Broad Cast Asia 2012 Rob Van Den Dam 20 June 12

IBM Institute for Business Value

The ‘Connected Consumer Era’ has Arrived
Rob van den Dam
Global Communications Sector Leader IBV

© 2012 IBM Corporation


Agenda

 Global digital behavioral trends of
consumers

 Challenges presented by the changing
media landscape

 Go beyond digital to deliver customized
experiences

 Looking ahead

2 © 2012 IBM Corporation


IBM questioned close to 17,000 consumers in 25 countries to evaluate
global behavioral trends in the age of consumerism

South Korea

China

India

Japan

2 types of surveys conducted in 25 countries mid 2011
3 (2011 Global Telecom Consumer Survey & 2011 Digital Consumer Survey) © 2012 IBM Corporation


Consumers in Asian emerging countries expect to increase spending
on almost everything, including Pay TV and communication services
Net Increase/Decrease Mature Net Increase/Decrease
China markets
Mobile Telephony M obileTelephony 40% UtilitiesUtilities 4%

Mobile Broadband M obile broadband 36% Food & drinks
Food & drinks
-15%average -3%

Transportation Transportation 33% Transportation
Transportation -6%

Fixed Telephony. Fixed Telephony 33% MobileMobile
Broadband
broadband
-10%

Holidays
Holidays/vacations 32% Mobile Telepony
Mobile Telephony -14%

Clothing Clothing 28% Pay television
Pay television -16%

Utilities
Electric/Gas Utilities 27%
Sports Sports -18%

Food & drinks Food & drinks 27%
FixedTelephony
Fixed
Telephony -19%

Going out Going out 20%
+26% average
Clothing
Clothing -19%

Elect. Appliances
Electrical appliances 16% Holidays
Holiday/vacation -23%

Pay television Pay television 16% Elect.Electrical
Appliances-24%
appliances

Sports Sports 5%
Going out -32%
Going out

4 Source: 2011 IBM Global Telecom Consumer Survey, © 2012 IBM Corporation
Question: Compared to previous years, are you likely to spend less, the same or more on the following products / services in the next 2-3 years?


Internet users in these emerging markets access media/ content
services more frequently than their counterparts in mature markets, …
Daily
Usage
1
2
User Generated Video

Online Audio Content
40%
40%
40%
of Internet users in
3 Online news Video 36% emerging markets
4 Online Music Video 35% user
access

5 Live Video Broadcast 32% generated
Access to
6 Full Length Movie 24% video daily
media/content
services 1 User Generated Video 22%
2 Online Audio Content 21% 40%
Mature markets of Internet users in
3 Online news Video 18%
emerging countries
4 Online Music Video 16% online
listen to
5 Live Video Broadcast 16% audio content
6 Full Length Movie 11% daily
Source: 2011 IBM Global Telecom Consumer Survey,; S08 How often do you access the following media/content services over the Internet?


…and around half of the heavy content/media users claim to do that
via a mobile device
Devices
Daily users to access media/content services

100% 6% 6% 6% 4% Other smart phone
9% 7%
3% 4%
3% 4% 4%
3% 6% 5%
6% 6% 6%
7% 4% 6%
5% 5% 5% Android device
80% 5% 7%
8% 8% 8%
9%
9%
Blackberry
23% 23%
60% 22% 22%
22% 22%
Tablet PC

40%
iPhone
48% 50% 49% 52%
45% 47%
20%
Laptop/Netbook via
Mobile Broadband

0% Laptop/ PC via Fixed
Broadband
Online Live video User Online Online Full movie
audio broadcast generated Music News
content video video clips video clips

6 Q08. Which of the following do you use to access the media/content services in the last question © 2012 IBM Corporation
Source: 2011 IBM Global Telecom Consumer Survey,


In the emerging markets 60% of consumers with (fixed and/or mobile)
internet access use social network sites to communicate

Mature markets
Usage of
Social Networking
Sites

100% 100%
8% 12% 8%
14% Daily Weekly
27% Occasionally
30% 30% 27%
80% 24% 80%
26% 32%
35%
60% 60% 28% 24%
26% 33%

40% 40%
68%
60% 60%
53%
20% 20% 45% 44% 46% 41%

0% 0%
Emerging China South India Mature US UK Germany
Markets Korea Markets

Source: 2011 IBM Global Telecom Consumer Survey,; S06 How often do you use the following communications services – Social networking sites ?


