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September 26, 2013

Warning: Streaming OTT Services Leads to Binging


Watching multiple-servings of TV in a day won’t leave you bankrupt or in the emergency room, but enabling subscribers to watch series and movies when they want to, in any serving size, and even without commercials, represents the latest milestone in the evolution of TV viewing.

By implementing innovative and disruptive business, technology and distribution approaches early on, OTT services Netflix and Hulu Plus have created a gateway “drug” of sorts for viewers seeking an alternative to appointment TV and video-on-demand (VoD) systems. DVRing weekly shows helps with ad skipping but doesn’t address the practice of airing new episodes once a week.

Overdoing It?

Enter binge viewing. 


Image via Shutterstock

Binge viewing of TV series on OTT services has caught on bigtime, with Nielsen claiming 88 percent of Netflix subscribers and 70 percent of Hulu Plus subscribers say they stream three or more episodes of the same TV show in one day. One day! About 58 percent of people from this OTT viewer group say they opt to view shows on their own schedule so they can watch several installments at the same time.

It’s worthy of note that some pay-TV subscription channels have tried to fuel binging by airing consecutive - but not new - episodes of the same show in a row in real-time. These episodes are often from prior seasons.

Nielsen’s latest release of survey-based data is from the Nielsen Online Panel, which is conducted as part of the Nielsen Over-the-Top Video Analysis. The survey was conducted in July 2013 with a sample of over 2,000 consumers, including 1,000 Netflix users and 600 Hulu users.

First and Foremost?

It’s important to note that binge viewing isn’t exclusive to OTT services. It can be done with pay-TV subscription services but is far more challenging. Worse still, Netflix is making its already-popular and easier binging better by releasing all episodes of a  TV series season at once, leaving it up to viewers when and how much to watch.

Such was the case this season with Netflix’ $100 million and Emmy-nominated original series “House of Cards” starring Kevin Spacey. Approaches like this should have those OTT binging percentages higher next year when released by Nielsen.

Live sports notwithstanding, binging which should be renamed “convenience TV,” will spread like a virus, but with happy results.

OTT DNA

To understand why the percent of OTT bingers for Netflix is much higher than Hulu Plus, you need to take a quick look at their contrasting revenue models.

Netflix is a monthly subscription service ($7.99) and is commercial free. Hulu.com, which was created by (NBC Universal) Comcast, Disney-ABC and Fox, offers Hulu, a free, ad-supported offering and Hulu Plus, which carries a monthly subscription fee and ads. That’s little surprise given the bloodlines of its architects. Hulu says advertising is “limited” with the Plus offering. The company explains that its content includes ads to keep the monthly subscription price ($7.99) down.

The basic Hulu service is ad-supported and thus likely trails Netflix in binge viewing by more than the limited-commercials Plus offering.

Tracking the Trend

Consumers initially cut the cord for a number of reasons, chiefly price/available of cheaper alternatives. With OTT services, viewing is at the subscriber’s convenience, eliminating the need for appointment TV, VoD with fast forward disabled to support ad watching and even DVRing to skip ads.

Netflix fueled the popularity of binge viewing by providing entire seasons of episodes at once as is the case with the Emmy-winning, $100 million House of Cards original offering with Kevin Spacey. This allows subscribers to watch as much or as little at once, and on the viewer’s schedule, not the provider’s or the network’s.

Gateway “Drug”

Binging in general is short of an earth-shattering development in video viewing when you consider the evolution of TV viewing which provided a gateway to this activity with OTT services.

  • Appointment TV. It’s essentially network TV on the networks’ schedule, not yours. Miss a TV series episode and you are out of luck.
  • Time-shifting options. These include VoD and DVRs, which enable viewers to watch episodes of TV series after they air. VoD for later viewing via a pay-TV provider’s system while a DVR allows to record programming yourself for later viewing.
  • Ad Skipping. Early days of VoD were light on ads, often opting for a single sponsor rather than repeated breaks full of commercials. Because of the need for ads, many shows on VoD disable fast forward to address the phenomenon. Back to ad breaks and lots of commercials, unless you have a DVR.

The Bottom Line

In the absence of numbers in context on binge viewing by (non-OTT) pay-TV subscribers, it’s difficult to make comparisons or contrasts between these offers and OTT services. In addition, comparing pricey services versus low-priced ones with different business and content models is a huge stretch and not apples-to-apples to begin with.

And though it’s a different beast - $79 a year Amazon Prime, which offers free two-day shipping on most vendor products and free borrowing of Kindle titles in addition to unlimited streaming of movie and TV shows at no extra charge, needs to be included in the future to provide a more complete analysis of OTT services when it comes to binge viewing.

What we have learned is that, when it comes to binge viewing of coveted content, it’s ultimately convenience that’s king as Netflix has proven, according to Nielsen’s numbers.




Edited by Alisen Downey


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