As viewing of Internet video shifts to mobile devices, digital advertising dollars will go along for the ride, says a report from Adobe Systems (NASDAQ:ADBE).
Mobile viewing will surpass PC desktop viewing by Q4 2016 as smartphone and tablet usage surges, says the Adobe Video Benchmark Report.
Comcast (NASDAQ:CMCSA) and other cable TV companies are accelerating the shift to mobile viewing with TV Anywhere, which lets subscribers use mobile apps after logging in to verify subscriptions, a process called authentication. Larger-screen smartphones, as well as tablets, are also driving the shift to mobile viewing, says Adobe.
« There’s no doubt that mobile devices are becoming a better environment for digital advertising, » said Tamara Gaffney, an analyst at Adobe Digital Index. « People are watching more video via their devices, and the larger form factor is even driving them to watch videos all the way through. »
Mostly At Home, Not On-Go
Much of the mobile viewing will take place in homes, not through consumers on the go. In 2014, 13 million subscribers to pay TV signed up for mobile viewing options, up from 6 million in 2013. Apple‘s (NASDAQ:AAPL) iPad is the most popular device for streaming TV Everywhere content, accounting for 29% of views in Q4 2014, says Adobe.
By year-end, Adobe forecasts that 17.5% of cable TV customers will access TV Anywhere, up from just 6.5% two years earlier. Adobe itself recently rolled out a personalized video ad-insertion technology.
Comcast and Cablevision (NYSE:CVC) have expanded Wi-Fi networks through in-home wireless gateways, supplementing public Wi-Fi hot spots. Comcast provides residential customers with Wi-Fi routers that broadcast two signals, one for private use in homes and a second signal that can be shared in neighborhoods without compromising security. Comcast says it ended 2014 with 8 million Wi-Fi hot spots.
« The biggest (cable operators) will follow Comcast’s lead and provide better TV Everywhere experiences with their own offerings, » said the Adobe report.
Comcast X1 Well-Positioned
Comcast developed advanced, Internet-ready X1 set-top boxes, along with a new cloud-based service, to compete with emerging OTT, or over-the-top Internet video products.
Dish Network (NASDAQ:DISH) and Sony (NYSE:SNE) recently launched online video streaming, and analysts expect Apple and Verizon Communications (NYSE:VZ) to follow.
The services are often dubbed over the top, or OTT, because they piggyback on landline broadband sold by other companies. Even if consumers don’t buy a traditional pay-TV package, they still need broadband Internet to stream video.
With its X1 platform, Comcast is well-positioned, Mike McCormack, a Jefferies analyst, said in a research report Thursday.
« Comcast’s X1 video platform has proved to be a differentiator in the market, helping reduce video subscriber declines, » McCormack said.
If federal regulators approve Comcast’s acquisition of Time Warner Cable (NYSE:TWC), the X1 strategy will get a boost, McCormack said: « We see the X1 deployment into the acquired footprints as a catalyst to improving residential subscriber and revenue trends. By combining the Comcast and Time Warner Cable advertising platforms and rolling out X1 in key Tier 1 Time Warner Cable markets, Comcast will have the ability to offer a broader and better targeted advertising product. »