The rise of the silver VODder

By 2023, viewers aged 50+ may watch 15 percent of all television content on-demand.

Currently, non-broadcast content, including VOD, makes up 17 per cent of the 249 minutes of content watched daily on a TV set by people in the UK.¹

The change in viewing patterns has been led so far by younger viewers. As one example of the shift, 16-24 year olds in the UK now spend more time on Netflix than all of the BBC’s programmes, including those accessed via iPlayer.² Netflix only launched in the UK in January 2012, five years after the iPlayer.

Yet this profound change in viewing patterns is less evident when considering all viewers of all ages in the UK. There has been a decline in viewing numbers. But it has been gradual.

Minutes of traditional TV, that is programmes viewed within seven days of first broadcast, declined by an average 2.5 per cent per year over 2010 and 2017, from 242 minutes to 203 minutes.³

However, these modest year-on-year falls obscure deep variations in behaviour by age group. The historical rigidity in viewing behaviours among the over 50s, and particularly among the over 65s, has historically spared TV’s blushes by keeping overall traditional TV viewing numbers high.

This contrasts with viewing patterns among younger age groups. Between 2010 and 2017, consumption of traditional TV plummeted from 169 minutes to 100 minutes among 16-24 year olds, a decline of 41 per cent, or 7.2 per cent per year.⁴ Among 55-64 year olds, the decline was far shallower, at about 8 per cent over 2010-2017. And among 65+ viewers, consumption barely changed, rising one minute to 343 minutes.

The depth of the divide in viewing behaviours by age cohort is unlikely to last. Over the next five years older age groups are likely to shift their viewing to on-demand sources. They will follow, but not equal, the trend set by the young.

The pace of the pivot from broadcast may surprise; indeed in the first half of 2018, traditional TV viewing among 55-64 year olds fell by 2 per cent, which was double the average decline over 2010-17.⁵

We expect that by 2023, on-demand viewing on a TV set, in all formats (subscription and broadcaster) will be 15 percent of the total for those in their fifties and older. For those in their fifties (which would include today’s 45 year olds), a fifth of their television programme viewing will be on-demand. For those aged 55 and older, we expect on-demand will be about a tenth of all viewing.

It is worth noting the speed with which smartphones have been adopted by older age groups. In 2012, 29 per cent of 55-75 year olds had a smartphone. By 2017, 71 per cent had one.⁶ Application usage also ratcheted up, from a low base. The proportion using instant messaging increased six-fold; social media usage trebled. The shift in news and sports consumption was notable. By 2017, the percentage of 55-75 year olds viewing news and sport on a mobile trebled relative to 2012.

Smartphone usage patterns among 55-75 year olds vary significantly. About five per cent are intensive users, with smartphone behaviours similar to 16-18 year olds.⁷ About a sixth use their smartphones to a similar degree as the average adult in the UK.

SVOD usage patterns among older age groups are similar: power users exist but are in the minority. Average SVOD usage among 55-64 year olds in developed countries averaged eight minutes per day in Q1 2018. But this average was dragged down by the majority block of non-users. However, when isolating only SVOD subscribers in this age group, average usage was 81 minutes per day, a similar level to that in all other age groups.⁸

The mainstream embrace of PCs and the surging adoption of smartphones are one enabler of familiarity with on-demand content. Another is faster broadband. In the UK, as in most countries, performance has risen steadily over the last decade.

Average download speeds more than doubled between 2013 and 2017, from 18 Mbit/s to 46 Mbit/s. Speeds attained should continue to rise through 2023, as homes on a basic ADSL connection upgrade to superfast or fibre-to-the-home connections, with the latter offering gigabit speeds (1,000 Mbit/s).⁹ Currently about 40 per cent of homes are on ADSL.¹⁰

The critical benefit that faster broadband enables is offering an on-demand experience that is similar to traditional TV, but with the added convenience of a la carte viewing.

New television sets are designed with on-demand viewing in mind, and provide access to this content via the remote control. Some TV sets incorporate voice control, which can make it yet easier to request a specific programme. A few TV sets default to Netflix when turned on, and may have a dedicated Netflix button on the remote control.¹¹

This experience contrasts with the early days of on-demand viewing, often initiated by a fumble with cables and apps, and occasionally disrupted by a loss of connection: it was the antithesis of zapping through linear channels. But today’s TVs enable the viewer to flick nimbly between on-demand services.

Older age groups will be nudged into on-demand viewing by their own peer group and the behaviours of younger generations in their family. The influence of children may be exaggerated by the number of young adults still living with, or returning to, their parents’ home.

One in four 20-34 year-olds, about 3.4 million individuals, lives in the parental home – an all-time high¹². Among men, one in three lives with his parents. Some, such as the boomerang generation, have returned home, often to save for a deposit. In returning home, young people may introduce on -demand viewing to their parents, and offer their SVOD subscriptions in lieu of rent.

