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What You’ll LearnUpdating one of the year's most popular episodes, Scott Meyer of Innovative Systems shares summer quarter viewership numbers showing which channels are the most and least popular rural viewers.
Guest SpeakerScott Meyer
Show NotesTranscripts have been lightly edited for clarity and readability.
Andy Johns: What can the latest data teach us about what people are watching? That's what we'll be talking about in this episode of StoryConnect: The Podcast. I'm your host once again, Andy Johns, from WordSouth. And I'm joined today for the second time by Scott Meyer, who is the Director of Marketing with Innovative Systems. Scott, thanks for joining me.
Scott Meyer: Hey, it's a pleasure to be here.
Andy Johns: This is your second time being on with us. And I think the second time that you're on, you're no longer a guest, your friend of the podcast. So congratulations on that standing with us there.
Scott Meyer: Oh, you know what? I feel privileged and honored.
Andy Johns: You've always wanted to be the friend of a podcast. If you remember, back in February, we had done a podcast with Scott about some of the data that he had from a study that Innovative Systems had done, looking at what people were watching on the 60,000 units out there that they've got deployed across rural America. I want to get into some of the latest trends. They've got a new version of that study out, reflecting some summer numbers. And I want to talk about that, and I think that's what people will be tuning in for. That was one of the most listened to podcasts we've had this year, so I wanted to be sure to get Scott back on for this one. But before we get into the details of some of the trends, if you don't mind, Scott, go ahead and kind of run over what study we're talking about, what data we're talking about, and kind of where you guys collected this information.
Scott Meyer: Sure. Very good. Well, we have a product, a video middleware product, that allows service providers to get channel stats data based on set-top box viewing. And so what I did — it has been about a year ago or so, Andy — I contacted a bunch of our customers, and I was hoping to get maybe 25 or so companies that would agree to report, and I actually ended up with over 55 different reporting locations that have contributed monthly reports from the channel stats software in our product. And we're talking about somewhere in the neighborhood of about 60,000+ set-top boxes. So these reports are actually what the set-top boxes are tuned to. And this is an IPTV network, so each IPTV channel has a stream, and we can correlate the stream with the specific channel, ABC, CBS, Discovery, or whatever. And then the software will take that data and put it into a spreadsheet. Then we can pull the reports, and we can see from a quarterly basis or a monthly basis — and it depends on however they want to set the software — we can see then what the most popular channels are. Then I just back out all of the information and put it together into one cumulative report, and that's how we get our quarterly report that we're talking about that I gave to you in February.
Andy Johns: Excellent. I think there are a couple of reasons why this is so valuable. Number one, what is on [the report] is not self-reported, so I would imagine that takes a little bit of the noise out of it. But number two, it focuses on the rural markets, which is something we've heard over and over again from the folks that we work with at WordSouth that a lot of the data that you see is for either the US as a whole or certain urban DMAs, that sort of thing. I think that's part of why this evaluable, that it does focus on rural.
Scott Meyer: Yeah, that is correct. And we certainly see that bear out in some of the stats that we see. You know, one example is programming that has Western-themed content like, for example, MeTV, RFD, those types of channels, STARZ Encore Westerns. Those all score very well, and obviously, you can attribute that to the demographics in rural America.
Andy Johns: Sure. I should have said at the beginning of the podcast that we are recording here at the NTCA Fall Conference in Denver. That's kind of the center of the rural telecom world this week. So we're recording on the travel microphone here at the lobby/vendor area of the conference, so it may sound a little bit different than some of the other recordings we've done. While Scott was here, I did want to grab him and get some of the information. So for the folks that listened to the episode back in February, we talked about some of those trends, but obviously this includes the more recent quarter, I guess. So what were some of the things, kind of top-level stuff, that struck you as a change from the previous quarter until this data?
Scott Meyer: Ok, well, good question, Andy. Just this quarterly period covers the months of June, July, and August. So really, it would be a good summer quarter. And some of the interesting things that we saw in comparison to the summer of 2018 — and this is probably one of the things that got my attention the most — is that the numbers, normally, in summer are quite a bit lower because people have a lot of outdoor activities and things of that nature. But we noticed that the viewership in the summer did not drop as significantly as it did in the summer of 2018.
Andy Johns: Interesting.
