Digital Media - Multiple Markets, Multiple Opportunities
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Consumers lead a digital lifestyle, demanding access to news & information, entertainment, friends and family and commercial enterprises, unbound by time, location or device
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Digital Media - Multiple Markets, Multiple Opportunities
- 1. Digital Media: Multiple Markets, Multiple Opportunities Michael Goodman Director, Digital Entertainment Yankee Group mgoodman@yankeegroup.com May 29, 2008 Š Copyright 2008. Yankee Group Research, Inc. All rights reserved.
- 2. Agenda ⢠Macro trends ⢠The digital home ⢠The connected consumer ⢠Emerging trends in digital media â Video â Music â Web 2.0 ⢠Outlook ⢠Question and Answer Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 2
- 3. Ubiquitous connectivity's impact on digital media Distribution Ubiquitous Connectivity Ubiquitous Connectivity Consumers Digital Content Connected Devices Ubiquitous Connectivity Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 3
- 4. Key issues affecting the digital media 1. Monetizing ubiquitous content: Ubiquitous connectivity means digital assets are everywhereâhow do content owners control, promote and monetize them most effectively? 2. Cross-platform distribution: From a few well-understood silos, ubiquitous connectivity is creating new paths to market and profit with growing cross-platform distribution options; highly competitive choices with differing capabilities, shifting power structures and evolving economics. 3. Anywhere Consumer⢠2012: With a greater diversity of devices and access to content and each other, Anywhere Consumers are increasingly less loyal, more experimental, and demand greater control over how, when and where they access content and interact with their communities. 4. Anywhere Brands: In the emerging Anywhere environment, ubiquitous connectivity has created a world where content, media and consumers are everywhere. As a result the value chain for advertising and brandbuilding is changing dramatically, with new players emerging and roles changing. Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 4
- 5. Who is the Anywhere Consumer? Anywhere consumers lead a digital lifestyle, demanding access to news & information, entertainment, friends and family and commercial enterprises, unbound by time, location or device Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 5
- 6. As consumers become more connected it effects how they interact with different forms of entertainment U.S. Addressable Market (in Millions) Networks 2006 2008 2010 2012 Mobile Subscribers 233.0 273.3 293.0 300.1 Active Mobile Data Users 106.8 157.1 174.4 181.0 Internet Users 210.2 226.8 247.6 270.3 Connected Consoles ----- 18.1 26.6 30.3 Digital Audio Players 65.3 81.5 83.1 85.0 Digital Video Players* 28.7 50.2 64.3 69.3 Handheld Game Systems 38.3 45.4 51.4 52.9 Devices owned * Includes DAPs, Sony PSP and dedicated video players Source: Yankee Group Forecasts, 2008 Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 6
- 7. The devices in the home have a heavy influence on digital media behavior 2007 Advanced Digital Home Digital Home 2008 3% 9% 22% 30% Advanced Digital Home â Owns an HDTV, DVR, video game console, laptop or desktop computer, and a home network Digital Home â Owns either an HDTV or a DVR, a laptop or desktop computer, and a video game console ⢠The average household income in Advanced Digital Households is $87.5k compared to $62.5k in Digital Homes ⢠46% of respondents in Advanced Digital Households are college graduates compared to 35% in Digital Homes Source: Yankee Group Anywhere Consumer: 2007 and 2008 US Penetration & Usage Surveys and the 2007 US Device Survey Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 7
- 8. A new generation of digital devices are starting to enter the digital home How many of the following products or services do you have in your household? % Respondents 53% External Hard Drive 36% 40% Home Security Equipment 28% 15% 20% Blue-ray Player Digital Media Adapter Placeshifting Device ⢠Purchase intent for most advanced devices is limited due to⌠11% 11% 5% â 13% of respondents in Advanced Digital Homes and 10% in Digital Homes said that they intend to purchase a Blu-ray player in the next 3 months â 2% of respondents in Advanced Digital Homes and Digital Homes said that they intend to purchase an external hard drive in the next 3 months 27% TV Tuner Card ⢠Blu-ray players are hot but not much else is Advanced Digital Home Digital Home â Consumer confusion â Unclear value proposition â Differing standards 9% â Lack of interoperability 4% Source: Yankee Group Anywhere Consumer: 2008 Penetration & Usage Surveys Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 8
- 9. External storage is more than consumers simply running out of space on fixed drives Why did you buy a new external hard drive? % Respondent 41% 37% 18% Still had room on PC but wanted to back up files 17% Back up Ran out of storage Back-up multiple multimedia files space on PC computers (music, pictures, etc.) 7% Complement backing up files online ⢠Eighteen percent of online households have purchased an external hard drive in the past 6 months â 56% of these were under 300GB ⢠The median price of a external hard drive purchased in the past 6 months was $74.50 ⢠Western Digital was the most common brand purchased Source: Yankee Group Anywhere Consumer: 2008 US Device Survey Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 9