Internet Search, Family/Friends and Social Media have become
the preferred sources of information
Preferred Sources of Information
70%
Internet search 66%

64%
Recommendations from friends/family 51%

51%
Social media 28%

45%
Web sites of providers 35%

31%
Traditional advertising 19%

22%
Emails/ promotional offers 13%

19% Emerging markets
Retail stores 23%
Mature markets
17%
Shopping portals/ auctions 8%

Source: IBM Institute for Business value Global Telecom Consumer Survey 2011,
8 Question: What are you preferred sources of information when you are looking for communication products and services? © 2012 IBM Corporation


The “Connected Consumer” era has arrived

Media and Entertainment
evolutionary eras



Today’s connected consumers are empowered, demanding instant
access to personalized content, wherever they are

I want access to
I want access to
content tailored
content
to the device I
am using whenever I am
ready for it

I want access to
content relevant
to my current I want content
location options based on
my preferences

I only want to pay
for content I access
I want content
I want to choose choices based on
whether I immerse my past
myself socially in consumption
selected content behaviors


Rampant adoption of digital devices has fueled the growth of digital
content consumption behaviors globally

Global Content
Consumption
Viewing on demand Viewing onthe run
Behaviors
“I’ll Catch You “Do you want that
Later” to go?”

Distracted Viewing Social Viewing
“THIS I have to check “How YOU doin’?”
out right now”

11 Source: IBM’s 2011 Digital Consumer Survey © 2012 IBM Corporation


The new behaviors of connected consumers have greatly impacted
M&E providers in both mature and emerging markets

Viewing on demand Viewing on the run
95% 97% 95% 99%
91% Early adopters 87% 88% 91%
81% 82%
71% (12 % of global sample) 73%
68% 65%
62% Mainstream consumers 55%
(35% of global sample)

Video on Demand Search/Email
On Home TVs On Mobile Phones

US UK Japan China US UK Japan China

Distracted Viewing Social Viewing
100% 97% 76% 76%
94% 71%
90% 91%
81% 85%
78% 58%
55%
52%
46%

31%

Surfing the Web Uploading Photos
While Watching TV Source: I
On Social Media Sites
IBM’s 2011 Digital Consumer Survey

12 US UK Japan China US UK Japan2012 IBM Corporation
©
China


To be able to meet demand for connected content it is critical to
understand the key challenges

Address content
Challenges
Get in tune with todays
cannibalization digital consumers
 Consumers are already  Consumers now wield
reducing their existing level of unprecedented power over how
pay TV service, or even brands are perceived
canceling it entirely

$
Finding new digital Serve a splintered
revenue models mass audience
 Digital revenue models are  Age is far less meaningful than
weaker than traditional revenue before in differentiating micro-
streams segments


Content cannibalization is real
Traditional media and devices are in decline
China
73%
Respondents in China, Japan and
the U.S. watch substantial less
Japan regular TV as their use of
United
States 35% mobile video increases
23%

Mobile video use
Reduction in TV viewing

23% Source: IBM’s 2011 Digital Consumer Survey: Q13: Please indicate
28% how watching television shows through online or mobile/portable
devices has impacted your “regular” television consumption (watching
41% on your television set as the regularly scheduled time).



Providers need to recognize that consumers are in control and
conducting conversations in which they may not be included

In the connected world, consumers have
Blogs
unprecedented power
to build and
Social Tweets
demolish brand strength as they
Networks blog, text and comment via social media
Peer about their various consumer experiences
Reviews

RTL Nederland analyses social
media buzz to optimise its
Customer Analytics can be product offering
4 May 2011. RTL Nederland is a trend-setting
used to mine digital channels, such multimedia and entertainment company with a
as blogs, tweets, social networks and leading position in the Dutch broadcasting market. It
owns five television channels, two ……….
peer reviews



With weaker revenue streams, digital revenue models have
yet to deliver value comparable to traditional models $
Lack of Willingness to Pay for Digital Media Content
By type of content and device, globally

