The Evolution of On-Demand Media Thesis

THE EVOLUTION OF ON-DEMAND MEDIA

An investigation into online video services and their influence on college

students’ television viewing habits

____________________

A Thesis

Presented to the Faculty of

the Department of Electronic Media

Kutztown University of Pennsylvania

Kutztown, Pennsylvania

____________________

In Partial Fulfillment

of the Requirements for the Degree

Master of Science

____________________

by Wim Mulder

May, 2010

Abstract

Throughout the history of television, various technologies have been

introduced that have changed the way viewers consume television programming.

A number of studies have been done about the effects of these new technologies

on the viewing habits of the people who used them and the television industry as a

whole. This study examines the viewing habits of college students and aims to

find out how these habits have changed since the introduction of the opportunity

to watch streams of full episodes online.

To conduct the study, 202 students at Kutztown University of

Pennsylvania were asked to fill out a 14-question survey inquiring about their

television viewing habits and their reasons for using online services to watch

television programming.

Although almost 61 percent of the respondents reported viewing some

programming online, the use of such services turned out to be fairly limited. Since

the overall television consumption of the respondents was relatively low

compared to the amount of television programming the average American

television viewer watches, the impact of online video services on their viewing

habits was difficult to determine.

This study did reveal specific reasons for online viewing by college

students, including increased flexibility in scheduling. These results are consistent

with those of other studies, which show that the viewing habits of Americans are

changing from so called “appointment viewing” to an on-demand oriented


ii

consumption of television content. The effects of this shift in television

consumption habits are transformative and far reaching for the television industry.


iii

Acknowledgements

Throughout working on this thesis I have been fortunate to have the

support of many friends, family, and faculty members. I want to take this

opportunity to thank all of those who made this thesis possible. First and foremost,

my girlfriend Sarah, who supported me from the beginning and put up with me

every time I had to work on my thesis instead of spending time with her.. I am

also very thankful to those who participated in conducting the surveys, in

particular Professor Jennifer Lanter and Professor David Lambkin who have been

very helpful and accommodating. My father, who has managed to keep me

focussed on this project. And last but not least, my advisor, Dr. Joseph Chuk, who

has given me diligent advice throughout the two years I have worked to put this

thesis together.

Thank you all.


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.........................................................................................................Abstract ii

.......................................................................................Acknowledgements iv

.............................................................................List of Tables and Figures vii

1. ................................................................................................Introduction 8

................................................................................Problem statement 9

..............................................................................Definition of Terms 9

.....................................................................Significance of the Study 9

......................................................................Limitations of the Study 10

2. ........................................................................................Literature review 11

.....................................................................................Viewing Habits 12

...............................................................Greater Program Availability 15

..............................................................Technological Advancements 17

..................................................................................Viewership Shift 30

...............................................................The Viewer as a Programmer 32

............................................Streaming Content on Network Websites 37

3. ......................................................................................................Methods 45

..................................................................................................Sample 45

............................................................................................Instrument 45

...........................................................................................Procedures 50

......................................................................................Data Analysis 51

4. Results

......................................................................................Demographics 52

..........................................................................Television Ownership 53


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................................................................................Broadband Access 53

.......................................................Hours of Television Consumption 53

............................................Change in Amount of Television Viewed 54

.................................................................Watching Television Online 55

.............................................History of Use of Online Video Services 55

...........................................Reasons for Using Online Video Services 56

........................Watching Television Content Exclusively on the Web 57

...............................................................................................Websites 57

......................................................................Hours of Online Viewing 59

....................................................................Online Viewing Year Ago 60

5. Discussion

.......................................College Students versus Average Americans 61

.............................................................................Viewing Experience 62

...............................................Market Share of Online Video Services 62

.............................................................Added Flexibility and Loyalty 63

.................................................................Integration of Technologies 64

...........................................................................Trends for the Future 64

........................................................Suggestions for Further Research 65

.........................................................................Appendix A: Pilot Survey 67

.........................................................................Appendix B: Final Survey 71

........................................................Appendix C: E-mail communications 74

.................................................................................................References 75


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List of Tables and Figures

Figure 1: ..................Percentage of DVR Playback and TV Usage by Hour 21

Across Total Day

Table 1: ............................................Age distribution of survey respondents 52

Table 2: ..................................Television consumption of surveyed students 54

Table 3: .........................................Reasons for using online video services 56

..............................Figure 2: Reasons for viewing television content online 57

..............................................Table 4: Use of different online video services 58

Figure 3: ...........................................Use of different online video services 59


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Chapter 1

Introduction

In recent years a shift has taken place in the way people consume media,

and in particular television. The so called “appointment viewing”, watching a

television show at the time it is broadcasted live on the network, is declining in

popularity (Thomas, 2008).

With new and emerging technologies like DVR’s, podcasting and

streaming media new opportunities open up for consumers to use the media

wherever and whenever they want to. People are not bound to the schedules of the

networks anymore, they can consume programming at their own convenience. To

cater to this demand, the television networks are offering some of their

programming on their websites in streaming format, so that viewers that missed

the show during its airtime can still watch it (Streisand, 2007).

Television has a changing role in the lives of the media consumer. The

availability of different on demand media have subtle but substantial implications

and effects on the media consumption and viewing habits of the consumer

(Holahan, 2006).

This research paper will focus on the effects that the availability of online

streaming content from television networks have on the viewing habits of college

students.


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Problem Statement

What effect does the availability of full streaming episodes on network’s

websites have on the viewing habits of college students ?

Definition of Terms

Full streaming episodes - A full length episode of a TV show in the same

form as it was broadcasted on television (with exception of commercial

interruptions).

Network websites - The online on demand video services offered by

broadcast networks on their website

Viewing habits - The media consumption patterns of a television viewer

(what shows are watched, how many times, is the viewing consistent or just

occasional, etc.)

College students - Students enrolled at Kutztown University, taking

General Education PSY 011 classes or SPE 010 classes.

Significance of the Study

The streaming of full episodes on network’s websites is a relatively new

phenomenon. Not much research has been done in this matter. This study will

focus on the effects the availability of these streaming episodes has on the users’

viewing habits. This will give insight in the way the correspondents use media and


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what role television plays in their media consumption. It will also give an idea

about how networks are using streaming video on their websites and how

effective it is and what reasons users have for using services like these.

This information could be useful for networks or stations trying to

implement streaming video on their website in that it will give an idea about what

role services like these play in the media consumption of their viewers and how to

target it to their particular audience.

Limitations of the study

The study will be conducted among a sample of students at Kutztown

University taking General Education classes (HPD 110 and SPE 010). The

limitation to this are that no general assumptions can be made about how these

results relate to other groups. For example, college students might be more

technically adept than people outside of this group, making them more likely to

use services like these.

Also the study will compare media consumption in the past and now, so it

will depend on the memory of the subjects used in the study. This will not be fully

accurate so this will influence the reliability of the results.


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Chapter 2

Literature review

This literature review will provide a history of television and how viewing

habits of television viewers have changed over the years, as new technologies

have been introduced. The chapter starts out with a section about viewing habits,

dealing first with early television use in the 1940s and then looking at how the

viewing habits of American television viewers changed as more programming

became available with the advent of more networks becoming established and

cable television being introduced.

The next section deals with technological advancements in the television

industry in the form of the VCR and DVR. Also, the effects on the industry in

terms of advertising revenue are discussed as well as the idea that viewers can use

these new technologies to be less dependent on the programming schedules that

networks dictate.

This leads into the next section which is a discussion of the ways people

have started to consume television content and how the networks are reacting to it

in terms of accommodating the viewers with new options to consume their

television content.

The Viewer as a Programmer section goes into the different ways

consumers now have to get access to television content: through cable on demand

services, streaming services on the internet and how people are starting to view

television content on mobile devices like cellphones.


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The last section called Streaming content on network websites, deals with

the implementations that different networks have made to provide access to

streaminng content for their viewers and how this changes the economics of the

television industry. It goes into detail about the benefits of streaming media for

television networks. Finally, it discusses the people that are using these streaming

services: who are they and what are their reasons for using these services instead

of, or in addition to, watching programming on a television set.

Viewing Habits

Start of Television in the 1940s.

Ever since television sets became commercially available in the late 1930s,

television as a medium has grown in popularity as a mass medium. When

television started to gain ground in the 1940s it was a way to connect people to the

rest of the world. Whereas previously people were relying on newspapers and

radio to obtain their news, now they could watch the news on their television sets

with moving images. This created a completely new media industry.

In the early days of television, there weren’t many people familiar with the

new medium. And those who did own a television set were usually companies or

wealthy individuals. Right after the second World War, few people knew about

television, but that quickly changed towards the end of the 1940s. By this time,

most Americans had heard of television and wanted to own one. A drop in the

price of television sets caused an influx in sales, with television sales averaging

100,000 a week in 1949 (Sassaman, 2006).


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Between the 1940s and the 2000s, commercial television has had a

profound and wide-ranging impact on American society and culture. It influenced

the way that people thought about such important social issues as race, gender,

and class. It played an important role in the political process, particularly in

shaping national election campaigns. TV programs and commercials have also

been mentioned as major factors contributing to increased American materialism

(a view that places more value on acquiring material possessions than on

developing in other ways). Finally, television helped to spread American culture

around the world. (Genova, 2006)

In the 1950s, television was considered a form of family entertainment.

