State of the Industry

Transcription

1 State of the Industry

2 Kevin Westcott US National Sector Lead for the Media & Entertainment Practice, Deloitte Consulting

3 Digital Democracy Survey A multi-generational view of consumer technology, media and telecom trends Executive Briefing for the Los Angeles Entertainment Summit #TMTtrends Digital Democracy Survey 3

4 Talking About the Generations The survey focuses on four generations, and five distinct age groups: Trailing Ages: Birth Years: Leading Ages: Birth Years: Generation X (Xers) Ages: Birth Years: Boomers Ages: Birth Years: Matures Ages: 67+ Birth Years: 1946 and prior Millions of people ( Age not included in this study) 2013 U.S. Population* Xers Boomers Matures 23 *2010 U.S. Census Bureau Population Division U.S. Interim Projections Digital Democracy Survey 4

5 The Digital Omnivore Subtitle runs here Rise of the Omnivore Digital Democracy Survey 5

6 Over one third of U.S. consumers are Digital Omnivores, principally due to strong adoption of tablets Digital Democracy Survey 6

7 Digital Omnivore growth driven by Xers and Percentage Digital Omnivores by Generation 2011 Total Digital Omnivores 10% 11% 20% 13% 6% 2% 2012 Total Digital Omnivores 26% 32% 40% 35% 16% 6% 2013 Total Digital Omnivores 37% 51% 51% 46% 22% 11% Trailing Leading Xers Boomers Matures Digital Democracy Survey 7

8 Digital Omnivores stream movies nearly twice as often as non-omnivores Q. What methods have you used to view a movie, available for purchase or rental, in the past 12 months? Digital Omnivores 83% 68% 37% 6% Viewed on home TV system (NET) Viewed by streaming/downloa ding content on any device (NET) Viewed on home computer system via DVD/Blu-ray disc I have not viewed a movie, available for purchase or rental, in the past 12 months Non-Digital Omnivores 74% 36% 24% 18% Viewed on home TV system (NET) Viewed by streaming/downloa ding content on any device (NET) Viewed on home computer system via DVD/Blu-ray disc I have not viewed a movie, available for purchase or rental, in the past 12 months Digital Democracy Survey 8

9 90% of Digital Omnivores are on social networks and twothirds are checking profiles at least daily Q. How often do you update/check your profile/social network? 66% Among Digital Omnivores 14% 10% 10% Daily Weekly Monthly Not on Social Networks Among U.S. Consumers (%) Digital Omnivores Non-Digital Omnivores Trailing Leading Xers Boomers Matures 67+ Male Female 1-3 times/day ^ times/day ^ times/day ^ 6 8 More than 20 times/day ^ 3 5 Weekly ^ Monthly ^ 9 11 ^ Not on social networks ^ 13 8 ^ ^ Base size too small to show. Digital Democracy Survey 9

10 Broadcast, Cable & Filmed Entertainment Shift to Digital Digital Democracy Survey 10

11 Home Internet is the most valued service across all generations Q. Of the services you indicated your household purchases, which three do you value the most? 2013 Among Total U.S. Consumers (%) Top three ranking Total 2013 Trailing Leading Xers Boomers Matures 67+ Home Internet Pay TV (cable and/or satellite) Mobile data plan Mobile voice Landline telephone Streaming video service Gaming News/Newspaper (print or digital) Magazine (print or digital) Streaming music service Digital Democracy Survey 11

12 Trailing are spending more time watching TV shows and movies on non-traditional devices than they are on TVs Q. Of the hours you spend watching movies and/or TV shows per week, what percentage of time is spent watching on the following devices? Percentage of time spent watching movies and or TV shows on each device Total Trailing Leading Xers Boomers Matures Desktop/ Laptop Smartphone Tablet TV Gaming device Digital Democracy Survey 12

13 More than half of consumers have connected their TV to the Internet; a third prefer to connect directly if possible 42% Not connected 58% Connected Q. In what ways is your TV presently connected to the Internet? 7% 21% 14% 3% 14% 15% 14% 24% 24% Among those who have their TV connected to the Internet to view content 62% From Traditional Sources 38% From Online Sources I do not know Do not have the ability Have ability, currently not connected Other method of connecting Streaming media device or other overthe-top box Set-top box from PayTV provider Computer Direct directly connection to connected to the Internet the Internet Gaming console Q. Of those not connected, how interested are you in connecting your TV to the Internet in the next 12 months? 19% Interested 38% 43% Somewhat Interested Not at all interested 1% Other method of connecting Q. Which is your preferred way of accessing content from the Internet on your TV? 15% 14% 15% Streaming media device or other overthe-top box Set-top box from PayTV provider 32% 23% Computer Direct directly connection to connected to the Internet the Internet Gaming console Digital Democracy Survey 13

14 Broadcast Multitasking Digital Democracy Survey 14

15 Viewers are increasingly distracted; 86% of all consumers are multitasking while watching TV Q. Which are things you typically do while watching your home TV? Among Total U.S. Consumers (%) Summary of Always/Almost Always Total 2012 Total 2013 Trailing Leading Xers Boomers Browse and surf the web Read Text message Use a social network Write Browse for products and services online Play video games Talk on the phone Purchase products and services online Microblogging Read for pleasure Read for work and/or school Nothing else - just watch TV Matures 67+ Average number of additional activities while watching TV Trailing Leading Generation X (Xers) Boomers Matures Digital Democracy Survey 15

