-roll ad buffering can result in large increases in content engagement and monetizable viewing time. Overall, the average pre-roll ad buffering ratio was 1.09% in Q2 2019. While many ads see little buffering, the averages take into account many cases of individuals who see high ad buffering, which in particular impinges viewer engagement.
RIGHT PLACE, RIGHT TIME
Ad quality has a clear impact on engagement, as does the length and placement of the ad. With an average ad length of 24.87 seconds, many streaming providers are still close to the 30-second commercial that set the standard for traditional TV. As competition mounts and viewer attention wanes, streaming providers must continue to test placement within programming and trial new business models. The goal to reduce fatigue and frequency means increasingly scarce inventory with which to ensure maximum engagement and monetization of every consumer touchpoint. With less time and fewer ad breaks to convert a viewer into a purchaser, the quality of each ad is paramount to carry out the promise of streaming to match the perfect ad to the perfect viewer. With comprehensive data about the relationship between ad placement, length, and quality, streaming providers can optimize their ad revenues without such adverse impacts on engagement. For pre-roll ads, ads less than 10 seconds resulted in 19.0% drop off while ads 10-20 seconds in length tallied 22.9% and those longer than 20 seconds saw 32.6% drop. For mid-roll ads, even ads 10 seconds long resulted in a dramatic 29.1% drop while slightly more than 51% of the audience dropped whether ads were 10-20 seconds or more than 20 seconds. With each additional break, these relative portions of the audience are lost, along with the opportunity to monetize. When this is compounded across each subsequent ad, the substantial impact means it is absolutely vital to find the right mix.
SCORING SCREENS
Whether on the couch for a night in, tuned in to pass the time during a long commute, or glued to the latest global happenings at work, both in and out of the home, streaming recorded significant growth across all devices. Consumption on connected TV continues to dominate with 54% share of all viewing hours in Q2 2019. Connected TVs also delivered huge improvements in quality with 48% less buffering, 6% better picture quality, and 34% less video start failures than the year prior. Among mobile devices, which commanded 23% share of viewing, iPhone saw the biggest growth at 114% with Android and iPad not far behind, up 110% and 97% respectively. Mobile also recorded significant quality improvements with buffering down 33%, picture quality improved 10%, and 20% less video start failures year over year. PCs accounted for just 14% share of viewing, but also improved their quality significantly with 34% less buffering, 22% improvement in picture quality, and 58% less video start failures than the previous year. Within connected TV’s 54% share, Roku saw 173% year-overyear growth to maintain its leadership position with 43% share of all connected TV viewing. Amazon Fire TV, up 145% in viewing to capture 18% share, maintained its second-place spot among connected TV devices. To round out the top three, Apple TV was up 129% to account for 10% share. While just shy of the top 3 with 9% share of viewing, Xbox delivered the most improved buffering, down 63% year-over-year to take the lead as the device with the least buffering at just 0.13% rebuffering rate. Leaders Roku and Amazon Fire TV improved 61% and 52% year-over-year to deliver buffering rates of just 0.21% and 0.16% respectively. A notable mention for Apple TV which continued to dominate on two key metrics to again boast the industry’s shortest video start time at 2.36 seconds versus 4.59 seconds for the connected TV category and highest bitrate, a proxy for picture quality, at 6.94 Mbps as compared to 5.34 Mbps for the category. It’s no surprise that the leaders have seen impressive growth in viewing as they continue to focus on the delivery of superior quality.
ESSENTIAL EXPERIENCE
Near-perfect experiences in streaming have become vital as viewers demand the same level of quality from their streams as they would expect with linear TV delivery. With the millions of potential combinations of factors that can impact the quality of the viewer’s streaming experience – devices, platforms, CDNs, ISPs, servers, locations, etc. — providers are required to employ increasingly sophisticated data as delivery is no longer a one-to-many broadcast but rather a highly personalized experience. These advances have proven effective as overall quality continues to improve with large reductions in video start failures and buffering – when the video pauses during playback so it can reload – along with modest improvements in video start time and picture quality as measured by bitrate. Overall, viewers experienced 35% less video start failures, down to only 1.83%, and 42% less buffering, as the average rebuffering ratio fell to 0.46% in Q2 2019 from 0.79% in Q2 2018. Video start time saw a small 1% improvement to 4.06 seconds, while picture quality increased 10% to 4.59 Mbps. Conviva has shown time and again through objective analytics that quality and engagement are clearly linked. Viewers are increasingly unwilling to continue viewing a program if the experience is poor. While there are multiple potential points of failure driving this behavior in combination, each has a significant impact. For example, small decreases in buffering result in much longer average play times. In Q2 2019, a reduction in rebuffering ratio from the 0.79% average measured in 2018 to 0.46% in 2019, results in a 12% increase in engagement. This factors directly into critical business outcomes like churn reduction. For publishers to monetize effectively, whether with subscribers or with advertising, it is crucial to maximize engagement. Quality overall has continued to trend up over the last decade, as viewers grow increasingly sophisticated and impatient. As the industry balloons and competition mounts, it has never been more imperative to improve the viewer experience.
