The State of Traditional TV: Q2 2016 Update

nielsen-traditional-tv-weekly-viewing-trends-among-18-24-q12011-q22016-oct2016[By MC Editor, JC Lupis] The latest quarterly TV viewing figures from Nielsen are in, giving us now 5-and-a-half years’ worth of quarterly data on Americans’ traditional TV viewing habits. It’s well established at this point that youth as a whole are watching less traditional TV. Does this latest study [download page], covering Q2 2016, have anything new to offer by way of trends? Let’s take a look..

NOTE: MarketingCharts’ newest study, the 3rd annual Advertising Channels With the Largest Purchase Influence on Consumers report, provides insights as to how TV ads rank as a stated purchase influencer among Millennials and other demographic groups. Another recent study – 2015 US Media Audience Demographics – is available, offering a look at the composition (by age, income and race/ethnicity) of various media audiences, including broadcast TV, cable TV, and online TV viewing.

Before getting to the data and trends, a quick note on methodology. The below data in large part concerns “traditional TV” viewing, which averages out all live and DVR/time-shifted TV viewing (such as video-on-demand) during each quarter. As such, it is a measure of legacy TV viewing on set-top boxes, and does not include viewing via connected TV devices. While DVR and time-shifted TV viewing is growing, it still represents only a fraction of total “traditional TV” viewing. For example, among the total 18-24 population, weekly live TV viewing averaged 13 hours and 39 minutes per week in Q2 2016, while DVR and time-shifted TV viewing averaged 1 hour and 26 minutes per week.

Also, below the analyses of viewing trends, this article also contains:

  • Data concerning changing habits as Millennials age, from the Q4 2015 Nielsen report;
  • Research from another recent Nielsen study (the Comparable Metrics Report) that looks at audience sizes and consumption across various media channels;
  • Income and race/ethnicity data outlined in recent Nielsen studies; and
  • Results from other sources that compare linear and streaming TV viewing.

Now, on to the data…

Nielsen’s most recent “Total Audience Report” indicates that Americans aged 18-24 watched a weekly average of 15 hours and 5 minutes of traditional TV during Q2 2016. That represents a year-over-year decline of roughly 1 hour and 20 minutes per week. In other words, 18-24-year-olds as a group went from watching about 2 hours and 20 minutes per day during the second quarter of 2015 to about 2 hours and 10 minutes per day during Q2 of 2016.

The year-over-year decline in traditional TV viewing among the 18-24 population was less than seen in Q1, and was the smallest decline since Q4 2013. Of course, while the declines may be easing, they’re still occurring.

In sum, between 2011 and 2016, Q2 traditional TV viewing by 18-24-year-olds dropped by more than 9 hours per week, or by more than one-and-a-quarter hours per day. In percentage terms, Q2 traditional TV viewing by 18-24-year-olds was down by about 8.2% year-over-year and has now fallen by 38% since 2011. In other words, in the space of 5 years, almost 40% of this age group’s traditional TV viewing time has migrated to other activities or streaming (a lot more on that below).

The interactive chart below offers a visual presentation of traditional TV consumption figures for each age bracket, showing how this type of TV viewing is trending down (sloping to the left) for younger demos, while remaining steady if not slightly increasing (sloping to the right) for the oldest group.

 

A couple of notes regarding the chart: a vertical line chart is used there because it better portrays the varying trends among age groups than a typical horizontal line chart. Also, the trends are exaggerated by making the horizontal axis range 10-55 hours per week rather than 0-55 hours per week.

Here’s what the data looks like as a horizontal line chart with no vertical axis limits applied:

nielsen-traditional-tv-viewing-by-age-q12011-q22016-oct2016

The above figures are averaged among the entire population, meaning that they include those Americans who don’t watch traditional TV. That number is more prevalent among youth: Nielsen’s recent “Comparable Metrics” report indicates, for example, that in Q1 2016, TV’s weekly reach was just 78% among 18-34-year-olds, well below the 88% average for all adults.