Most American homes had only one TV set, and many families would gather

around it in the evening to watch programs together. Recognizing this trend, the

networks produced programs that were suitable for a general audience, such as

variety shows and family comedies. From the beginning, fictional TV families

have often reflected—and sometimes influenced—the real lives of American

families (R. Thomas, 2008).

Early television use.

In the 1940s, only 10 percent of American homes contained TV sets, so the

new technology was quite a novelty. Since the networks only broadcast shows for

a few hours in the evening, watching TV was a form of entertainment that people

often shared with their friends and neighbors.

The earliest TV programs were broadcast live from network studios in

New York City. Most of the shows featured the same forms of entertainment that


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were popular before television came along. Playwrights and actors who had

become famous through their work in the theater began staging dramas for TV

(McDonald, 1990).

In 1938, NBC transmitted a number of telecasts from its station in New

York City. In that same year was also the first live broadcast of a news event as it

was going on. At the time there were few regular television shows as we know

them today, and programming changed a lot from day to day. By 1946, network

series started taking off. Television programming was often funded and produced

by advertisers (Brooks, 1988).

Use of television in comparison to other media.

Just as radio had caused a drop in newspaper sales figures in the 1930s,

television caused a decreased use of radio and newspapers. Television slowly

started to dominate the media spectrum. Television was a convenient all-in-one

device that could bring entertainment, news, sports, etc. into the home of the

viewer (Grolier, 2004).

While before World War II mass media consisted mainly of print media,

movies, and radio, the advent of the television was a big shift in media

consumption. After the war, television ownership exploded to 55 percent in 1956

and 87 percent by 1960. The popularity of television as a medium impacted other

forms of media. There was a greater reliance on television to provide news and

people turned to television instead of radio, print media, and movie theaters

(Bradley, 2009).


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Paik looked specifically at media use of youth and how it has changed

over the years with more and more media options becoming available. He notes

that the introduction of new media typically changes the uses of and interactions

among existing media (Singer, 2000).

A study by Roberts and Foehr looked at the media consumption of youth.

The research shows that children from 8 to 18 years old get almost 8 hours of

media exposure every day. The distribution between different media varies per age

group, but television is most popular among all researched groups. The 15 to 18

year old age group watches over 2.5 hours of television per day. Roberts and

Foehr distinguish between media use and media exposure. Where media exposure

includes passive use of media (for example having television on in the

background), media use is indicating actively using the particular type of media

(Roberts & Foehr, 2008).

Greater Program Availability

The television broadcast networks controlled the evening hours known as

"prime time" from the 1940s through the 1970s. In the 1980s, however, the

networks began losing control of prime-time television and its audiences.

Cable television service spread rapidly during that decade, to reach 60

percent of American households by 1990. In addition, the 1980s saw the rise of

national cable TV networks—such as CNN, ESPN, and MTV—that catered to the

specific tastes of smaller segments of the viewing audience. Instead of the four or


15

five broadcast channel options that were previously available, American viewers

suddenly had up to fifty cable channels from which to choose (Jost, 1994).

In the television industry, the competition that had emerged during the

1980s became more intense in 1987 when the new Fox broadcast network

introduced several hit programs aimed at younger audiences, like 21 Jump Street,

while cable networks continued to grow and draw more viewers away from

broadcast offerings. Soon the Big Three networks followed Fox's lead and began

focusing on smaller segments of the overall viewing audience. The breaking-up of

the mass audience meant that a program could be considered a hit by reaching

fewer viewers than ever before. For instance, the ratings that made Seinfeld the

top show of 1995 would not even have placed it in the top 25 two decades earlier.

This situation encouraged the networks to experiment and take more risks in order

to create quality programs that would appeal to the upscale viewers favored by

advertisers.

Although it took a while for the new broadcast and cable networks to

break into the national TV ratings, the availability of multiple channel options had

an immediate impact on the Big Three. The decision of networks to focus on

smaller segments of the market led to more experimentation and greater diversity

of programs. Even though the networks produced some hit shows, they saw their

combined share of prime-time audiences decline to around 60 percent in the

1990s. By the 2000s, original cable programming was earning critical acclaim and

even winning key ratings periods (Collier & Hillstrom, 2007).


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Like the rest of the country, the American television industry faced tough

economic times in the early 2000s. The networks continued to lose viewers to

cable TV, while the Internet and other emerging technologies increasingly

competed with television for Americans' time and attention. TV programs became

more expensive to produce, while the basic genres started to seem uninteresting

and predictable. The answer to these problems came in the form of reality

television shows, which became very popular in the early 2000s (Newcomb, 2004,

pp. 1481-1483).

Technological Advancements

Introduction of VCRs.

In 1972, the Phillips Corporation introduced the first video cassette

recorder (VCR) for TV viewers to use at home. VCRs allowed viewers to record

television programs for later viewing. They used magnetic videotape enclosed in a

plastic cassette. Competing companies soon offered similar machines that used

cassettes of different shapes and sizes (Calem, 2004).

The earliest VCRs were large, expensive, and the subject of serious debate.

In fact, shortly after home videotaping technology became available, several

major Hollywood movie studios joined in a lawsuit against the companies that

manufactured the machines. The studios argued that VCRs should be outlawed

because their main purpose was making illegal copies of television shows and

movies. The studios felt that people who used home VCRs to tape movies were

stealing copyrighted material.


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The basic question that was posed by this case was: Are manufacturers

responsible for the potential copyright infringing actions that can be made with

their devices. The Supreme Court ruled that a company was not liable for creating

a technology that some customers may use for copyright infringing purposes. If a

technology has different uses, the public cannot be denied the use of this device

just because some people maybe use it to infringe on copyrights. The EFF

(Electronic Frontier Foundations) notes the parallel between this particular case

and later efforts by the media industry to regulate use of other technologies like

the iPod, DVRs, or file sharing software. Without the particular outcome in the

Betamax case the entertainment industry would have looked very differently than

it does today (Electronic Frontier Foundation, 2005).

Opposite to the expectations, the movie studios actually benefitted greatly

from the VCR as the sale and rental of motion pictures on video tapes became a

major new stream of revenue for them. It was a different story for the television

industry. Now that viewers could use the VCR to fast forward through

commercials, the networks had to find new ways to keep their advertisers happy

(Castonguay, 2006).

Effect of VCRs on television viewing.

The impact of home VCR use on the broadcast TV networks has not been

as positive as it has been on the movie industry. The most frequent use of the VCR

draws viewers away from network television to watch movies that played in

theaters. Many people also use their VCRs to record television programs for later


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viewing. When they watch these programs, however, they often use the VCRs

fast-forward feature to skip the commercials (Dobrow, 1990).

A 1999 study on the influences of VCR use on television viewing by Van

den Buick suggests that the time-shifting that is made possible by the VCR leads

to more selectivity in what the television viewer watches. It does not necessarily

mean that people will watch less television, but rather that the television they do

watch is more diversified. They watch a bigger variety of different shows.

Because the VCR lifts the restraint of having to sit down to watch a program at

the time designated by the broadcaster, it allows the viewer to better manage their

time spent watching television (Van den Buick, 1999).

VCR Use Patterns.

VCR devices had a relatively slow adoption rate, from 36 percent in 1986

to 69.7 percent percent in 1990. By 1997 however, almost 90 percent of American

homes were equipped with VCRs (Campbell, 1998). The use of VCR devices

varies. Levy (1987) found that while some VCR users use their device to record

and play back television programming and skip commercials, others use it as an

alternative to network or cable programming viewing rented or purchased videos

(Levy, 1987).

In a 1999 study conducted by Alali and Conner, VCR use is studied in a

college environment. The study mentions that viewing habits of college students

are often very different from the general population, due to a demanding school

schedule. At the time of the study, the average amount of time the surveyed


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students watched television was two hours a day, compared to an average of seven

hours a day in the general population.

Ownership of VCRs was higher in the college students’ household than in

the general population (97 percent of the respondents indicated they owned at

least one VCR). Sixty-six percent of the respondents indicated using their VCRs

up to two hours per week, whereas 23 percent indicated using it two to four hours

per week.

The motives for using their VCRs leaned heavily towards watching

movies (58 percent) and movie ownership (34.3 percent). Another important

motive for ownership of a VCR was being able to view taped shows and the added

control and convenience (32.3 percent). Twenty percent of the respondents

indicated that they used their VCR to skip commercials in regular network or

cable programming.

The authors of the study indicate that the motives of the surveyed students

for using a VCR are similar to those ofthe general public, suggesting that the

technology serves the same purposes for both, namely, for entertainment and to

have more control over their television viewing experience (Alali & Conner,

1999).

DVR usage.

Moving beyond VCRs, DVRs, or Digital Video Recorders, are the next

generation of recording devices that allow consumers to record television content.

The quality of DVR recordings is much higher than VCR recordings, because of


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the digital nature. While video cassettes deteriorate in quality over time, DVR

recordings keep the same quality because of their digital format.

All DVRs, whether that be a set top box receiver that includes DVR

functionality or a stand alone DVR device like TiVO, are based on the concept of

recording on a hard disk, like that found in a computer. Users can set the recording

quality of the video lower or higher, which allows them to fit more or fewer

recordings on the disk (Strickland, 2007).

