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Succeeding in a Fragmented Media and Entertainment Market

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The media and entertainment market is fragmenting as a result of ubiquitous connectivity. This is fundamentally changing the production, distribution, consumption, and monetization of movies, TV …

The media and entertainment market is fragmenting as a result of ubiquitous connectivity. This is fundamentally changing the production, distribution, consumption, and monetization of movies, TV shows, games and music.

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  • WHAT I SAY:
    Of course if you already know Yankee Group – the old horsehead – you probably know we have been monitoring and analyzing issues in communications for our entire 37-year history.
    We now do primary quantitative research and forecast connectivity trends around the world.
    Within the last two to three years, we have seen a fascinating set of things emerge from the thousands of data points we gather each year. Here are just a few that got us thinking harder about what we’ve been seeing:
    (Click)
    (Repeat a few of the emerging data points)
    If you step back a bit from the trees, what does this forest look like? An incredible adoption around the world of connectivity technologies in all their various forms. It tells you that the US is not the center of connectivity adoption, it tells you that connectivity matters to businesses, entertainment, consumers, all over the place.
    NOTES/SUGGESTIONS:
    This slide is a build. There is nothing wrong with it. Once it’s up and the picture is blank, the next click will start the boxes coming on counter-clockwise. They start slowly and then pick up speed. Just click ONCE.
  • Notes/Suggestions:
    Remember to let the audience thank you!
  • Transcript

