Younger FTA TV watchers migrating to other devices

TLDR version: Our annual consumer media survey data shows that smart TV takeup in Australia is strong. However, there is also a trend towards other devices for BVOD watching. This reflects the widening number of ways for FTA TV to reach audiences. 18-24 year old viewers are most likely to do this, but some older cohorts aren’t far behind. The result is a bifurcation of audiences which may threaten the long-term viability of traditional FTA TV broadcasting.

Smart TV takeup strong

Just last week we surveyed 1,124 Australian respondents across a representative sample across age (18+), household income and urban/rural split. The margin of error on such a survey is about 3%. Our reports on this video and audio media survey will be available to our subscribers in June.

The results show that smart TV penetration is strong. 80% of all households reported at least one smart TV and a high proportion of these are connected to broadband. Conversely, households without a broadband connection were very unlikely to report having a smart TV set.

Growing use of other devices

Despite this strong showing, there are signs that some viewers are abandoning the TV set altogether and using other devices. In our last survey (Dec-21), we found that 4% of households reported they didn’t watch a TV set. In last week’s survey (17 months later) 9% of households made this response, a statistically significant shift.

Only 1% of respondents were true video refuseniks, who didn’t watch video services at all. The remaining 8% are still watching video services, but they aren’t using a TV set to do it.

This 9% was unevenly distributed by age of respondent. Young people 18-24 years were the least likely to have a TV set at home, while older people 65+ were the most likely. Itinerant lifestyles might account for this amongst the youngest, but TV refusal extends well into the middle-aged cohorts as well. These figures need to be interpreted with care because the average age in a household may differ from the age of the respondent. But it appears something is going on amongst younger people.

Our data shows that 4% of respondents had no TV set at all in their household but were watching FTA TV apps on other devices. The vast majority of these TV-less individuals used their smartphones to watch video, while a strong majority used a PC or laptop. Less than half used a tablet, and a mere 8% resorted to DVD or Blu-ray. In short, telco devices were the main alternative for those without a TV.

Why does this matter?

This trend reflects a growing bifurcation amongst video viewers, and FTA TV viewers in particular.

Most viewers remain wedded to the TV set, though more of that viewing is being delivered over the Internet rather than the airwaves. We estimate that in FY22, around 7% of total FTA TV viewing was delivered online. Smart TV penetration is high, and almost all of these TVs are connected.

But amongst a small but growing minority, telco devices are becoming the preferred viewing platform, and we expect this minority to grow in the coming years. Combined with more online viewing, this means that fewer and fewer viewers will be relying on the antenna for their FTA TV connection.

But a smooth migration from the airwaves to online is unlikely. Significant minorities still don’t have home broadband (12%) or a smart TV (20%), and these figures haven’t shifted much in recent years. So a shutdown of broadcast TV isn’t realistic in this decade, and maybe not for a long time after that.

The likely outcome is that Australia’s broadcast transmission infrastructure will be serving fewer and fewer people over time, without any reduction in the cost of operating the infrastructure. At some point, hard questions will need to be asked – and answered – about the industry’s ability to fund this infrastructure as competition from SVOD and AVOD erodes FTA TV viewing. The policy dilemma is that we don’t have any universal substitute for the broadcast transmission infrastructure. It will take some fancy policy footwork to ensure that the public goods delivered by FTA TV broadcasting are preserved in a challenging industry environment