The first DVR was introduced in 1999 by Dish Network as part of their

satellite receivers. Early versions of DVR equipment were limited in their

functionality. Since the first versions only had a single built-in tuner, the user

could only watch the show that was being recorded. This severely limited the

usefulness of these devices for consumers. When dual tuners were introduced


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Figure 1. Percentage of DVR Playback and TV Usage by Hour Across Total Day. Reprinted from “How DVRs Are Changing the Television Landscape,” by Nielsen

later, it became possible to watch one show while recording another (Willis,

1999).

The manufacturer that popularized DVRs to a mass market was TiVo,

whose brand name has become almost synonymous with the concept of DVRs.

The first TiVo device was introduced in January of 1999 at the Consumer

Electronics Show. TiVo DVRs distinguish themselves from the competition by

their user-friendly software, which is possibly the reason for their big success. The

device can automatically record shows, and it also allows the viewer to pause,

rewind and fast forward live television as if it were a video tape or a DVD. In

order to do this, the device starts recording at the beginning at the show. The user

then starts watching a few minutes later, effectively creating a buffer for the user

to rewind and fast forward.The TiVo system also incorporates user ratings for

television shows. Based on the ratings the television viewer gives to a show, the

TiVo system recommends other shows the user might like and can record these

shows automatically as well (Tivo, 2009).

DVR technology has signified an important shift in the media landscape.

DVRs make it easy for consumers to break free from network scheduling, and

perhaps more importantly to use fast forwarding to skip the advertising that

networks and stations insert into their programming.

A study conducted by Information Resources over a time period of

eighteen months between 2005 and 2008 found that not all brands are being

equally impacted by consumers skipping their ads. According to this study, about

20 percent of all brands included in the study, had a significant negative impact


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from viewers skipping their ads. Some brands however, actually saw slight

increases in sales in DVR households. The study suggests that the impact of ad

skipping by DVR users can be compensated by advertisers diversifying their

advertising strategies, i.e. investing more in print or other media. The study also

mentions that creative advertising generally keeps viewers from skipping

commercials (Neck, 2008).

DVR users are selective in the types of ads that they choose to watch.

Although it is easy to skip all advertising and resume a television show after the

commercial break, viewers are not skipping all commercials. An important

exception is movie advertising. Movie ads make up a big share of the most

popular commercials. According to Adam Fogelson, president of marketing and

distribution at Universal Pictures, commercials for motion pictures are not

perceived as advertising but more so as “short form-entertainment” (Stanley,

2008).

Advertisers and networks are coming up with creative ways to get viewers

to watch their ads. One approach is represented by commercials that networks and

advertisers create in conjunction with each other. This is becoming a more

common approach to draw viewers’ attention. A good example of this type of

advertising is a deal between Microsoft and NBC to promote Microsoft’s new

search engine called Bing. In a spin on the familiar approach of product

placement, a character from one of NBC’s shows promotes the Microsoft product.

In this particular example, the ads were tied to comedian Joel McHale’s show

Community. Because of the close integration with the familiar show and


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characters, the ads become less obvious and intrusive for viewers who in turn are

less likely to skip over them (Helm, 2009).

ABC entered in a similar partnership with telecom provider Sprint,

developing eight 45-second advertising spots to pair with their show Desperate

Housewives. According to TiVo’s StopWatch system, a tracking system which

looks at users’ viewing habits, more than twice as many people watched the

integrated commercials, the first of which was broadcast during the season

premiere of the show on September 27, 2009, compared to the regular

commercials between segments of the show (Steinberg, 2009a).

The secret to a well-integrated product promotion is to fit it in with the

style and tone of the show it is incorporated into. When FOX offered Microsoft

the chance to have the creator of Family Guy make a 30 minute Family Guy

special about Windows 7, Microsoft initially reacted enthusiastically. After

reading the script, though, they backed out of the partnership because the type of

humor in the show didn’t reflect the brand values that Microsoft wanted to portray

(Helm, 2009).

Although advertisers are finding new ways to make their ads more

effective, a January 2010 report from media agency MPG suggests that most

commercials are viewed during live broadcast: i.e. not from a DVR. According to

the study, conducted in the first 11 weeks of the broadcast season of 2009-2010,

only nine percent of all commercial viewing occurred from DVR playback. This

pattern is true across the board. Different television genres, networks, and days of

the week all have comparable numbers. Although particular shows, like The Office


24

and Heroes, sometimes have higher ratios of commercials viewed (24 percent and

23 percent respectively), these are the exceptions to the rule (Crupi, 2010).

DVR ownership has seen a steady increase since its introduction. When

Nielsen first started measuring DVR ownership in January 2007, ownership was

12.3 percent. In March 2009, that number increased to 30.6 percent. As noted in

the report, one of the key factors in adoption of DVR technology is the fact that

many television providers are implementing DVR functionality into their set top

receivers. In fact, the majority of DVRs are used through one of these set top

boxes (95 percent), either cable or satellite. Only 5 percent of households have a

stand-alone DVR device (Nielsen, 2009b).

An interesting statistic that Nielsen looked at is the impact of DVRs on

viewers’ loyalty to programs. Because DVRs allow viewers to watch programs

when they want, they have more opportunity to watch their favorite shows. The

report found that households that own a DVR watch less live television, but that

their viewing frequency when accounting for live viewing plus seven days is

higher than households without a DVR. According to the measurements

conducted by Nielsen during the 2008 sweep, households without a DVR watched

1.9 broadcasts, versus households with a DVR watching 2.5 broadcasts. The

report looked at viewing frequencies of five particular popular television shows.

So, while this gives no idea of total viewing time, it does indicate that DVR

owners are more likely to watch shows more frequently (Nielsen, 2009b).

Nielsen mentions that as DVR ownership goes up, it might have

implications for the reruns of television shows networks are broadcasting in


25

summers. Since DVR users are generally more loyal to the television shows they

view, it will be less likely that the reruns will be new to them and it is less likely

they will be tuning in to these reruns. Another interesting side note that is made in

the report is that users viewing more content through DVRs could be less likely to

“channel surf” and sample new shows the networks are putting out.

Nielsen split up DVR owners into three groups: heavy, medium and light

shifters. Users are divided into these groups based on the amount of television

they watch time-shifted. Whereas heavy shifters are watching over 30 hours of

television time shifted, light shifters are watching an average of almost 6 hours

which equals 27 percent of their overall television consumption.

Most likely to be watched through time shifting on a DVR is the type

prime time programming. A relatively low amount of people are recording

daytime programming on their DVRs. For example, the morning hours from 6AM

to 12PM account for only 15.8 percent of overall DVR playback. Just over 32

percent (32.1%) of all television programming recorded on a DVR is viewed

during the prime time slot (8-11PM) (Nielsen, 2009b).

The CW, a joint venture between CBS, UPN and Time Warner, is one of

the networks that is feeling a severe impact from viewers using a DVR to view

their programming instead of tuning in live. According to Bauder (2008) nearly 17

percent of the CW’s viewership came from DVR audiences. Two years earlier, this

was less than 5 percent. When looking at individual shows the changes can be

even more dramatic. One week the 18-34 female demographic for the show 90210


26

increased by an additional 79 percent of the live broadcast in a week due to DVR

viewing.

According to the article, the most time shifted show on television is The

Office, with 28 percent of its audience time shifting the show. This is partly due to

the tough time slot that The Office is in. The show is competing against popular

shows on the other networks like CSI and Grey’s Anatomy (Bauder, 2008).

Time shifting has made a significant impact on audience flows in the

different time slots during prime time television. The 10PM time slot was having a

lot of trouble pulling in audiences at the time of the writing of the article in 2008.

Only three of Nielsen’s top 20 prime-time shows were in this particular time slot.

This was due to the fact that a lot of DVR users are recording shows in the 8 to 9

PM time slot, then watching them later at the expense of other shows. Late-night

programming is also affected negatively by this phenomenon.

Bauder mentions that television networks will likely move their top shows

up earlier on the night in order to grab a larger audience, although local stations

are putting pressure on the networks to keep providing a strong lead in for their

late night news programming.

Since Nielsen ratings do not always reflect the complete audience of a

show, it is a challenge for networks is to get accurate insights into how well shows

are doing. For example, when the CW was debuting their show Gossip Girl the

success was not reflected in the overnight ratings, but the show had a big pickup

in DVR audience. Also, a lot of the younger audience were watching the show

online. When The CW stopped streaming the show online, in order to increase the


27

television audience, fans found their way to illegal versions of the episodes on the

web, after which the network put the episodes back on their site (Bauder, 2008).

This brings up the issue of monetizing video content on network websites.

Although audiences are moving to DVRs and the Internet to watch episodes,

advertisers are still very much tied to a traditional advertising model based on

ratings for television shows. If ratings go down, advertisers expect to pay less for

the same slot and in the end the network is missing out on this advertising

revenue. Screen Digest, a media consultancy company, reports that the

broadcasting industry is set to lose 2 billion dollars in advertising revenue by

2013. In addition the company looked at online advertising revenue. This market

is on the rise, but still not nearly as big as television advertising. The projected

advertising revenue from long-form network content on the web is 1.45 billion

dollars. Most of the advertising revenue from online television programming was

generated by the broadcast networks (44 percent), followed by cable networks

which are responsible for 22 percent (Atkinson, 2009).

