Consumer expectations around video content are continually evolving. As technology advances to offer new features and devices for users to consume content, providers need to keep up. Consumers are now accustomed to moving between services to meet momentary entertainment demands. Incorporating interactive elements into the viewing experience helps increase viewer engagement as well as deepen emotional investment in the content and the video platform. Interactive components that accompany video entertainment such as co-viewing capabilities, sports betting, exclusive features, gamification, and shopping also keep viewers on the platform longer, allow more room for partnerships and collaborations, and promote customer loyalty, ultimately driving revenue.
Leaning In: Engaging Viewers with Interactive Video
DEVELOPED FOR:
Video Service Delivery The introduction of streaming video services has radically changed how consumers enjoy media by introducing more choice and control for the viewer. It also complicates how video services are delivered.
In 2017, 75% of internet households paid for the linear experience of cable television versus only 44% of households today.
Streaming is now the most popular way for consumers of all ages to watch video content.
As of 2022, 87% of US internet households subscribe to at least one over-the-top (OTT) service. But saturation in the streaming market means services are experimenting with new ways to add revenue, retain and grow subscribers, and meet modern consumer expectations. New business opportunities are emerging as interactive features become integrated into video streams and as more consumers shift to multiplatform and mobile viewing. This white paper covers consumer interest in interactive entertainment and the next generation of video viewing. It discusses various forms of interactive entertainment and includes data about consumer demand and interest in such services. It also discusses the value of livestreaming and how interactive services can best be implemented and managed.
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Many viewers are already “leaning in” by using a mobile device as a second screen to engage in conversations and other activities while watching a specific program. With more content competition than ever, providers need innovative ways of enticing new customers and keeping current ones. Interactive television and streaming services create opportunities for providers to differentiate themselves, engage new and existing audiences, increase profit, and minimize churn. As the technology evolves, audiences evolve alongside it and now expect more than the flat viewing experience of days past. Incorporating participatory elements into the viewing experience transforms it from a passive to active event. Meeting Modern Expectations: Making Interactive Viewing Work Modern technology allows consumers to access any type of content whenever they want on virtually any device. The television is no longer the primary device for every viewer. Mobile phones, tablets, PCs, and other devices capable of streaming video are now commonly used to watch television shows, movies, and even sporting events. Interactive video engages viewers by making them active participants in what they’re watching. There are a few common ways this is built into video. Some examples of participatory elements include the following: Building a Robust Interactive Infrastructure • Hotspots : Responsive points within a video that can be activated to reveal more content or launch real-time interactive features such as quizzes, on-demand stats, emojis/soundmojis, and more. • Branches : A choose-your-adventure approach that allows the viewer to take control of the content. • Chat : Content such as livestreams often offer a way for viewers to talk with each other and to the creator.
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Synchronization: Bandwidth, Bitrates, and Resolution
Content today is streamed for multiple users by way of varying sources, including TV, mobile, tablet, computers, and streaming media devices. Synchronizing video and interactive elements across all devices, operating systems, internet connections, and viewer locations presents numerous challenges. The increase in the number and types of devices consumers watch has made internet video more accessible while simultaneously changing the conditions under which successful companies distribute video. These new content demands affect video delivery in the following ways: • Storage : Modern video files are larger than in the past but still require the ability to be accessed rapidly. • Encoding/Transcoding : The diversity of video viewing devices used increases the amount of file conversion processes that must be done. Interactive livestreams present situations where viewers can influence, choose, or contribute to the content that is presented. For example, a webinar could allow participants to ask questions, or a Twitch broadcast could give viewers the ability to guide and chat with the player. Livestream audiences can ask questions, chat with other viewers, and answer polls. Opportunities for Interactivity Within Live Programming • Compression : Higher video demand means more data exchanged over mobile and broadband networks. Techniques such as adaptive bitrate streaming dynamically adjust file compression levels to deliver video resolution that matches bandwidth availability.
Incorporating interactive elements into video as well as executing successful live broadcasts often requires different software.
