The way we watch television is changing fast — good news for viewers who like to pick their own programmes with no ads, but more worrying for the industry.

Teena Harris likes to have a movie night with her family once a week, so they can enjoy watching TV together for a change.

"What I've found is that now everybody has a device, you're not sitting down like you used to," says the 47-year-old marketing manager and mother of three.

Back in the old days - well, a year ago, actually - she says the St Heliers family used to gather in front of their 42-inch TV in the lounge and fight over which channel to watch.

"Last year we'd all sit down and watch My Kitchen Rules, but now we don't."


The Harris family are at the leading edge of a TV-watching revolution in New Zealand and around the world. A few years ago they watched free-to-air channels and Sky. Three months ago they dropped Sky because they weren't watching it enough to justify the cost. The family has subscribed to Netflix, the US internet-based giant which started in New Zealand in March, and their viewing habits have almost totally switched to commercial-free online viewing.

Teena streams an episode of Netflix on the TV at night after coming home from work and doing dinner and the evening chores. Her husband Craig likes movies and documentaries and dips back into free-to-air to catch the late news.

Their 14-year-old son Sam has moved off the big screen altogether, watching action dramas like Homeland on his iPad. Daughters Sally, 12, and Molly, 9, follow the same teen dramas on Netflix that they used to watch on Sky's Disney Channel.

"It's changed from watching what's served to you on traditional TV to going and picking what you want to watch," says Craig.

He says this comes naturally to Sam, who tracks down films, TV programmes and YouTube videos on his iPad. Craig likes the new freedom too but sometimes finds it hard work.

"For the older generation it's quite nice to switch the TV on and ... see what the state's serving up to you."

Nielsen research shows many Kiwis are still quite happy doing just that. The company's 2015 figures show 91 per cent of home TV viewing remains live and 72 per cent of us watch programmes only on a TV set. Broadcast television, both pay and free-to-air, continues to make up the vast majority of total viewing - 20.5 hours a week for the average TV watcher, compared to only 1.5 hours of internet viewing on other devices.

But the landscape is changing fast, thanks to personal video recorders (PVRs) and online viewing. Just over half of all households now have PVRs, either as stand-alone devices or built into another platform such as My Sky. These households record 18 per cent of all programmes and 22 per cent of prime time programmes to play back when it suits them and skip the ads.


Teena's parents John and Margaret Wright are prime examples. Apart from rugby on the sports channel and TV One news for John, they have recorded and watched nearly all their programmes on My Sky for the past six years.

"There's hardly anything we watch live, which is incredibly convenient," says John. "We fit TV around our lives rather than being dictated to by TV."

The couple also use Netflix for movies and old TV shows, such as Dr Who. John - who admits he's probably not a typical 66-year-old when it comes to IT - uses a virtual private network, which makes it appear as if he lives overseas, allowing him to access shows from other countries.

The recent conversion of many New Zealanders like the Harris family to online viewing may have overtaken local pollsters. According to Nielsen, which plans to revisit the issue soon, half of all New Zealanders watch online video content each week for an average of 7.3 hours and young people watch a lot more.

Overseas research suggests the picture is changing even faster. An Ericsson Consumerlab survey of more than 20,000 people in 20 countries reported in September that video-on-demand now accounts for a third of all TV and video watching time. The survey estimates the number of people who watch live TV each day is gradually slipping and is only just ahead of video-on-demand.

Broadcast TV's overall share is propped up by recorded programmes, whose fall in popularity mirrors the growth in streaming.

Along with other surveys, Ericsson predicts online watching will soon overtake broadcast TV, which is struggling in the United States. Overall US viewing declined by 4.6 per cent year-on-year to December 2014 - including a 16 per cent fall among 18-to-24-year-olds, who now watch about a third less TV than they did four years ago. The Wall Street Journal calculates the top 40 cable channels, including heavyweights like ESPN, have lost more than 3 per cent of their customers in the past four years.

Locally Sky TV, which has enjoyed growing viewer numbers for decades, recorded a dip in total subscribers this year to 851,561 (47.1 per cent of households). Last month its shares fell 15 per cent, after the company said annual profit could fall by 11 per cent, thanks to rising costs and growing competition from online services.

Forsyth Barr sharemarket analyst Blair Galpin, who covers Sky and other media and technology stocks, thinks there's plenty of life left in pay TV, especially once Sky updates its set boxes with on-demand content which mimics its online rivals.

He is reserving judgment about the effect of newcomers such as Netflix and Lightbox until the free offers run out and programme choices become clearer. "We're seeing in the US that if you want a broad choice of content, you might need to have five or six subscriptions."

Galpin says the most likely effect on pay TV is "cord shaving" - where viewers keep their subscriptions but cut back to a more basic package to take advantage of the new online offerings. He says this trend has already led to "quite [notable] drops in movie channel uptake" at Sky and an impact on pay-per-view movie ordering.

For Teena Harris, on-demand TV is too convenient to give up. But she admits the amount of programmes on offer can be a little overwhelming.

"There is that thing when you look at Netflix and you go; "My god, there's five series of that and there's 30 episodes. That's 150 hours - I don't know if I've got the commitment."