Interestingly, the drop-off in viewing among 18-24-year-olds is just as large when looking just at persons in TV households (TV viewers). Among 18-24-year-old viewers, the Q2 2016 average of 76 hours and 55 minutes per month was down from 85 hours and 34 minutes per month during Q2 2015, representing a drop of close to 10 hours per month. On an encouraging note for the traditional TV industry, that drop was smaller than the 11-hour decline seen in Q1 2016. Still, the per-day decline among 18-24-year-old viewers of around 17 minutes is larger than the viewing drop among the 18-24 population overall (close to 12 minutes per day). Losing traditional TV viewing due to a decline in reach (with cord-cutters/cord-nevers likely to blame) is one thing; losing consumption due to less viewing among TV users is another.

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    What About Other Age Groups? (Updated Data)

    Of course, there are other age groups of interest when analyzing traditional TV viewing, including teens (a potential leading indicator) and older Millennials (aged 25-34), who might be more apt to watch traditional TV as they round into life stages such as parenthood and home ownership. (More on that coming.)

    Looking at the latest Total Audience Report, the data indicates that:

    • Teens (12-17) watched 14 hours and 18 minutes of traditional TV per week in Q2, a rather large 13.5% drop year-over-year and a 36.2% contraction over the past 5 years;
    • Older Millennials (25-34) watched 20 hours and 56 minutes per week in Q2, a 5.5% decrease year-over-year (up from 3% in Q1) but a more expansive 25.6% drop over 5 years;
    • Gen Xers (35-49) watched 29 hours per week, just a 1% decrease year-over-year but a 12% decline over a 5-year period;
    • Adults aged 50-64 watched 40 hours and 18 minutes per week, representing a 1% increase year-over-year, but a 1.9% drop over 5 years; and
    • Adults aged 65 and older watched 48 hours and 38 minutes per week, up 1.2% from the previous year and up by 5.1% over 5 years.

    In other words, what a difference 5 years makes! If you’re looking for one chart that says it all (the TL:DR version), here it is:

    nielsen-traditional-tv-viewing-trends-by-age-group-in-q2-2016-oct2016

    Those results demonstrate the age-related skew in traditional TV viewing, with declines easing off with each age bracket and turning into viewing increases among the oldest age group. To wit, the 65+ group has only recorded two quarters (in Q4 2014 and Q1 2015) of declines in traditional TV viewing in the past 5 years.

    Overall, live TV consumption by adults averaged 4 hours and 9 minutes per day in Q2, down just 2 minutes from Q2 2015, but a larger 10-minute-per-day drop from Q2 2014. Clearly, those modest declines mask the larger drops among younger age groups.

    How Does Traditional TV Measure Up With Streaming Video? (Updated Data)

    So yes, 18-24-year-olds are watching less traditional TV, likely due to increasing consumption of over-the-top video.

    It’s worth remembering that Q1 2016 marked the first time that streaming video services were in 50% of US TV households. That was up 8% points from just a year earlier. By contrast, DVR penetration had remained flat at 49-50% for the prior 6 quarters.

    With that in mind, reports have been out suggesting that streaming video has supplanted linear TV as the dominant form of video consumption among youth:

    • A survey from Deloitte finds 19-25-year-olds estimating that they spend 39% of their TV content time watching streaming video as opposed to 29% watching live programming, with streaming (31%) also ahead of live viewing (28%) among 26-32-year-olds; and
    • A Defy Media study [pdf] similarly suggests that 13-24-year-olds are spending more time with “free” and subscription digital video than with TV.

    While these data points are interesting, a trended perspective would show the extent to which streaming is or is not catching up with linear TV. In a recent custom research project conducted on behalf of a client, MarketingCharts reached out to several industry sources to obtain such a perspective of Millennials’ viewing habits.

    Data provided by SSRS from its National Media & Technology Survey (NMTS) offer such a viewpoint. Narrowing the results from its quarterly survey of close to 30,000 households down to self-reported viewing hours among 18-34-year-olds (a sample ranging from roughly 1,350-2,000 per quarter), the below chart created from SSRS data gives another perspective on the TV versus video consumption debate.

