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Proximity Research Report

**

Computer TV: Gen-Y's Switch to Online-based Viewing **

//How Gen-Y is increasingly getting their video content online//

By Justin Seaton

Spring 2010

**Table of Contents**

Title Page

1. Executive Summary 1

2. Introduction 2

3. Where ae Gen-Y Going Online 3

4. Why is Gen-Y Moving Away from Regular Television 4

5. Who is Doing Most of the Viewing 5

6. What is Being Watched Online 6

7. Recommendations 7

8. Attachment 1 8

9. Attachment 2 9

10. Attachment 3 10

11. Resources 11

**Executive Summary** In the past few years, with the coming of some great, free online streaming sites, the old way of viewing television has changed for Gen-Y. As opposed to the old way of having to wait until a specific time for a certain program to come on, Gen-Y now has access to most shows with just a mouse click, and mostly free of charge.

The focus of this report is how Gen-Y is increasing abandoning the old way of watching television, what new ways that Gen-Y is viewing their video content, and its implications. This report will look at which new ways of viewing content are preferred among Gen-Y and why that is.

With the bettering of technology comes more ways for Gen-Y to access their favorite shows through the internet. According to many Gen-Yers, the reason online viewing is surging is due to the fact that its convenience and to the fact that many online streaming sites are free of charge. With the move away from old way of viewing video content, advertisers are looking for ways to market their products to Gen-Y.
 * Introduction **

Gen-Y, when viewing video content online tend to go the most popular sites such as Hulu and YouTube. In fact, the focus group results, which came from a focus group that I ran in April, confirms this. All five of the participants had said that they had used both of those sites recently. Not only that, but four out of the five claimed to be frequent visitors.
 * Where are Gen-Y Going Online **

What is Hulu? Hulu is a free online streaming website that offers television shows and movies from ABC, NBC, Fox, and many other network (Wikipedia). Hulu's videos are in flash video format with some high quality videos available. Hulu is a joint venture of NBC Universal, Fox Entertainment Group, and ABC Inc (Wikipedia). Hulu is one of the more popular streaming online sites, as evidenced by the fact that its videos receive millions of hits every day.

The other most popular streaming video site is YouTube. YouTube, which was started in 2005, is a video-sharing website in which users can upload, view, and share videos. The service uses adobe flash technology to display video content including television clips, shows, and music videos. There is also a lot of amateur content. In 2006, YouTube was purchased by Google Inc. and it is now operated as a subsidiary of Google (Wikipedia).

These sites get the bulk of online viewers. Other sites to get movie rentals like NetFlix or iTunes Purchases are not as popular, probably due to the fact that they have a cost.

The old way of viewing television is becoming less and less popular among Gen-Y for many reasons. First, Gen-Y is attracted to the convenience of viewing through their television. With just one click on sites like Hulu or YouTube, and you can be watching your favorite television show at your computer chair. Lynn Franco, Director of The Conference Board Consumer Research Center, says that, "online viewing allows users to watch TV on their own schedule, catch up on missed content and focus on their favorite programs" (Sachoff, Mike).
 * Why is Gen-Y Moving Away from Regular Television **

Another reason that this is clicking with Gen-Y is that is free of charge. The focus group results confirm this as all members of the group said that are attracted to these sites because they are free and that they would not pay for them. Many members of Gen-Y might not be able to pay for cable television, so having free online sites for them to see their favorite shows is attractive.

It looks like the days of regular television being the dominant form of viewing are over. According to James Kennedy, Research Executive in YouGov's Media Consulting team, 55% of 18-24 years olds watch television online at least once a week (TV sets a 'Thing of the Past'). With such a rapid shift to online television, advertisers need to find new ways to reach out and try to market to this very important demographic.

See attachment 3 for just how much traffic has increased at online video sites over the past few years.

Who is Doing Most of the Viewing **

Who is doing most of the viewing is an interesting subject. Obviously, as I have pointed out above, this remains extremely popular with Gen-Y, who use it due to its convenience, realiability, and its lack of charge. According to the article by Michael Greeson, over one-third of all internet viewers are between the ages of 18 and 32 (Greeson, Michael). Indeed this is more proof that Gen-Y is leaving the old television and moving to the computer. Although the most growth is with the younger viewers, there is growth among all age groups and all demographics when it comes to online viewing. The median age for online viewing is 40 (Greeson, Michael.)