All consumers Late Adopters Stragglers
61%
59% 60% 60%
% of Respondents

56%
52% 52% 53% 52%

48% 47% 47% 48% 48%
45%

Movie on Tablet Newspaper on Video Games on Magazine on TV Shows on
Website Smartphone Tablet Website
16 Source: IBM’s 2011 Digital Consumer Survey, Q14: What is your preferred way to pay for the following types of media content?
© 2012 IBM Corporation


Age-based segmentation NO longer suffice – adoption
distinctions between younger and older audiences have closed
18-24 25-34 35-44 45-54 55-64
100%
94% 96% 96% 93%
90%
85% 86% 86% 87% 86%
82% 82%
79%
75% 76% 74%
Global Digital 64%
69%
72%

Adoption Leaders
by age, 2011
55-64 >65
5% 2% Willingness to Adopt New Consumer Electronic Devices, 2011
18-24 By Age and Country
45-54
12% 14%
China Japan US UK
95%
91%
35-44 25-34 88%90% 88%86%
79%80% 78%
29% 38% 71% 73%
67% 66%
58%
53% 52%

37% 35%
30% 31%

Internet on Mobile Phone, 2011 By Age and Country
China Japan US UK
17
Source: IBM’s 2011 Digital Consumer Survey; Q5: How would you categorize your adoption of consumer electronics devices? © 2012 IBM Corporation
Q6: How often do you use the following digital content services?


Behavior-based segmentation is now essential to delivering compelling
consumer experiences

Digital Consumer Segmentation Analysis, 2011

High

Connected
Access to Content

Maestros
Content
35%*
Kings
9%*

15%*
Efficiency Social
Experts Butterflies
Low

41%*

Low High

Intensity of Interaction

Note: * of respondents
Source: IBM’s 2011 Digital Consumer Survey; IBV analysis


Content providers need to deliver experiences tailored to their digital
consumers’ personalities
Example Digital Consumer Experience Models
High

“All Access Pass” “Always On”

Smart Immersive
Access to Content

“Path of Least Resistance” “We Gotta Talk”
Convenient Social
Low

Low High



For example, sports programmers should consider how their fans
segment and the resulting differentiated services they require
Illustrative Future Sports Fan Experience Models
Sports stats available Virtually play with
High

simultaneously with action professionals or other fans
Smart Immersive
Access to Content

Advanced analytics enable Instrumentation and gaming blur
tailored, “smart” sports the lines between “spectating”
entertainment experiences and “participating”

“Traditional” viewing with added Experiences created and
convenience of instant availability controlled by consumers
Convenient Social

Experiences largely driven by The ability to connect socially
matters more than the
Low

enhancements to the broadcast
model production quality

Low High



A critical mass of global consumers embrace the ability to interact
more personally with content

Appeal of Interacting More Personally With Content
By Country

US 78%
74% UK
Germany
% of Respondents

Japan
49% China
48%
42%
40%
37%

26% 24% 23%

Control Replay, Angle of Scene Play Alongside a Sporting Event

Source: IBM’s 2011 Digital Consumer Survey, Q18: As content becomes more digital, we as consumers will have the opportunity to experience
21 various forms of content in new ways. Please rank on a scale of 1-5 (5 being very appealing) how appealing the following types of © 2012 IBM Corporation
experiences would be for you.


Content is still king – BUT must be augmented with the three other key
attributes of the Connected Consumer Era

Connected Consumer Era
Key Attributes

Content + Social + Analytics + Distribution

More video is updated to Social - embedded into Smart: personal, Seamless, integrated
YouTube in 60 days than the content experience, insightful, relevant, experiences across
the three major US and Immersive - lines contextual analytics devices
networks created in 60 blur between “spectating”
years and “participating”



Providers Must Move Beyond Digital To Deliver Tailored Experiences

 Target consumers based on their “digital personalities”
 Deliver individualized experiences, not just content
 Act like a B2C company, no matter where you are in the
industry value chain
 Connect consumers, content, and monetization



Recent IBV Publications



Thank you

Rob van den Dam
Global Telecom Industry Lead
www.ibm.com/iibv rob_vandendam@nl.ibm.com


Broad Cast Asia 2012 Rob Van Den Dam 20 June 12

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