With online television programming, the viewer is expected to be more

engaged with the advertising and the viewing experience. As of April 2010, Hulu

claims to have only 25 percent of the ad-load of that of a traditional television

show broadcast on a network schedule. To increase effectiveness of commercials,

Hulu sometimes opts to present multiple advertising options to the user. The user

gets to pick the commercial they want to view, which makes the ad more effective

The advertising is sold based on a CPM (Cost Per Thousand) basis. This means


28

that the advertiser is only paying for actual impressions of the ads, not an

estimated audience like with television advertising (Hulu, 2010a).

Nielsen began measuring playback of television episodes in 2000, and

according to Nielsen the DVR is having a significant impact on the ratings of

television shows. The shows that see the biggest lift in ratings from the use of

DVRs are the shows that are in the competitive prime-time television time slot.

The DVR is also having a big effect on viewers’ loyalty to their favorite television

shows. Quoted in the article is CBS research chief David Poltrack, saying that the

people owning DVRs watch shows at a much higher rate than the general

population (Levin, 2006).

Difference in technology and use of DVRs

One of the most popular uses of the DVR is to time-shift television.

Although this was already possible with VCRs, it became much easier with digital

recording: Fast forwarding and rewinding the footage is much easier and faster

and the quality of the video does not deteriorate over time as with VHS tapes. In

addition to digital recording capabilities, the DVR offers a variety of functions to

make television viewing more convenient for the viewer. With a built-in television

guide you can easily set up recordings without having to set a timer. You can set a

so-called Season Pass to record all shows in a certain season, and some models

even allow for scheduling recordings over the Internet (Baig, 2005).


29

Viewership Shift

Use of traditional television.

Television viewing is still a very popular activity. Nielsen’s Three Screen

Report for the third quarter of 2009 contains statistics about the use of different

types of media. The report estimates that the average American is watching 31

hours of television per week. The report also notes that 99 percent of video

consumed in America is viewed on a traditional television. Although the reach of

television viewing, the number of households with a television, has slightly

increased (+0.4 percent) when comparing Quarter 3 of 2009 to Quarter 3 of 2008,

the amount of time spent watching television has declined slightly (28 minutes).

All demographic groups that are represented in the study spend the

majority of their time watching television, as opposed to watching time shifted

content on a DVR, using the Internet, watching video on the Internet or watching

video on a mobile phone. The demographic group that is watching television the

most is the 65+ age group (Nielsen, 2009a).

Although traditional television viewing still is heavily represented in the

media consumption of American consumers, a shift to different media is starting

to take place. The use of online video is steadily increasing. Comparing the third

quarter of 2008 to the third quarter of 2009, viewers watched 53 minutes more

video online. Online video viewing is most popular among young adults, aged 18

to 24 years old). This is the only demographic group that spends more time

watching online video than time-shifted video from a DVR (Nielsen, 2009b).


30

Network innovations.

The television industry depends on two major sources of revenue: content

or television programming and distribution of that content. Now that much of the

distribution is happening through other parties or in other places the traditional

model that television networks have been using for years is threatened.

The fact that appointment viewing, watching a television show at a time

designated by the network, is becoming a thing of the past has a number of

implications for the networks. It means, for example, that the networks can no

longer dictate when the viewer consumes their programming. This in turn has an

influence on advertising, a major source of income for networks. Certain parts of

the day are worth more in terms of advertising revenue than others. So, if a

consumer can watch programming at any time of the day, the advertising in that

particular show might be worth less (Ai InSite, 2010).

Looking at the content side of the networks’ revenue model, the value of

content for the network is important. However, with many people now owning a

DVR and availability of episodes online being as high as it is, the value that can

be generated from syndication deals and reruns is diminishing. There is less

incentive for television viewers to tune into reruns or syndicated programming

when they can watch them at their own convenience at a time they like.

Seeing that the distribution side of the network’s business is diminishing,

the networks are forced to focus more on what the viewer sees, that is, the content.

Arrango found that the majority of content that networks were broadcasting in


31

2008 was produced internally, 79 percent compared to only 58 percent in 2006

(Arango, 2008).

Although advertisers still prefer to advertise alongside professionally

produced content as found on network websites, rather than user-generated

content on YouTube and similar websites, the advertising income earned from

digital distribution of episodes online has been negligible in the bigger picture of

the networks. According to Jeff Zucker, CEO of NBC, it is unlikely that their

income from content online will ever match that of broadcast. By investing in

online video sites like Fancast and Hulu, networks are trying to get back some

control of online distribution (Lapan, 2009).

The Viewer As a Programmer

On-demand services from cable companies.

Several cable companies are offering on-demand services to their

customers. In order to receive these on-demand services, customers need to have a

digital cable subscription. The content gets streamed to a set-top box through the

coaxial cable that brings television into the homes. The fees for these services

depend on the cable provider the customer uses and what type of content they are

watching. Most cable companies offer some free on-demand content, but there is

premium content available, for which consumers have to pay extra.

Digital cable subscriptions are getting more common, and are taking an

increasingly higher share of the overall number of subscriptions. As of June 2009

the penetration of digital cable subscriptions was 65.8 percent of the overall

number of cable subscriptions. With the majority of households being connected


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to digital cable, on demand services are becoming available to more consumers

(National Cable & Telecommunications Association, 2009).

According to research by Nielsen done in 2009, the use of on-demand

video services is still relatively small compared to DVR usage and especially live

television viewing, but it is steadily increasing (Nielsen, 2009a).

In a study done by Rentrak, video-on-demand services showed to be

gaining popularity. According to statistics from Rentrak gathered from studies in

2004 and 2005, 47 percent of the households owning VOD capable set top boxes

used them to access on demand content (Killam-Williams, 2005).

Portable media devices.

Ownership of portable media devices like the popular iPod from Apple is

becoming more and more common, especially in younger age groups like teens.

According to a study by Ipsos, one in five Americans owns a portable media

player of some kind and, in the teen age group (12 to 17 years old), the ownership

of portable media player is at 54 percent.

The study does not specify whether the media players these people own

are capable of playing video content, but it does mention that the owners’ interest

in consuming video content on their players is high (39 percent - music videos; 33

percent - TV shows; 32 percent - full length motion pictures) (Ipsos, 2006).

In 2005, Apple was one of the first brands to introduce a portable media

player capable of playing video content. Since Apple is such a big player in the

portable media player market, with a market share of around 70 percent, they have

the power to create a big demand for new services like television episode


33

downloads. In conjunction with the introduction of the first video capable iPod,

Apple opened up a video section in its iTunes store where consumers are able to

download full television episodes priced at $1.99. This is a very competitive price

point in comparison to cable video-on-demand services, where you have to pay a

fee every time you watch an episode. Once a television episode is downloaded

from iTunes, the consumer owns this video and can watch it as many times as he/

she wants (DeWitt, 2008).

At this point all major television networks are putting content on iTunes

for consumers to download, in addition to a number of cable networks and

specialized content providers like NBA, Nascar and DC Comics (Apple, 2010).

File sharing.

Another option to obtain television content online is downloading it

illegally through online distribution methods like Bittorrent. Users of Bittorrent

websites capture television content on their computers and make it available

online without the permission of the content creators or television network. One of

the most popular websites aggregating Bittorrent files of television content is

called EZTV. In September 2009 alone, the site has received 15 million visits.

Downloading television content through Bittorrent is especially popular with

people who are fans of US television shows but live outside of the United States .

Because of contracts with television networks in their own countries, their favorite

television series might be months or sometimes years behind on the schedule in

the United States. There are often no legal alternatives to watch the most recent

episodes of television shows (Ernesto, 2009).


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Availability of streaming episodes.

In reaction to the flurry of illegal sharing of network television content on

the Internet, networks have started to offer the options for television viewers to

watch their shows online. Because networks are missing out on any advertising

revenue that might be gained from these shows if they are offered illegally online,

it is worthwhile for television networks to invest in their own solutions to get

consumers to stop downloading content illegally and go through the network

website to view television content. At first, mostly short clips of television shows

were provided to viewers, but full streaming episodes have become common. And

it has proven to be a big hit among consumers, Fox alone served approximately

150 million streams in August of 2009 (Nielsen, 2009a)

. In October of 2007, News Corp. (owner of Fox) and NBC joined forces

to create the biggest offering of full streaming episodes (legally) available on the

net: Hulu. In August of 2009, Hulu served up 392,545,000 streams of video

content, meaning individual requests for content. This does not equal fully

watched episodes but rather the number of video streams that were fully or

partially downloaded from Hulu’s servers. Meanwhile, many other networks

besides Fox and NBC have joined Hulu (Grover, 2009).

The line up of networks, as of the broadcast season of 2009-2010, is as

follows: A&E, ABC, Bravo, CNBC, Comedy Central, Fox, FX, History Channel,

MyTV, National Geographic, NBC, PBS, SPEED, Starz, USA, and WB. The

biggest name missing from this list is CBS. Although they do offer full streaming


35

episodes, they are not part of Hulu. Instead, CBS has opted to offer their content

only through their own website (Hulu, 2010b).

As of November 2009, CBS is in discussion with Hulu to offer their

content on the site. Main objections from CBS executives to including their

programming on Hulu is that CBS would have to sign an exclusive contract to

Hulu and relay 30 percent of the ad revenues on their content back to Hulu.

Another deal breaker for CBS was that Hulu did not allow CBS’s online video

outlet TV.com to stream Hulu programming on their site (Grover, 2009).

Integration of television and online services.