    • 1. Succeeding in a Fragmented Media and Entertainment Market Michael Goodman Director, Digital Entertainment Yankee Group mgoodman@yankeegroup.com May 6, 2008 © Copyright 2008. Yankee Group Research, Inc. All rights reserved.
    • 2. The media and entertainment market is fragmenting as a result of ubiquitous connectivity This is fundamentally changing the production, distribution, consumption, and monetization of movies, TV shows, games and music © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market Page 2
    • 3. Agenda • Macro trends • Who is the Anywhere Consumer? • Why are they important? • Conclusions and recommendations • Question and Answer © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market Page 3
    • 4. Ubiquitous connectivity's impact on the media & entertainment ecosystem Distribution Ubiquitous Connectivity Ubiquitous Connectivity Consumers Digital Content Connected Devices Ubiquitous Connectivity © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market Page 4
    • 5. Key issues affecting the media & entertainment industry 1. Monetizing ubiquitous content: Ubiquitous connectivity means digital assets are everywhere—how 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. © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market Page 5
    • 6. Key issues affecting the media & entertainment industry 1. Monetizing ubiquitous content: Ubiquitous connectivity means digital assets are everywhere—how 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. © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market Page 6
    • 7. 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 © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market Page 7
    • 8. The Anywhere Consumers presence is being felt around the world In 2006 advertising expenditures on new media outgrow traditional media in the US 56% of Internet users in France have shared photos with friends and family in the past month 26% of Chinese households will subscribe to digital television by 2011 Apple has sold over 100 million iPods 29% of Internet users in Spain Interact with friends through social networking web sites In the US 123 million Internet users a month watch internet video There are 1.157billion broadband users and 2.57 billion mobile users worldwide By 2010, 82% of mobile users will be on 2.5G or 3G networks There are over 170,000 hotspots globally Source: TVB, IAB, InternetWorldStats.com, Yankee Group, 2008 © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market Page 8
    • 9. Pirates are quintessential Anywhere Consumers • Pirates consume abnormallyhigh volume of content, making them media companies’ best customer 68% 41% 35% • Pirates have the greatest need for consumption flexibility 43% 25% 23% 11% 10% Subscribe to premium channels (i.e.,HBO) Watch Video on Demand (VOD) Watch video online several times per day Somewhat/very interested in mobile video Services consumed – They supplement legitimate consumption with piracy, when content is not available, or can’t be easily consumed on the desired device • Content owners can curb piracy by giving “pirates” access to content – At a reasonable price Non-Pirates – Without burdensome consumption restrictions Video Pirates – In any geographic locale, at any time Source: Yankee Group Anywhere Consumer: 2007 U.S. Entertainment Survey © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market Page 9
    • 10. 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 © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market Page 10
    • 11. How do connected consumers spend their time? • Consumption is a function of time and access Average Perceived Time Spent per Day by Activity Total (HH:MM) Teens (HH:MM) Moms (HH:MM) Watching TV 3:36 3:38 3:50 Surfing the Web 3:12 2:58 3:41 Reading Newspaper/Magazine 1:36 1:33 1:55 Talking on Phone 1:24 1:22 2:02 Listening to Radio 1:20 2:16 2:20 Listening to Music (CD, Internet, MP3, etc.) 1:18 2:56 1:42 Talking on Cell Phone 1:18 2:13 1:02 Watching DVD/Video 1:18 2:05 1:38 Playing Video Games 0:54 2:25 1:00 IM 0:42 1:41 0:59 SMS 0:24 1:09 0:39 Total 17:02 21:46 18:07 Source: Yankee Group Anywhere Consumer: 2007 U.S. Entertainment Survey © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market Page 11
    • 12. How do connected consumers spend their time? • Consumption is a function of time and access • Time spent on various activities vary by segment Average Perceived Time Spent per Day by Activity Activity Total (HH:MM) Teens (HH:MM) Moms (HH:MM) Watching TV 3:36 3:38 3:50 Surfing the Web 3:12 2:58 3:41 Reading Newspaper/Magazine 1:36 1:33 1:55 Talking on Phone 1:24 1:22 2:02 Listening to Radio 1:20 2:16 2:20 Listening to Music (CD, Internet, MP3, etc.) 1:18 2:56 1:42 Talking on Cell Phone 1:18 2:13 1:02 Watching DVD/Video 1:18 2:05 1:38 Playing Video Games 0:54 2:25 1:00 IM 0:42 1:41 0:59 SMS 0:24 1:09 0:39 Total 17:02 21:46 18:07 Source: Yankee Group Anywhere Consumer: 2007 U.S. Entertainment Survey © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market Page 12
    • 13. How do connected consumers spend their time? • Consumption is a function of time and access Average Perceived Time Spent per Day by Activity Activity Total (HH:MM) Teens (HH:MM) Moms (HH:MM) • Time spent on various activities vary by segment Watching TV 3:36 3:38 3:50 Surfing the Web 3:12 2:58 3:41 Reading Newspaper/Magazine 1:36 1:33 1:55 • TV and Internet are always the top two activities Talking on Phone 1:24 1:22 2:02 Listening to Radio 1:20 2:16 2:20 Listening to Music (CD, Internet, MP3, etc.) 1:18 2:56 1:42 Talking on Cell Phone 1:18 2:13 1:02 Watching DVD/Video 1:18 2:05 1:38 Playing Video Games 0:54 2:25 1:00 IM 0:42 1:41 0:59 SMS 0:24 1:09 0:39 Total 17:02 21:46 18:07 Source: Yankee Group Anywhere Consumer: 2007 U.S. Entertainment Survey © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market Page 13
    • 14. Today the television and the internet peacefully coexist Which of the following activities do you do while watching TV? Percent Respondents 62% 60% Surf the web 65% 61% 69% 66% 70% 57% e-mail Talk on phone 32% 32% IM 51% 42% 45% 47% Read magazine 16% 15% Listen to radio Read newspaper SMS 73% 23% 21% 8% 6% Total Moms Teens 38% 41% 20% Source: Yankee Group Anywhere Consumer: 2007 U.S. Entertainment Survey © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market Page 14
    • 15. Increasingly consumers want greater control over what they view and when they view it • User generated videos (57%) are the most popular from of streaming video followed by clips from TV shows (54%) and movie trailers (51%) Percent Online Users Watch streaming online • In addition to internet delivered video, DVRs and VOD also provide on-demand solutions – – 43% of online households have used VOD from their cable or IPTV service provider 27% of online households own a DVR • The challenge for broadcast and cable programmers is it maintain their brand in an on-demand world 34% Download video 12% Copy video from my PC to a portable device (e.g. iPod or similar device) 3% Recorded a TV program to a PC 3% Copy video from my PC to my mobile phone 1% Source: Yankee Group Anywhere Consumer: 2007 U.S. Entertainment Survey © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market Page 15