- 10. Home networks are being underutilized What devices are currently connected to your home network? % Respondents 88% 86% 69% 60% 36% Multiple Computers Printer 27% Game Console 25% 14% DVR 22% 15% 12% 7% 8% 6% 7% 5% Television Home Stereo External Hard Drive Home Monitoring Advanced Digital Home Digital Home ⢠Most users who recently set-up their network are using them for basic broadband sharing ⢠Improved integration, more liberal business rules and the development of standards between CE devices, PC and internet delivered content will accelerate the adoption of digital media â 30% of internet users said they would be more likely to view internet video if they could watch it on their TV Source: Yankee Group Anywhere Consumer: 2007 US Device Survey Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 10
- 11. Bringing the personal experience beyond the home is the next logical step 2007 2008 Connected Consumer 3% 8% Entertainment-To-Go ----- 9% Connected Consumer â Owns an digital camera, digital camcorder, laptop, mobile phone, handheld game system and a mp3 player Entertainment-to-go â Owns a handheld game system, a digital audio player (mp3 player) and a mobile phone which they use to play games, listen to music or watch video Connectivity in the home is addressed by WiFi, but beyond the home device connectivity is limited Source: Yankee Group Anywhere Consumer: 2007 and 2008 US Penetration & Usage Surveys Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 11
- 12. Connected Consumers and Entertainment-To-Go consumers are significantly more connected than the typical consumer From where do you currently access the internet? % Respondents 93% 91% 41% 40% 16% 22% Home Work 15% 20% 19% 20% School Mobile Device Public WiFi Connected Consumer Entertainment-To-Go Connected Consumers and Entertainment-To-Go consumers are more than twice as likely to have access to the internet outside the home than the typical consumer â 84% of consumers 18 and older have internet access at home, followed by 29% at work, 10% at school, 6% on a mobile device, and 8% use public WiFi Source: Yankee Group Anywhere Consumer: 2008 US Penetration & Usage Survey Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 12
- 13. Form and functionality beat connectivity ⢠Did you know that you could watch video on your âŚ? Consumers do not see much value in mobile video Do you use your _____ to watch video ? 1. Not interested in using phone to watch video -76% % Respondents 2. Donât want to pay a monthly fee â 68% 79% 77% 3. Screen is too small to watch video â 59% 59% 4. Only use phone to make calls â 55% 5. Too expensive â 45% 25% 6. Already pay too much for wireless service â 41% ⢠Digital Audio Players and Handheld Game Systems have done a better job integrating into consumers digital lifestyle Source: Yankee Group Anywhere Consumer: 2007 US Entertainment Survey Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. 21% 6% Mobile Phone Digital Audio Handheld Player Game System Aware Video is Available Use to Watch Video Digital Media: Multiple Markets, Multiple Opportunities Page 13
- 14. Top ten online behaviors Which of the following have you used a PC for in the past month? % Respondents Get the latest news/current events 83% Make a purchase for personal use 72% Pay bills 68% Play games 55% Get sports news/information 46% Get medical information 44% Store digital pictures on PC 44% Listen to music 44% Watch video 40% Send pictures to friends/family via email 40% Source: Yankee Group Anywhere Consumer: 2007 US Entertainment Survey Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 14
- 15. The PC has emerged as a viable platform for video distribution Which of the following have you done in the past three months? % Watch video on PC Watch video online 34% Download video 12% Burn video to a DVD 5% Copy video from my PC to a portable device 3% Rip video from a DVD to a computer 3% Recorded a TV program to a PC 3% Copy video from my PC to my mobile phone 1% ⢠In addition to internet delivered video, DVRs and VOD also provide ondemand solutions â 43% of online households have used VOD from their cable or IPTV service provider â 27% of online households own a DVR ⢠The challenge for broadcast and cable programmers is it maintain their brand in an on-demand world Source: Yankee Group Anywhere Consumer: 2007 US Entertainment Survey Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 15
- 16. Internet delivered video represents both a threat and an opportunity to broadcast and cable networks What types of video do you watch online? % Watch online video User Generated Videos 57% Clips from TV Shows 54% Movie Trailers 51% Music Videos 47% News Highlights 41% Full Episodes of TV Shows 38% Sports Highlights 27% Full Length Movies 17% Adult Entertainment Sporting Events Online Ads 16% 11% 9% Source: Yankee Group Anywhere Consumer: 2007 U.S. Entertainment Survey Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 16
