Upc report on ireland's digital future


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Upc report on ireland's digital future

  1. 1. The UPC Report on Ireland’s Digital Future Driving Economic Recovery Researched & produced bywww.upc.ie 3
  2. 2. Designed by
  3. 3. UPC Report on Ireland’s Digital FutureContentsForewordDana Strong, Chief Executive, UPC Ireland 2Executive Summary 4Introduction 6Chapter 1: Life Online 9Chapter 2: The Digital Consumer 24Chapter 3: The Digital Business 33Conclusion: Towards a Digital Future 45© 2012 UPC Ireland and Amárach Research, the content of this report may be usedand republished freely once The UPC Report on Ireland’s Digital Future is credited.
  4. 4. Foreword Driving Economic Recovery The shared goal of transforming Ireland into The report puts current online consumer spending at €3.7 billion and a knowledge based society and a competitive forecasts it to rise to €5.7 billion, an increase of more than 40% by economy is critically dependent on our 2016. It also predicts a doubling of Ireland’s ‘Internet economy’ by 2016 capacity not only to deliver a world class digital bringing its total value to €11.3 billion. A challenge for Irish businesses infrastructure but also on our ability to maximise will be to ensure that these increases are met by Irish based productivity engagement with that infrastructure. and innovation with a corresponding benefit for jobs and the economy.For the past 3 years, UPC has been a key change agent in Ireland The evidence is clear. Ireland is well capable of grasping theleading a surge in broadband adoption and raising awareness of the opportunity presented by new media, digital developments, broadbandbenefits of going digital for households and businesses. and the Internet and this will contribute to restoring the health of our economy. In turn, all stakeholders must play their part in theThis independently conducted research, commissioned by UPC, is development of our digital economy to create jobs growth, economicpart of our continued contribution to transforming Ireland into a growth, and enhanced competitiveness.global digital leader. The report presents findings of surveys across asample of the Irish consumer and business population. It provides a I would like to thank Amárach for their research expertise andcomprehensive snapshot of Ireland’s current position and seeks to look everyone who has participated in this groundbreaking report forahead to the future where digital uptake can drive economic recovery Ireland. UPC is proud to be playing its part in delivering the digitaland create new jobs which will underpin national competitiveness. future and we will continue to work with Government, business and society in general to ensure that we all collectively realise this potentialThe Internet is clearly having a profound impact on the way we live for Ireland to succeed to the maximum extent possible.and work. The Amárach research shows that Irish society is ready andconfident for the digital future. Ireland performs well in many criteria Why not help us track Ireland’s progress? We would like to invite allin comparison with OECD and EU indicators. Consumer investment in individuals and businesses to participate in the UPC Digital Index atdigital products and services is strong and is equally matched by the www.upc.ie/digitalindexskills to use them.Crucially, Irish businesses are already making strong progress towardsthe digital future and they are very aware of the opportunities itpresents for efficiencies and growth. Most telling is the firm belief onthe part of the majority of companies that getting their online strategy Dana Strongright will translate into real and significant revenue growth. Chief Executive Officer, UPC Ireland2 UPC Report on Ireland’s Digital Future
  5. 5. €11.3Bn Projected Value of the Irish Internet Economy (Ireland 2016) €5.7Bn Projected Online Consumer Spending (Ireland 2016)€3.7BnOnline Consumer Spending(Ireland 2012) UPC Report on Ireland’s Digital Future 3
  6. 6. Executive SummarySeize the Future The SurveysIreland is in the middle of a revolution – a digital revolution. For all UPC commissioned Amárach Research to carry out two, parallelthe economic difficulties and challenges we have faced in recent surveys in August 2012: the first was an online survey comprisingyears, the story of digital technology in Ireland is a story of success. 1,000 adults aged 16 and over, representative of Ireland’s population;Comparisons with other countries show that Ireland is on par or and the second comprised a telephone and web survey of 201even ahead of OECD and EU nations when it comes to several key IT decision-makers in Irish SMEs and larger corporations, with quotasmeasures of digital adoption. to ensure a cross-section of companies by size. The surveys were carried out on an entire market wide basis and included customersIreland’s future progress towards the digital future will help us solve of all telecommunications providers.some of the economic problems we now face. Improving access tohigher broadband speeds in households and businesses opens up new Life Onlineopportunities for citizens, consumers, employers and employees. By Already, 8 in 10 adults use the Internet in Ireland, up from fewer thanseizing the digital future, Ireland can secure a higher standard of living 5 in 10 in 2007. Indeed, broadband take-up in Ireland matches the EUthrough faster economic growth, as well as tackling the scourges of average at two thirds of homes.unemployment and emigration through the creation of new jobs, new The Internet is now a vital part of our everyday lives, and shapes howservices and new businesses. we work, relax, learn and shop. Internet users spend 156 minutesThe Size of the Prize (2.6 hours) online on a typical weekday, rising higher at the weekend. OnIf Ireland simply follows the trend in other countries at a similarly average there are two or more people using broadband in every home,advanced stage of digitisation, then the Internet’s contribution to our with two or more devices connected at the same time – as smartphoneseconomy will grow from about 3% of GDP at present to 6% by 2016. become more common, more people and devices will be connected.That’s an increase in the value of Ireland’s digital economy from under Shopping and social networks are the most popular online activities,€5 billion this year to over €11 billion in 2016, creating new jobs and while a third of adults already use the Internet at home for worknew businesses along the way. purposes. 