Comments on: Cost per hour: A new metric for paid content

By: David Justus

David Justus — Tue, 12 Feb 2013 12:02:37 +0000

Yes, consumption time is one of the many elements of paid content utility. Others include: Consumption style (active/passive), Content category (news, entertainment, etc.), Status (http://bit.ly/ynXdEK), and Quality. I think there are two types of quality: Production value, which is largely objective, and satisfaction/enjoyment, which is highly subjective. What are the other elements of paid content utility?

By: mikegaertner

mikegaertner — Mon, 11 Feb 2013 21:20:24 +0000

What this fails to take into account is the active/passive viewership, e.g the 32 hours of Netflix viewing is likely intentional and selective, whereas TV is sometimes just on a particular channel or show because “nothing else is on.” Sure those hours count, but they are not the “valuable” hours a consumer would mentally equate in their personal CPH calculations. Mix advertising in as 1/4-1/3 of every hour as well and the “value” drops even further.

I’d be surprised if that distinction does not play into the consumer placing a much greater perceived value of Netflix vs. Pay TV, even if the numbers prove otherwise.

By: David Justus

David Justus — Mon, 11 Feb 2013 16:25:36 +0000

That’s a great point! For selected content categories there may be an inverse relationship between consumption time and utility. I’d think stock market data for consumers, as opposed to perhaps all business media, is one example. Another one is weather. Every morning I want to learn the local forecast quickly. In both instances, a quality experience may be short individual visits, but of high frequency. Even when the overall consumption time is added up, my sense is that the total – for these unique content sets – would not be a good indicator of utility.

By: CErickson

CErickson — Mon, 11 Feb 2013 15:16:21 +0000

Everything old is new again. The irony is that when AOL was in its fledgling days in the early 1990s, they paid content providers based on how many hours users spent in their branded content area. At the time I was in charge of Business Week’s relationship, and I recall fighting this metric … with business media, less time finding and consuming what you’re looking for can actually be the better ‘value’ for the user!

By: David Justus

David Justus — Mon, 11 Feb 2013 12:43:47 +0000

Thanks for your comment. It sounds like you know the space well so I appreciate your participation in the conversation.

Here’s the basis for the cited Netflix and Pay TV figures, which are provided for “illustration purposes.”

GFK estimates the average Netflix user watches 8 hours per week. http://bit.ly/145lwV5.

The $86 figure for Pay TV (including premium) is from NPD http://bit.ly/145jfcB. The hours are from Nielsen and include Live TV + DVR playback http://bit.ly/145jm80.

By: David Justus

David Justus — Sun, 10 Feb 2013 23:33:43 +0000

Most media and information products are consumed by more than one person today. Shared consumption is tracked more closely today for platforms that are ad supported, like newspapers and magazines, because publishers want all eyeballs counted.

Increased content consumption on tablets and smartphones, which are primarily personal consumption devices, should reduce shared viewing experiences. As tablet prices drop and screen sizes decrease (e.g. iPad Mini), shared viewing on tablets will likely fall. But, as you suggest, it probably won’t evaporate.

For screens that are shared today – PCs and TVs, new technologies, like Netflix personal profiles and Samsung smart tv facial recognition (http://bit.ly/U3ak9M), will enable better tracking. These technologies may be most effective when multiple persons use the same PC or TV sequentially, as opposed to simultaneously, as you point out.

By: David Justus

David Justus — Sun, 10 Feb 2013 23:00:02 +0000

The calculations assume:

The average length of a theatrical film is 2.366 hours (or 142 minutes) http://thebea.st/145iq3q; and

The average adult reads a book at 300 words per minute. http://onforb.es/YlXc1H

The newspaper time is based on this. http://bit.ly/YlWy4z. And magazine time is based on this. http://bit.ly/10FTroD

By: JP

JP — Sun, 10 Feb 2013 22:48:33 +0000

Some of the video metrics are off. The pay TV viewing listed above is close to, but lower than, Nielsen’s latest figure of 145 hours per month of individual viewing. But pay TV, or multichannel television service is sold to households, so household viewing should be the denominator. The most recent Nielsen data on household multi-set viewing reported that weekly television viewing for multichannel households was 72 hours, which translates to 312 hours per month (note this doesn’t include time spent watching time shifted (DVR) video, approximately 40 hours, or TV Everywhere content on other screens). The most recent FCC video price report indicated that the average digital video price was $70.79, therefore the correct price per hour for multichannel video service is 23 cents. [the cost per hour drops to 20 cents if the 40 hours of time shifted viewing is included]
Not as significant, but the Netflix viewing listed above appears to be somewhat overstated. Reed Hastings’ Facebook post in July claimed that Netflix had delivered 1 billion hours of streaming video in June. Assuming that the 1 billion hours claim is still valid, spreading that over 33.3 million global streaming users results in 30 hours per month of average viewing, and a cost per hour of 27 cents.

By: David Justus

David Justus — Sun, 10 Feb 2013 22:40:20 +0000

I noticed that functionality this morning, when my kids were watching a cartoon series on Netflix. It’s a great example of how Netflix keeps subscribers watching and, in turn, the CPH down.

By: saumya

saumya — Sun, 10 Feb 2013 21:52:45 +0000

If newspapers and magazines tend to count pass alongs as audience, so must Netflix. I may have a movie party at my house, and 6 of my friends may get together to watch the latest shows. Even couples trvelling together may share an iPad screen to watch a show together.