Media and Entertainment Barometer IV

KPMG’s Media and
entertainMent BaroMeter

Smart moves
for new media
How is smart technology
shaping ‘new media’?

kpmg.co.uk

Media Barometer 2011

introduction
Smartphones and tablets reel in new consumers
while TV continues to enjoy biggest audience.

Every six months, KPMG takes the pulse of most popular source of entertainment at a survey indicates that there is a fine line to
the media industry, surveying users of new time when global events have dominated tread between protecting their stables of
and traditional media. the news agenda. However, certain other traditional media activities while branching
traditional media activities, such as reading out into digital opportunities.
the surveys, conducted on KPMG’s behalf
print newspapers and listening to the radio,
by research and consulting organisation there remains a general reluctance
continue to decline in popularity.
YouGov, reveal shifts in consumer appetite among consumers to acquire paid-for
and consumption that can translate into Four-fifths (79 percent) of respondents content online. However, the important
david elms powerful indicators for media providers engaged in new media activities, while exceptions are online access and online
Head of Media when setting future strategy and direction. 99 percent participated in traditional media content on the move. Smartphones and
activities – both statistics are consistent tablets are paving the way for media
our fourth Media and entertainment
with wave 3 of the research. companies that seek to develop their
Barometer highlights a sharp increase
new media business models.
in the uptake and monetisation of in new media, trends mostly continue
smartphones, tablets and e-readers on an upward trajectory in areas such as By keeping track of consumer habits
to the month ending 31 March 2011. social networking and eBooks. although on a six-monthly basis, KPMG will alert
online media appeals predominantly to media providers to shifting patterns
Smartphone ownership is up by one-third
the younger age groups (92 percent of 16 of consumer demand, spend and
while tablets, new to the UK market in
to 24 year-olds participate in new media consumption as they happen.
July 2010, have seen their customer share
activity), it now extends to 69 percent of the
more than double. Users happily pay for
over-55s too. in fact, one-third of this older
apps, with tablets currently getting the
age group engages in social networking
larger proportion of their spend. the old
and blogging. For media companies, this
favourite, television, continues to be the

Introduction About this Survey Trend for smartphones Spend on apps
Tablets take off What’s going on in new media? Streaming – as long as it’s free TV resilient to smart invasion >>

Online or offline? Content worth paying for... or not Global events About KPMG <<

© 2011 KPMG LLP a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
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about this Survey

all figures, unless stated otherwise, are the surveys sampled people aged 16 or YouGov asks participants about their
from YouGov Plc. research was conducted over in the UK. the number of respondents preferences and consumption habits across
at six-monthly intervals: to YouGov’s online panel varies in each all types of media, including publishing,
wave of research: broadcast, music and gaming in the prior
- Wave 1 — 11 - 14 September 2009
month. their responses inform our analysis.
- Wave 1 — 1,037
- Wave 2 — 15 - 18 March 2010
- Wave 2 — 1,063
- Wave 3 — 14 - 21 September 2010
- Wave 3 — 2,241
- Wave 4 — 31 March - 5 april 2011
- Wave 4 — 2,103



,


trend for smartphones
and tablets surges upwards

Increased spending on smartphones Smartphones are especially popular
and tablets indicates growing consumer among younger consumers — more than
demand for ‘on the move’ media. half (54 percent) of 18-24 year-olds choose
smartphones. three-quarters (74 percent)
People cannot get enough of smartphones
use their smartphones to surf the net and
and tablets in the UK. despite being a
to read emails, while 61 percent use it for
relatively new introduction to the market,
social media. one in eight (12 percent)
smartphone ownership is growing strongly,
users has read an eBook on the device.
up one-third from wave 3 to 36 percent in
wave 4. Meanwhile, tablet ownership has What’s more, in the past six months,
more than doubled in the past six months. consumer spend on smartphones and,
notably, tablets has increased. People
now spend close to £9.00 per month
on applications (apps) for their tablets
and near to £6.00 on apps for their
“the bright spot in the
smartphones. in the prior month, over
media industry is the rise 60 percent of tablet owners paid to
of media on the move via access online content, considerably
tablets and smartphones. ” more than the 24 percent who paid to
david elms, Head of Media, KPMG access content on their smartphones.



