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
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consumption of television content. The effects of this shift in television
consumption habits are transformative and far reaching for the television industry.
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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
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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
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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
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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
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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
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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
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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).
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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).
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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
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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
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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
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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).
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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
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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
THE EVOLUTION OF ON-DEMAND MEDIA
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.
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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
THE EVOLUTION OF ON-DEMAND MEDIA
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.
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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
THE EVOLUTION OF ON-DEMAND MEDIA
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
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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.
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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,
THE EVOLUTION OF ON-DEMAND MEDIA
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
THE EVOLUTION OF ON-DEMAND MEDIA
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
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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)
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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.
THE EVOLUTION OF ON-DEMAND MEDIA
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
THE EVOLUTION OF ON-DEMAND MEDIA
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.
THE EVOLUTION OF ON-DEMAND MEDIA
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.
THE EVOLUTION OF ON-DEMAND MEDIA
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.
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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).
THE EVOLUTION OF ON-DEMAND MEDIA
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 %
Between 7 and 10 hours 41 20.3 %
Between 10 and 15 hours 16 7.9 %
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
THE EVOLUTION OF ON-DEMAND MEDIA
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.
THE EVOLUTION OF ON-DEMAND MEDIA
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
THE EVOLUTION OF ON-DEMAND MEDIA
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).
THE EVOLUTION OF ON-DEMAND MEDIA
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).
THE EVOLUTION OF ON-DEMAND MEDIA
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.
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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
THE EVOLUTION OF ON-DEMAND MEDIA
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
THE EVOLUTION OF ON-DEMAND MEDIA
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).
THE EVOLUTION OF ON-DEMAND MEDIA
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
THE EVOLUTION OF ON-DEMAND MEDIA
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.
THE EVOLUTION OF ON-DEMAND MEDIA
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.
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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
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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
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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 ____________________________________________________________________________________________________________________________________________!
THE EVOLUTION OF ON-DEMAND MEDIA
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
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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
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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
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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
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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]
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