There are feature-rich platforms that provide interactive functions such as live polling and chat-based services in addition to video editing, real-time analytics, adaptive bitrate, and security capabilities. These end-to-end solutions can support large live broadcast audiences in conjunction with the features necessary to deliver highly engaging video.
Moving to a Lean-In Experience
A “lean back” experience is where the viewer is not directly engaged in content; they take a more passive role. This contrasts with a “lean-in” experience where viewers not only choose what to watch but how to watch it. On-demand television is now mainstream. Audiences enjoy the power of choice when watching video. Interactive video content offers a new opportunity for monetization and consumer satisfaction – consumers can choose to engage or not, and this mix of autonomy and personalization can provide a serious boost to viewer satisfaction.
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The ease with which customers can trial, subscribe, and cancel OTT services brings new dynamics and challenges for content companies and service providers. Today’s consumers are well acquainted with online video and are comfortable trying many different streaming services. With a wide selection of streaming options that do not require long-term contracts, churn across OTT service providers is increasing, and services are struggling to retain and increase viewers. Major service providers are experimenting with hybrid business models to capture market share and expand user and revenue bases. Providers in more established OTT video markets want to expand worldwide and boost foreign offerings. As the streaming wars intensify, it is likely acquisitions and bundles of small services will become popular. Market Shifts, Direct-to-Consumer (DTC), and Intense Competition
Defining Churn and Hopping
Service hoppers are OTT subscribers who frequently switch between services and re-subscribe to services multiple times. These customers tend to stay with services for a shorter time, have more subscriptions at a time, and have canceled more services than other subscribers over the previous 12 months. Currently, 36% of OTT subscribers (32 million households) are “service hoppers.”
As of 2022, 44% of subscribers reported canceling a service.
Parks Associates calculates video service churn by comparing the percentage of households that report canceling a video service in the prior 12 months with the current reported service adoption rate.
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Service Stacking: Unbundling to Re-bundle
Before the boom of OTT services overwhelmed consumers with options, cutting the cord in favor of individual subscriptions simplified the viewing experience and was cheaper than traditional cable-TV. This contrasts with today’s consumers who endure subscription fatigue, ever-increasing prices, and confusion over which service is currently offering a specific program. Consumers crave the simplicity provided by the early days of streaming. In the first quarter of 2022, 54% of US internet households subscribed to four or more OTT services, with 20% subscribing to eight or more services. Both providers and consumers recognize the need for simplification, and bundles are one way to achieve this. Parks Associates survey research finds that 56% of OTT subscribers prefer one bill and one account for home subscription services. • To the consumer, bundles provide simplicity, value, and convenience. • To the provider, bundles add value to services, increase long-term ARPU, reduce subscriber churn, and increase customer stickiness.
Personalization and Choice
Consumer expectations of personalized experiences and discovery are higher than ever, with video services and entertainment devices expected to provide user-specific interfaces, search results, viewing recommendations, and advertising. Consumers also personalize their own “service stacks” by subscribing to both large and small services to meet general and niche entertainment needs. As competition grows and churn rates stay high, interactive entertainment can keep customers engaged longer and, most importantly, keep them on the platform longer. Past behaviors and activity on the platform can also provide intelligent insight which can be leveraged to create a personalized experience tailored to specific interests. This will, in turn, keep customers coming back.
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As technology changes, so do consumer viewing behaviors. The streaming media environment is fragmented, and broadcasters and service providers are searching for new ways to optimize audience reach. Doing so will require leveraging innovations, new content formats, multidevice capabilities, and new advertising solutions to make the viewing experience align with consumers’ advanced and growing expectations. Consumer Viewing Expectations for the Future • Search and Discovery A seamless discovery experience is crucial, especially as consumers continue to “hop.” Content discovery solutions are moving beyond search histories and demographics to advanced artificial data-based solutions help predict consumer content preferences even for live broadcasts and instances where there is no usage history that typically enables viewer predictions. • The Shift to Mobile Viewing For the past ten years, the total average video consumption has hovered around 30 hours per week, with 15-20 hours taking place on a television. Mobile viewing, however, has increased from two hours in 2012 to six in 2022, illustrating how viewing preferences are changing over time.
