I believe so. Search has benefited from a lack of information about the full path to consumption. Ironic, isn’t it? That the company professing to help organize the world’s information is actually the biggest beneficiary of an informational gap in the market. Check out this post, “Search street cred” on my company blog to see more and comment.
Check out the post I made on Interpret’s blog – http://www.interpretllc.com/blog/2011/05/16/is-the-future-of-advertising-integrated/
[post originally posted on www.interpretllc.com/blog on 5/6/11]
Two stories caught my attention this morning, “Netflix CEO Reed Hastings Swears He’s Not Going to Kill HBO” and “Time Warner CEO Discusses Threat from Netflix.” In the first, Hastings from Netflix believes his company and HBO are competitive like football and baseball are competitive (i.e. not really competitive at all) and the latter, Jeff Bewkes from Time Warner says that Netflix subscribers aren’t cutting the cord. For the moment, both are right. According to New Media Measure™ data, Netflix subs are just as likely to be cable/satellite subscribers as the rest of the US population – meaning they are NOT less likely, suggesting they indeed haven’t cut the cord.
However, their attitudes tell a slightly different story. Netflix subs are 30% more likely to strongly agree with the statement, “You see yourself one day unplugging your TV and turning exclusively to the Internet for video entertainment.” So for now, the path of collision between Netflix and HBO is still on the horizon, but that collision WILL happen.
[Post originally posted on www.interpretllc.com/blog on 5/4/11]
News yesterday, that for the first time in 20 years, television households in the US declined. This comes at an interesting time for the television industry as it grapples with the forces of new media technologies. The news is being touted as the death knell for television, and while a decline for the first time in a long time is definitely notable, how significant is a move from “everybody” to “nearly everybody”?
A report we released today shows that the debate about traditional versus digital television consumption is misplaced. We also show a decline, but its qualified as those who only watch television programming through a television – dropping in the last year from 60% to 55% of 12-65 year olds (a decline of more than 9M people). More interesting, and perhaps where the dialogue needs to shift, those that watch programming through both traditional TV and digital options has grown to more than 75M people in the US between the ages of 12-65. The rate of increase isn’t as dramatic as those only watching through digital options, but that group is still relatively small (and definitely worth monitoring).
Our data also showed that demand for content is not waning — those leaving television are not only turning to digital options, but are looking to alternative forms of consumption, like Netflix, Kiosk rentals and video games. In fact, among traditional-only TV viewers, subscriptions to Netflix have increased by 26% and the incidence of gaming has increased by nearly 20%.
The debate needs to shift from “which one is winning” to how traditional and digital can commingle. The advantages for advertisers are numerous. The “hybrid” TV viewer is a highly desirable demographic group that also happen to be very active on social networks. They are also influential consumers making their use of social media a powerful tool for advertisers to enhance their brand messaging.
I have seen a lot of discussion lately about the state of digital video - which models will be victorious, which brands will win, will consumers completely cut the cord? Mark Suster, a Los Angeles area based Entrepreneur turned VC, offers one of the more provocative and interesting perspectives I’ve seen about one of the key players, in a post he wrote recently, “Why Hulu is the OPEC of Online Video.” In it, he posits that Hulu was set up by key stakeholders of the industry as a defensive maneuver to protect the TV industry from being disrupted by the video industry’s version of Napster. The theory being, provide consumers a high value product with a wide selection of exclusive content and build a strong enough brand that it will stave off competitors who are delivering unlicensed options. And, by so doing, control the pace at which digital gets rolled out to the masses, while still appealing to the niche group of techno-geek content junkies. Suster’s comparision of Hulu to OPEC focuses on that both are “cartels” (of sorts) that restrict supply, cheat among themselves, and innovate slowly. The parallels are fascinating and I encourage you to check out the full post (check out some of his older posts as well, especially if you are interested in digital entertainment).
There is one major difference, though, between Hulu and OPEC - the “consumer” of video content has a lot more power against the “cartel” than the consumer of oil does. While, in theory, we’d love to break our dependence on foreign oil in this country, it is virtually impossible considering the interdependencies. The same does not hold true in digital entertainment. The consumer is very much in the driver’s seat, and they don’t really care what goes on behind the scenes to get them the content, as long as they get it when they want it. Nor do they care that the TV industry is figuratively and literally caught in between a rock and a hard place. The figurative rock being the beneficiaries of the current model (network affiliates, MSOs) and the hard place being the catalyst of the new model – the consumers themselves.
To provide some additional perspective on the consumer, we released a study today, “TV Everywhere Revisited: How Distibutors, Advertisers and Content Owners Should Respond to Consumer Trends” in which we look at consumer trends in online video viewership. This is a follow up to a study we did last year. Not surprisingly, we have seen online video, streaming in particular, grow over the last year. At the same time, linear TV viewership has seen a decline, most prevalent among streamers. In fact, we found that the audience of consumers who stream television content, but DO NOT subscribe to a pay TV service, has increased by 18% in the past year – a powerful indicator of the potential impact online video streaming may have on convincing consumers to cut the cord. The study also reveals that consumers are motivated more by convenience than avoidance of advertising when turning to online viewing options. Good news, indeed, for advertisers and the Hulus of the world. But, the study also exposes a cautionary bit of information for advertiser-supported models - Netflix as a streaming service is growing at a very rapid pace, suggesting their subscription model is gaining momentum with consumers.
