TV & Media Consumer Insights
This is ERICSSON CONSUMERLAB ConsumerLab is a knowledge-based organization. We provide consumer insight to influence strategy, marketing and product management in the Ericsson Group. Our knowledge helps operators develop attractive revenue-generating services. We gain our knowledge through a global research program based on annual interviews with 80,000 individuals in more than 40 countries statistically representing the views of 1.1 billion people. We have been doing this since 1995 and we use both quantitative and qualitative research. We spend hundreds of hours on in-depth interviews and focus groups with consumers from different cultures. Our research includes general market and consumer trends and in-depth insights into specific areas. To be close to the market and the consumers ConsumerLab has team members in most of Ericsson s market regions. Being part of the Ericsson Group gives us a thorough understanding of the Information and Communication Technologies (ICT), its market and business models. This broad knowledge is unique and is the basis for our credibility and integrity. We see the big picture, understand where the individual fits in, and know what this means for future trends and services. References Multiscreen Media Consumption 2009-2010 Media in the Cloud 2010 IPTV and the Connected Home 2008 TV and Media Consumer InsighTS 2
Executive Summary Exposure to media is fundamental to modern life. Keeping up to date with the latest news, music and movies makes it possible for people to have an opinion and be listened to. Many daily conversations center on what was on TV last night. Media consumption is therefore an important part of people s lives, and TV consumption is perhaps the most important of all. Live TV in particular will continue to have a strong position, due to the importance of seeing events live (as they happen) and the collective aspect (being able to take part in discussions). However, consumers won t accept just any TV/video offering. Instead, they actively seek and select solutions, such as alternative technologies and distribution channels that best match their behavior, needs and expectations. IPTV, mobile TV, computers, file-sharing and new technologies are giving consumers access to new capabilities, services and other options. At present, however, no single service or interface offers all the options or gives consumers the full control they need. TV and Media Consumer InsighTS 3
Broadcast TV remains strong Exposure to media is fundamental to modern life. Keeping up to date with the latest news, music and movies makes it possible for consumers to have an opinion and be listened to. Many daily conversations center on what was on TV last night. Media consumption is therefore an important part of people s lives, and TV consumption is perhaps the most important of all. People spend up to 35 percent of their leisure time watching TV and videos, and no less than 93 percent watch scheduled linear broadcast TV on a weekly basis. Broadcast TV is still the main source for audiovisual content, and it is present in all three viewing dimensions: > > Social: enjoying a family dinner in front of the TV > > Individual: relaxing and watching a program/series > > Collective: discussing the content shown the previous evening during a coffee break Each viewing dimension is important to consumers, but for different reasons. The social dimension enables bonding, conversation and shared experiences. The individual dimension enables choice, total involvement and complete escapism. And the collective dimension fulfills consumers need to belong, to share and to discuss. Live TV in particular will continue to have a strong position, due to the importance of seeing events live (as they happen) and the collective aspect (being able to take part in discussions). Originally, TV was perceived to cover all genres, from news to reality shows. Every genre was regarded as a subcategory of the overall TV category. The only genre not intimately linked to TV was movies, which came under their own category. Our research shows that this is changing. Consumers are beginning to regard content that is only of a live nature, such as news, reality and talk shows, as TV. Sport is becoming slightly detached, due to the advent of pay-per-view and live streaming. Series are becoming detached from TV and are perceived as being almost equivalent to movies. The sovereignty of movies has only been strengthened by online access. TV and Media Consumer InsighTS 4
The power of on-demand Today s consumers are developing new habits and behavior, based on the conventional world of TV, as well as the internet world. This behavior involves several media forms, a large selection of content and a variety of platforms. This also allows consumers to decide how, when, where and what they want to watch. Consumers are becoming more aware of new technologies, which in turn are creating new patterns of media consumption. Consumers are moving from a what s on TV? mentality to what do I feel like watching now? Watch scheduled broadcast TV Watch recorded broadcast TV Watch short video clips Watch DVD/VHS/Blu-ray 48 57 62 93 More than 70 percent of internet users in China, Germany, Spain, Sweden, Taiwan, the UK and the US stream, download or watch recorded broadcast TV on a weekly basis, and 50 percent of internet users watch internet-based on-demand TV/video every week. Broadcast live content is still important to consumers, but the ability to decide when and how to watch TV will affect the role of linear or scheduled broadcast content. Consumers are requesting a personalized, easy-to-use, high-quality, on-demand service without commercial breaks as their next TV service. The focus is on the user experience rather than the technical platform. Watch streamed on-demand TV programs Watch downloaded content Watch streamed on-demand movies Watch pay-per-view 19 36 45 41 0 20 40 60 80 100 Figure 1: Percentage of consumers that use the different types of TV services on a weekly basis. Ericsson ConsumerLab research shows a clear correlation between the features that consumers find important and their willingness to pay for them. Consumer spending is likely to shift in the future, with a significant increase in on-demand spending, provided that consumer requirements for high quality, ease of use and access to the right content are met. The ability to include recommendations and to easily explore available content are much needed functions. For a recommendation service to be successful, the consumer must feel in control. The service needs to be both transparent clearly show what the recommendation is based on and it should be done in a non-intrusive way so consumers perceive the recommendations as relevant. Ericsson ConsumerLab research shows that phrasing recommendations like similar artists is much preferred to other people bought TV and Media Consumer InsighTS 5
