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How the Empowered Consumer Impacts the Media IndustryPaul JacksonPrincipal AnalystForrester Research
February 9, 2007
3Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Agenda
• When empowered consumers attack!
• The future media device: The PC or not the PC?
• How are media companies dealing with this?
4Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Agenda
• When empowered consumers attack!
• The future media device: The PC or not the PC?
• How are media companies dealing with this?
5Entire contents © 2007 Forrester Research, Inc. All rights reserved.
“Content” versus distribution
Objectivejournalist
Newsorganization
Broadcaster/publisher
Source Filter Aggregator Distributor
News
Scripts/ideas
TV channels Broadcaster
consumerEntertainment
Information
Productioncompanies
Empoweredconsumer
6Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Empowered consumers
• Seek out what they need
• Create and connect to communities of like-minded individuals
• Get frustrated by seemingly arbitrary boundaries (geography, payment mechanisms, laws, etc.)
7Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Empowerment cascades down the four C’s
Couch potatoesCouch potatoes
CollectorsCollectors
CriticsCritics
CreatorsCreators
8Entire contents © 2007 Forrester Research, Inc. All rights reserved.
9Entire contents © 2007 Forrester Research, Inc. All rights reserved.
10Entire contents © 2007 Forrester Research, Inc. All rights reserved.
11Entire contents © 2007 Forrester Research, Inc. All rights reserved.
12Entire contents © 2007 Forrester Research, Inc. All rights reserved.
13Entire contents © 2007 Forrester Research, Inc. All rights reserved.
14Entire contents © 2007 Forrester Research, Inc. All rights reserved.
15Entire contents © 2007 Forrester Research, Inc. All rights reserved.
16Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Media is an extreme example, but there are others
• Medicine
» Pharmaceuticals: Knowledge of generic alternatives
» Doctors’ diagnoses
» Hypochondriacs’ diagnoses!
• Commerce
» Comparison shopping
• Travel
» Trip advice, planning and booking
17Entire contents © 2007 Forrester Research, Inc. All rights reserved.
But . . . how widespread is this behavior?
• The good news:
» It’s only advanced users so far – only 4% of the population are creators and less than 9% are critics
» Most consumers aren’t as driven about their entertainment (i.e., they have lives!)
• The bad news:
» As technology becomes as easy as turning on the TV, more consumers will engage – watch IPTV’s progress carefully
» Many vested interests WANT this – Google, telcos, device manufacturersPlus, you need to factor in
a new generation of consumers
18Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Millennials Older generations
Like to receive information quickly,from multiple sources in real time
Used to receiving information linearly, thinking about it, and digesting it
Like to parallel process and multitask Like to proceed step-by-step and do tasks in order
Like to work in peer groups Like individual work
Are more learner-centered with teacher as a guide
Are more teacher-centered with teacher as the “sage”
Have little tolerance for delays with IT systems
Are happy when the technology works; show more patience but also experience frustration
Prefer to “construct” their knowledge from experiences
Prefer to receive instruction in a logical sequence
Tend to be more visual learners Tend to be more text-based learners who are careful observers
Are flexible, adaptable, and comfortable with uncertainty in a change-driven world
Resist change but find coping strategies
Millennials (born 1980 to 2000) fuel social media
19Entire contents © 2007 Forrester Research, Inc. All rights reserved.
European consumers: behavior
2.7
1.2
2.7
3.5
11
1.5
3.5
4.4
7.3
10.7
Reading newspapers
Playing games
Watching DVDs
Personal Internet usage
Watching TV
Millenials
Everyone else
Base: European consumers (1st graphic), online consumer (2nd graphic)Source: Forrester’s European Consumer Technology Adoption Study Q2 2006 Survey
24%
6%
56%
20%
Use IM
Download video
Hours per week:
Regular online activities:
20Entire contents © 2007 Forrester Research, Inc. All rights reserved.
European consumers: device ownership
22%
21%
63%
84%
92%
50%
53%
88%
96%
95%
Game Console
Digital Player
PC
Mobile Phone
TV
Millenials
Everyone else
Base: European consumersSource: Forrester’s European Consumer Technology Adoption Study Q2 2006 Survey
21Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Agenda
• When empowered consumers attack!