,


Spend on apps
for smartphones continues

Almost three-quarters (74 percent) For which, if any, of the following activities
downloaded apps on their smartphones
have you used your smartphone?
in the past 12 months — however, 42
percent only downloaded free apps, up 97%
96%
from 39 percent in wave 3. Those paying
for apps spent, on average, £5.65 in the 86%
84%
month to 31 March 2011, up slightly from 80%
£5.30 in wave 3. 74% 74%
76%

apple and BlackBerry continue to lead
62%
the smartphone market, although 61%
58% 58%
there is increasing pressure from other 53% 53%
50% 51%
manufacturers, notably HtC. Men, at Wave 4 Wave 3
40 percent, are more likely to own a 43%
smartphone than women (32 percent).
However, women smartphone users 32%
28% 28%
are nearly twice as likely to own 25% 25% 26%
22%
a BlackBerry as men. 18%
21%
15%
14% 14%
13% 12% 11% 11%
9% 9% 8%
7% 6% 4% 3%
Sending text messages

Surfing the
internet

Social media

Purchasing items

Downloading free music

Ordering takeaway
Taking photos/
emailing photos

Reading emails

Email & instant
messaging

Listening to music

Playing/downloading
free games

Reading documents

Watching TV/video clips

Listening to the radio

Paid for games

Downloading
paid for music

Reading eBooks

Editing documents

Online gambling
Reading newspapers


,


Unsurprisingly, given its dominance in
the market, apple’s app Store accounted
for the majority (73%) of paid apps. this is
largely because it offers a wider selection
of apps than its competitors, as well as ease
of use and a simple payment mechanism.
Meanwhile, just 7 percent chose Google
app store and 6 percent opted for
Blackberry app World.
Furthermore, 24 percent of consumers paid
to access content using their smartphones.



,


tablets take off

Despite the relative novelty of the tablet For which, if any, of the following activities
— Apple’s iPad was only launched in the
have you used your tablet?
UK in July 2010 — its popularity continues.
Ownership of tablets more than doubled 74%

in the past six months, up from two percent
of respondents in wave 3 to five percent 66%

in wave 4.
Consumers are embracing tablets for
making content on the move more 52% 52%
50% 50%
49%
48% 47%
accessible via apps and for delivering
44%
services, such as games, music and 41% 41%
video, that they currently demand. 36%
38%
Wave 4 Wave 3
35%
34%
as more apps become available, more 31%
consumers are indulging in a variety of 28% 27%
25% 25%
activities: 74 percent use the tablet to surf 22%
24% 23% 24%

the internet; 66 percent to read emails and 19% 19%
16% 15%
52 percent to play/download free games 16%

or to read eBooks. Half use it to watch 10% 10%

tV/video clips and for social media. 6%
7%

3%
0%
Surfing the internet

Reading emails

Reading eBooks

Listening to music

Purchasing items

Reading newspapers

Listening to the radio

Editing documents

Downloading
free music
Playing & downloading
free games

Watching
TV/Video clips

Social media

Email/instant
messaging

Playing & downloading
paid for games

Reading documents

Downloading
paid for music

Ordering takeaway

Online gambling


,


apple continues to be the most popular 74 percent of smartphone owners preferable for viewing books, newspapers,
tablet on the market — increasing market downloaded apps in the same period, of films and tV programmes than on the
share by 12 percentage points to 57 percent which, 42 percent were free, one percent smartphone. as new content providers such
between waves 3 and 4. However, it is paid for and 31 percent a combination as Sky news, Channel 4 and itV come on
anticipated that Samsung, HP dell and
, of both. board with video services, we anticipate
archos, (which all saw declining market that the tablet’s popularity will grow further.
almost three-quarters (74 percent) of
share in the fourth wave), will ignite price
tablet owners also own a smartphone. Consumers in wave 4 paid to access
competition by introducing more
these dual owners are, interestingly, more games (32 percent), eBooks (21 percent)
affordable hardware.
inclined to spend on apps for tablets (£8.87 and music (20 percent) on the tablet. the
Four-fifths of tablet-owners downloaded in the month to March 31 2010), than on survey findings clearly point to a continued
apps in the month to March 31 2011, of apps for smartphones (£5.65). they are rise in the popularity of smartphones and,
which 29 percent were free, 6 percent paid also more willing to pay for content on particularly, tablets. this will continue to
and 45 percent a combination of both. the tablets (62 percent paid for access) than on drive expenditure through the internet.
apple app Store continues to be the main smartphones (24 percent). this is inevitably
source of paid apps — 93 percent visited the due to the size of the tablet and its superior
store to download paid apps to their tablets. video quality and screen that make it


,


What’s going up
in new media?

“there is uncertainty about how Our media barometer provides a
fast online markets will develop. snapshot of new media preferences
and finds out where consumers are
However, high awareness
spending their money.
levels indicate latent demand,
with aspiring consumers buying
eBooks: the alternative paperback
smart technology and paying for
online apps and online media. the increasing availability of tablets and
e-readers such as the iPad and the Kindle
the catalyst for growth is likely
is turning readers to digital content.
to be the introduction of lower-
priced tablets and smartphones. Since wave 1 of our research in September
2009, consumers of electronic books have
More affordable online media
almost doubled. For users who prefer
services may bring on the tipping the look and feel of traditional content,
point that turns innovative e-readers offer an accessible and portable
services into mass media. ” format, with a page-turning rather than
david elms, Head of Media, KPMG scrolling experience that is not possible
on a PC screen.
Users spend more on eBooks (£4) per
month than on online games (£2) or
streamed tV (£1). only downloaded
music competes for fractionally more
disposable income (£5).