Back to the OPEC analogy. Suster suggests that the Hulu cartel will struggle to survive unless the studios take a lesser stake. His contention is there are just too many competing influences among the studios to simultaneously roll out a digital choice and cater to their individual objectives. I see his point, but I’m not entirely sure I agree with it. Lets not forget that Hulu was the first service to deliver a high value streaming service, which is not a small feat. I do agree that any service is challenged given the fickle nature of consumers, but this race is far from over. The studios, while concerned about killing the cash cow, are smart enough to cultivate other revenue streams. Hulu has also developed a strong brand in a very short time period, and provided they are well capitalized, they should be able to benefit from the equity they’ve established in the minds of consumer. With all this talk about OPEC, one thing I can say for certain, I wouldn’t mind envisioning a future in which the consumers of foreign oil rose up and challenged OPEC, breaking our dependence on foreign oil!
I recently had the pleasure to co-author an Interpretations report with a friend and colleague, Jim Banister, CEO of SpectrumDNA. The report, gCommerce: The Gamification of eCommerce looks at the ability for retailers (on and offline) to use game play dynamics to drive more engagement and sales.
Jim and I recently sat on a panel at Hatchfest in Bozeman, MT and got to talking about how games are, and always have been, an integral part of the human experience. We play all types of games throughout our childhood and adult life – from soccer to chess to World of Warcraft. While the former two are undisputed as games played universally, there is still an element of doubt that the latter (WoW) extends beyond a certain age and demographic. The fact is, whether we realize it or not, games, or more aptly, game play dynamics, are intrinsic to our every day lives. Look no further than popular loyalty programs – such as AAdvantage from American Airlines, Membership Rewards from AMEX or AMC Moviewatcher – which allow the participant to experience many of the key drivers of gamer behavior – earning points, “laddering” up (e.g. Gold, Platinum, Executive Platinum), self-aggrandizement.
Jim hypothesized that, because gaming is a native human trait, ”gamifying” (i.e. game-ify) shopping experiences would drive more sales and deeper consumer engagement. Intuitively it made sense, so I invited him to be our first “guest author” and work on one of our Interpretations reports with me, and one of Interpret’s top analysts in digital and social media, Zak Kirchner. In order to prove the hypothesis, we first wanted to define “Gamer 2.0″ (size, demographic makeup) and see the prevalence of shopping behavior among them. Additionally, we wanted to explore what it meant to “gamify” and then determine how targeting these “shopping gamers” could help retailers and etailers. Naturally, we turned to New Media Measure™ to see what the data would tell us. The results were very interesting, in that gamers are 20% more likely to be online shoppers, so they are not only where etailers need to reach them, but they are better conditioned to purchase online. In addition, gamers are more comfortable buying within gaming environments (such as virtual goods within games), which opens the door to very creative commerce opportunities. Moreover, they are 50% more likely to be influencers, a trait that is even more impressive when you consider their propensity to make their feelings known through social networks, blogs, comment pages, etc.
Thanks to Jim for not only contributing such a compelling hypothesis, but for helping us to show how New Media Measure™ can provide actionable insight to our clients.
Saw this article today in the LA Times, “Wii titles drag down July video game sales“, by Alex Pham. It shows that while video game console sales are up, overall spending is down 1%, the fourth month of consecutive sales decline. According to the article, the lack of Wii title sales are contributing most to the decline. I wondered why and was curious to know if the economy has anything to do with this trend?
In looking at first quarter Economic Impact data from New Media Measure™, it appears that the economy might be a contributor. In my analysis, I excluded those that haven’t used their console in the last 3 months and chose instead to study active users. If a console hasn’t been used in a household in the last 3 months, that household is likely not an engaged video game consumer. Isolating this group will help me to see the impact of likelier buyers.
When asked the question, “as a result of the current economic situation, you have cut back your spending a lot” all active console owners, whether Wii, Xbox 360 or PS3 are less likely to agree with this statement than the average household. However, when asked, “as a result of the current economic situation, you have cut back your spending a little“ active Wii owners are 12% more likely to agree to this statement compared to active PS3 owners and 15% more likely to agree compared to active Xbox 360 active owners. On the flip side, active Xbox 360 and PS3 owners are much more likely to agree with the statement, “as a result of the current economic situation, you haven’t changed your spending habits,” while active Wii owners don’t agree as much with this statement. So, it does appear that active Wii households are somewhat more impacted by the economy and very well could be why Wii sales are down.
Plastic Logic announced yesterday they are canceling the release of their Que ebook reader device. The decision is a good one. It would have been near impossible to compete in a marketplace at a price point of $649 – especially in light of Amazon Kindle’s recent price reductions – and also because the market is well served at the higher end by Apple with its iPad device.
It got me thinking about the market in general so we pulled some data from our New Media Measure™ product, which is this week’s “data point of the week” (#DPOW).
