Tuesday, June 24, 2008, 9:57 AM ET|Posted by Will Richmond
I recently attended a presentation by Martin Olausson, Director of Digital Media Strategies at Strategy Analytics, who shared key findings from his firm's recently fielded digital media survey. Strategy Analytics is a research and consulting firm specializing in information, communications and entertainment. In a follow-up chat, Martin provided a little more color on the data and he also agreed to share a half dozen slides as a complimentary download for VideoNuze readers.
Some of the most interesting data confirms the shifts that are well underway in how younger people consume video. For example, the weekly TV reach for 15-19 year olds is 64%, while for 35-49 year olds it's 82%. Conversely, the weekly reach for broadband video averages around 25-26% for those in the 15-29 age brackets, but at 35-49 it drops to 15%, and then for 50+ it drops again to just 5%. Broadband consumption clearly skews younger, suggesting a more permanent shift as this group ages.
In addition, 16-18% of 15-29 year olds said they'd be interested/very interested in paying for TV online, while only 11% of those 35-49 said so, and only 3% of those 50+ said so. Similarly, 21-22% of 15-29 year olds said they'd be interested/very interested in paying for movies online, while only 16% of those 35-49 said so, and only 5% of those 50+ said so.
Media and marketing executives need to focus on what opportunities this creates. For example, this might suggest that special offers to download TV programs and movies that have particular appeal to younger people might help accelerate the paid business model. Or that co-marketing deals with other brands that already have credibility and reach into these age groups would help open up the market.
Strategy Analytics also included a revenue forecast for various business models for 2008-2012. The four paid categories, "Download to Own: Movies," "Download to Own: TV," "Download to Rent: A-La-Carte" and "Download to Rent: Subscription" total up to approximately $3.87 billion by 2012, while the ad-supported category totals to $3.48 billion by then.
Martin is most bullish on the subscription model as the big driver of paid revenues, and focuses on Netflix in particular as having a strong online delivery opportunity. While I haven't created my own revenue projections, I still bias toward thinking ad-supported will outstrip paid in the next 3-4 years. If I look longer-term, say 5-10 years out, I can see that shifting to the paid model as today's issues (portability, rights, mass broadband connectivity to TVs, etc.) are resolved at scale.
Taken together, the data adds to our understanding of what's happening in the market today and where things may be heading. If you want further information about the survey, Martin's contact information is on the cover slide.
Companies: Strategy Analytics
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