- 17. For TV content, broadband video is just another DVR ⢠Thirty eight percent of consumers who watched video online in the past month, watched episodes of TV shows % of consumers who watched full TV episodes 83% ⢠Women prefer online TV for practical reasons 56% 36% 35% â Eighty-seven percent of women, who watch full TV episodes online, do so because they missed the broadcast, compared to 80% of men 31% 18% ho m e s ts id e de r ou ol ⢠Men like to watch the same episodes over again an w at ch Li ke w at c hi n g sh on ow TV n ag ai ra m w hi le â Thirty-four percent watch because they were interrupted, compared to 29% of men In t C to te d W an d Fe w at ch w er pr og co m rE ld e O w ith up g hi n at c C er ru pt e pi so m er ci al de e so d Ep i an se d M is s 11% Why Do You Watch TV Episodes Online â Forty-two percent of men who watch TV episodes online, do so to see an episode again, compared to 28% of women â Twenty-four percent like watching older shows, compared to 11% of women Source: Yankee Group Anywhere Consumer: 2007 U.S. Entertainment Survey Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 17
- 18. Today the television and the internet peacefully coexist Which of the following activities do you do while watching TV? Percent Respondents Talk on phone 66% e-mail 65% Surf the web 62% Read magazine 42% Read newspaper 38% IM 32% Listen to radio SMS 16% 8% Source: Yankee Group Anywhere Consumer: 2007 U.S. Entertainment Survey Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 18
- 19. Digital audio players are the device of choice for portable music Do you think you willâŚ? % Respondents Buy another mp3 player or digital audio player 51% Replace your mp3 player or digital audio player with a music phone Replace your mp3 player or digital audio player with a handheld game system Don't Know â 25% of teens and 15% of young adults would consider switching to a music capable phone 18% Will not replace my mp3 player or digital audio player â Even in Europe, which is much more âmobile-centricâ consumers are not much more willing to replace their digital audio players with music phones 14% 0% ⢠Teens and young adults are not much more likely to adopt cell phones as their primary portable music player DAP Owners 17% Source: Yankee Group Anywhere Consumer: 2007 U.S. Entertainment Survey Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. ⢠Eighty-eight percent of digital audio player owners are very/somewhat satisfied with their player â Ninety-five percent of iPod owners are very/somewhat satisfied Digital Media: Multiple Markets, Multiple Opportunities Page 19
- 20. Solid industrial design and good service-device integration give consumer little reason to switch Why do you think you will buy another mp3 player or digital audio player? % Respondents 57% I really like the portable music player I have I don't want to use my mobile phone as a portable music player 44% I trust the manufacturer of my portable music player 33% I don't want to use a handheld game system as a portable music player I can't transfer my music to another brand of portable music player Other 29% 9% 7% Reasons for buying another DAP when current one dies Source: Yankee Group Anywhere Consumer: 2007 U.S. Entertainment Survey Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 20
- 21. The PC is key to the acquisition, storage and management of digital music Where do you usually get the music you listen to? (select all that apply) Which way do you use MOST OFTEN to get the music you listen to? (select one) % Listen to Music on PC 78% Buy CDs 58% Borrow CDs From Friends â DAP owners have, on average, 1,334 music tracks stored on their PCs but only 841 tracks stored on their digital audio player 47% Download Music to PC 28% 33% 8% ⢠Young adults (age 18-24) are nearly twice as likely (46%) to downloaded music to their PC 16% Trade CDs w/Friends 2% Download Music to Phone ⢠On average, DAP owners store just under two-thirds of their music files on their player 4% 1% ⢠Fifty-seven percent of respondents who downloaded music to their PC do so from licensed music services Sources For New Music One Main Source For New Music Source: Yankee Group Anywhere Consumer: 2007 U.S. Entertainment Survey Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 21
- 22. Online content creators are a small but vocal minority ⢠Content creation is a niche undertaking by consumers with the knowledge, expertise and time to create and post content to the web Please indicate if you did any of the following activities online in the past month % Respondents Photos 25% Blogs 9% Online Video 4% UGC Creators ⢠The exception is photos â not surprising considering the number of services and applications available to consumers to post photos, as well as the ubiquity of digital photography ⢠Despite the hype, Second Life participation is a very niche online activity with only 2% of users participating monthly Online User Generated Content and Communities Trends Podcasts 1% Activity Percent of Respondents Answered a question on a social Q&A page UGC Creators are those consumers who are creating, uploading and posting content to the web. Source: Yankee Group Anywhere Consumer: 2007 US Web/Data Survey Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. 7% Created mashup 3% Participated in a Second Life community 2% Digital Media: Multiple Markets, Multiple Opportunities Page 22
- 23. However, strong interest in consuming and using UGC exists Please indicate if you did any of the following activities online in the past month ⢠Strong interest exists for viewing UGC among consumers % Respondents Photos 32% Online Video 31% 28% Blog Podcasting 8% UGC Consumers ⢠This gives the relatively few content creators a tremendous audience for their work ⢠Viewing photos, video and reading blogs are the most popular activities for UGC consumers â Because these activities are often created and posted by friends and relatives they draw in loyal viewers who will return to consume more content from those they know and trust UGC Consumers are those individuals that are viewing, listening to or reading photos, videos, podcasts or blogs. Source: Yankee Group Anywhere Consumer: 2007 US Web/Data Survey Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 23