    SSRS-Millennials-Weekly-Viewing-Hours-Linear-TV-vs-Streaming-Q2-2013-Q4-2015-Apr2016

    While SSRS’s figures with respect to linear TV viewing don’t show the dramatic drop seen by Nielsen (likely due to methodological differences, including – potentially – SSRS’ removal of significant positive outliers), they clearly show a trend for streaming hours narrowing the gap with linear TV viewing. Indeed, while linear TV viewing had been flat at best, weekly streaming hours more than tripled between Q4 2013 and Q4 2015.

    This data seems to lend support to the notion that digital video is complementing more than replacing traditional TV, as total video hours continue to grow. The alternative view is, of course, that if almost 40% of youths’ traditional TV viewing has migrated to other activities, the most likely destination is streaming video. (And new data suggests that streaming is at least partly to blame for Millennials’ decisions to forego pay-TV.)

    What does Nielsen data have to say about streaming versus traditional TV? According to the data presented by Nielsen, traditional TV is still the dominant video consumption source. It’s also clear that measurement concerns persist, as its Comparable Metrics report notes the various video metrics included and not included in consumption counts. For example, smartphone and tablet video figures do not include content available through applications and the web where video is not the primary focus, such as Facebook. Even so, the methodology does include apps and sites where one might expect most long-form video consumption, such as Netflix and HBO GO… It’s worth keeping those disclosures in mind when looking at the following chart.

    (It’s also worth noting that Nielsen has just launched its digital content ratings, and will soon be rolling out its Total Audience measurement for more effective cross-platform comparisons.)

    nielsen-video-viewing-18-34-by-device-in-q1-oct2016

    Note that the above chart measures video consumption among users of each medium; those 18-34-year-olds who don’t watch video on their smartphones are not diluting the average. Were one to average these figures out among the total population (bearing in mind that this would dilute viewing time for digital devices to a greater extent than traditional TV), the gap would be greater.

    The online-offline comparison is obviously up for debate as Nielsen itself is in the thick of a vibrant discussion about total audience measurement, and that’s why the prevailing focus of this article is on trends within a single viewing source (traditional TV). Nevertheless, the above charts offer some insights as to why the industry is abuzz over digital video and not traditional TV. The following two charts from MarketingCharts’ report, US Media Audience Demographics, offer another reason.

    Here’s broadcast TV’s audience breakdown, by age:

    Experian-Broadcast-TV-Viewers-by-Age-2015

    And here’s the age breakdown of monthly online TV program viewers:

    Experian-Monthly-Online-TV-Program-Viewers-by-Age-2015

    (Note that these aren’t apples-to-apples comparisons, as they measure different base samples and viewing frequencies. They’re nonetheless illustrative of the demographic gap between TV audiences.)

    Whether or not one agrees that Millennials are a more valuable demographic than, say, Baby Boomers (this chart has something to say about that), the online TV viewing audience is probably the choice for most marketers today, if all of the hullabaloo about Millennials is to be trusted.

    (See the MarketingCharts report on media audience demographics for more data about the audience composition – age, household income and race/ethnicity – of broadcast, cable TV, and online video viewers, along with audience data for about a dozen other major online and offline media.)

    Nielsen’s Q1 2016 Comparable Metrics report (the latest available as of publication) don’t show a huge shift in viewing time from traditional TV to mobile devices. But there are other devices, as shown in the earlier chart above, that might be picking up the slack for Millennials: TV-connected devices. In Q1, TV viewers in the 18-34 bracket watched TV on average during just 4.8 days per week, about one day less than the 5.7 average among all adults. But 18-34-year-old users of TV-connected devices spent an average of 4 days per week with them, above the adult average of 3.5 days per week.

    In this case, TV-connected devices refers to DVDs, game consoles, multimedia devices and VCRs (and includes time spent playing games on game consoles), so it’s difficult to ascertain to what extent this relates to streaming video via multimedia devices. Still, the latest Total Audience Report indicates that adults (in general) spend more than half as much time with multimedia devices as they do with gaming consoles, suggesting that a good portion of the ~11 hours per week that 18-34-year-olds spend with TV-connected devices is spent watching video.