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• Short-Form Viewing Content creators today compete with short attention spans and viewers who are never content- deficient. Short-form videos last from a few seconds to one minute and are one way to capture a viewer’s attention and convert them into a customer. This length is long enough to convey a message the audience relates to in a fun and interactive way before attention spans expire. • Content and Brand Partnerships Brands differentiate in competitive markets by partnering with video providers to deliver programming that may not be available on other services. The Real Housewives on Peacock Premium offers one example. Subscribers can choose to engage in extra footage and interviews, adding an extra layer of interactivity to an otherwise flat viewing experience. The extra footage also offers a competitive advantage due to the exclusive content and its interactive element. • Advertising and T-Commerce Emerge Advertisers also have an opportunity to develop partnerships and capture more revenue. According to Parks Associates’ research on ad-supported services, 41% of users did not mind watching ads on a free streaming service. Additionally, nearly one in four users (23%) often click on ads that they watch, and the same percentage (23%) often buy things that they see advertised.
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Delivery of live content has evolved over the past few years to include viewer engagement and content interactivity. Viewers expect a level of interaction with anything they view live, and content creators can use this to drive live viewership. Features such as co-viewing, gambling, and t-commerce encourage viewers to lean in, interact with friends, place wagers during sporting events, and make purchases. Interactive Video: New Offerings and Models Emerge
75% of heads of US internet households reported playing video games for at least one hour per week in 2021, up from 69% in 2019.
Many consumers supplement their viewing experiences with a second screen. These hyper-personalized interactive experiences can include features such as watching replays, finding statistics, and interacting through polls, chats, and social media. Second-screen multitasking follows the rising interest in consumers using their mobile devices for a variety of interactive entertainment functions such as gaming and live-streaming.
• Current Consumer Interest in Co-Viewing Co-viewing is a feature available on some social media platforms: it allows multiple people to watch entertainment content while interacting with each other through chat. Parks Associates survey data finds that 25% of US internet households say they would be very likely to try a co- viewing feature if offered by their favorite video service. This feature was especially popular among households with children.
• The Role of Data and Advertising Ad-based streaming services are increasing in popularity as consumers navigate inflation and recession fears. Predictably, these services generate most, if not all, of their revenue from the sale of advertisements, much like traditional broadcast or pay-TV services. An interactive experience for ads offers an additional revenue stream for advertisers and service operators. Implementing interactive shoppable ads can help monetize streaming video while potentially limiting the number and length of traditional ad breaks in the future.
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Community and Social Viewing
There is a growing demand for shared viewing experiences. With 86% of adult consumers having a smartphone, creating shared experiences is easier than ever. Remote co-viewing experiences are most commonly hosted through a web browser or app available on a mobile device or tablet. Parks Associates data finds that more than half of households own a device capable of supporting shared viewing experiences.
Some examples of remote co-viewing:
• Disney+ Watch Party: Available as a browser extension, Disney+ subscribers can watch synchronized Disney content together with others in different locations. • Amazon Prime Watch Party: Prime Video subscribers and transactional purchasers can watch synchronized content across a variety of supported devices (e.g., Fire TV, mobile phones, web browser). • Scener: A free extension available for Google Chrome where viewers can host and join watch parties where groups can experience synchronized content from some of the most popular OTT services (e.g., Netflix, Hulu, HBO Max). • Kosmi: For those preferring a more customizable chat room experience, Kosmi offers a free way for friends and strangers to unite over similar interests by watching content, playing games, and chatting either through their app or website.
Gamification
Gamification involves incorporating game mechanics into a non-game environment. It can help increase engagement and boost brand/content awareness through social, interactive, and psychological means. Gamification can provide a rewarding experience which can even increase receptivity to advertisements, platform stickiness, and monetization of the platform. For example, Crackle offers a loyalty program where viewers are rewarded for watching content on the platform. For every one-minute of content watched on Crackle, viewers earn one point. These points can then be redeemed for rewards such as a 24-hour ad-free pass. The ability to earn points, perks, discounts, and rewards is highly appealing to consumers.