Pirates are consumers too Consumers expect media flexibility unhampered by content rights. They do not want to be limited, but hope and expect to consume media with total freedom regardless of the type of device or physical setting. In their desire for a flexible mediaconsumption setting, they show little concern over content rights. If something has been broadcast on TV, it is considered to be in the public domain. Downloading something that you could have recorded yourself is not considered morally wrong. Studying successful commercial alternatives, such as Hulu, Netflix or Spotify, leads to one simple conclusion that these companies have all strongly considered these habits when designing their legal offering. Figure 3 shows that certain consumers perceive the total sum of an illegal service to have greater value than its legal counterpart. It comes as no surprise that consumers prefer the illegal option, given that it is seen as a better solution, offering more content and better access at a lower cost. Figure 4 shows a typical example of how the establishment has dealt with illegal threats to date: by outlawing some options and imposing hefty fines on those caught using them. Outlawing refers to moral. This is a relatively small percentage of the total value because consumers don t consider this aspect to be very important. This doesn t mean that consumers are immoral per se; they simply have a different mindset than the owners of the media rights. Figure 5 shows that introducing the IPR Enforcement Directive (IPRED) added a significant fear of getting caught element to the equation. For example, file-sharing traffic in Swedish networks decreased by about 30 percent the first week after this law took effect in Sweden. This approach, however, will only work as long as the fear element is present. If the file-sharing traffic were encrypted through the use of darknets, for example, this element and its effects would vanish. Figure 3: Perceived value of two services Other Other Figure 4: Total perceived value of two services and the effect of legislation and anti-piracy laws Fear of getting caught Outlawing Other Counter measure Other Legal option x Illegal option y Legal option x Illegal option y Fear of getting caught Counter measure Other Fear of getting caught Counter measure Other Outlawing Other Outlawing Other Legal option x Illegal option y Legal option x Illegal option y Figure 5: Fear of getting caught. The effect of IPRED legislation (left) and how it might backfire (right) TV and Media Consumer InsighTS 6
Key Insights Internet-based TV is growing rapidly, with 50 percent of consumers using it every week. Despite consumers current unwillingness to pay for online content, there is a clear promise of future revenues. Consumer spending is estimated to shift when easy access to unlimited on-demand content moves from the personal PC screen to the social settings of the TV sofa. The best way to keep consumers satisfied is to give them what they really want. This calls for a true consumer approach, based on research about behavior and demands. Recent evidence from successful service launches both in Europe and in the US shows that a highly effective way of fighting piracy is to make legal options more appealing than illegal ones. What is it about non-conventional services that consumers find so compelling? Consumer behavior research reveals three main : Scope of content; virtually everything is available. But one advantage that legal services have in their favor is that providers can guarantee the quality of their content to content; consumers want to consume content when, where and how they like, according to their habits and needs The goal should therefore be to offer user-centered high-quality services that motivate consumers to stay legal not a system or service that forces them to stay legal. TV and Media Consumer InsighTS 7
Ericsson is the world s leading provider of technology and services to telecom operators. Ericsson is the leader in 2G, 3G and 4G mobile technologies, and provides support for networks with over 2 billion subscribers and has the leading position in managed services. The company s portfolio comprises mobile and fixed network infrastructure, telecom services, software, broadband and multimedia solutions for operators, enterprises and the media industry. The Sony Ericsson and ST-Ericsson joint ventures provide consumers with feature-rich personal mobile devices. Ericsson is advancing its vision of being the prime driver in an all-communicating world through innovation, technology, and sustainable business solutions. Working in 175 countries, more than 90,000 employees generated revenue of SEK 203.3 billion (USD 28.2 billion) in 2010. Founded in 1876 with the headquarters in Stockholm, Sweden, Ericsson is listed on NASDAQ OMX, Stockholm and NASDAQ New York. The content of this document is subject to revision without notice due to continued progress in methodology, design and manufacturing. Ericsson shall have no liability for any error or damage of any kind resulting from the use of this document Ericsson AB SE-164 80 Stockholm, Sweden Telephone: +46 10 719 0000 Email: asq.us@ericsson.com www.ericsson.com Ericsson AB 2011