    The following are some other takeaways from the Comparable Metrics report specific to the 18-34 bracket:

    • Radio had the broadest reach of any platform (92.2%) of 18-34-year-olds during the average week in the Q1 period, while the smartphone (app + web) audience was larger than the TV audience (86.2% vs. 78.1%);
    • Weekly reach was higher for smartphone video (60.2%) than for PC video (28.1%) and tablet video (22.9%) for this demographic; although
    • Time spent by the total 18-34-year-old population was higher for PC video (153 minutes per week on average) than for smartphone video (41 minutes) and tablet video (28 minutes);
    • Among 18-34-year-old users of these various media, PC video (544 minutes per week) far outstripped tablet video (120 minutes) and smartphone video (69 minutes) in time spent; and
    • More than half (52.1%) of 18-34-year-olds used TV-connected devices during the average week in Q1 2016, with users averaging almost 11 hours a week with these devices.

    What Happens When Millennials Move Through Life Stages? (Not Updated)

    An argument can be made that youths’ media habits will change as they grow older and progress through life changes such as starting a family and owning a home. Twin pieces of research released by TDG back in 2013 illustrated this potential phenomenon. The first survey showed that few 18-24-year-olds living with their parents were “highly inclined” to get pay-TV once they struck out on their own, with 1 in 4 saying they were “highly disinclined” to do so. But, in a separate survey of 18-24-year-old broadband users who had moved into a non-college residence, TDG found only about 1 in 10 saying they had never signed up for a cable or satellite service after moving out on their own for the first time.

    Nielsen’s Q4 2015 Total Audience Report took a deeper look at the impact of life stages on Millennials’ media habits, segmenting 18-34-year-olds into three distinct groups: “dependent adults” (living in someone else’s home, mostly their parents’); “on their own” (living in their own home without children); and “starting a family” (living in their own home with children).

    Nielsen’s data showed that virtually all (97% of) 18-year-olds live in someone else’s home (or presumably in a dorm), while almost 90% of 34-year-olds live in their own home, about 3 in 5 with kids. (If nothing else, this is a solid argument for not treating Millennials as a homogenous group…)

    Comparing the technology ownership of these groups yielded some interesting results:

    • Dependent adults (those living in someone else’s home) are the most likely to have DVRs, DVDs, and PCs, though in each case penetration among those starting a family is higher than those living on their own without children; and
    • Millennials who are “on their own” have the greatest adoption of multimedia devices and subscription video-on-demand (SVOD), in each case by a fairly sizable degree.

    From those results, one could surmise that as Millennials get their own place, at least some drop DVRs and DVDs in favor of multimedia devices and SVOD services, while the opposite trend occurs when they have kids. However, it’s worth remembering that this data measures different segments of 18-34-year-olds, and doesn’t look at the same group as they grow older. It’s entirely possible that the Millennials examined who have kids are composed more of older Millennials who are simply more akin to Gen Xers in their media habits than the younger Millennials who don’t have children.

    Nevertheless, a similar pattern emerges when looking at pay-TV penetration (measured as service from an MVPD – wired cable, DBS or telco): use of these services was highest (88%) among dependent adults, falling to the lowest point among those who are on their own (72%), but then higher again among those who are starting a family (79%).

    The presence of children seems to have some impact on pay-TV penetration, as across all Millennial age brackets (18-24, 25-29, 30-34) penetration was higher among those living in their own with children than those living in their own home without children. Again, age may be a greater factor than the presence of children, as it’s difficult to separate these disparate factors.

    The pattern, though, translates into live TV consumption also. Looking at 18-34-year-olds’ weekly TV screen usage during Q4, Nielsen finds that live TV viewing averaged:

    • Slightly more than 2-and-a-half-hours per day for “dependent adults” (living in someone else’s home); but
    • Was almost half-an-hour less among those living on their own without kids (2 hours and 6 minutes per day); while
    • Soaring to roughly 3-and-a-quarter-hours per day among those living in their own home with children.

    Meanwhile, time spent with TV-connected devices was highest among those living on their own without kids (1 hour and 32 minutes per day), and lowest among those living in someone else’s home (1 hour and 11 minutes per day). And in examining the TV versus TV-connected device mix, 53% of Millennials “on their own” use such a device on any given day that they use a TV set, compared to only about 4 in 10 from the other groups.