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Shoppable Video
Shoppable video provides a new way for advertisers to reach customers, for brands to develop deeper relationships with their viewers, and for consumers to engage further with the content they see on screen. With ad-based video on the rise, shoppable video may become the new normal. Some examples include: • Walmart & Roku partnered up to produce “shoppable ads” where viewers can purchase items directly from an ad on their TV. • Fade Technology Solutions offers an advertising tool to publishers and a discovery tool for consumers; viewers can watch video without interruption but are also able to explore where products are purchasable. • Disney+ introduced shopping capabilities to the streaming platform. Subscribers can scan a QR code on the screen or visit a special URL to view and purchase exclusive merchandise related to popular content on the platform. Inserting shoppable advertisements into video streams or on a familiar platform like Roku means consumers can remain in an environment that they trust while becoming more immersed, influenced, and inspired by the characters on the screen. Inserting shoppable advertisements into short-form video content located on social media platforms (e.g., TikTok, Instagram Reels, YouTube shorts) meets consumers where they are and is a proven mechanism for brand discovery. Consumers are routinely entertained and engaged by the content on the platform, returning to it almost impulsively. This frequent exposure and return behavior can help drive sales and promote brand loyalty if done authentically. • TikTok: The famous social media platform that offers “shoppertainment” – immersive, content- driven commerce that both entertains and educates. In 2022, TikTok introduced a new advertising solution, “Shopping Ads,” in three formats: » Video Shopping Ads: Hyper-relevant ads placed at the bottom of the screen for users to engage with and make quick purchases. » Catalog Listing Ads: Located under the “For You” page, is a product catalog that lists a variety of targeted merchandise across content creators. » LIVE Shopping Ads: Also located under the “For You” page, these ads are placed within live streams and show which products the content creator is using to drive audience purchases.
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Consumer Loyalty to Livestreaming
Traditionally, live entertainment on television was defined by linear broadcasting in real time. “Live entertainment” meant any television content that was broadcast to viewers. However, with the advent of live streaming, time-shifted viewing, and on-demand content, the idea of what constitutes “live content” continues to evolve. The transition of live content to the internet, as well as the popularity of connected devices, is creating a resurgence of live entertainment. The concept of live TV is evolving alongside the development of on- demand OTT services. Increased options across digital services have given rise to bloggers and other social influencers, creating a more competitive marketplace for traditional media sources. While viewing on traditional cable television has faced a decline, live video – sports, news, and events – continue to play a critical role in the television business. Parks Associates research shows consumers on average watch two more hours of live content per week on their television as compared to non-linear content. Adults 55 and older disproportionately favor a linear experience while viewers 18-24 prefer watching content from YouTube, social media, and the like. Consumers value live content because it is engaging, sometimes interactive, and personal to their interests.
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User-generated content (UGC) is media content created by online influencers and everyday consumers. Often, live UGC is in response to or in conjunction with a professionally created program or event. It represents a cheap and effective way to engage viewers by allowing them to interact with the content creator, while simultaneously creating shoulder programming – pre- and post-event broadcast programming – for other viewers. How Live and User-Generated Content Benefit Businesses • Increased Engagement and Emotional Investment A major change with live entertainment in recent years is the desire for interaction and engagement across all involved parties. UGC is now a substitute for shoulder programming around live events. Consumers self-select which influencers, brands, or services they follow and with which they connect. This increases the time viewers spend on the platform because they are self- engaging in related content before, during, and after the event occurs. • Flexible Advertising Advertisers must create ads that can be adapted to different platforms and devices. From television to the mobile phone, from Meta/Facebook to TikTok, ad presentation and interactivity must cater to the specific medium on which it will be hosted. At the same time, brand perception and messaging must remain consistent. Social media influencers are experts on their respective platforms and can create tailored content that is appealing to these audiences. Advances in data capturing technology and aggregation models can help customize content and advertising based on previous viewer behavior for OTT and UGC across all kinds of devices. • Multitasking and Platform Engagement Content creators, providers, and networks are not just looking for viewers, but for dedicated fans who engage with their intellectual property on a variety of platforms. Now, the amount of video consumed on a mobile phone continues to increase—over 6 hours per week, on average – even as overall video consumption declines, according to Parks Associates research. Many consumers are also using a second device to supplement the viewing experience by engaging in activities such as seeing an advertisement on a smart TV and then searching for the item on a computer or smartphone.