6 in 10 workers are expected to work from home some orAs for jobs potential, raising the level of digitisation in Ireland to that of all of the time by 2016.our nearest neighbour, the UK, would reduce the numbers unemployed The Irish are digital optimists, and look forward to a host of newin Ireland by nearly 18,000; with even bigger reductions possible if the services that will enable them to study, shop, work and share fromlevel rose to that of the leading Scandinavian countries. the comfort of their home in future. Indeed, half of all adults would be interested in running their own business from home at some stage, facilitated by digital technologies.4 UPC Report on Ireland’s Digital Future
  7. 7. The Digital Consumer The Digital BusinessThe impact of digital technology on the Irish economy is significant. Ireland’s digital revolution is not just good for consumers, it’sAlready there are 2.6 million online shoppers in Ireland, who will spend good for business. It appears that Irish businesses have ‘moved€3.7bn in 2012 across a range of product and service categories. Irish on’ from the recession, with 8 in 10 now optimistic about theirconsumers will spend €5.7bn online by 2016, or 7% of all consumer growth prospects for the next 2 years. Two thirds expect to expandspending in the economy. in Ireland in the coming years, and nearly half plan on expanding abroad. Furthermore, a majority of businesses intend hiringSome 8 in 10 Internet users use the web to research products they are new staff in the next 2 years, with a strong emphasis on IT andinterested in buying, but then buy them locally in Irish shops. It goes digital skills.the other way too: 6 in 10 Irish Internet users use their local shops to Digital technology has delivered productivity increases and costresearch products they are interested in, but then buy them online, savings to a majority of businesses. One key area for futureoften at significant cost savings. improvement is the application of digital technology to employeeThere are significant opportunities for Irish businesses – including engagement and management. Already, 6 in 10 companies enableretailers – to respond to these trends. Over 6 in 10 online shoppers their staff to work from home to varying degrees during contractedwould buy from an Irish website if they knew about one that matched hours – a practice that is expected to grow.equivalent offers from international sites. The UPC Digital Business Index – also created for this study –The UPC Digital Consumer Index – specially created for this study – tells us that 3 in 10 Irish businesses are ‘Digital Leaders’, while 1 in 7tells us that some 30% of Irish adults are ‘Digital Leaders’, while 8% are ‘Digital Laggards’; with the balance falling into the category ofare ‘Digital Laggards’: the balance are what we call ‘Digital Followers’. ‘Digital Followers’. We have much to gain from the digital future in terms of higher standards of living, a better quality of life, improved consumer welfare, greater business productivity and lower unemployment. This report shows the road ahead to the digital future: together we must take the next steps. UPC Report on Ireland’s Digital Future 5
  8. 8. IntroductionWhat is the one service in your home that you couldn’t live without? From a European standpoint, the EU has identified a number of DigitalThe number 1 choice, for over a third of Irish adults in 2012, is Agenda targets (EU Targets) aimed to “help reboot the EU economy andbroadband. Number 2 is electricity (for over a fifth of adults), enable citizens and businesses get the most out of digital technologies”.1with television in the number 3 position. These findings are a More locally, the Irish Government recently published its Nationalremarkable indication of how embedded the Internet has become Broadband Plan which aims to better the EU’s broadband speed targetsin our daily lives (leaving aside the matter of how broadband could during the lifetime of the current government.2work without electricity!).But even more remarkable is just how quickly the ‘digital revolution’ EU Digital Agenda targetshas happened in Ireland, and how much more we have to look forward By 2013to in the years ahead. This report is designed to help Irish citizens and Basic broadband for allbusinesses prepare for the digital future. We think you will be surprisedand inspired by the findings from our research and by the changes By 2015we can expect in how we live, work and play. The good news is that, 50% of population to buy onlinedespite the tough economic challenges we face, Ireland is well placed 33% of SMEs to make online salesto be a winner on the road to the digital future. 60–75% of the population to use the Internet regularlyOur SurveysUPC commissioned Amárach Research to carry out two, parallel By 2020surveys in August 2012: the first was an online survey comprising 30Mbps for all citizens1,000 adults aged 16 and over, representative of Ireland’s population; 50% of population to subscribe to 100Mbpsand the second comprised a telephone and web survey of 201 ITdecision-makers in Irish SMEs and larger corporations, with quotas Ireland’s National Broadband Plan targetsto ensure a cross-section of companies by size. 70Mbps for 50% of populationThe key findings from both surveys are explored in the rest of this report. 