Access to exclusive content tuned for an older audience may also drive adoption. New commissions, such as Grace and Frankie featuring Jane Fonda, updates of legacy titles such as Dynasty and library content, such as classic comedies from the 1970s may entice adoption.

Access to sports may also spur a move to on-demand viewing: Discovery has licensed streaming rights to the PGA Golf tour. Eleven Sports has acquired the rights to the PGA championship. The average age of an avid golfer (playing weekly) is in the late 60s. In 2008 it was 49.¹³

The 55+ viewer represents a third of the population and half of all viewing. A steady migration to on-demand among older viewers would create a marked dent in national viewing numbers. In 2017, 65+ adults consumed over three times more traditional TV than 16-24 year olds and four times more than children: 343 minutes, versus 100 minutes and 86 minutes respectively.¹⁴

The rise of on-demand viewing among older age groups is very likely – almost inexorably, based on adoption patterns seen with other complementary disruptions, from email to e-commerce.

Bottom line
The challenge and opportunity to each player in the TV industry is to be leader in this migration, rather than to see their audiences taken away from them. On-demand services, from broadcasters and subscription services, need to be as easy to use as traditional TV. Design and testing should be done by people who represent the target audience, and not just younger age groups. User interfaces should not be intelligence tests; font size selection should not replicate an optician’s test.

Broadcasters should not regard on-demand (ad-funded or subscription based) as merely for younger viewers. On-demand is a convenience that viewers of all ages may like; what varies is their readiness to cope with significant changes in device, or ease of use, or user interface.

Traditional pay TV platform owners should continue to integrate on-demand capabilities into their platforms, making it ever easier for subscribers to access content in the way they prefer. They should exploit their advantages, such as being able to pre-emptively download and store programmes that viewers may want to watch, reducing the risk of interruptions to connectivity. Pay TV platforms may also be better able to cope with 4K sports delivery, due to their ability to fall back on satellite transmission.

Commercial entities should also bear in mind the wealth of older age groups: 55-75 year olds own half the wealth in the UK. Offering VOD is not just about lower cost solutions, but also about improving quality of service and ease of use.

The era of the silver VODder will arrive: the timing depends on the industry’s willingness to usher it in. 

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¹ Media nations: UK (Figure 7), Ofcom, 18 July 2018: https://www.ofcom.org.uk/__data/assets/pdf_file/0014/116006/media-nations-2018-uk.pdf
² Younger viewers now watch Netflix more than the BBC, says corporation, The Guardian, 28 March 2018: https://www.theguardian.com/media/2018/mar/28/bbc-younger-viewers-now-watch-netflix-more-on-demand
³ Media nations: UK (Figure 10), Ofcom, 18 July 2018: https://www.ofcom.org.uk/__data/assets/pdf_file/0014/116006/media-nations-2018-uk.pdf
⁴ Ibid.
⁵ Ibid.
⁶ Hi ho silver swiper, Deloitte LLP, as accessed on 29 August 2018, http://www.deloitte.co.uk/mobileuk/?_ga=2.134522353.1262093746.1534352878-412977467.1529667116#hi-ho-silver-swiper; source: Deloitte Global Mobile Consumer Survey, UK cut, May-Jun 2012, base: all 639 respondents aged 55-75; May-Jun 2017, base: all 1,260 respondents 55-75
⁷ Ibid.
⁸ Bingeing grows up – study highlights over-55s SVOD uptake, Television Business International, 14 March 2018, https://tbivision.com/2018/03/14/bingeing-grows-up-study-highlights-over-55s-svod-uptake/
⁹ Full-fibre broadband is coming to the UK... in 2023: quick speeds are only available in 4% of the country and it will cost £5bn to cover the rest, Daily Mail UK, 24 July 2018: http://www.dailymail.co.uk/news/article-5984539/Full-fibre-broadband-coming-UK-2023-Quick-speeds-available-4-country.html
¹⁰ UK home broadband performance, Ofcom, 9 May 2018: https://www.ofcom.org.uk/__data/assets/pdf_file/0027/113796/home-broadband-2017.pdf
¹¹ The smarter smart TV, Netflix, as accessed on 29 August 2018: https://devices.netflix.com/en/recommendedtv/2018/
¹² Number of young adults living with parents reaches record high, The Independent, 8 November 2017: https://www.independent.co.uk/news/uk/home-news/young-adults-live-parents-at-home-property-buy-homeowners-housing-market-a8043891.html
¹³ Golf loses some of its lustre as sales decline, The Financial Times, 22 August 2014,https://www.ft.com/content/e62feadc-29e0-11e4-914f-00144feabdc0
¹⁴ Media nations : UK Figure 10), Ofcom, 18 July 2018: https://www.ofcom.org.uk/__data/assets/pdf_file/0014/116006/media-nations-2018-uk.pdf