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Sports and Betting are Big Business
34% of internet households who watch sports programming are likely or very likely to place a bet via a sports betting feature within the video stream itself. As of 2020, Parks Associates research found that 10% (10-11M) of heads of US internet households reported participating in sports betting with 81% of sports bettors being male and 78% wagering on NFL games. Sporting events are unique in the content marketplace and represent the largest library of live programming. Sports betting represents a major revenue opportunity for OTT services both in the form of wagering and partnerships with sports leagues (e.g., NFL, MLB, NBA).
Fantasy sports in the US currently occupy a grey area in terms of legality, with various states having differing opinions as to whether it counts as a game of skill or as gambling. However, given the high potential for additional revenue, more states are expected to loosen restrictions in the near future. The two largest fantasy sports platforms in the US are FanDuel and DraftKings, which both offer additional services for sports betting and online casino products. Smaller and more recent entrants into this market include: • StreamLayer: Offers an interactive and engaging platform for OTT and mobile media distributors to bet on live games, view player statistics, and participate in polls, trivia, watch parties, and chats without leaving the game. • SimWin Sports: Is the metaverse’s first digital sports league that combines gaming with fantasy sports and betting; players can engage with their fantasy teams 24/7. • Tappp: A technology and marketing company focused on providing a single-screen interactive gaming, betting, and transaction experience.
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The Future is Interactive
Consumer expectations around video content are continually evolving. As technology advances to offer new features and devices for users to consume content, providers need to keep up.
Consumers are now accustomed to moving between services to meet momentary entertainment demands. Incorporating interactive elements into the viewing experience helps increase viewer engagement as well as deepen emotional investment in the content and with the video platform. Interactive components that accompany video entertainment such as co-viewing capabilities, sports betting, exclusive features, gamification, and shopping also keep viewers on the platform longer, allow more room for partnerships and collaborations, and promote customer loyalty, ultimately driving revenue.
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About Parks Associates Parks Associates, a woman-founded and certified business, is an internationally recognized market research and consulting company specializing in emerging consumer technology products and services. Founded in 1986, Parks Associates creates research capital for companies ranging from Fortune 500 to small start- ups through market reports, primary studies, consumer research, custom research, workshops, executive conferences, and annual service subscriptions. The company's expertise includes new media, digital entertainment and gaming, home networks, internet and television services, digital health, mobile applications and services, consumer apps, advanced advertising, consumer electronics, energy management, and home control systems and security.
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About Adeia
Adeia invents, develops and licenses fundamental innovations that shape the way millions of people explore and experience entertainment and enhance billions of devices in an increasingly connected world. From TVs to smartphones, in almost any place, and across all types of entertainment experiences, from Pay-TV to OTT, Adeia’s technologies allow users to manage content and connections in a way that is smart, immersive and personal. For more information, please visit adeia.com .
About the Author
Sarah Lee , Research Analyst, Parks Associates Sarah joined Parks Associates as a Research Analyst on the Entertainment side and covers topics such as OTT and consumer electronics. Sarah earned her PhD in Experimental Psychology from The University of Texas at Arlington. She also earned an MS in General Experimental Psychology from Murray State University and a BS in Psychology from Xavier University.
ATTRIBUTION Authored by Sarah Lee. Published by Parks Associates. © Parks Associates, Addison, Texas 75001. All rights reserved. No part of this book may be reproduced, in any form or by any means, without permission in writing from the publisher. Printed in the United States of America. DISCLAIMER Parks Associates has made every reasonable effort to ensure that all information in this report is correct. We assume no responsibility for any inadvertent errors.
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