40Mbps for 70-85% of population 30Mbps for 100% populationDigital Targets for a Digital FutureThe importance and benefits of being digitally connected and engagedalong with having access to high speed broadband services are 1 EU Digital Agenda scoreboard for Ireland: https://ec.europa.eu/digital-agenda/en/globally recognised. Given this, there is growing interest in measuring scoreboard/ireland 2 ‘Delivering a Connected Society: A National Broadband Plan for Ireland’, Departmentthe performance of countries in terms of digital trends and their of Communications, Energy and National Resources, http://www.dcenr.gov.ie/NR/economic and social impact. rdonlyres/1EA7B477-741B-4B74-A08E-6350135C32D2/0/NBP.pdf6 UPC Report on Ireland’s Digital Future
  9. 9. The good news is that Ireland rates very favourably not just among its The comparative picture for Irish businesses is, if anything, even moreEU counterparts but also at a global level. Irish consumers are broadly positive.equal to their OECD and EU counterparts when it comes to measures The percentage of businesses (employing 10 or more) with broadbandsuch as the percentage of households with broadband – in fact Ireland in Ireland is slightly over the OECD average (90% vs 88%), as is thehas already met the first of the EU’s Targets, universal broadband. 3, 4 proportion of employees using the Internet at work. The biggestIreland also compares very well in relation to other indicators such as (positive) gap in terms of these businesses relates to selling online,the percentage of Irish consumers who shop online (slightly above the where Irish businesses are nearly 30% more likely to sell online thanOECD average and significantly in excess of future EU Targets). the OECD average.With respect to the availability of high speed broadband services the most International targets and comparisons are an important indicatorrecent Akamai State of the Internet report shows that Ireland ranks 15th in of Ireland’s progress. There have been several efforts to gauge thethe world – and 9th in Europe – in terms of average measured broadband progress of nations towards the digital future:speed 5. The Akamai report shows that Irish households are surfing faster »» IBM and the Economist Intelligence Unit have published a reportthan advanced markets such as the UK and Germany. Indeed, in the two on Digital Economy Rankings 20108 which places Ireland 17th inyear period from Q2 2010 to Q2 2012, the share of residential broadband the world, based on a composite score across six indices, includingsubscribers with contracted download speeds greater than or equal to broadband speeds as well as consumer and business digital10Mbps tripled: from 7.3% to 22.9%6. As a result, not only has the first adoption.of the EU Targets been met but with 35% of Irish households alreadytoday able to receive 150Mbps7, Ireland is well on its way to meeting its »» The World Economic Forum’s Global Information Technology Reportambitious targets as set out in the National Broadband Plan. 20129 ranks Ireland 25th in the world in terms of a Networked Readiness Index (derived from economic, social, political as well as technological measures).3 Available from the Organisation for Economic Co-operation and Development (OECD): http://www.oecd.org/sti/Interneteconomy/ieoutlook.htm Both reports help us track our digital progress and the strength of our4 National and Rural Broadband Plans: digital economy. http://www.dcenr.gov.ie/Communications/Communications+Development/ National+Broadband+Scheme/National+Broadband+Scheme.htm and It is important to stress, however, that Ireland still has some way to go in http://www.dcenr.gov.ie/Communications/Communications+Development/ terms of securing the maximum benefits for its citizens and businesses Rural+Broadband+Scheme/ from digital technology. One indication of the ‘digital gap’ is measured5 Akamai State of the Internet: http://www.akamai.com/stateoftheInternet/6 ComReg’s latest commentary: http://www.comreg.ie/publications/quarterly_report_ q2_2012.583.104195.p.html 8 IBM/EIU: http://www-935.ibm.com/services/us/gbs/bus/html/ibv-digitaleconomy2010.html7 UPC Press Release http://www.upc.ie/pdf/UPCbreaksIrishInternetSpeedBarrier.pdf 9 WEF: http://www.weforum.org/reports/global-information-technology-report-2012 UPC Report on Ireland’s Digital Future 7
  10. 10. by Booz & Company’s Digitisation Score10. Their measure is a compositeindex, derived from national data for the ubiquity of digital servicesand products, affordability, usage and broadband speeds, etc. AlthoughIreland scores well in terms of its Digitisation Score – putting it in theadvanced group of countries among the 150 surveyed – we clearly haveroom for improvement. Booz estimates a score of 47 for Ireland whilethe highest scoring nation is Norway at 6411.The crux of the Digitisation Score is that it shows a clear relationshipbetween higher scores and higher economic growth – and lowerunemployment. The Booz analysis of the links between digitisation andthe wider economy shows that among digitally advanced countries likeIreland, every 10 point increase in digitisation scores increases GDP percapita by 0.62%.Furthermore, an increase of 10 points in digitisation reduces a nation’sunemployment rate by 0.84%. To put this in context, simply raisingIreland’s digitisation score from 47 to the equivalent UK score of 54(a 7 point increase) would reduce the numbers unemployed in Irelandby nearly 18,000 – based on the Live Register in September 201212.10 Booz & Co: http://www.booz.com/global/home/what_we_think/digitisation/megatrend11 Booz & Co article on Digitisation and Prosperity: http://www.strategy-business.com/ article/0012712 Central Statistics Office: http://cso.ie/en/releasesandpublications/labourmarket/8 UPC Report on Ireland’s Digital Future