,


Social networking for all
50% 50%
Please indicate which if any of the following activities
Social networking and blogging remain 49%

47%
you have done in the past month? (new media)
the most popular online activity. Half of
all respondents participate, including one
third of the over-55s, while women are 40%
Wave 4 (March 2011)
more likely to use social networking/ 37%
blogging sites than men. 36%
Wave 3 (September 2010)

Gaming, now a relatively mature 32% Wave 2 (March 2010)
online industry, may have suffered as a 29% Wave 1 (September 2009)
consequence. it has steadily declined in 27%

popularity, from 29 percent in wave 1 to 21 24% 24%

percent by wave 4, as it competes for user 22% 22% 22% 22%
21% 21% 21%
time. However, gaming (along with social 19%
networking) still accounts for the greatest 17%
18%
17% 17%
16% 16% 16%
amount of time (12 hours) spent online. 15% 15%
14%
16%
14%
15%

13% 13%
12%

8%

6%
4% 4%
Used video on
demand for TV
Online news portals/
newspapers

Streamed online
TV programmes

Streamed radio
Online games

Streamed music
Social networking/
blogging sites

Downloaded music

Online magazines

Read digital books


,


Streaming – as long
as it’s free

For the first time, KPMG tested among the younger generation, awareness
BBC iPlayer 90%
respondents’ awareness of streamed TV of itV Player, Channel 4’s 4od and Lovefilm
services and found it to be very high. is higher than among older counterparts, ITV Player 74%
while BBC iPlayer’s audience remains
the top seven providers achieved awareness
consistent, irrespective of users’ age. LoveFilm 58%
of between 39 percent and 90 percent.
awareness of streaming is much higher
Free-view tV services, such as BBC BT Vision 55%
among smartphone users than standard
iPlayer (acknowledged by 90 percent of
handset owners. People who own Sky Player 50%
respondents) and itV Player (74 percent),
smartphones tend to be tech savvy; they
which are heavily cross-promoted by
know what streaming services are available 4oD 48%
broadcasters, are the most well-known.
and are more inclined to search for data
Conversion rates are also high. BBC Sky Anytime 39%
services online.
iPlayer, is used by just under two-thirds
(63 percent) of those respondents who Demand 5 25%
Which, if any, of the
have heard of it.
TalkTalk TV 15% following online streaming
However, awareness does not always services have you heard of?
convert into usage, especially for paid Apple TV 14%

services. Half of our respondents had
Google TV 14%
heard of Sky Player but less than 1 in
10 of these (8 percent) use it. Conversion Seesaw 9% Wave 4 (March 2011)
rates for other paid streaming services
are even lower. Looking ahead, media Blinkbox 5%

providers might respond to consumers’
Other
appetite for streaming by offering single 1%

tV programmes or mini-daily or weekly
None of these 6%
subscriptions without long-term tie-ins.



,


tV resilient
to smart invasion

TV continues to be a top pastime, but other
92%
93%
94%
Please indicate which if any of the following activities
traditional media activities are losing fans. 88% you have done in the past month? (traditional media)
the survey finds that watching tV offline 81%
82%
80%
remains the most popular form of consuming 77%
79%
77%
79% 79%

media. in wave four, 92 percent of people 72%
72% Wave 4 (September 2009)
watched tV, barely changing on the previous 68% 68% 68%
70% 70%
68%
two waves. 65%
63%
66%
Wave 3 (March 2010)
60%
However, the overall consumption of Wave 2 (September 2010)
traditional media is declining, and the 53%
Wave 1 (March 2011)
inexorable migration to online 48%
50% 50%

media continues.
Certain traditional media activities fail
to find favour and attract less disposable 34% 34%

income than in the past. Going down in 30%
27% 27% 27%
popularity are print newspapers (from 81 26%

percent in wave 1 to 77 percent by wave 21%
19%
18% 18% 18%
4), radio (from 82 percent to 77 percent) 16%
15% 15%
14%
and playing console/video games (from
34 percent to 27 percent). Listening to Cds
declined markedly, from 72 percent in
wave 1 to 60 percent by wave 4.
Listened to radio
Read print
newspapers

Music events/
performances
Read print
magazine

Listened to CD
Watched TV
(not online)

Visited cinema
Read book

Sporting events
Watched DVD/
Blu-Ray

Played console/
video game


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