Nielsen Convergence Audit

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Study: More Cellular-only Homes as Americans Expand Mobile Media Usage …

Study: More Cellular-only Homes as Americans Expand Mobile Media Usage
Nielsen Wire - December 21, 2009

The latest Nielsen Convergence Audit – an annual survey on voice, video and data products – shows a rise in households who have “cut the cord” by trading their traditional landlines for wireless cellular services and an increase in mobile media device usage among a diverse set of households. The survey collects more than 32,000 U.S. online and mail respondents.

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  • 1. Communication Trends Highlights from the 2009 Nielsen Convergence Audit
  • 2. Introduction VOD, DVR, VoIP, FiOS—you may need a dictionary to decipher the acronyms of some of the latest technology advances that have re-defined the media and telecommunications landscape in the U.S. Understanding the media and communications habits of today’s consumers more deeply than the competition offers companies the best way to win in this hyper-competitive, fragmented environment. To understand consumers’ attitudes and behavior towards voice, video and data products, Nielsen conducts one of the largest surveys of its kind—the Nielsen Convergence Audit. The Convergence Audit® is an annual survey that collects more than 32,000 U.S. online and mail respondents. The most notable trends in 2009 include a rise in households who have “cut the cord” by trading their traditional landlines for wireless cellular services and an increase in mobile media device usage among a diverse set of households. Cutting the telephone cord Blackberry versus iPhone Interestingly, in terms of psychographic differences, the iPhone household has a While an overwhelming majority, 88%, Nielsen reveals that approximately 15% slight edge over the Blackberry household of U.S. households have a wireless phone of U.S. households own a smart phone. in being the first to seek out the newest in 2009, most still maintain a traditional In spite of the recent sales success of technology. Blackberry households landline at home. However, this is changing. the iPhone®, the earlier introduction tend to wait until a new technology is In the second quarter of 2009, over one in of the Blackberry® gives them a higher proven before investing. However, both five households reported they are wireless penetration rate of 8% versus 4% for the Blackberry and iPhone audiences tend to cellular only—an increase of 16% from iPhone. Given the high price point of both be technology savvy, early adopters of the past year. This increase comes from devices, the demographic profile of the technology and wireless oriented. the two-thirds of households who have Blackberry and iPhone user looks very dropped their landlines as well as from similar—both appeal to households with young adults that started new households higher income and education levels. with just a wireless phone service. Psychographic Differences (iPhone vs. Blackberry) Wireless Cellular Only Penetration 21% 76% I prefer to wait until a new technology has 18% been proven in the market before buying it 79% 15% 15% 36% I want the latest technology regardless of price 26% 2006 2007 2008 2009 54% I always seem to be the first to try out a new technology 41% I'm much more interested in the 70% latest technology than most people 62% I like technology that reflects my 80% personal style 77% 0% 20% 40% 60% 80% 100% Blackberry households iPhone households Households with Blackberry phones = 1,238 and households with iPhone phones = 2,543. Copyright © 2009 The Nielsen Company. 09/747 1
  • 3. Primary reasons for prepaid phones Mobile media expansion For many of the mobile media devices, more technologically savvy people drive Most wireless cellular phone users have This year all media player products in growth. However, consumers who are a post-paid contract, but 15% of house- the market have seen growth. Given an less technology oriented have embraced holds use prepaid phones. This attractive increase in availability, product op- gaming devices and use DVR’s heavily. “pay-as-you-go” option offers simplicity tions and cost reductions, these types Further analysis of the Convergence and minimal commitment which are of products have become more main- Audit data usage among two Nielsen noted as the primary reasons for choosing stream. With one-third of households ConneXions lifestage groups—Young & this type of service plan. owning gaming devices (xBox® 360, Wireless and Frugal Folks—demonstrates Playstation® or Wii®) and digital video this trend. recorders (DVR), they are becoming well Primary Reasons for Prepaid Wireless established products that continue to The ConneXions® household segmenta- Cellular Phone Service exhibit healthy year-over-year growth tion system groups consumers into 53 rates. Growth of portable MP3 music segments based on voice, video and Simple plan/ simple to use 14% players without video capabilities data consumption, as well as consumer leveled off in 2009 at 25%. Adoption of technology adoption, or Technodoption. No monthly bill 13% other alternative media player products The 53 ConneXions segments fit within is still in the early stages, although 10 lifestage groups based on the combi- Emergency use only 13% all have exhibited growth this year. nation of technology adoption, age and Most notable are devices that offer family structure. No lengthy contract 10% video capabilities. Budget control 9% For use by 7% Media Player Products Currently in Household child/teenager xBox 360, 33% 30% Credit issues 5% Playstation or Wii 13% N/A 32% Received DVR or TiVo 27% as a gift 5% 28% 19% Portable MP3 Music 25% Prefer to 3% 24% pay cash Player Without 25% Video Capabilities 17% 20% Cellphone with 15% Total sample size = 4,256. MP3 Music Player 12% 5% Sony PSP or 18% 17% Nintendo DS 14% Portable Game Player 14% 2009 Cell Phone with 18% 12% 2008 Streaming Video 13% Capabilities 8% 2007 Portable MP3 Player 15% 12% (Such as iPod) 10% 2006 with Video Capabilities 4% Total sample size = 32,735. Copyright © 2009 The Nielsen Company. 09/747 2