  11. 11. 1 | Life Online» 8 in 10 adults use the Internet in Ireland, up from fewer than 5 in 10 in 2007» Broadband takeup in Ireland matches the EU average at two thirds of homes» On average there are two or more people using broadband in every home, with two or more devices connected at the same time» Broadband users spend 2.6 hours online on a typical weekday» Shopping and social networks are the most popular online activities» A third of adults use the Internet at home for work purposes» Half of all adults would be interested in running their own business from home at some stage in the future UPC Report on Ireland’s Digital Future 9
  12. 12. Cast your mind back five years to 2007. It was the height of the Celtic Connected NationTiger in Ireland, following a decade of remarkable growth, and we But before we look ahead to the digital future, let’s take a closer a look athad one of the highest standards of living in Europe. Nowadays we the digital present. The UPC consumer survey shows that Irish people areare painfully aware of what has been lost since the peak, but we are confident users of digital technology already. Indeed, there is widespreadperhaps less aware of what we have gained. Take digital technology ownership of a range of technologies, as summarised in Fig 2:- the table below contrasts the % of Irish adults owning and usingeach technology then and now (Fig 1). Digital Technology in the Home % Fig 2: Digital Technologies at Home: % of Irish Adults %Fig 1: % of Irish adults owning and using digital technology Laptop 85since 2007 Digital Camera 75 Landline Telephone 71 % of All Irish Adults* 2007 2012 Flat Screen TV 70 Internet at Home 48 78 Paid for TV Service 67 Broadband at Home 24 65 Ordinary Mobile Phone 64 Shopping Online 15 59 Smartphone/iPhone 61 Banking Online 18 42 WiFi 60 Mobile Phone 90 98 MP3/iPod 57 Smartphone 5<** 34 PC 50 HDTV 45 Using Social Networks 10<** 52 Portable Games Console 37* Sources: ComReg & Amárach Research data ** Amárach estimates GPS Device 37 Internet Enabled Games 29Despite a decline in consumer spending, falling house prices and rising Tablet/iPad 19unemployment, Irish consumer adoption of digital technologies has eReader 17risen steadily through the recession. Consumer investment in digital Home Surveillance System 10products and services - and the skills to use them - tells us something Smart TV 5very important about the shape of the recovery when it comes,namely that Ireland’s next phase of economic growth will be driven 3D TV 4more by ‘clicks’ than by bricks. 0 20 40 60 80 10010 UPC Report on Ireland’s Digital Future
  13. 13. Ownership and adoption is not evenly distributed, however, and some European context, the chart below (Fig 3) shows the percentage ofsignificant differences emerge from our study: households with broadband across the European Union. Average take- up runs at 67% in the EU, with Ireland just slightly below at 65%.»» Laptop ownership declines with age, after peaking among 25–34s Among those with broadband at home, almost half in our survey»» Landline phone ownership rises with age, peaking among over 55s (49%) say that broadband access is more important than having a»» Smartphone ownership is highest among 25–34s, and higher for telephone, and 1 in 5 (19%) say broadband is more important than TV men than women (rising to 31% of under 25s). Though only 1% considered their home broadband more important than their car!»» HDTV ownership peaks among 45-54s One of the key reasons for the appeal of broadband is that it enables»» Internet enabled games peak among under 24s; tablets/iPads multiple users in a household to benefit from the technology at the same among 35-44s time. Indeed, our research shows that only 1 in 4 broadband users is theBroadband is a key enabling technology facilitating a diverse number sole user in their household; while among the 76% with multiple users,of digital devices in the home. To put Ireland’s performance in a there are typically two or more other users as well (Fig 4).Household Broadband Europe %Fig 3: Broadband take-up: % of Households having a Broadband Connection %10080 European Union – 27 countries6040 United Kingdom Slovak Republic Czech Republic Luxembourg Netherlands Lithuania20 Germany Denmark Romania Portugal Hungary Slovenia Bulgaria Belgium Sweden Norway Estonia Austria Finland Iceland Cyprus Greece Ireland Poland France Latvia Spain Malta Italy 0 Source: Digital Agenda for Europe: https://ec.europa.eu/digital-agenda/en/scoreboard UPC Report on Ireland’s Digital Future 11
  14. 14. Fig 4: Number of Broadband Users in the household One key gap in evaluating broadband speed sufficiency is that a significant minority of Irish broadband users simply don’t know their Five or home broadband speed. Indeed, almost 1 in 4 (23%) home broadband more Yes 13% users is unsure of the speed they are supposed to have at home (rising 24% to a third of under 25s). The picture that emerges from our research shows future room for improvement: typical broadband speeds are, on Four Number Two Only user balance, not considered sufficient for the future. 