Video viewing is changing. The family room TV, which has dominated with linear broadcast for decades, is starting to lose its sway. More consumers are turning to different devices—computers, tablets, gaming consoles, and even mobile devices—to watch the content when and where they want to. And unless you’ve been living under a rock, you’ve probably heard about cord cutting in which viewers ditch their cable subscriptions for the video they can access over the Internet through OTT (over-the-top) services. It’s clear that change in the way we consume and watch video is coming. But when will we reach that tipping point? To arrive at an answer, or at least to track some key indicators on the path to OTT dominance, this blog is the first in a year-long series that will look at consumer video traffic composition, changes in traffic volume for OTT services, and new OTT services having a significant impact on adoption.
Let’s establish some baselines of video consumption data and consumer behavior today, and then in subsequent blogs, note changes from this. Here are snapshots that we plan on updating throughout 2016.
Millennials are leading the way
Perhaps the shift is generational in nature as it would seem that Millennials have a much greater penchant for watching online video than their demographic counterparts. As we can see in the graphs below (from Limelight Networks’s 2015 State of Online Video report), the majority of the general population (40% as indicated in Figure 23) tends to watch only 1-2 hours of online video per week.
On the other hand, Figure 24 shows about half that number of Millennials watching 1-2 hours which means that more Millennials are watching more online video each week. Look at the “greater than 10 hours response”—Millennials are almost double the number as everyone else.
But the amount of video being watched is only half the story. Let’s look at how many pay online services are subscribed to:
As demonstrated in the two figures above, Millennials are about half as likely to “not subscribe” to a pay TV or OTT service (like Netflix and Hulu) and more likely to subscribe to multiple providers.
It is clear Millennials are leading the way in OTT adoption right now. As 2016 unfolds it will be interesting to see if the “Everyone else” group catches up.
Early success of OTT is clear from Internet traffic data
Regardless of the demographics, the previous figures demonstrate one clear thing—people are watching more online video. While Millennials are leading the charge (and may signal the generation tipping point between shifting from linear broadcast to online video), all of the demographics are showing a penchant for watching online content and that is reflected in an analysis of network traffic.
Now let’s set baselines on what today’s video traffic contribution is to overall volume. The below graphs and charts from Sandvine show North America’s peak period traffic on fixed access networks in Q4 2015:
Real-time entertainment (audio and video traffic) hit 70% of downstream bytes during peak period. Now let’s drill down to see what specific traffic makes up these broad categories:
In the above table, Upstream is traffic from the consumer to the app service, Downstream is traffic delivered to the consumer, and Aggregate is the combined results. No surprise that Netflix and YouTube are leaders in peak period traffic. This picture could be altered quite a bit as we approach the end of 2016 with Facebook’s announcement that they will support video embedding soon. New entrants that include Apple, Amazon, and Google could also have major implications on network expansion planning and partnerships with network owners - OTT newcomer Amazon already is the fourth largest source of downstream traffic.
As new OTT services launch this year, I would expect the see the top few traffic share leaders decrease their share of traffic even as their volume grows, so I will be monitoring this.
The variety of OTT service offerings is increasing
It’s nice to have data on the top 10 traffic generators, but to get a better sense of what the OTT space looks like, we need to drill down below the heavy hitters. Here is a list of other OTT services to give a sense of the broad spectrum of video content available:
People who care about internet infrastructure or are planning to offer new OTT services will be watching this space to see who the winners are and who the new entrants will be. It will be interesting to see how the traffic volumes grow this year, and if there are significant changes in the ranking of Internet traffic usage. In future blogs we will look at consumer behavior regarding OTT services, how they are coping with Internet peak traffic congestion, and the impact of several significant new players, such as Apple, entering the OTT space this year. Expect the unexpected in Internet traffic usage.
As a final note, 2015 marked the 20th year of the streaming media industry. For those who weren’t around to witness the early days of the industry, a blog on the early history is a great read.