A trend that is apparent when looking at consumer electronics being

marketed at the time of this writing, is that different media are getting integrated

into a single device. With regards to television, this means that there are

televisions being produced that allow the viewer to watch content that is streamed

from the internet on their television. These technologies can be integrated into the

television itself, but there are also set-top boxes available that make it possible for

existing televisions to display online content.

The type of content that can be accessed depends on the software that is

integrated into the device. For example, an Apple device called the Apple TV

allows access to all content that is available on the Apple iTunes service. Other

manufacturers like Roku, offer access to a variety of internet video sources like

Amazon, MLB, NBA and Netflix (Tarr, 2009).


36

Streaming Content on Network Websites

Possibilities of the technique.

The most prominent software that is being used by networks and other

television streaming websites is Adobe Flash. Since the Adobe Flash player is

almost standard on any computer (adoption rates are close to 99 percent), there is

no barrier to entry for consumers. Adobe Flash is used for rich media Internet

applications like video services or games, and has become the standard for

applications like these. The advantage of streaming video over services like

iTunes is that the service is browser-based. Consumers need no additional

software or hardware to get the content, so they can do it right from their browser

(Adobe, 2010).

Although the Adobe Flash player is available on most computers,

broadband Internet access is still an additional requirement. The bandwidth that

streaming video needs is higher than what dial-up connections can provide.

As of March 2009, broadband adoption in the United States was at a level

of 63 percent for homes. Although this is a fairly high adoption rate, it is still low

in comparison with television. In addition to that, the adoption rate of broadband

is flattening. Although there was a surge in broadband adoption over the past

years, the market is starting to get saturated (Pew, 2009).

Availability of streaming episodes on network websites.

Almost all television networks are offering streamed episodes on their

websites. Many networks have their own services for streaming episodes on their

websites, but there are also aggregating websites where users can view video


37

content from a number of different television networks. As discussed above, Hulu

is an example of one of these types of sites. According to Nielsen, Hulu was the

most used access point to network video content in the third quarter of 2009

(Nielsen, 2009a).

Although YouTube is still providing access to much more video content

than Hulu, Hulu has the upper hand when it comes to the offering of long-form

content. In financial terms, Hulu is also doing a lot better financially than

Google’s YouTube. While YouTube generated no gross profit in 2008, Hulu had

an estimated 12 million dollar gross profit (Lyons, 2009).

Content differences among network websites.

Although most television networks offer all of their most popular shows

on their websites, there are networks that choose to offer only clips of episodes or

only certain shows for online viewing. A common strategy among all networks is

to offer only a limited number of full episodes for each show. Since many

distributors are selling season DVDs of television series, an easily accessible full

archive of television episodes would cut into revenues of these products. There are

exceptions to the rule, though. For example, the television show South Park on the

Comedy Central cable network has a website that offers all the episodes ever

created for viewing in full length at no charge (O'Leary, 2009).

Since Hulu is starting to be a dominating player in the market most

broadcast networks in addition to many cable networks are offering at least some

content through the Hulu website. The online video field is competitive, and so

Hulu has been protective of having its content distributed to other sites on the


38

web. As noted earlier, competitor website TV.com, owned by rival network CBS,

was asked by Hulu to pull their content from the TV.com website.

Whereas Hulu is more or less an aggregator for different network video

content, networks are also offering incentives for people to go to their own sites.

After all, if a user goes to the network site to view programming instead of to

Hulu, the network is able to get more advertising return. Some television shows

have a unique web presence by which, in addition to the full episodes of the show

that is broadcasted on television, users can view web-exclusive content that is not

available on Hulu. Examples of this are NBC’s shows 30 Rock and The Office

(Steinberg, 2009b).

Advantages for the networks

The incentive for television networks to offer their content online lies

mainly in the fact that they need to regain viewers who have gone to other

avenues to watch television content. By offering their own solution for viewing

their content online, television networks can earn advertising revenue on their

content.

With content available on-demand on the web, viewers have the flexibility

of consuming it whenever they like. Audiences for certain shows have gone up

substantially since they have been offered for viewing on the web. By having

content available for consumers at any time of the day, it then becomes more

flexible for viewers to consume the content at any time of the day they like. This

in turn gives viewers an extra opportunity to watch a show, because they do not

have to adapt to the broadcast schedule to watch it.


39

Although online video advertising still only makes a fraction of the

revenue that is being generated in television advertising, it is a growing market.

Unlike in television, where viewers are getting more and more options to skip

commercials, the viewer of online television episodes has to watch the ads in

order to watch the rest of the show. The advantage of online advertising is that it

can be much more targeted to the individual than a television ad could ever be.

Since some basic demographic information about the user can be traced through

the internet connection, it offers advertisers the opportunity to target ads, for

example, to a specific geographic area (Raz, 2009).

This is why advertisers are willing to, proportionally, pay more for an

online ad than an ad broadcasted on television. The cost of one impression online

is more than one estimated impression on television, but it is highly more likely

that the viewer is actually paying attention to the ad. The demand for ads on sites

like Hulu far outweighs the spots that are available to advertisers. Online viewers

are much more likely to take action after seeing an ad than television viewers,

particularly because the ad can be more targeted to the individual viewer.

(Streisand, 2007)

Online audiences tend to be younger, giving advertisers access to the very

desirable target group of the 18-34 year-old crowd. Another benefit of using

advertising in Internet video content is that the statistics that can be gathered are

much more specific than could ever be gained from television. Advertisers can

find out information about exactly how many people saw their ad, what the

demographics of those people was, and how many people clicked through to find


40

out more information about their product. This can be very valuable information

for advertisers to measure the efficiency of their campaigns and make adjustments

accordingly (Fung, 2005).

Who is using it and why

Watching television online is no longer an activity that’s only done by a

minority of people. Retrevo, a consumer electronics brand, conducted a survey

about the respondents’ viewing habits and the conclusion was that over 50 percent

of the people were using online services to watch television. Watching television

content online does not necessarily mean that it has to be viewed on a computer.

As noted before, more and more television companies are releasing televisions

with streaming video technology built into the device.

The study looked at the use of online media to watch television by people

under 25 and found that this group was more likely than the average respondents

of the study to watch most of their television content online. The study notes that

men are almost twice as likely as women to watch most of television

programming online (17 percent of men versus 9 percent of women). In fact, 26

percent of the respondents either cancelled their cable or satellite subscription or

considered canceling it. With an increasing amount of content being available

online, television is becoming a more easily dispensable expense: There are

cheaper alternatives.

The study suggests some possible reasons for why people are switching to

online services as opposed to watching programming on their television set.


41

Saving money is an important incentive, especially in economically tough times

(Retrevo, 2010).

NBC Universal examined the use of full episodes available online. Among

the aspects studied were the number of users, time of use, reasons for using online

services to watch television content, reasons for missing episodes on television,

retention rates and the age / sex of the respondents.

NBC found that 40 percent of online users are aware that full episodes are

available to watch online. Specific statistics on three major networks (NBC, ABC

and CBS) indicate that ABC has the biggest awareness (44 percent). In

comparison, 64 percent of online users are aware of being able to download music

from iTunes.

In examining the type of video content that users have looked at over the

past six months, the study identifies that the most popular type of content is movie

trailers. According to the report, 19 percent of online users has streamed a

television episode in the past 6 months. Most people hear about the option of

viewing content online through advertisements on the television channel (NBC

Universal Strategic Research, 2007).

Not only is the amount of people watching full episodes online increasing,

according to the statistics presented by NBC the number of episodes these people

watch is on the rise as well. Twenty-one percent of the respondents have watched

more than six episodes in the past month. People watching an episode usually

watch the full episode (66 percent says they always do; 26 percent says they

usually do). The time and place of use is mostly at night and at home, although


42

there is a spike during lunch hour. The study suggests that this is possibly due to

people catching up on their shows at work.

The most common reason for watching television episodes online is that

the viewer missed the show in its original broadcast schedule (87 percent). Other

reasons the study suggest are watching a show that the viewer has not seen before

(browsing for new interesting content) or watching an episode that the viewer has

already seen before.

The profile of the online viewer is mostly male (56 percent) and in the age

group 35 to 49. Surprisingly, representation of this age group is higher than in the

18-34 age group. The percentages are 37 percent in the 18 to 34 year old age

group, compared to 42 percent in the 35 to 49 old year age group (NBC Universal

Strategic Research, 2007).

Taking a broader perspective, Arbitron researched what is the most

essential media for Americans today. In the survey, conducted among 1753

respondents, 42 percent picked the Internet as the medium they can’t do without,

compared to 37 percent that chose television. A similar survey was conducted in

2002 yielded very different results: Seventy-two percent of the respondents back

then indicated they could do without the internet (Arbitron, 2010).

According to the latest comScore Video Matrix Report at this writing, the

amount of television that users view online is increasing. The results from the

report indicate a shift from watching a large amount of short-form content, like

that on YouTube, to watching more long-form content as on sites like Hulu.

ComScore indicates that, comparing January 2010 to February 2010, Hulu’s


43

market share went from 2.9 percent to 3.2 percent of all videos viewed online. The

total audience for online video is estimated at 174 million people, equal to 83.1

percent of the total U.S. online audience (comScore, 2010).

The present study was conducted to see how members of a particular

audience segment, college students, are making use of online media to watch

television shows. Chapter 3 will discuss the methods that were used to conduct the

study.