• The future media device: The PC or not the PC?
• How are media companies dealing with this?
22Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Agenda
• When empowered consumers attack!
• The future media device: The PC or not the PC?
• How are media companies dealing with this?
23Entire contents © 2007 Forrester Research, Inc. All rights reserved.
“Content” versus distribution
Objectivejournalist
Newsorganization
Broadcaster/ publisher
Source Filter Aggregator Distributor
News
Scripts/ideas
TV channels Broadcaster
consumerEntertainment
Information
Productioncompanies
empoweredconsumer
24Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Making the home PC sexy to use again
Before social media: After social media:
• Productivity• Banking/eCommerce• Games• Education
• Communication• Global communities• Creative engagement• Instant access to entertainment
25Entire contents © 2007 Forrester Research, Inc. All rights reserved.
And the PC is starting to evolve
26Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Making the home PC sexy to use again
Before social media: After social media:
• Productivity• Banking/eCommerce• Games• Education
• Communication• Global communities• Creative engagement• Instant access to entertainment
BUT, it is still a PC and still in a spare room
or a home office
27Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Social, connected devices
Sony Mylo
Microsoft Zune Nintendo DS
Sony PSP
28Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Sophisticated TV devices driving consumer empowerment
29Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Rich interaction: next-generation game consoles
Around 8-9million were online aroundthe globe at the end of 2006
Wii
Xbox 360PlayStation 3
30Entire contents © 2007 Forrester Research, Inc. All rights reserved.
The telco rush to video: BT / AT&T / Glowria
31Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Realistically, there are still hurdles to overcome
• Blanket coverage for infrastructure
» Broadband
» Wi-Fi
• Ability of non-PC devices to break out of niches
• Lack of standards and manufacturer cooperation
• Business models are still unclear
32Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Agenda
• When empowered consumers attack!
• The future media device: The PC or not the PC?
• How are media companies dealing with this?
33Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Agenda
• When empowered consumers attack!
• The future media device: The PC or not the PC?
• How are media companies dealing with this?
34Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Not well in general…
35Entire contents © 2007 Forrester Research, Inc. All rights reserved.
BSkyB + myspace
36Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Warners, Universal etc
37Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Fighting back with HD services
• New TVs and new physical media allow delivery of better experiences
• Increased production in HD (now that the costs have dropped and the tools have improved)
• Still not possible (easily!) via IPTV or other streaming mechanisms
• Creates demand for more back catalogue releases
38Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Asset Management
• Digitisation of catalogues
• Trancoding for different devices and channels
• Allows global production workflow
39Entire contents © 2007 Forrester Research, Inc. All rights reserved.
The endgame: The video delivery long tail
Titles
Views
TVAdvertising
Subscriptions
Bro
adca
st &
Cab
leTV, DVDBuy, rent
Advertising
Mo
vies
& V
OD
IPAdvertising
Per
son
al p
rog
ram
min
g
Nic
he
pro
gra
mm
ing
,D
eep
cat
alo
g,
Ext
end
ed m
ater
ial
DVD, IPRent
Advertising
40Entire contents © 2007 Forrester Research, Inc. All rights reserved.
What should media companies do?
• Don’t get trapped in a pure ‘broadcaster’ role
» Could easily be displaced by IPTV, Google or other new delivery technology
• Talk to key technology rain-makers: Apple, Intel, Cisco, HP, Microsoft, Google
• Don’t assume advertising revenue or government subsidy will remain unchanged
» Investigate multiple, merged revenue models
» Focus on IP and building direct consumer relationships
41Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Summary
• Social media creation is taking off: the first wave of empowered consumers is already among us
• The PC may be the primary device today, but other devices will play a key role in the future
• Media companies must embrace these new technologies and consumer needs to survive in the long term
42Entire contents © 2007 Forrester Research, Inc. All rights reserved.
Paul Jackson
+31 20 305 4882
pjackson@forrester.com
www.forrester.com
Thank you
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