  • 4. The Young & Wireless group consists mostly of young, upscale singles and couples who set trends and love ConneXions Index: Young & Wireless and Frugal Folks technology. These households adore wireless devices and connect to the 250 Internet by cell phone, laptop and handheld devices like iPhones and 200 Blackberries. Many gave up their landline telephones—if they ever had them—for cell phones with MP3 and video players. 150 They subscribe to a DVR, but use it less Index heavily as they spend most of their leisure 100 time online downloading music, watching Blackberry iPhone Cord cutters Cell phone Cell phone Portable game Video game DVR heavy streaming video and instant-messaging with MP3 with streaming player (e.g. console users friends as well as checking out information music player video capability Sony PSP or (e.g. Xbox 360, 4+hours Nintedo DS) Playstation 3, 50 about jobs, cars and apartments. Serious or Wii) music fans, they rarely travel without their Young & Wireless Frugal Folks MP3 players or car radios blaring. When it 0 comes to cool technology, they own it. With their more lower-middle-class incomes from blue-collar and service industry jobs Frugal Folks boast more moderate technology tendencies. Ethnically diverse and widely scattered throughout the exurban landscape, these Americans spend what they can on technology to keep their children entertained at home, indulging them with video game consoles and portable game players as well as educational computer software. These video-focused households watch their Fiber Optic TV Subscribers by Income DVR for more than four hours a day as well as watching on-demand TV. They rent 46% movies at a video store and use their kids’ <$50K 24% game systems to watch video content. Modest incomes depress technology usage 18% and lead these households on a constant $50K-$74.9K search for cheaper alternatives for phones 19% and the Internet. 14% $75K-$99.9K 19% Fiber optic TV growth 11% Fiber optic TVs continued to grow over the $100K-$149.9K 23% past year with penetration increasing from 3% to 5%. Fiber optic TV homes tend to 3% have higher incomes, with almost one $150K+ in three subscriber households earning 8% $100,000 or more, compared with just 14% of all other TV households. Those HHs Not Subscribing to Fiber TV HHs Subscribing to Fiber TV switching to this relatively new service tend to be early adopters of technology. Households not subscribing to Fiber TV = 30,859 and households subscribing to Fiber TV = 1,373. Copyright © 2009 The Nielsen Company. 09/747 3
  • 5. The evolving landscape Conclusion About The Nielsen Company The cut-throat telecommunications Advanced services will continue to The Nielsen Company is a global informa- landscape continues to evolve, with transform our lives. As the costs of these tion and media company with leading consumers simultaneously deepening services come down, more and more con- market positions in marketing and con- their commitment to wireless services and sumers will purchase devices that connect, sumer information, television and other responding to higher-value bundles from entertain and inform them at home as media measurement, online intelligence, their wireline cable or telecom provider. well as when they are away from home. mobile measurement, trade shows and The growth of Verizon’s FiOS and AT&T’s business publications (Billboard, The U-verse services underscores the parallel To win, telecommunication marketers Hollywood Reporter, and Adweek). The growth of these technologies. must continue to stress the value of their privately held company is active in more products, weigh the costs and the benefits than 100 countries, with headquarters in Consumers subscribing to wireless cellular of each service and each campaign more New York, USA. For more information, services expect not only telephone com- critically. They must also understand the please visit munication, but also value-added features nuances—and particularly the differences from simple enhancements like an MP3 between—of the people who will become player, to Internet-accessible smart their new customers and those who com- phones. Despite their higher costs smart prise their existing customer base. Those phones will continue to gain market share. companies who can quickly differentiate The benefits of mobile email and the their customers will prosper. Internet coupled with improvements in Internet display capabilities and network speed will continue to drive this trend. Similarly, cord-cutting households will Passion for precision continue to grow in numbers as consum- Nielsen Claritas, an industry leader for ers find wireless cellular service meeting over 35 years, is the preferred choice their needs, further pressuring the of Fortune 500 companies who wish to telecommunications landline business. optimize their customer targeting, media Prepaid cell phones will also gain, as strategies and site analysis decisions. some consumers seek the simplicity they Combining the most passionate team of offer and others look for more mini- industry experts with world-class data, mal financial commitments during the software and services, we deliver solutions economic downturn. As a result of these that help you identify both ‘who’ and trends, traditional wireline telephony has ‘where’ your best customers and pros- ceased to offer high-profits reliably for pects are—with precision. telecommunication companies. For more information call (800) 234-5973 or visit Copyright © 2009 The Nielsen Company. 09/747 4