19% of users 42% No 76% Digital Time Use Three 26% Inevitably, access to and usage of digital technologies have resulted in profound shifts in how Irish people spend their time. In the UPC consumer survey we asked broadband users about the amount of time they spend accessing the Internet a) on a typical weekday, andOf course, it is not just people who connect to broadband in the b) on a typical weekend day. The answers by demographic groups arehome - it’s devices as well. The average broadband household has summarised in minutes per day in Fig 6 below.two devices connected at the same time, rising to three devices inhouseholds containing 16-24 year olds, and falling to under two Fig 6: Minutes per day spent onlinedevices in broadband households among over 55s. Weekend Increase at Weekday Day WeekendSpeed Check All Adults 156 167 11But we are only at the beginning of a user and device explosion. The 15-24 179 187 8average number of users and devices connected to broadband in Irish 25-34 173 189 16homes will grow sharply in the near future, thanks to smartphones, 35-44 155 166 11tablets and the emergence of the ‘Internet of things’ (e.g. your fridgeconnected over the web to your online shopping list). This raises a 45-54 147 160 12fundamental question about broadband capacity. 55+ 133 140 7 Higher Income 152 166 14In our research we asked broadband users whether the speed of theirbroadband was a) sufficient for their current needs and b) sufficient Lower Income 159 168 9for their likely future needs (Fig 5, on facing page). At present some69% of home users consider their broadband speed to be sufficient.However, looking to the future, only 44% of home users expect theirexisting broadband speed to be sufficient for their likely future needs.12 UPC Report on Ireland’s Digital Future
  15. 15. Fig 5: Sufficiency of Broadband Speeds: Present & FutureYes No Don’t Know 3% Only 44% 17% 28% Is your Sufficient broadband for future 44% speed likely needs? sufficient? 69% 39% of people feel their broadband speed is sufficent for future needs UPC Report on Ireland’s Digital Future 13
  16. 16. 69% 63% Use Soclal Networks 55% Bank online 44% Read the news Use On Demand TV 33% Play games14 UPC Report on Ireland’s Digital Future
  17. 17. Fig 6 indicates that age is an important driver of time spent online, The Broadband Explosion UPC Insight though at an average of over 2.6 hours per weekday it is clear that The consumption of data and content has exploded around the world Internet usage now occupies a lot of people’s leisure and work time. and no less so in Ireland. Data from INEX shows an 800% increase Accessing the Internet at home is the main way in which people access in total traffic per month in Ireland since 2009. While all forms of the web. On a typical weekday, consumers say that over three quarters data consumption are going up, the largest driver of this increase is (79%) of their access takes place at home, only 13% at work and the coming from the continuing massive growth in video viewing across balance while out and about (e.g. via their mobile phone). Nowadays, the web – from professional output to self-published content. In meeting these changing demands, UPC is enabling consumers to Irish people use the Internet for a wide range of activities and services, access increasing volumes of content at higher speeds and at a ranging from entertainment to work to simply keeping in touch. Fig 7 constantly reducing cost per megabit ratio. The market has been shows the proportion of adults who use broadband at home for responding to affordable broadband and UPC is leading this change. each activity. Fig 8: Ireland Year-on-Year Traffic Growth – Petabytes* Fig 7: Online Activities and Services used at Home 40 % 30 Shopping online 70 20 Social networking 69 10 YouTube 68 0 Sept 09 Sept 10 Sept 11 Sept 12 Search/research 63 Banking 63 65% News 55 Irish households have a broadband connection Music 46 70% On demand TV 44 Reduction in the price per Mbps in UPC’s service since 2010Skype/video conversation 39 Movies 33 50 Mbps Sports 33 The entry level speed for UPC broadband customers Games 33 1.4 Gbps Instant Messaging 30 The record breaking consumer Irish Internet speed set by UPC iTunes 25 (September 2012) Streaming TV 24 Total Users: source Comreg quarterly reports (www.comreg.ie) Education 23 Peering Traffic Volume: source INEX (www.inex.ie) Streaming radio 21 Total Traffic: assumption that 20% of total broadband traffic is INEX peering while Betting 14 remaining 80% is Transit * 1 Petabyte = 1 million gigabytes 0 10 20 30 40 50 60 70 80 UPC Report on Ireland’s Digital Future 15
  18. 18. Of course, there aren’t enough hours in the day to fit in all of theabove activities. Sure enough, many people are now doing different Fig 10: Media Multi-Tasking: EU countries % incidenceactivities in tandem with one another. Some 3 in 10 in our consumer % 80survey are surfing the web while watching TV. And young people are 70leading this trend (Fig 9). 60 50Fig 9: Media Multi-Tasking in Ireland: % using laptop/tablet/ 40 30smartphone all the time/almost always, while watching TV 20 Ireland 10 % NO HU HR UA RU UK RO GR CH DK BG EU RS SK NL CZ TR DE BE FR PT PL SE AT ES SI IT FI 050403020 54 69 10 30 43 44 31 27 13 58 0 Total 15–24s 25–34s 35–44s 45–54s 55+ 56 66 59Indeed, the Irish generally are leading the way, as the incidence of 62 58 47 48 58what some call media multi-tasking in Ireland is already above the EU 59 60 62average as reported in a recent IAB Europe survey (Fig 10). 71 62 53 31We can expect media multi-tasking to grow in future as more users 37 41with more devices - linked to faster broadband - enjoy the benefits of 52 53a more interactive TV experience, enhanced by the capabilities of real 47 55time participation, feedback and commentary via Twitter etc. Source: IAB Europe: http://www.iabeurope.eu/research/mediascope-europe/ media-multi-tasking-means-more-active-consumers-bulletin.aspx16 UPC Report on Ireland’s Digital Future