    Nielsen-Millennials-TV-Usage-by-LIfe-Stage-in-Q4-2015-Apr2016

    Overall, the “starting a family” group most closely resembles the “dependent adults” segment in its viewing. This suggests (but certainly doesn’t confirm) that as Millennials have kids, they fall into similar patterns as they had when they were living with their parents.

    What About Race/Ethnicity and Income? (Income Data Not Updated)

    When sorting by race/ethnicity, consumption data in the most recent Nielsen reports reveal that:

    • African-American households continued to consume the most TV on a monthly basis in Q2, close to triple the amount of time spent by Asian viewers, who spent the least amount of time watching TV (197:51 vs. 73:54);
    • Among Black American adult users of each medium, time spent with traditional TV was down only slightly in Q1 on a year-over-year basis, while AM/FM radio was up slightly, with time spent with video on digital devices increasing more rapidly; and
    • Similar patterns were observed with Hispanic and Asian-American adult users of each medium.

    The Total Audience Report for Q3 2015 analyzed media consumption and device ownership patterns by household income, with some interesting conclusions highlighted below.

    As one might expect, device adoption is greater among higher-income ($75k+) households than among lower-income households (<$25k), with this true for all devices measured:

    • DVD/Blu-Ray player (85% for the higher-income households versus 67% for the lowest-income households);
    • DVR (65% vs. 29%);
    • Enabled Smart TV (29% vs. 9%);
    • HD TV (98% vs. 83%);
    • Multimedia device (34% vs. 12%);
    • PC with internet (95% vs. 51%);
    • Any smartphone (92% vs. 64%);
    • Subscription video-on-demand (66% vs. 27%); and
    • Any tablet (74% vs. 34%).

    As those results demonstrate, the penetration gaps are larger among newer technologies and services.

    What’s more interesting, however, is what the examination of consumption among users found: in each case, lower-income media users spent more time with the specific medium than higher-income users. This again was true for all media measured:

    • Traditional TV: 211:14 monthly among the lowest-income users versus 113:41 among the higher-income users;
    • AM/FM radio: 75:28 versus 58:02;
    • DVD/Blu-Ray device: 16:00 versus 7:16;
    • Game console: 42:22 versus 17:58;
    • Multimedia device: 39:09 versus 18:25;
    • Internet on a PC: 51:29 versus 33:38;
    • App/web on a smartphone: 56:19 versus 44:43; and
    • App/web on a tablet: 29:18 versus 27:32.

    Overall, TV accounts for a larger share of total media time for the lowest-income households than the highest, with this attributed to lower-income adults watching TV more throughout the day. When looking at time-of-day activity (not specific to users of each medium):

    • TV usage is highest among lower-income adults across the entire day, with the delta largest during the daytime and overnight;
    • Radio listening has the smallest difference between high- and low-income adults throughout the day;
    • TV-connected device usage is actually highest among the mid- and high-income adults during prime-time, but lower-income adults have the highest use outside of prime-time;
    • The lowest-income adults have the greatest usage of digital devices in the evening hours but the least usage until 5PM.

    Meanwhile, looking at device adoption among households with income of at least $50k, the study finds that:

    • DVD/Blu-Ray Player and DVR penetration are higher among Blacks and Hispanics than among Asian-Americans;
    • Hispanics (34%) and Asian-Americans (34%) have higher rates of enabled smart TV penetration than African-Americans (26%);
    • Half of Asian households (with income of at least $50k) own a multimedia device, far outstripping Hispanics (32%) and Blacks (28%); and
    • Subscription video-on-demand and tablet penetration are highest among Asian households ($50k+) than among Hispanic and Black households.

    For more details on Nielsen’s methodology, access the latest reports here:

    The MarketingCharts report on media audience demographics – which not only sizes the audience by demographic but also shows the breakdown of audiences in a way not portrayed by Nielsen (e.g. 48.4% of the monthly online TV program viewing audience is aged 18-34) – is available for purchase here.