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TV's Detour: Waves of Disruption

Themes from 20 years of industry change include a move away from the TV and toward other devices, and away from traditional providers of paid TV services.

A version of this essay was originally published at Tech.pinions, a website dedicated to informed opinions, insight and perspective on the tech industry.

    The TV industry is constantly going through change. Focusing just on the last 20 years or so, we’ve seen several waves of disruption:

    Boxes: TiVo, Slingbox and others allowed viewers to take the content they traditionally had to consume where and when it aired on their televisions and move it through time and space, digitally.

    Piracy: File sharing, YouTube and a myriad of other sites and services made it easy for viewers to consume the content they couldn’t find anywhere else, without paying for the privilege.

    Legitimate online services: The next wave was an increasing legitimization of online options for consuming video, as YouTube began to respond to lawsuits, Netflix began to offer streaming and Hulu emerged as a first attempt by many content owners to re-engage with viewers.

    One of the consistent themes in almost all of this disruption has been a twofold shift:

  • A move away from the television and toward other devices
  • A move away from traditional providers of paid television services

I’m going to focus on the first of these shifts but I’ll touch on the second briefly at the end, and will likely come back to it in a future post.

A permanent shift or just a detour?

The big question in my mind has always been to what extent these trends were inevitable and inexorable, and to what extent they represented a temporary detour from past patterns to which users would return in time. I’ve always favored the latter explanation myself, and we recently got some interesting insight from Hulu on this point. Hulu’s SVP of advertising sales Peter Naylor did a blog post about viewing habits. He shared some statistics about how and where people consume Hulu — note that what is labeled “OTT” in this chart, Hulu calls “living room viewing” in its description:


As with many of the other disruptions outlined above, the primary vehicle for viewing video with Hulu was at first the PC. But even as early as Q1 2014, Hulu saw living-room viewing overtake PC viewing, and it’s now by far the dominant method of watching Hulu.

This is important, because what it suggests is that people didn’t view video content on their PCs as a matter of device preference, but as a matter of availability and convenience — they knew how to watch Hulu (or Netflix or YouTube) on their PC, but didn’t have a way to do so (or couldn’t figure out how to) on their television. As such, what has appeared to be a shift away from the television over the last several years may have been — at least in some cases — a temporary phenomenon, which will fade over time as the adoption of smart TVs, connected Blu-ray players, boxes like Roku, Apple TV and Fire TV increase, making TV-based consumption even easier than PC-based consumption.

Mobile in the minority

Of course, the other piece that’s growing — and which usually gets far more attention — is mobile. But it has grown from 15 percent to 17 percent over the same period that what Hulu calls “OTT” grew from 44 percent to 58 percent. Mobile is important, but the vast majority of Hulu viewing (and of TV viewing in general) is happening in the living room, not while truly mobile.

One caveat: Hulu’s “OTT” category appears to include something it calls “connected devices,” which might include tablets. Why would someone use a tablet in their living room rather than the TV? I see a couple of possible reasons: Convenience (it’s still easier to just watch using a connected tablet than figure out how to do it on my TV) and solitary viewing.

It’s the combination of that latter trend — viewing TV alone rather than in couples or larger groups — combined with truly mobile viewing that’s going to stick, at least to some extent. But the evidence from Hulu and other data suggests it’s small in comparison to the majority of people who still prefer to watch TV programming on the largest screen in the house. What you end up with then is this picture:

Jackdaw Research

The other shift looks equally vulnerable

The other shift I mentioned was the shift away from traditional providers of paid television services. So far, the rise of Netflix in particular — and, to a lesser extent, Amazon, Hulu and others — suggests we are indeed seeing this shift continue. However, we’ve also seen the major pay television providers respond to almost all of the disruptions by these new players over the last several years, though imperfectly in some cases.

I’m not going to focus on this shift here but, suffice to say, I suspect that the pay TV providers will hold up (and hold share) much better than a lot of people are assuming. The disruption we’ve seen in the industry has moved at a relatively slow pace, and that has given these players time to adjust their models and find ways to respond to almost all the major changes occurring around them, with one exception. But that’s a topic for a future post.

Jan Dawson is founder and chief analyst at Jackdaw, a technology research and consulting firm focused on the confluence of consumer devices, software, services and connectivity. During his 13 years as a technology analyst, Dawson has covered everything from DSL to LTE, and from policy and regulation to smartphones and tablets. Prior to founding Jackdaw, Dawson worked at Ovum for a number of years, most recently as chief telecoms analyst, responsible for Ovum’s telecoms research agenda globally. Reach him @jandawson.

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