44

Chapter 3

Methods

Sample

The study was conducted among college students at Kutztown University

enrolled in general education classes. This was done in order to ensure a fairly

homogeneous sample with regards to age, education, and to guarantee that

different majors would be represented in the sample. Also, the surveying of the

students would be easier, because the surveys can be distributed and returned

quickly.

The requirements that were set for the survey were that the students were

enrolled at Kutztown University in a bachelors degree program, this ruled out

most of the older students. In order to make sure that the sample would not be

skewed towards a certain academic program the surveys will be conducted in a

general education class. HPD 110 and SPE 010 were selected as classes to

conduct surveys in. These are fairly large classes and have a variety of different

majors, but a fairly consistent age group. The students taking these classes are

mostly freshmen.

Instrument

To study the viewing habits of the students a paper survey will be used. In

order to ensure the consistency of the sample, it was decided to conduct the survey

in class rather than put the survey online. This makes the results more reliable,


45

since it is known who filled out the surveys, whereas an online survey can be

filled out by anyone.

The survey consisted of 14 questions, and included questions about the

media consumption patterns of the participant, their use of streaming video

services on the network websites, how they use these services and how these

services have changed their media consumption.

The main purpose of the survey was to find out about the subject’s viewing

habits regarding online television programming and how they may have changed.

Also, the survey was aimed at acquiring information about what some of the

motivations are for students to use online video services to consume television

content.

The questions on the survey were as follows:

1. Do you own a television set?

This question was put in the survey to find out whether ownership of a television

makes a big difference in online viewing of television content.

2. Do you have broadband internet?

Possible answers were A. DSL, B. cable, C. school network, D. no broadband or

E. Don’t know. The goal of this question was to figure out if people with a

broadband connection watch more online content than people without broadband

access.

3. How many hours of television do you watch in a week on average?

This question was intended to get a good idea of the average student’s television

consumption this question was included in the survey. The distribution for the

answers in this question were changed based on results from the pilot survey. The


46

original answers had more variance, but the pilot resulted in a distribution that

was heavily leaning towards one answer. The available answers for the

respondents were A. Less than 3 hours, B. Between 3 and 7 hours, C. Between 7

and 10 hours, D. Between 10 and 15 hours, E. More than 15 hours

4. Have you watched more or less television in the past year than the year

before?

This question was intended to test the hypothesis that traditional television had

gone down over the past year because of the availability of streaming episodes.

5. Do you use online video services like Hulu or television network

websites to watch television programming?

Since this survey was mainly aimed at obtaining information about online viewing

question 5 was included as a way to separate the respondents that use online video

services from those who don’t. Respondents who filled out they did not use online

video services were asked to indicate why they did not use these services and

instructed to skip to the end of the survey where they were asked to provide their

demographic information (gender and age)

6. How long have you been using services like this?

This question seeks to answer both how much experience users have with these

services and when online video services started to gain traction within the sample

group. Answers were based on research into when networks started putting full

episodes of their television shows on their websites. Available answers are:

A. Since 2009, B. Since 2008, C. Since 2007, D. Since before 2007


47

7. What are your main reasons for using services like these?

This is one of the most important questions in the survey. The goal of the question

is to see what people are using services like this for, what the most common

reasons are, and how the availability of online episodes influences the viewing

habits of the respondent. The available answers were based on common recurring

reasons for use of online video services found in the literature review in addition

to feedback gained from the pilot survey. Available answers were:

A. Having to watch fewer commercials, B. Getting better video quality, C.

Discovering new television shows, D. Being able to view episodes at any time of

the day, E. Catching up on episodes I haven’t seen, F. Watching an episode that I

missed, G. Watching an episode again after it was broadcast.

8. Do you watch any television programming exclusively on the web?

This question was intended to determine if the respondents were using online

video services occasionally, if doing so represents a change in viewing habits or a

complete shift from traditional television to alternative web services. Available

answers to this questions were:

A. Yes, all of it (for people that watch all the television they view online), B. Yes,

some on traditional television and some online (for people that switch between

traditional television and web services, but view one or more of the television

shows they follow exclusively online), C. No, I use both traditional television ad

internet (for people that switch between viewing their shows on traditional

television and watching them on video streaming sites)


48

9. What websites do you use to view television content ?

This question was included in the survey to determine the most popular video

streaming site among the sample group. Respondents were given the opportunity

to fill in their own additions to the provided list of sites. The available answers

were: A. Hulu, B. Network websites, C. TV.com, D. YouTube, E. Fancast, F. Other.

Another fact that can be determined from this question is if respondents are

primarily directly using the network websites, or if they are going through third

party sites like Hulu or even Youtube.

10. How many hours of television content do you watch online in a week

on average?

This question was included to see how many hours respondents watched online in

comparison to the amount of traditional television viewing they did. The

distribution of the provided answers was based on feedback from the pilot survey.

Provided answers were: A. Less than 2 hours, B. Between 2 and 4 hours, C.

Between 5 and 7 hours, D. Between 8 and 10 hours, E. More than 10 hours

11. How many hours of television did you watch online in a week on

average a year ago?

In order to determine if there is an up- or downward trend in the amount of

television content viewed online this second data point was added to be able to

compare online viewing behavior at the time of the survey with that of a year ago.

12. What is your preferred viewing method ?

This question was included to discover if users prefer to watch television online or

traditional television and has an open line to provide an explanation for the answer

they chose.


49

13. Gender

14. Age

These questions were included to see if significant relationships could be found

between gender or age and particular types of viewing habits. Distribution of age

was based on the class surveyed and adjusted based on returned surveys from the

pilot survey.

Procedures

The survey for the study was submitted for approval to the Department of

Electronic Media and approval was given in November of 2009.

A pilot survey was then conducted by the researcher in two Introduction to

Electronic Media classes to determine whether any changes needed to be made in

the survey with regards to language or distribution of the answers. After analysis

of the results, some minor adjustments were made in the age distribution and the

instruction text for the survey. For a copy of the pilot survey, refer to Appendix A.

In the pilot version of the survey no instructions were provided to skip to

the demographics questions at the end of the survey, causing some uncompleted

surveys where the answers to these questions were missing. In the final version

that was administered an instruction was added to skip to the last two questions of

the survey if the respondent did not have to fill out the online viewing section. For

a copy of the final survey, refer to Appendix B.

In order to find classes in which to conduct the surveys, the researcher

contacted the department head of the Speech department, Mr. Robert Smith,

through e-mail. Through a department communication, the professors teaching

SPE 010 were contacted and arrangements were made to conduct and


50

arrangements were made with professors that were interested in participating, to

conduct the surveys. For the HPD 110 classes, the professor was contacted

directly. The written communication that was used is included in Appendix C,

After corrections were made, the survey was conducted with a total of 202

students. In the time frame between November and March, five Introduction to

Speech (SPE 010) classes and two Health (HPD 110) classes participated in the

survey.

The surveys were conducted by the researcher in the classroom. A short

introduction as well as instructions for filling out the survey were given to the

students. After the surveys were completed they were collected by the researcher

and processed into an Excel spreadsheet.

Data analysis

After all survey results were gathered, all the data was entered into the

Statistical Package for the Social Sciences (SPSS) for analysis. All independent

variables (TV ownership, broadband internet access, gender and age) were cross

tabulated to find relationships between the variables. A Chi-square test was run to

calculate the significance of these relationships.

Results were rendered in a table giving percentages and were also

presented in chart form.


51

Chapter 4

Results

Reported percentage values in this chapter have been rounded up or down

to one decimal. Any value of .5 percentage points was rounded up, anything under

this value rounded down. In each survey question, percentages provided are

related to the number of students who responded to that particular question.

Demographics

Of the 201 respondents who answered Question 13, 84 were male (41.6

percent) and 115 were female (57 percent). The distribution in age groups of the

201 respondents who answered Question 14, is indicated in Table 1.


52

Table 1. Age distribution of survey respondents

Age group Number of respondents Percentage

18 or under 37 18.3%

19 to 20 108 53.5%

21 to 22 38 18.8%

23 to 24 8 4%

Above 24 10 5%

Total respondents 201 100%

Television Ownership

Of the 202 respondents who answered Question 1, 186 (92 percent)

indicated they own a television set, and 16 (7.9 percent) did now own a television

set.

Broadband Access

For convenience, the results for the distribution of broadband Internet were

split into three groups: those who have broadband access, those who don’t, and

respondents who did not know whether they had access to broadband Internet.

Question 2 was answered by all 202 respondents, and indicated that a majority of

190 respondents have broadband access (94 percent). There were three

respondents who did not have broadband, representing 1.5 percent, and nine

respondents (4.5 percent) did not know whether they had broadband access.

Hours of Television Consumption

In Question 3, students were asked to indicate the number of hours they

watched television per week. Table 2 is based on the responses to Question 3. The

number of respondents that replied to this question was 202. The surveyed

students watch a relatively low amount of television: 87.6 percent (177

respondents) watch television 10 hours or less per week. This percentage is based

on the combined responses to the first three options for this question.


53

Change in Amount of Television Viewed

To see the change in viewing habits over the past year, the students

participating in the survey were asked in Question 4 to compare their time

watching television at the time of the survey to a year ago. There were 201

respondents to this question. A majority of 119 students (59.2 percent) have

watched less television over the past year. A common reason referred to in the

comment section of the question was that the students had a busy schedule. Of the

143 students that filled out the comment section of this question, 101 students

indicated time constraints as being the most important reason they were not

watching as much television. Many students spent more time doing school work

(97 respondents), working at a job (17 respondents) or spending time with friends

(5 respondents).


