press release

release detail

Fragmented video-on-demand market pushes viewers to illegal downloads

• Rights restrictions, poor delivery and pricing undermine sector

London, 29 January, 2009: A study into the state of Video-on-Demand (VOD) in the UK, from the perspective of the viewer, has revealed that fragmented delivery technologies, confusing rights restrictions and expensive download charges risk driving viewers away from legitimate VOD services. Many viewers are keeping their use of VOD to a minimum, while others are turning to illegal download sites. But the study: VOD State of Play, developed by Essential Research, found that there is strong consumer demand for a TV-based VOD service and that viewers are willing to accept advertising to help make this a reality.

The report, which combines qual. and quant. research from hundreds of VOD users, predicts that once barriers to VOD are resolved, a seismic shift in the way that TV is consumed will take place: Currently 8/10 PC VOD users only use the services occasionally, however 24% of VOD users claim that they now watch more TV then they did before.

26% of PC VOD users admit to using peer-to-peer or torrents to download video content, with 42% of illegal VOD users saying that “watching programmes that are not scheduled in the UK” is a key driver. Price is also a factor with 75% of VOD users saying that on-demand services should cost less than the equivalent DVD.

Stuart Knapman, Partner at Essential Research and Director of the Study comments: “There is a growing realisation among audiences that they can control what they watch and when they watch it and this has huge appeal. But most are not doing it regularly as they feel that the industry is not keeping up with their expectations. Viewers want a hassle-free, cinematic TV experience with the right content and the right commercial model. When this happens, TV is going to change forever. But for most people the current reality is a computer screen with confusing rights restrictions and lots of proprietary software.”

The report also includes classifications to define the attitudes of different VOD users:

1. Broadcast Assassins (18%)
• A tech savvy viewer who no longer relies on the TV schedule
• Has a busy social life, but will find time for must-watch television, such as US series and cult classics
• Uses various VOD services, including illegal file sharing sites to search for specific titles
• Feels forced into use of illegal providers by the deficiencies of legitimate services.
Tend to be male, with a quarter under the age of twenty-five.

 2. Schedule slaves (20%)
• Have occasionally experimented with VOD services, but are none too fussed about them.  Like television and trust the schedule to help them find something to watch
• Are broadly content with the way they are currently watching
In general this group is ambivalent towards VOD services. It is a diverse group in terms of demographics, understanding and ownership of technology

3. Willing confused (17%)
• Plan television viewing to ensure they never miss their favourite programmes
• Have experimented with VOD and have been impressed with services such as the BBC iPlayer. Complicated interfaces, technical jargon and pricing in many VOD services have left them confused and frustrated

This group tends to be slightly older (average age is 48) and whilst VOD is unlikely to replace scheduled television, there is an opportunity for incremental viewing

4. Unengaged (24%)
Television is not important to this diverse group. Since they see TV as a largely disposable product, they are unlikely to feel compelled to use VOD any time soon

5. Sky Plussers (21%)
• Regular users of Sky+ (and increasingly VOD services) to schedule television around their busy lives.  This also allows them to watch more of the television they like, instead of whatever happens to be on
• They are often parents and their children regularly watch clips, programmes and films on computers & laptops. Some are experimenting with file sharing sites

They are generally happy to pay extra for VOD services. 4 in 10 claimed to have bought video from the iTunes store. 

The report, which is available from Essential Research on request, was developed in consultation with the BBC, BT Vision, Channel 4, Five, ITV, Microsoft UK, MTV, O2, Ofcom, Three, UKTV, Virgin Media and Warner.

About Essential Research
Essential is a research consultancy specialising in Media, Communications, Technology and Entertainment. Our clients include Microsoft, MTV, the BBC, Channel 4, ITV, O2 and Freeview and we’ve worked on everything from the launch of new TV channels to consumer expectations of mobile video. Essential was established in 2005 by three former BBC executives; Luca Antilli, Stuart Knapman and Alex Charlton and in December 2007 was voted “Best New Agency” by the Market Research Society.

Please visit www.essentialresearch.co.uk for further information.

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