16 However, fewer than one-quarter of multitasking activities are directly related to the programs that consumers are watching Q. What percentage of your multitasking activities are directly related to the program you are watching? Percentage of Multitasking Directly Related to Program 2013 Total Related Multitasking 22% 26% 30% 22% 20% 11% Trailing Leading Xers Boomers Matures Digital Democracy Survey 16

17 Advertising Subtitle runs here Recommendations Rule Digital Democracy Survey 17

18 Personal recommendations, including those from within social media circles, continue to play a major role in buying decisions Q. To what degree do the following influence your buying decisions? Total U.S. Consumers 2013 (%) Recommendations from a friend/family/known acquaintance Television ads Online review or recommendation from someone within your social media circle Online review by someone you do not know in real life A reseller or channel partner website Magazine ads Products or services mentioned/featured in a TV show or movie Manufacturer or vendor website Newspaper ads An from a company/brand Radio ads In-theater advertising (pre-movie) Billboards and posters Ads delivered through social media platforms Video game advertising (all forms of games) SMS/Text Message ad Ads delivered on mobile apps, including location-based ads A tweet/post by someone you do not already follow (NOT an ad) A tweet/post by company/brand you do not follow 4 19 High Medium Digital Democracy Survey 18

19 Personal recommendations continue to outpace television ads influence on consumer buying decisions Q. To what degree do the following influence your buying decisions? (High / Medium Net Influence) TV Ads 74% 88% 86% 87% 80% 76% 81% 75% 75% 71% 71% 66% 71% 83% 82% 59% 49% 59% 51% 32% Trailing Leading Xers Boomers Matures 67+ Recommendations from a friend/family/known acquaintance (someone you know in real life) Online review or recommendation from someone within your social media circle (could be a friend of a friend) Online review by someone you do not know in real life Digital Democracy Survey 19

20 The future of home entertainment Subtitle runs here A Deloitte Perspective June, 2014 Digital Democracy Survey 20

21 New business eras are driven by technology disruption Technology Digital Revolution Industrial Revolution 1800 Services Revolution 1975 Information Revolution 1990 Internet Revolution 2000 In the past, disruption was followed by stabilization, allowing new industries to build on the new technological innovations. However, this historical pattern has itself been disrupted. Absent this stabilization cycle, established business find themselves constantly racing to keep up. Time Digital Democracy Survey 21

22 Technology + business models are ripe targets for innovation Hammered by relentless technological change, many companies take a reactive stance: They focus solely on keeping up, protecting their existing markets, and improving their performance. - John Hagel III and John Seeley Brown, Lang Davison Harvard Business Review, Oct 2008 The Ten Types of Innovation Business Model Risk Digital Democracy Survey 22

23 Challenging our assumptions: A traditional view of the home entertainment business 1 Better experience means larger TVs and higher resolution 2 Home entertainment technology and format will be evolutionary (e.g., Blu-ray 4K TV) 3 Theatrical success drives home entertainment sales 4 Big retailers and pay TV providers own the primary direct viewer relationship 5 Blockbusters drive bulk of demand 6 Home Entertainment = Professional Movie and TV Content 7 Mainstream viewers are willing to pay a la carte for premium content 8 Regulations will protect content owners access to viewers, and vice versa But, what if these assumptions are no longer true? Digital Democracy Survey 23

24 Challenging our assumptions: A traditional view of the home entertainment business 1 Better experience does not mean larger TVs and higher resolution 2 Home entertainment technology and format will not be evolutionary (e.g., Blu-ray 4K TV) 3 Theatrical success does not drive home entertainment sales 4 Big retailers and pay TV providers do not own the primary direct viewer relationship 5 Blockbusters do not drive bulk of demand 6 Home Entertainment Professional Movie and TV Content 7 Mainstream viewers are not willing to pay a la carte for premium content 8 Regulations will not protect content owners access to viewers, and vice versa But, what if these assumptions are no longer true? Digital Democracy Survey 24

25 Challenging our assumptions: Each future scenario describe a shift in preferences, power, and profit pool Most Differentiated Experience More Closed Customers demand high quality content Access is controlled by a few dominant platform players Access is controlled by a few dominant platform players Customers accept or want a large variety of content Consumer Preferences Delivery & Display Platforms Customers demand high quality content Access is open and content owners control access to content Customers want a large variety of content (both professionally produced and user generated) Access is open and content owners control access to content More Open Best Value Digital Democracy Survey 25

26 Challenging our assumptions: Each future scenario describe a shift in preferences, power, and profit pool Who will be the winners? Most Differentiated Experience Home Technology Ecosystems Production Services & Software Developers More Closed Cable, Telco & Wireless Providers Sense & Sociability Consumer Preferences Delivery & Display Platforms The Real Pipe Dream Battle of the Brands Crowded House Content Producers & Rights Owners Marketers & Marketing Platforms Search & Social Aggregators Advertising platforms More Open Best Value Digital Democracy Survey 26

27 Kevin Kevin Westcott

28 About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. 36 USC Member of Deloitte Touche Tohmatsu Limited