  19. 19. Gaming Partner % 80 70 60 50Digital Entertainment »» Nearly 1 in 5 (17%) have used their TV to view Facebook 40Television, as we have seen, is still the dominant leisure time activity (27% of under 25s) 30in the home for most Irish people. But television is no longer confined »» Nearly 1 in 2 (44%) use On Demand TV (such as RTÉ and TV3 Players) 20to the television set. In our survey we found that significant minoritiesof adults use their TV - or a device connected to their TV - to access a One activity that has traditionally combined the television set with 10 71 21 14 21 1range of web services: another device has been gaming. 1 in 3 (33%) of all those with 0 Alone At home with friends Other players in Ireland Other players abroad Other broadband in the home use the Internet to play online games. Most»» Nearly 1 in 4 (23%) have used their TV to watch YouTube play alone or with other household members, but over a third play (35% of under 25s) with players elsewhere in Ireland or even abroad (Fig 11).Fig 11: Online Gamers: Players and DevicesGaming Partner % Device Used %80 2570 206050 154030 1020 510 71 21 14 21 1 0 0 Alone At home with friends Other players in Ireland Other players abroad Other XBox 360 Playstation PC Laptop Nintendo Wii Nintendo DS iPhone/smartphone Other N/A Dont knowDevice Used %25 UPC Report on Ireland’s Digital Future 1720
  20. 20. The Digital Viewer – On Demand UPC Insight Working from Home Of course, people use the Internet at home for work purposes as well -There is an ongoing proliferation of information devices in Irish and the incidence is quite remarkable, as illustrated in Fig 12.homes. Consumer bandwidth and content requirements are growingconstantly and this is being driven primarily by an explosion in videocontent, ranging from the use of iPlayers to all other streaming, Fig 12: Incidence of Working from Homeviewing and downloadable content.These trends are also impacting across wider society as socialnetworking communities grow specifically around TV and onlinecontent. TV itself is being totally transformed where the advent of Do you useOn Demand TV is changing habits by putting viewers in full control the Internet For what at home activities?of their personal TV schedule. They can watch whatever they want, for work?whenever they want it.Since launching our free On Demand TV service, UPC has gleanedsome unique insights into this “anytime” phenomenon.8m Yes 34% Check Emails 89%The number of views of UPC On Demand content in 5 months No 40% Work on reports/77% Don’t Know 26% presentations 56%The percentage of UPC’s On Demand capable customers who have Planning/scheduling 48% Skype with colleagues/used the service since launch clients 21%45% Research 3%of the 8 million views of On Demand TV to date are views of Other 6%domestic Irish TV A third of adults in our survey are already working from home to70% varying degrees, rising to 46% of 35-44 year olds. Although mostThe proportion of Irish households with a pay TV subscription are using it for ‘bandwidth-lite’ activities such as checking email, a minority are also using it for more collaborative work such as video- conferencing and report preparations.18 UPC Report on Ireland’s Digital Future
  21. 21. Knowledge vs Benefits All of us use many different technologies – and most would struggle to explain how they work, even though we benefit every day from their capabilities. In our research we asked consumers to rate a) their knowledge of digital technology, and b) the benefit from digital technology on a scale of 1 to 10, where 1 is low and 10 is high. Fig 13 summarises the overall findings, and points to a clear difference between knowledge and benefits. Fig 13: Digital Technology: Knowledge & Benefits Rating of Rating of knowledge benefits of digital from digital technology technologyA recent report by IDC forecasts that mobile workers will represent 57% of the total Irish working population – or 1.4 Low 11% Low 4%million workers – by 2016*, driven by the communications tools Medium 42% Medium 30%and channels now increasingly available. This future dynamic High 47% High 67%between home and work is a theme we return to in Chapter 3when we explore how Irish businesses are responding to thedigital opportunity.* Source: IDC Report for O2 Ireland: http://www.o2online.ie/o2/uploads/pdfs/terms/business/O2-7801-G-Joined-Up-IDC-Inserts.pdf UPC Report on Ireland’s Digital Future 19
  22. 22. There are a number of demographic differences in relation to thedigital knowledge/benefit gap, as summarised in Fig 14.Fig 14: The Digital Knowledge/Benefit Gap – Mean Scoreout of 10 Digital Digital Digital Knowledge Benefits K/B Gap TOTAL 6.2 7.2 1 15-24s 7.2 7.7 0.5 25-34s 6.6 7.3 0.6 35-44s 6.2 7.3 1.1 45-54s 5.6 6.9 1.3 55+s 5.3 6.8 1.4 Higher Income 6.3 7.2 0.9 Lower Income 6.0 7.1 1.1 » Nearly 3 in 4 agree the Internet allows them to make smarter purchasing decisions (rising to 77% of 35–44s)The gap is bigger for some than for others, but most people clearlyfeel they benefit from digital technologies, indicating a generally » Nearly two thirds agree the Internet opens up new career,positive, even optimistic outlook on the contribution of digital educational and social opportunities (rising to 69% of under 25s)technology today and in the future. » Over half agree they wouldn’t be able to buy many of the things they want without the Internet (rising to 60% of 25–34s), and 4Digital Optimists in 10 say they wouldn’t be able to afford many of the things theyGiven the positive dynamic in consumer adoption of digital technology want without the Internet (also higher for 25–34s)– despite weak domestic demand – we might assume that Irish people » Over 4 in 10 (44%) agree their family life is better because ofare optimistic about the digital future. Indeed they are, and not just the Internet (rising to 50% of 35–44s)the future. In our survey we asked people about the impact of digitaltechnologies on their lives today – whether they agree or disagree » Nearly 4 in 10 (38%) agree they wouldn’t be able to do theirabout the different impacts of technology. The responses overall are job without the Internet (rising to 45% of 25–34s)very positive (Fig 15).20 UPC Report on Ireland’s Digital Future