Scott Meyer: Yes. And one of the things that we think we can attribute that to — especially for our reporting points, of course, we have reporting points from Alaska to New York and we have a fair amount in the Midwest — has been the weather pattern this summer has been very unfriendly for outdoor activities. Flooding, tornadoes, bugs, and lots of things that maybe would keep people from going out and doing their normal activities. So we think overall the numbers were a little bit higher, and we think it had more to do with the weather. Now, there were some other things that we found that were somewhat notable this summer. And one of those things was — and it's probably kind of hard to explain — but people that carry video channels usually carry two different channels for the standard-definition (SD) and the high-definition (HD). And so what we're starting to see — and this really started probably like last fall, fall of 2018 — we are seeing a lot more viewership on the HD channels. And this summer quarter, we saw some of the highest jumps in HD channels. So let's say, for example, Discovery SD versus Discovery HD. Discovery HD is creeping up to almost being more viewed than the Discovery SD. So we're seeing a lot of that kind of a trend. And one of the things that we think we could probably safely attribute that to...
Andy Johns: Yeah, let's unpack that a little bit. This is interesting.
Scott Meyer: Yes. You got to go to the retailers, the box retailers. The box retailers, you probably can't find an SD TV at a box retailer with a searchlight anymore. So we believe that the HD TVs, especially considering the fact they have significantly dropped in price point, are now becoming more prevalent even in the rural homes. So consequently, people are gravitating towards channel 605 to watch their HD channel versus going to channel 75, that's an SD channel, because that's just a better picture. So, you know, one of the things that we've done is — and vendors should do — is start looking at taking the SD content and maybe just — if they can contractually do so — just offer HD, if it's possible. Because the data is showing that there's more of a gravitation, and it was extremely strong in the summer of 2019 with this reporting period. And then the only other thing that I think is worth mentioning is the regional sports channels had a really, really good summer. And I think a lot of that had to do with the Southeastern United States, with the Atlanta Braves having a great year.
Andy Johns: I bought my playoff tickets last week. So, yeah, I'm ready.
Scott Meyer: Right on. Washington Nationals are in the hunt. The Yankees are always strong. This year they've had a great year. Them and the Minnesota Twins have both broken the record for most home runs in major league history. Then in the Midwest — Milwaukee Brewers, St. Louis Cardinals, Minnesota Twins, Chicago Cubs — all in the hunt. And so the regional sports channels just had an exponentially strong increase in viewership compared to last summer. So those are some of the key points that we saw in our most recent quarterly summer report.
Andy Johns: Interesting how the performance of the teams would impact that this much. But as somebody who's watched a couple of bad Braves teams in the last few years, I definitely understand you want to tune in when the teams are winning. That makes a lot of sense.
Scott Meyer: Yeah. I mean, call us fair-weather fans if you want, but it is what it is. And so, I mean, were we surprised? Not really. But it does actually go back to, what you had mentioned earlier regarding the difference between rural America and urban America, because what we've seen is rural America really does attach themselves to their local home or sports teams.
Andy Johns: That makes a lot of sense, and especially the markets that you talked about. I mean, between the Cardinals, the Braves, the Twins, and the Brewers, that's a whole lot of rural America that tuned into those. That's interesting. Well, let's get into some of the specific channels now that we've hit some of the high points. Were there any particular channels that either dropped significantly, jumped significantly, whether it's seasonal or not? Was there anything that you saw individual networks getting a big jump or a big drop?
Scott Meyer: Yeah, well, that's a good question. We'll just kind of start at the top. The alphabet networks — ABC, CBS, NBC, FOX — are all consistently staying up there in that top tier. That's a double-edged sword for our service providers because of retransmission and those expenses. But one of the channels that we saw that really snuck up on us was Hallmark Drama, which is part of the Crown Media family of channels. And as I'm looking at the data, the Crown channels, the Hallmark channels, together are the most viewed cable programs, bar none. So they're extremely strong. And I guess the advice that I would give based on our data from these 60,000 set-top boxes, is we see there are companies that are just primarily carrying maybe the traditional Hallmark, and they might be carrying like Hallmark Movies & Mysteries, but they're not carrying the full suite of them. And I would strongly encourage them to take a look at adding those because from what my contacts tell me Crown Media is a very easy content provider to work with. Their rates aren't outrageous. They're very promotional oriented and easy to touch base with. Inspirational TV continues to stay strong. They've been in top 20 status for five consecutive quarters. Their cost to carry is very, very low. And those of you who know those costs can attest to that. And if you're not carrying Inspiration or INSP, I definitely would encourage you to take a look at that. And then the other final one that I saw that was of interest was Paramount Network continuing to show a steady rise in the ratings. So those are some of the ones that really caught my attention.
