Ofcom’s Communications Market Report garnered headlines for its analyses of media “meshing”, “stacking” and the rejuvenation of the living room. But much other useful data in this incredibly rich tome is buried in its nearly 500 pages.
Amongst the hidden stories are some stark realities: TV consumption on mobile devices is booming – but mobile networks are not benefitting much, as viewers prefer to watch over home WiFi and tablets over mobile phones.
Smartphone adoption last year broke through half of all UK mobile phones used, according to Ofcom. But more people who watch TV on their smartphone do so at home (77%) than out of it (74%) – and tablet owners do so far more than that (92% at home). As Ofcom says: “The most common location for viewing AV content on either a tablet or a smartphone at home is in the bedroom.”
This is not to say that mobile viewing isn’t booming. The share of video-on-demand (VOD) requests coming from tablets grew from 3% in 2011 to 12% in 2012, Ofcom found – with more than half of owners watching linear or catch-up TV every week using their device. Tablets have become a very real second screen – not just for engaging with main-screen TV shows, but as viewing devices in their own right.
But, whilst tablet consumption is putting mobiles in the shade, tablets aren’t shining much opportunity on mobile network operators. Whilst 46% of tablet users say they have a 3G-enabled device, just 20% of them actually take their tablets online via mobile networks.
This all adds up to a growth opportunity that mobile carriers are missing out on. Whilst UK online TV revenue grew 38% last year to £252.4m, according to IHS Screen Digest via Ofcom, mobile operator revenue grew just 1.3%. The reasons for this lag may be several-fold: Consumers are concerned about heavy mobile TV data bills, or about TV streaming maxing out data allowances, many of which were capped by networks a couple of years ago.
People don’t need to watch TV whilst out of home – they are working, commuting or socialising.
When at home, they prefer tablets’ larger screen to smartphones for streaming.
Broadcasters have succeeded at keeping their internet TV offerings – and their associated video ad sales – under their own product banners, like ITV Player and Demand Five.
The mobile operators that do have a revenue stake in offering paid mobile TV packages consisting of broadcasters’ channels, like Orange’s Swappables, don’t tend to disclose subscriber numbers, suggesting less-than-stellar take-up.
BSkyB was so cognisant of the 3G TV challenges that it bought a WiFi operator, The Cloud, not a mobile network, to serve up its channels out of home. When it comes to mobile networks, it seems the biggest TV usage is social interaction around shows, not viewing of shows.
Could anything help realise the dream at the nexus of TV and mobile? Perhaps all is not lost.
Data for BBC iPlayer, whose mobile apps are clever enough to vary stream definition according to bandwidth available, shows an almost equal number of requests coming from both phone and tablet.
Whilst the higher initial prices of 4G plans would seem to mitigate further against consumer video streaming, the first 4G customers are, in fact, more likely to stream video, Ofcom cites EE as reporting, with YouTube accounting for an eighth of all data use.
EE has already made moves in mobile movies by offering one free film download per week (now from 99p), ensuring the transfer is zero-rated – that is, it does not eat up customers’ data allowance.
Zero-rating TV streaming in the same way could reassure subscribers about watching whilst on the go – but the carriers will likely be nervous about giving away one of their costliest segments of network usage.