  23. 23. Fig 15: Life Online: Impact of Digital Technology Nowadays Fig 16: The Digital Future: Likelihood and Appeal Disagree Agree Likelihood of future outcome Appeal of future outcome Unlikely Likely Unwelcome Welcome The Internet allows me to make 7 smarter purchasing decisions 13 73 People will get more of their shopping 58 delivered to their home after ordering The internet opens up new career it online, including groceries 15 8 49 opportunities, educational opportunities, social opportunities 64 People won’t need to go to the 21 22 cinema or rent DVDs. They will pay to 51I wouldn’t be able to buy many of the watch movies using online services 27 things I want without the Internet 52 available via broadband 35 My family life is better because 23 19 of the Internet 44 Faster Internet services will have 48 improved my life 10 26 60 I wouldn’t be able to afford many ofthe things I want without the Internet 41 People will be able to work abroad 24 and not have to leave Ireland because 45 28 technology will enable them to stay I wouldn’t be able to do my job 19 without the Internet 38 at home while doing their job 49 My internet speed at home isnt fast 46 31 People won’t need to physically go to 40enough for all my family requirements 28 universities/colleges because they will be able to do all course work online 33 % 0 10 20 30 40 50 60 70 80 34 29 People won’t need to go to work in 39Irish people look forward with considerable optimism to the future offices because they will be able to 28effects of digital technologies. work from home most of the time 41In our survey we asked people to consider a range of possible future % 0 10 20 30 40 50 60trends driven by technology. They were asked to say a) to what extentthey thought each trend is likely or unlikely to happen; and b) whetheror not they would welcome each trend in the future. The results aresummarised in the chart on the right (Fig 16). UPC Report on Ireland’s Digital Future 21
  24. 24. »» Home Shopping: the majority (58%) of consumers think it likely In terms of expected and welcome futures, over half of Irish that people will use the Internet to do more shopping, with adults (53%) think it likely that ‘the adoption of better digital deliveries to their home, while almost half (49%) would welcome technologies will speed Ireland’s economic recovery’. An even such a scenario. bigger majority (63%) would welcome the digital-led recovery.»» Home Movies: just over half of all adults (51%) expect that movies via broadband will replace going to the cinema, though fewer When asked, more people were interested in availing of lifestyle, welcome this development (35%). learning and employment changes if technology made it possible»» Faster Services: just under half of all adults (48%) expect faster (Fig 17). Internet services to improve their lives in future, and even more The most popular change is that of working from home for 1 to 2 days (60%) would welcome such improvement. per week. Over 6 in 10 (62%) of all adults are interested in such an»» Migration: under half (45%) of people in Ireland think it likely that arrangement, rising to 67% of 25–34s. This is followed by the prospect we will be able to become ‘virtual emigrants’, using technology of running your own business from home: attractive to half the to work abroad but stay at home, while nearly half (49%) would population (51%). Moving to the countryside while still working from welcome this. home also has broad appeal for 43% of all adults (and even more so»» College: some 4 in 10 (40%) think it likely that future students will among 25–34s). do all their course work online.»» Working: 4 in 10 (39%) think that office work will become a thing of the past, with the same proportion welcoming such a trend.One interesting demographic difference that emerges in our studyis that over 55s are typically more positive and welcoming about thepotential changes that the digital future might bring – suggesting thatthe ‘generation gap’ in relation to technology will soon be gone.22 UPC Report on Ireland’s Digital Future
  25. 25. Fig 17: The Digital Home: Interest in Future Services One area that will see considerable change being driven by digital Not interested Interested technology is that of health care and medical services. Half the population (51%) is open to diagnoses and treatments by foreign 15 Working from home 1 or 2 days a week experts, delivered via digital technology, rising to 57% of over 62 55s (inevitably a key target market). 20 Running your business from home 51 Exploiting the full capacity of the web to create fulfilling lives and Receiving full medical 23 satisfying work is not all a one way street. Our assessment of future diagnoses/treatment by world class health/medical experts in different 51 scenarios included the idea of ‘digital mentoring’ – enabling people to hospitals and centres around the world use their skills and experience to coach and advise young people and Getting further qualifications from an 25 even businesses in Ireland and in other parts of the world. There is Irish university 50 very considerable interest in this idea: with 45% of adults expressing Using your skills/experience to an interest. This type of initiative is indicative of the transformative 24coach/advise young people in other parts potential of the web, and another sign of how Ireland’s economic of the world or even business/ organisa- 45 tions like ones you have worked in recovery might come about. Learning a foreign language by receiving 26 lessons via Skype from a native speaker 45 Getting further qualifications from a 30 European University 44 Moving to the countryside while still 29 being able to work from home 43 % 0 10 20 30 40 50 60 70 80 UPC Report on Ireland’s Digital Future 23