Andy Johns: Paramount Network is not one I'm familiar with. Is that another movie channel?
Scott Meyer: I think it's a movie-themed channel. I really have not had a chance to really delve into it, so I think it is.
Andy Johns: So the implications of this study — because obviously throwing data at people is great, but I'm assuming you want people to actually use it. So the implications of this from when you've talked about before is to look — like you talked about with the Crown Networks — and say what's being watched versus what has a low cost or, you know, lower cost relative. That's kind of how you're hoping folks use this data, right?
Scott Meyer: Yeah, that is correct. And some of our customers that we have that have our software are much more sophisticated. They'll actually assign a value based on what the cost of that content is versus the viewership based on these channel stats. And then they'll use that in making their decisions. And, you know, obviously, some of these channels, if they're attached to a family of channels that they just can't drop, there's nothing they can do about it. But there could conceivably be channels that they aren't contractually obligated to carry that nobody's watching. And with the channel stats, software, and the data that they can look at, it gives them the confidence to say that nobody's watched this channel for six months, and I'm not obligated to keep it. It's costing me $0.20 a sub to keep it. Why do I keep it?
Andy Johns: Right, that's excellent. Well, if somebody missed the first episode that we recorded, there's one particular channel that I wanted to highlight here, because it seemed to be very interesting. Tell us about STARZ Encore Westerns and how it stacks up against some of the others.
Scott Meyer: Well, it's really interesting. That channel, since we started doing the survey in summer 2013, has consistently been — and it's a premium channel — has consistently been in the top 50 every single month.
Andy Johns: The top 50 most-watched network's most-watched networks?
Scott Meyer: The most-watched channels. Period. I tabulate about 160 channels, and STARZ anchors in the top 50, which is very, very good, given the fact that all of the other premiums — HBO, Showtime, Cinemax — none of those channels ever break the top 150.
Andy Johns: Wow.
Scott Meyer: So this really does speak to a demographic and the rural touch of that particular channel. And the other thing that can be correlated with that, Andy, is the fact that we know that rural America watches Netflix. But if you delve into that, Netflix's library of Western-themed content is minimal. And so these people are looking for that type of content; long play content, no commercials. And that's why it's doing so well.
Andy Johns: Excellent. That's good insight on a couple of levels there. Just to reiterate, STARZ Encore Western tops 50 every time. All of the other premiums — HBO, all of that — never in the top 150. That is amazing to me. And that's the kind of thing you only get from a study like this, so I appreciate you sharing that with us. That was all that I had on my list to ask you. Is there anything else that you want to share? Any other insights or anything else that you wanted to share with listeners before we wrap up here?
Scott Meyer: No, but I think we can wrap up with encouraging anybody that has a mechanism in place — whoever your video vendor is — you need to to find out if you can get this data, and you need to look at this data on a monthly basis and share that with people that are making content decisions as your company. Because really, if you can take a network that nobody's watching, that you aren't stuck with keeping, and you can shave off $0.25 a sub and all of a sudden you find four, five, or six of those that you can do, all of a sudden you're saving two, three, four or five dollars a sub. Well, guess what? That brings you into a better perspective with managing the cost of video.
Andy Johns: Right. Excellent. That gets into real money real quick. So if there's somebody that's heard this and wants to find out more, wants to talk to you, or get into anything of that data with you, what's the best way for them to get in touch with you.
Scott Meyer: They can just send me an email. Can you post that?
Andy Johns: Yeah, I can put your email in the show notes, so we'll do that. Well, Scott, thanks for joining me. I appreciate you being back on this episode. Love to have you on again when the next quarter data comes out because I think this is going to be another very well listened to episode. So thanks for joining me.
Scott Meyer: All right. Well, maybe we'll see you in Phoenix.
Andy Johns: Hopefully so. He is Scott Meyer. I'm Andy Johns, your host with WordSouth. Scott is the Director of Marketing at Innovative Systems. And as we always say, until we talk again, keep telling your story.