54

Table 2. Television consumption of surveyed students

Hours of television viewing Number of respondents Percentage

Less than 3 hours 44 21.8 %

Between 3 and 7 hours 92 45.5 %



More than 15 hours 9 4.5 %

Total respondents 202 100 %

Of all respondents to this question, 22 (11 percent) answered that they

watched more television over the past year, and 60 said the amount of television

they viewed remained about the same (29.9 percent).

Watching Television Online

In response to Question 5, Do you use online video services... to watch

television programming?, most students indicated that they did make use of these

services. This question was answered by 202 students. A majority of 123 students

(60.9 percent) watched television programming on online video sites, and 78

students (38.6 percent) indicated not using these services. The total number of

respondents that indicated a reason for not watching television programming

online in the comments field of Question 5 was 64. Among the most common

reasons for not using these types of services were that the respondents were not

interested in watching television on a computer either because they preferred the

viewing experience on a regular television (26 respondents), or because they did

not spend much time watch television programming in the first place (16

respondents). Another 10 respondents indicated that they did not have time , 9

respondents indicated not knowing how to get access to the content as the reason

to not use online video services.

History of Use of Online Video Services

In Question 6, respondents were asked how long they have been using

online video services. A total of 123 students answered this question. Use of

online video services has only recently started to gain traction with most of the

respondents of the survey. Most students answered that they have been viewing


55

online episodes of television programming since either 2009 or 2008, at 44.7

percent (55 respondents) and 35 percent (43 respondents) respectively.

Reasons for Using Online Video Services

A total of 124 students responded to Question 7, in which they were asked

to give the reasons they use online video services to watch television

programming. This was a check-all-that-apply question, so multiple answers were

possible. Table 3 reports the responses on all individual values for Question 7.

Figure 2 gives a graphical representation of what the respondents answered to

Question 7.


56

Reason Number of respondents Percentage

Having to watch fewer commercials 55 44.7 %

Getting better video quality than traditional television

9 7.3 %

Discovering new television shows that I haven’t seen before

36 29.3 %

Being able to view episodes any time of the day, on my own schedule

98 79.7 %

Catching up on older episodes that I haven't seen before

89 72.4 %

Watching an episode that I missed on television

92 74.8 %

Watching an episode again after it was broadcasted on television

39 31.7 %

Other 3 2.4 %

Table 3. Reasons for using online video services

Watching Television Content Exclusively on the Web

A total of 124 respondents answered Question 8. Based on the responses to

this question, a very limited amount of respondents are watching television

content exclusively on the Internet (9 respondents or 7.3 percent). Most

respondents use both television and the Internet to watch their shows (72

respondents or 58.4 percent), and 43 respondents (35 percent) indicated that they

watch some of their television shows exclusively online.

Websites

In Question 9, students were asked what websites they used to watch full

episodes online. Question 9 was answered by 124 respondents. This was a check-

all-that-apply question, so respondents could choose multiple possible answers.

The most popular outlets to obtain full episodes of television shows are Hulu (78


57

0

20

40

60

80

100

Number of respondents

Having to watch fewer commercialsGetting better video quality than traditional televisionDiscovering new television shows that I haven’t seen beforeBeing able to watch shows any time of day, on my own scheduleCatching up on older episodes that I haven’t seen beforeWatching an episode that I missed on televisionWatching an episode again after it was broadcasted on televisionOther

Figure 2. Reasons for viewing television content online

respondents or 63.4 percent), YouTube (68 respondents or 53.7 percent), and

network websites (65 respondents or 52.8 percent). Table 4 gives an overview of

the responses to Question 9, and Figure 3 provides a graphical representation of

the relative popularity of the different video services.

Noteworthy in this row is YouTube, since the site is not targeted at being a

portal for full episodes of television shows and does not usually have current

episodes of television shows.

Based on the comment section for this question, popular alternative to the

options provided in the question were Netflix (5 respondents) and iTunes (2

respondents).


58

Site Number of respondents Percentage

Hulu 78 63.4%

Network websites (FOX, NBC, CBS, ABC, etc.)

65 52.8%

TV.com 6 4.9%

YouTube 66 53.7%

Fancast 8 6.5%

Other 30 24.4%

Table 4. Use of different online video services

0

20

40

60

80

Number of respondents

Hulu Network websites TV.com Youtube FancastOthers

Figure 3. Use of different online video services

Hours of Online Viewing

A total of 125 students answered Question 10 about the weekly amount of

television content watched online. As with the amount of traditional television

viewing, the amount of online viewing was also relatively low among the students

who were surveyed: 88.6 percent of the respondents (109) to this question report

watching four hours of television programming or less online per week (this is a

combined percentage from values A and B). A majority of 79 of the students that

answered this question was in the lowest target (63.2 percent) of less than two

hours of online television programming viewing per week. Thirty students (24

percent) watch between two and four hours per week. Very few students watch

more than 4 hours of television programming online. The combined percentage of

all possible answers above 4 hours is 12 percent (15 respondents).


59

Online Viewing Year Ago

In Question 11, respondents were asked to indicated their usage of online

video services a year ago. The question was answered by 125 respondents. The

most common amount of television watched online was Less than 2 hours, which

represented 52 percent (65 respondents). Between 2 and 4 hours accounted for

almost 26 percent (32 respondents). Fifteen respondents (12 %) indicated that they

did not watch television online the previous year.


60

Chapter 5

Discussion

College Students versus Average Americans

This study particularly looked at the viewing habits of college students at

Kutztown University. What is interesting about the particular situation of college

students is that they have a lot less time available to watch television, due to their

busy academic schedules. This clearly showed in the survey results, their

television consumption was dramatically lower than that of the average American.

Whereas the average American watches 31 hours of television per week (Nielsen,

2009a), almost all respondents to the survey (87.6 percent) indicated watching

under 10 hours of television a week.

This has some major implications for the effects of new technologies on

their viewing habits. Since the overall consumption of television content is low, it

proved hard to measure the increase in the use of new technology like video

streaming of full episodes.

Use of Online Episodes

Because of their demanding schedules, college students are a particular

group that could potentially benefit greatly from on-demand technologies like

streaming television online. This shows in the results of the survey: Almost 61

percent of all the surveyed students indicated that they use online video services to

watch television programming, and increased flexibility in schedule is the most


61

common reason given by the respondents to use online video services (79.7

percent). Taking into account the busy academic schedules, jobs, and social

activities of students, it is understandable that they do not have a lot of spare time

to watch television.

The main purpose for watching programs online is to catch up on missed

(74.8 percent) or older episodes (72.4 percent) of a television show. Most students

use online services in addition to their existing television consumption, that is to

say they do not watch content exclusively online.

Viewing Experience

The majority of the respondents (58.4 percent) that used online video

services use both television and the Internet to watch television . In fact, most

students (74.8 percent) still prefer to watch television on a traditional television

set though.

The big benefit of a traditional television set is that it offers a superior

viewing experience to that on a computer. A computer is usually located at a desk,

making it a less comfortable situation than sitting on the couch watching TV. In

addition to that it’s difficult for a number of people to watch television

programming together on a computer. Watching television together with other

people is inherently a more social experience.

Market Share of Online Video Services

The survey clearly showed that Hulu was a dominant player (63.4 percent

of the 124 respondents to Question 9) in the online video-on-demand market

among the surveyed students. This corresponds with the trends that came through


62

in the literature review. According to comScore, the market share of Hulu is 83.1

percent of the total U.S. online audience. Hulu has been able to bring a very

strong content offering to television viewers, with most of the major networks

represented. Research also shows that the use of Hulu is still on the rise. Although

the increase in the number of new users is slowing down, the amount of content

viewed per user is increasing. Individuals spent more time online watching

television content (comScore, 2010).

The numbers from this study, however, show a different picture. This study

did show that the number of users is actually increasing (12 percent did not use

online video services in the year previous to the study), but the amount of

television programming watched online is decreasing. This can be attributed to the

fact that many of the students who were surveyed were freshmen, and therefore

had a big change in the amount of free time they had available.

Added Flexibility and Loyalty

Although the students surveyed did not watch a lot of television content,

either online or on a traditional television set, their reasons for using online video

services indicated that the flexibility that online viewing brings is one of the

important factors for them to use it. Network schedules are no longer commanding

the viewing patterns of the students. The online services are often used to catch up

on episodes that the student hasn’t seen before (72.4 percent), or watching

episodes that the the student missed when they were broadcast the first time (74.8

percent).


63

The online services make it possible for students to watch particular shows

on a more regular basis. If they miss an episode on television they can go online

and watch it on their computer, whereas, on television, viewers would have to

wait for a rerun to see an episode they missed the first time it was broadcast. If

this trend continues, the market for syndication of episodic television

programming could potentially be marginalized.

Integration of Technologies

Although traditionally online content has usually been accessible only

through a computer, various electronics manufacturers are starting to offer

integrated solutions. TiVO is releasing a new version of their DVR in 2010, called

the TiVO Premiere that allows users to watch YouTube, Netflix, Amazon, and

Blockbuster on-demand titles on their television through the DVR.

TiVO is not the only company releasing hardware like this. There were

numerous other companies getting in the market to bring online content to a

traditional television screen. The integration of technologies might eventually lead

to more people using online services to view television programming.