  26. 26. 2 | The Digital ConsumerThe previous chapter examinedtechnology usage and time spent onlineby Irish consumers. In this chapter wefocus on money. » 2.6 million Irish online shoppers will spend €3.7bn in 2012 » Travel related spending and clothing and footwear are the biggest purchases » 8 in 10 Internet users use the web to research products but buy in local shops » 6 in 10 Internet users use local shops to research products but buy online » Over 6 in 10 online shoppers would buy from an Irish website if they knew about it » Irish consumers will spend €5.7bn online by 2016, or 7% of all spending » 30% of Irish adults are ‘Digital Leaders’, while 8% are ‘Digital Laggards’24 UPC Report on Ireland’s Digital Future
  27. 27. Online SpendingFig 18 summarises the current state of play of the online market in Our estimates for the value of online expenditure are derived fromIreland. Irish consumers will spend €3.7 billion online this year. Just to answers to our consumer survey. We asked consumers to estimateput that in context, total consumer spending is forecast to reach €80.9 their average monthly expenditure online. The average stands atbillion in 20121, which means that nearly 5% of all consumer spending €116 per adult per month, rising from €61 per month among 15-24will be online this year – compared to less than 1% in 2007. year olds to €168 per month among over 55s.We have profiled the market by age group – and it tells us somethingvery interesting about the distribution of digital spending power. For Online spending is driven by travel and hotels – as shown in the nextexample, 15-24s represent just 15% of the adult population but nearly chart (Fig 19) – though other items also figure prominently, especially20% of Internet shoppers. However, when it comes to spending power, clothing/footwear, and books and music.their combined spending is just over 10% of the total. On the otherhand, over 55s make up 28% of the population but just 14% of Internetshoppers. But their spending power is over 20% of the total.Fig 18: Online Consumer Spending by Age Group Internet Online Share Share Share Population Shoppers 000s expenditure of adult of Internet of online Age Group 000s 2012* 2012** €m 2012*** population Shoppers spending 15–24 553.4 509.1 €371.8 15.4% 19.8% 10.1% 25–34 733.5 669.0 €926.5 20.4% 25.1% 25.2% 35–44 700.0 604.8 €721.6 19.5% 22.5% 19.6% 45–54 586.3 418.9 €622.9 16.3% 15.9% 16.9% 55+ 1,017.8 369.2 €746.1 28.3% 14.2% 20.3% Total 3,591.0 2632.9 €3,680.5 100.0% 100.0% 100.0% * QNHS CSO ** Amárach Survey *** Amárach Calculations1 ESRI Quarterly Economic Commentary, Autumn 2012: http://www.esri.ie/UserFiles/ publications/QEC2012AUT_ES.pdf UPC Report on Ireland’s Digital Future 25
  28. 28. Fig 19: Items Purchased Online in past 6 months Clicks & Bricks % of adults Though nearly 5% of all Irish consumer spending is now online,Travel/hotel related bookings 61 95% is not. However, a significant proportion of offline spending Clothing/footwear 53 is influenced by the web, even if that is not where the transaction Books 51 ultimately takes place. Indeed, most Irish Internet users use the web to help find better deals and to inform their purchase Music/CDs MP3 tracks 29 decisions; ‘always’ in the case of 41% of all users, and ‘often’ in Movies/DVD/film rental 28 the case of an additional 50% of users. Electronic goods (e.g. ipod) 26 Medical/health related 21 Some consumers use the web to research products and choices online Toys/baby products 19 but ultimately buy offline in local stores, perhaps because it is more Electrical goods (e.g. toaster) 19 convenient (‘clicks and bricks’). Consumers also research products Groceries 19 and choices in local stores and then buy online, perhaps because it is cheaper (‘bricks and clicks’). The chart on the next page (Fig 20) Perfumes/cosmetics 18 summarises this situation: 8 in 10 (80%) Internet users research online Flowers 10 and buy local, while 6 in 10 (58%) research local and buy online. Furniture 7 How does this impact on different markets and sectors? The table on Tickets/concert tickets 1 the next page (Fig 21) shows the channel preferences of consumers Other 4 who have purchased online in each category over the past 6 months, 0 10 20 30 40 50 60 70 80 in terms of whether they prefer to buy in a shop or prefer to buy online, or have no preference.Perhaps not surprisingly, price is a key motivation for Ireland’s 2.6 Clearly a number of markets have effectively gone ‘virtual’: bookingmillion Internet shoppers (45% of the total). The importance of price for flights, buying music and ordering movies, to name the most obviousshopping online falls slightly with age, while convenience (32% of the from the chart. Others still show a strong preference for ‘bricks’:total) rises with age. A better range or selection is important too (21%). clothing, groceries and furniture for example.26 UPC Report on Ireland’s Digital Future
  29. 29. 67% Fig 20: Clicks vs Bricks Yes No Don’t Know 5% 5% 15%Of people prefer to buy Research Researchmusic online online 37% locally but 58% buy locally buy online 80% Fig 21 Doesn’t Prefer to matter Prefer to buy in a or no buy online shop preference Travel/hotel related services 87% 2% 11% Music/CDs/mp3 tracks 67% 12% 21% (e.g. iTunes) Medical and health related 60% 14% 26% (e.g. insurance, equipment) Movies/DVDs/film rentals 59% 16% 25% (e.g.iTunes) Electronic goods (e.g. iPad) 48% 19% 33% Flowers 48% 19% 33% Books 42% 28% 30% Electrical goods (e.g. toaster) 40% 37% 23% Perfumes and cosmetics 35% 33% 32% Toys/baby products 30% 30% 40% Clothing/footwear 19% 55% 26% Furniture 19% 53% 28% Groceries, food or alcohol 16% 55% 29% UPC Report on Ireland’s Digital Future 27