- 24. As an aging population joins social networks, the demands of users are changing Use social networks Top concerns about social networks: % Respondents 1. Donât know anyone on social networks 2. Lack of time to participate 3. Fear of viruses or spam 68% Connect with friends, colleagues, relatives Post photos 35% Meet new people with similar interests 32% Send IMs 31% Share info about me and my interests 20% Blog 16% Those ages 35 and up are statistically more concerned about a fear of viruses and spam than those younger people. 14% Connect w/communities and organizations Top 5 Social Networking Sites Look for a new job 12% Find new music or videos online 12% MySpace Make professional connections 12% Yahoo! Groups Meet people to date/have a relationship with Post video MSN/Windows Live Spaces 10% 6% Facebook MSN Groups Source: Yankee Group Anywhere Consumer: 2007 US Web/Data Survey Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 24
- 25. Online collaboration and storage is about to take off ⢠In order to identify workplace versus personal trends, Yankee Group asked respondents about their use of spreadsheets, word processing documents and online calendars. Have you used any of the following? At Home At Work At Home and Work Web-based and web-stored spreadsheet 9% 4% 5% Web-based and web- stored word processing document 12% 4% 7% Web-based and web-stored calendar of personal appointments, events, meetings 15% 5% 6% ⢠Consumers are increasingly comfortable with online storage for documents, calendars and photos: â 18% of consumers are using online tools to collaborate to create documents, videos or photos at home â Those ages 18-34 are statistically more likely to have created a web-based and web-stored word processing document, spreadsheet or calendar at home â Most consumers still backup most of their data manually such as on CDs, external hard drives or USB thumb drives Source: Yankee Group Anywhere Consumer: 2007 US Web/Data Survey Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 25
- 26. Outlook Entertainment Rules for the next five years ⢠The need for multiple file formats, DRM, and business models will continue to hinder this market (ie DVDâs digital copy) ⢠Content will become free â enabling newer use cases and flexible video usage than ever before (both in the home and beyond) ⢠Consumers will store their most valuable content with them on a device â to ensure the content is always readily available regardless of their connectivity options ⢠The handset (beyond iPhone) continues to be an unattractive multimedia device for users ⢠Physical formats remain and must be factored in ⢠Timeshifting is a regular behavior and placeshifting is emerging Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 26
- 27. Outlook Connectivity is impacting digital imaging ⢠Photography is taking place on multiple devices and leading to interesting ways to capture, share, and store images â Connected Cameras. Allowing users to directly upload photos sharing sites (and perhaps to home servers in the future) â WiFi SD Cards. For users of disconnected cameras WiFi cards allow for direct uploading â Connectivity to social networks & photo sharing sights. Allowing for immediate sharing of content, is creating new ways for users to share experiences â Geotagging. Providing location based information for photos and video creates a new dimension in metatagging content. WiFi and cellular signals could be used to provide such information without specific geotagging hardware ⢠The home remains integral for long term archiving of photos ands represents another medium for which devices should connect with to back-up content Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 27
- 28. Outlook Ease of interoperability is key to the realization of the digital home ⢠There are a number of obstacles preventing interoperability becoming a reality â Lack of video standards (H.264, DiVX, WMV, MPEG) â Digital rights management (Zune, Fairplay AAC, DiVX) â Device connectivity ⢠DLNA is the most interesting solution to the connectivity gap in the home â but it only addresses some of the issues around hardware, not around software (and its educational outreach has been non-existent thus far) ⢠Interoperability of portable devices in the home and beyond is an additional challenge that has not yet been addressed Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 28
- 29. Outlook Open networks are the future but issues must be resolved â Business models â Partnerships â Speeds â Education ⢠Connectivity in the home is addressed by WiFi, but beyond the home device connectivity is limited â Open networks impact on in-home connectivity â Planning necessary for CE manufacturers ⢠Device Manufacturers will be faced with difficult decisions â Lack of ubiquitous WiFi beyond the home is the challenge â To Incorporate multiple connectivity standards (3G, EVDO, WiMax) or not â Bundle remote connectivity into cost or charge a subscription fee â What value foes connectivity add? (Intel example) Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 29
- 30. Question & Answer Michael Goodman Director, Digital Entertainment Yankee Group mgoodman@yankeegroup.com Charting the Evolution of Anywhere Š Copyright 2008. Yankee Group Research, Inc. All rights reserved. Digital Media: Multiple Markets, Multiple Opportunities Page 30