    • 16. For TV content, broadband video is just another DVR % of consumers who watched full TV episodes 83% 56% 36% 35% 31% 18% ho m e s ts id e de r an w at ch ou ol In t C at c w w hi le Li ke hi n g sh on ow TV n ag ai m ra pr og to te d W an d Fe w at ch w er c om rE ld e O w ith up g at ch in 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 Source: Yankee Group Anywhere Consumer: 2007 U.S. Entertainment Survey © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market • Thirty eight percent of consumers who watched video online in the past month, watched episodes of TV shows • Women prefer online TV for practical reasons – Eighty seven percent of women, who watch full TV episodes online, do so because they missed the broadcast, compared to 80% of men – Thirty four percent watch because they were interrupted, compared to 29% of men • Men watch TV online for sentimental reasons – Forty-two percent of men who watch TV episodes online, do so to see an episode again, compared to 28% of women – Twenty four percent like watching older shows, compared to 11% of women Page 16
    • 17. Advertisers must bring less disruptive, better-targeted ads to TV • Ad-skipping will continue to grow as DVR penetration increases with time % of DVR owners 49% 2006 42% 2007 40% • Consumer will time-shift their consumption to avoid ads 33% – Fifty three percent of DVR owners wait to start watching the show, to skip the commercials 15% 14% 2% 2% Always Most of the Time – DVR ownership increased to 27% of US households, compared to 20% in 2006 Occasionally Never • Ad-skipping is slightly less severe in men – Women are less patient, with 47% fast forwarding always, compared to 37% of men Frequency of skipping commercials Source: Yankee Group Anywhere Consumer: 2007 U.S. Entertainment Survey © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market Page 17
    • 18. Limiting functionality does not enhance engagement • Consumers dislike ad formats that interrupt their video % of DVR owners Disable FF Capability During Ads 78% Can't FF ads during ondemand TV shows 77% – Fifty seven percent found picture-in-picture ads, which conceal part of the screen very/unacceptable • Less intrusive formats are more likely to gain consumer favor – Fifty two percent of DVR owners found advertiser’s logo displays very/acceptable Can't FF ads at beginning and end of shows 58% – “More information” ad button found even more support, with 64% of DVR owners finding it very/acceptable Somewhat/Not at all Acceptable Source: Yankee Group Anywhere Consumer: 2007 U.S. Entertainment Survey © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market Page 18
    • 19. In order to succeed business models must be aligned to consumer behavior Mobile Users % Respondents Aware of mobile video service Interested in subscribing to mobile video service Use mobile phone to watch video 77% 12% 7% Mobile video’s business model is misaligned with consumers usage patterns • Early results show that mobile users are snacking on video – watching 1-2 hours a month • Most consumers will not pay ~$15 a month for a service they are only using for an hour or two • Advertising is required to remove the financial burden from consumers and make mobile vide a success Source: Yankee Group Anywhere Consumer: 2007 U.S. Entertainment Survey © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market Page 19
    • 20. Mobile billing paves the way for digital media % mobile phone owners who bought and downloaded content to mobile phone 61% 22% 12% 3% Add to mobile bill Credit card Bank account PayPal When Purchasing Entertainment on Mobile Phone, How Do You Pay? • Thirty percent of mobile users have purchased and downloaded content to their mobile phone – Ninety percent of US consumers own mobile a phone • Females are more pragmatic, with 65% preferring payment added to mobile bill, compared to 57% of males • Although they want to paying by adding charges to their mobile bill, males also favor credit card payments – Twenty eight percent of men who bought and downloaded content to their phone, paid with credit card, compared to 17% of females Source: Yankee Group Anywhere Consumer: 2007 U.S. Entertainment Survey © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market Page 20
    • 21. Conclusions and recommendations Multi-channel Video Providers – Launch online properties for video syndication. Programmers are looking for online audiences. Service providers that are usually also the broadband providers have those audiences. Launching online properties similar to Comcast's Fancast and offering programmers a distribution outlet will help solidify a service provider's position in the online entertainment value chain. – Connect the set-top box to the internet. Service providers are uniquely positioned to deliver PC video to the TV. Bridging the PC-TV divide is inevitable. Being the first movers in this space, service providers can stake their place in the market and negotiate more favorable distribution deals with the programmers. Programmers – Protect your brand. Media companies must maintain and enforce their brands in cross-platform environments. The role of the media brand cannot be overstated, because it is the thing that unifies the content with the experience. – Design for usability. Usability is the branded experience. Ubiquitous broadband connectivity means that viewers have dozens of choices for the programming they seek. The only way to monetize fragmented, cross-platform audiences is to maintain the audience from one platform to another. Media companies must make it easy for the viewer to remain loyal to their brands and properties. Advertisers – Standardization is required. Standardization is one of the key obstacles in shifting from a world of 30- and 60-second video ads to interactive overlays, tickers, bugs and telescopes. Advertisers and agencies are challenged--both in terms of media planning and implementation--when each vendor and media company has a slightly different implementation of common advertising format. © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market Page 21
    • 22. Thank You Michael Goodman Director, Digital Entertainment Yankee Group mgoodman@yankeegroup.com Charting the Evolution of Anywhere © Copyright 2008. Yankee Group Research, Inc. All rights reserved. Succeeding in a Fragmented Media and Entertainment Market Page 22

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