Trends for the Future

Mobile consumption of television content is likely going to be the next big

frontier. With an increasing number of people owning a mobile device capable of

playing video, and new devices like the iPad coming to the market, new

distribution opportunities are opening up for networks. With the advertising

revenue declining this might be a valuable avenuefor networks to try. Netflix, for

example, has already announced that they are releasing applications for both the


64

Apple iPad and iPhone / iPod Touch devices giving users the ability to view

movies and archive seasons of television shows when they are on the go.

Apple has also proven that people are willing to pay for the ability to take

content with them on their portable devices. Through their iTunes service, people

can buy episodes of television shows or a so-called Season Pass, which gives

access to all the episodes of a particular television season.

This might be a way to monetize content outside of traditional television

advertising. Although the advertising revenue of streaming sites like Hulu is bleak

in comparison to the massive television advertising market, Hulu is a profitable

company as of 2009 and brought in more revenue than one of the biggest sites on

the Internet, YouTube. Advertisers like to be associated with professionally

produced content rather than user-generated content such as that found on

YouTube.

Suggestions for Further Research

Because the sample from this study, college students, has a very particular

set of viewing habits, it is difficult to extract any trend information about

developments in viewing habits in the population at large from this research.

Many of the college students in the sample, indicated they have watched less

television in the past year. This can be explained by the fact that most surveyed

students were freshmen. Going from high school to college, they found that they

had a lot less time on their hands to spend on leisure activities, which influences

their television viewing time.


65

For this reason, it would be beneficial to do this research with different

sample groups, which would make it possible to draw more substantial

conclusions with regard to television viewing trends and the use of online media

for consumption of television programming.

Another interesting avenue of research to explore might be to look at

different types of on-demand media and the demographics of the people who use

them. Since this study only looked at the effects of online television content on

viewing habits, it gives a somewhat limited view on the issue because there are

numerous other on-demand technologies available that can be used to gain more

flexibility in television viewing. Taking into account the different on-demand

technologies that are currently available and studying their use, would give a more

complete picture about changes in viewing habits.


66

Appendix A

Television viewing habits surveyWim Mulder, Electronic Media Department

Please answer the following questions by checking the SINGLE box () representing the most accurate answer. For questions asking you to check “all that apply” please check EACH circle () that applies to your viewing. All questions apply to your viewing behavior during the school semester.

* When talking about television, we refer to broadcast or cable programming being viewed on a television set as distinct from television content distributed online.

1. Do you own a television set ?! A. Yes! B. No

2. Do you have broadband Internet ?! A. Yes, DSL! B. Yes, cable! C. Yes, school network! D. No! E. Don't know

3. How many hours of television do you watch in a week on average ? *! A. Less than 5 hours! B. between 5 and 10 hours! C. between 11 and 20 hours! D. more than 20 hours


67

4. Have you watched more or less television in the past year than the year before? *! A. More, because ____________________________________________________________________________________________________________________________________________________________! B. Less, because ____________________________________________________________________________________________________________________________________________________________!! C. About the same amount

5. Do you use online video services, like Hulu or television network websites, to watch television programming?

! A. Yes! B. No, because ____________________________________________________________________________________________________________________________________________________________

If you answered no to question 5, please skip ahead to question 13.—————————————————————————————————

6. How long have you been using services like this ?! A. Since 2009! B. Since 2008! C. Since 2007! D. Since before 2007

7. What are your main reasons for using services like these? (check circles for all that apply)

! A. Having to watch fewer commercials! B. Getting better video quality than traditional television! C. Discovering new television shows that I havenʼt seen before! D. Being able to view episodes any time of the day, on my own ! ! schedule! E. Catching up on older episodes that I haven't seen before! F. Watching an episode that I missed on television! G. Watching an episode again after it was broadcasted on ! ! television


68

8. Do you watch any television programming (that is available on traditional television as well as online) exclusively on the web?

A. Yes, I watch all my television programming online and use no ! television set to watch television programming

! B. Yes, I watch some television programs exclusively online and ! ! some programs either on television or online

C. No, I use both a regular television and the Internet to watch ! television programs regardless of the specific television ! ! program

9. What website(s) do you use to view television content ? (check circles for all that apply)! A. Hulu! B. Network websites (FOX, NBC, CBS, ABC, etc.)! C. TV.com! D. YouTube! E. Fancast! F. Other: __________________________________________________

10. How many hours of television content do you watch online in a week on average ?! A. Less than 5 hours! B. between 5 and 10 hours! C. between 11 and 20 hours! D. more than 20 hours

11. How many hours of television content did you watch online in a week on average a year ago?

! A. Less than 5 hours! B. Between 5 and 10 hours! C. Between 11 and 20 hours! D. More than 20 hours! E. Did not watch television content online a year ago

12. What is your preferred viewing method ?! A. Watching on a television set! B. Watching on a computer, because ____________________________________________________________________________________________________________________________________________!


69

13. What is your gender ?! A. Male! B. Female

14. What is your age ?! A. under 18! B. 18-20! C. 21-22! D. 23-24! E. Above 24


70

Appendix B

Television viewing habits surveyWim Mulder, Electronic Media Department

Please answer the following questions by checking the SINGLE box () representing the most accurate answer. For questions asking you to check “all that apply” please check EACH circle () that applies to your viewing. All questions apply to your habits during the school semester.

* When talking about television, we refer to broadcast or cable programming being viewed on a television set as distinct from television content distributed online.

1. Do you own a television set ?! A. Yes! B. No

2. Do you have broadband Internet ?! A. Yes, DSL! B. Yes, cable! C. Yes, school network! D. No! E. Don't know

3. How many hours of television do you watch in a week on average ? *! A. Less than 3 hours! B. Between 3 and 7 hours! C. Between 7 and 10 hours! D. Between 10 and 15 hours! D. More than 15 hours

4. Have you watched more or less television in the past year than the year before? *! A. More, because ____________________________________________________________________________________________________________________________________________________________! B. Less, because ____________________________________________________________________________________________________________________________________________________________! C. About the same amount


71

5. Do you use online video services, like Hulu or television network websites, to watch television programming?

! A. Yes! B. No, because _____________________________________________________________________________________________________________________________________________________________

If you answered no to question 5, please skip ahead to question 13.—————————————————————————————————

6. How long have you been using services like this ?! A. Since 2009! B. Since 2008! C. Since 2007! D. Since before 2007

7. What are your main reasons for using services like these? (check circles for all that apply)

! A. Having to watch fewer commercials! B. Getting better video quality than traditional television! C. Discovering new television shows that I havenʼt seen before! D. Being able to view episodes any time of the day, on my own schedule! E. Catching up on older episodes that I haven't seen before! F. Watching an episode that I missed on television! G. Watching an episode again after it was broadcasted on television! H. Other, __________________________________________________________________________________________________________________________________________________________________

8. Do you watch any television programming (that is available on traditional television as well as online) exclusively on the web?

A. Yes, I watch all my television programming online and use no television set to watch television programming

! B. Yes, I watch some television programs exclusively online and ! ! some programs either on television or online

C. No, I use both a regular television and the Internet to watch ! television programs regardless of the specific television ! ! program


72

9. What website(s) do you use to view television content ? (check circles for all that apply)! A. Hulu! B. Network websites (FOX, NBC, CBS, ABC, etc.)! C. TV.com! D. YouTube! E. Fancast! F. Other: _____________________________________________

10. How many hours of television content do you watch online in a week on average ?! A. Less than 2 hours! B. Between 2 and 4 hours! C. Between 5 and 7 hours! D. Between 8 and 10 hours! E. More than 10 hours

11. How many hours of television content did you watch online in a week on average a year ago?

! A. Less than 2 hours! B. Between 2 and 4 hours! C. Between 5 and 7 hours! D. Between 8 and 10 hours! E. More than 10 hours! F. Did not watch television content online a year ago

12. What is your preferred viewing method ?! A. Watching on a television set! B. Watching on a computer, because ____________________________________________________________________________________________________________________________________________

13. What is your gender ?! A. Male! B. Female

14. What is your age ?! A. 18 or under! B. 19-20! C. 21-22! D. 23-24! E. Above 24


73

Appendix C

Hello Prof. [Name],

I am a grad student in the Electronic Media department and currently working on my thesis. Dr. Chuk (my thesis advisor) suggested I contact you about a survey I am planning on doing. My thesis is about the rising popularity of watching television content online and how it affects television viewing habits of college students. For my thesis I am conducting a survey among KU students about their television viewing habits.

At the moment I am working on this survey that I am planning on conducting this semester. In order to get a varied sample of all college students I would like to conduct surveys in Fundamentals of Speech classes (SPE 010) or General Psychology classes (PSY 011). The ideal way to conduct this survey would be in a classroom setting, since it would give the quickest turnaround of the survey data. Also, it would give me the opportunity to clarify any confusion about the questions in the survey.

I would like to ask your opinion about conducting a survey in one of the SPE 010 classes. The surveys will be fairly short and so they should not take up too much time. Please let me know what your thoughts are and if you think it would be a possibility to conduct this survey during class time.

If you would like to hear more specifics about the survey or the study in general I'd be more than happy to set up an appointment with you to discuss it further and please feel free to e-mail me with any questions you might have.

Thank you very much for your time.

PS: I have copied my advisor on this e-mail.--Wim [email protected]


74

mailto:[email protected]

mailto:[email protected]

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The Evolution of On-Demand Media Thesis

Education

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