Another group that is doing the most viewing, according to Michael Greeson, are more wealthy people. About 14% of total online viewers make over $100,000 a year (Greeson, Michael). This fact alone makes online viewing attracting for product advertisers. Among those not doing a lot of viewing are those that still have an internet dial-up connection. Due to its much slower speed, it is very difficult to sit through a show while it buffers many times.

What is Being Watched Online ** What are the most popular things to watch online? According to Michael Sachoff, "shows focused on news are the most popular online programs, watched by 43 percent of Internet users. Sitcoms, comedies and dramas are watched by 35 percent, while 19 percent of online TV viewers prefer reality shows and 18 percent follow sports. Other forms of online content include previews, user-generated content, additional content from favorite shows, soap operas and advertisements" (Sachoff, Mike).

According to the focus group that I ran, the most popular thing among the group to watch was comedies. Almost all of the participants said that they went online to watch their favorite comedy shows. One thing my focus group showed was not being watched online was sports. Many of the participants in the focus group said that they don't enjoy watching sports in a computer chair and that they enjoy watching sports live on their bigger-screened televisions.

One more interesting find from the Michael Greeson article is that older online viewers tend to go online to look at one specific kind of entertainment. On the other hand, the younger viewers are known to look at bits of all different kinds of entertainment.

See attachment 2 for a chart that has the break down of what is watched online.

It seems clear that Gen-Y wants to get their video content in a good quality, at their own time, and free of charge. Many online video streaming sites fill this need. Due to the fact that this has become the new destination for Gen-Y, advertisers must use this new technology in order to market their products to an important demographic.
 * Recommendations **

I'd advise proximity clients to target their advertisements to these online streaming sites. They have been proven succesful among the Gen-Y crowd. Targeting males on these sites might be even more succesful, as the focus group results show. I'd advise to do research on which ways are most effective in reaching Gen-Y through these sites.

Focus group results:
 * Attachment 1 **

The rationale of the focus group that took place in April of 2010 was:

Premium video content is increasingly being delivered through the Internet, giving Gen-Y many different ways to access TV shows and movies. As a result, broadcast TV audiences are being fragmented and the movie industry can no longer assume that box office revenues alone will pay for the production of new movies. The rationale for our focus group sessions is to determine how Gen-Y currently watches premium video and which broadband technologies they prefer. This information will allow us to advise Proximity clients on how best to target Gen-Y using ads associated with premium content.

Questions asked during the session were:
 * What televisions shows must you watch live? Would you be willing to switch to watching shows through a streaming service?
 * How do you watch the bulk of your premium content?
 * Does the size and quality of the screen play a role in determining how wach TV shows and movies?
 * What cable company provides the best access to premium content?
 * If those companies made the interface more user-friendly, would you be willing to switch? How much would you pay for that service?

Findings:
 * Most males only watch sports live- they stream a lot.
 * Only a few used consoles.
 * Most females don't know how to stream through platforms.
 * Not willing to pay for online streaming services.
 * Those without DVR use a PC as a second options.

According to the video focus group findings, targeting males on streaming sites has greater potential. Most are not willing to pay for services unless there is some great benefit. They said, though, that they price would have to be very reasonable.


 * Attachment 2 **

This is a breakdown, according to the Pew Research Center, of what people watch online.

According to the chart below, suprisingly news has the highest percentage of adult internet viewers, slightly edging out comedy. This may be due to the fact that the chart includes all adults, not just Gen-Y. Had it been specific to Gen-Y, I'm pretty sure that comedy would probably be number one, at least that's what my focus group results say.

Source: Pew Research Center. "Online Videos Go Mainstream".

Attachment 3 **

This graph clearly shows the recent surge in online video-sharing sites. In the most recent year, 2009, a little over 60% of all internet users have accessed a video-sharing site.

Source: Pew Internet & American Life Project. "The share of online adults watching video has doubled".

References ** Greeson, Michael. (8 April, 2010). Retrieved on May 14, 2010. []

Pew Internet & American Life Project. "The share online adults watching video has doubled". Retrieved on May 16, 2010. []

Pew Research Center. "Online Videos Go Mainstream". Retrieved on May 16, 2010. []

Sachoff, Mike. "More People Watching TV Online". (3 April, 2009). Retrieved on May 12, 2010. []

"TV Sets a 'Thing of the Past". (15 May, 2010) Retrieved on May 15, 2010. []

Wikipedia. Hulu. Retrieved on May 15, 2010. []

Wikipedia. YouTube. Retrieved on May 15, 2010. []