ON-DEMAND ONSLAUGHT
While live viewing saw moderate 93% year-over-year growth across devices with an impressive average of 26.4 minutes per play, video on demand viewing grew much faster than live with a 155% increase year-over-year clocking a more modest 17.1 minutes per play. While PC led, up 157% in viewing growth among devices for video on demand, this was starkly contrasted against just 19% growth in live viewing on PCs. Similarly, but in more measured contrast, mobile saw 122% growth in ondemand viewing and just 86% increase in live. Connected TV saw strong growth for both categories, but video on demand edged slightly ahead of live viewing at 149% and 133% growth respectively. Video on demand now accounts for 66% of all viewing hours, up from 59% the year prior. While mobile devices command near equal share of live versus on-demand viewing at 22.8% and 23.7%, PCs garner more share of on-demand viewing at 16.5% versus 12.6% while connected TVs command more share of live at 56.5% versus 53.1%. Notably, Roku accounted for the majority of all live viewing via connected TV with 53.8%. As the industry has recognized the importance of getting it right for live content, the streaming ecosystem has continued to invest in preparations, redundancies, and real-time data intelligence. This hyper focus has ensured that the overall quality of live streaming continues to improve, in fact it exceeded quality delivered for on-demand programming for buffering, with 13.9% less, and video start time, at 25.6% faster, with near equal average picture quality. The main focus for improvement of live content should be video start failures, which on-demand content was nearly 70% less likely to experience.
BURGEONING BUNDLES
Content aggregators (aka virtual MVPDs) in the United States like DirecTV, Hulu, PlayStation Vue, and Sling, and publishers both saw triple-digit growth in viewing year over year. Market dynamics, including consolidation and the increase of hybrid business models, suggest there is even more room for growth and innovation as the lines between business models blur, especially as heavyweights including Disney, Apple, and WarnerMedia launch new, yet to be fully defined, streaming services in 2019. The growth gap between publishers and aggregators closed even more in Q2 than previous quarters, but content aggregators continue to best other services in terms of consumption as well as quality, with viewing hours up 168% year over year. Not to be outdone, publishers in the United States also recorded impressive growth of 137% in viewing hours year over year. The overall growth in consumption is indicative of headroom for existing streaming services alongside future entrants. Increased competition will also spur innovation and, as the industry saw with hybrid models with subscription and ads, more convergence in business models. Content aggregators continue to outperform other services in the United States in quality with 64% less buffering at 0.23% as compared to 0.63%, 9% higher picture quality at 5.10 Mbps versus 4.69 Mbps, and 62% fewer video start failures at 0.82% as compared to 2.16%. For content aggregators, video start time increased 10% to 4.23 sec, however, this might be an acceptable tradeoff for the other improvements in quality as buffering improved 47%, bitrate improved 5%, and video start failures improved 11%. For publishers in the United States, video start failures increased 19% but buffering was improved 26% as bitrate improved 7% and video start time improved 16%.
STATE OF SOCIAL
Streaming providers have turned to social media in droves to drive both viewer retention as well as conversion to owned and operated channels. This is evident in the 15% increase in total number of videos posted on Facebook and YouTube in Q2 alone. The providers that make the most of these and other premium social channels utilize these resources to test market, determine what resonates to build better content, promote their catalog, monetize with branded content on social, and to acquire audiences. As more businesses reap the successes that social media bolster, there is room for much more growth on social and improvement as they optimize strategies and learn what works best engage their audiences. With the increase in videos posted, average total views predictably increased as well, while average views per video also increased significantly. Facebook records a view when a video plays for at least three seconds, while YouTube tallies a view at 30 seconds. For industry segments, including sports, brands, media, and entertainment, all saw significant gains year over year. Media led with the largest growth in average total views, up 197% year over year, followed by brands up 129%, entertainment up 90%, and sports up 68%. For views per video, entertainment led in growth, up 99%, but close behind were sports and media with 96% and 95% increases respectively, while brands trailed slightly, up 63%. Despite growth in viewing, engagements – which is the measure of comments, shares, and reactions – were down as is the trend in social media overall. For Facebook and YouTube, average engagements per video fell 16% year over year. As social platforms prioritize human interaction as well as monetize and grow their value as video distribution platforms, engagements will likely continue to fluctuate. This is not surprising given the highly personalized human interaction and topical nature of social, meaning that fluctuation will continue to be a meaningful factor in reporting metrics.
THE STORIES OF ENTERTAINMENT
Instagram Stories has become an increasingly popular marketing platform for the entertainment industry. TV networks have grown more adept at utilizing the platform to promote their lineup of shows, while TV shows have turned to stories as a tool to reinforce the personal affinity viewers have with their program. On average, entertainment accounts posted 58% more stories than the previous year, with an average of 2.7 stories per week. Stories have also increased in length with frames per story up 9% for an average of 7.3 frames per story in Q2. Even with the increase in stories posted and longer stories, viewers were more likely to be engaged for the length of the story, with completions up more than 12% year over year to 83% completion rate in Q2. As the entertainment industry grows more sophisticated with social media, creation of personal affinity has proven to be a winning strategy for Instagram Stories. Networks see great success when they connect with audiences via takeovers, with stars left in charge to post stories for a limited time. Likewise, TV shows can encourage a personal relationship with the fans by providing access to the actors and behind the scenes content. Because viewers tend to feel much closer to TV shows than TV networks, it’s no surprise that while average completion rate was in the same ballpark, at 83% for shows versus 75% for networks, TV shows had nearly 3x the reach rate (the percentage of an account’s followers who viewed their story) as TV networks at 5.5% versus 1.9%. If the rise of influencers has highlighted anything, it’s that people want to engage with people.
CLOSING THOUGHTS
Every year since its inception, streaming has posted impressive growth, but in 2019 streaming is coming into its own. The TV industry of yesterday was built on inflexible standards, antiquated measurement, and limited data. Streaming offers the vast potential of a rapidly maturing market, flexibility, targeting, and data to understand the audience like never before. Industry pioneers and leaders such as Hulu, HBO, ESPN, and YouTube continue to grow, make strides, innovate, and have focused on their audience to understand and optimize their streaming services for years. Significant new entrants will find untapped potential as they attract new subscribers and grow the share of wallet to the benefit of the streaming industry overall. With the continued growth of streaming, the industry is anything but saturated.