The current mix of owners is skewed male, but women appear to be the more voracious consumers of novels/books, downloading slightly more than 3 novels/books compared to men over the last 6 months (almost double). Moreover, when we looked at planned purchase (i.e. “plan to own within the next 3 months”), women are slightly more likely than males to purchase an e-reader device. This should be very good news for Amazon as the price for the Kindle is now at a point where most consumers won’t need to second guess the decision. It is not too far-fetched to believe the prevailing sentiment at the checkout counter is/will be - it almost pays for itself given the price differential between electronic books and hardcover books – not to mention the savings in gas and time efficiency not having to go to the bookstore.
At the higher end of the market, where “bells and whistles” are an important consideration in buying such a device, the iPad would be difficult to topple. However, while a superior device to the Kindle in terms of features and style elegance, the iPad is not the “Kindle Killer” many had predicted. What appears more likely is that the Kindle and the iPad can pleasantly co-exist, with Amazon the ultimate winner in terms of ereader etailing. As someone who owns both devices, I definitely find myself gravitating towards the iPad more often because of its broader utility, but even so, I’m buying books through the Kindle app! I suspect I’m not alone.
In a report written by Interpret’s Marissa Gluck, “Getting Moms to the Movies” moms and dads show some distinct differences in their media behavior. According to data from the report, which comes from New Media Measure™:
Dads tend to spend more time on entertainment-related activities, such as watching cable, watching movies on DVD or Blu-ray, watching videos on the Internet, or downloading movie content. In contrast, moms spend more time on social networking activities, spending 4.3 hours per month on average, while dads spend almost an hour less per month, or 3.42 hours on average.
While the behavior of dads isn’t surprising, what is interesting and notable is the amount of time moms are spending with social media. Spend anytime at home during the day watching television, based on the content of the advertising, it is clear advertisers are largely focused on women and/or stay-at-home moms. Again, this shouldn’t be a surprise to anyone as according to the U.S. Census, nearly 35 million households have a child under the age of 18, which means a large potential audience of stay-at-home moms (and dads, in some cases). Not only significantly large, but an influential audience as these are generally the key household purchase decision makers.
This data shows that these are no longer merely passive viewers (wipe away the archaic vision of women at home ironing their husbands shirts while watching a soap opera). Instead, these are active consumers who are engaging more with interactive media – not only social networking for communication, but our data also shows a high propensity for social network gaming as well. Marketers take note. This channel of communication is becoming increasingly more important and the need to understand its unique nuances (which change by the day at the hands of Facebook/MySpace/Twitter programmers) is crucial for reaching and influencing key consumer segments.
Today, we are releasing data and analysis from our New Media Measure™ interpretations report, “3D State of Union: Are Consumers Ready?” Leading up to, and after the release of “Avatar,” discussion and debate about the viability of 3D entertainment has been on the rise. Will it succeed? What will be the impediments to success? What do consumers think? Is 3D in the home appealing enough to drive purchases of new televisions? For the first time, thanks to Michael Cai and Brenton Lyle of Interpret, we now have quantitative data to answer many of these questions and begin to build a perspective on the future of 3D entertainment.
With research data, people tend to look for the “ah-hahs!” but often some of the more interesting data are what confirms our suspicions. In this case, we intuit that the 3D glasses are a major impediment to the success of 3D, which the data supports not surprisingly. Interestingly, though, the people you would expect to have greater comfort with the glasses are the 3D theatergoers. In fact, just over half of 3D theatergoers report wearing glasses as their primary dislike of the technology, versus 3D game players, only 37% of which have concerns about the technology. The other way to look at this, and perhaps the more pessimistic view, is that those with more experience with the technology are more likely to dislike it. All of which means, the glasses are a problem no matter what your experience with 3D.
The glasses aren’t the only impediment. We found that the average amount of time between consumers replacing the primary television in their household is 4.5 years with nearly half claiming it takes 6 or more years. We, like many others, believe that consumers looking to upgrade their primary televisions are now facing a choice between HDTV and 3D. Consumers will need to weigh the relative value of purchasing either type of television. A key finding from the study that should cause concern in the industry, is that consumers are very confused about 3D, and in fact, are misinformed about how the technology actually works. Consumers tend to be much more informed about HDTV and believe the length of time the technology has been in the market will be to their benefit in terms of price.
The consumers most likely to purchase a 3D set are early adopter consumers – who just happen to be those that already bought an HDTV set. Of the 54% of consumers who currently own an HDTV, they purchased it on average approximately 1.7 years ago. So, promoters of 3D television sets have their work cut out for them.
There is good news - 5% of heads of households in our study stated that they are “definitely interested” in purchasing a 3D TV in the next 12 months. As Michael Cai points out, “Even though consumer self-reported purchase intention needs to be discounted significantly, the percentage of 3D TV intenders is nothing to be sniffed at. Based on consumer data, we anticipate more than 4 million 3D TV sets to be sold in the United States in the next 12 months.”
That is perhaps a large enough number to keep content creators interested in producing for the format. Without their support, 3D will once again experience a stalled start and we’ll all be discussing what could have been.
