How the Empowered Consumer Impacts the Media Industry Paul Jackson Principal Analyst Forrester Research February 9, 2007

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?


Agenda





“Content” versus distribution

Objectivejournalist

Newsorganization

Broadcaster/publisher

Source Filter Aggregator Distributor

News

Scripts/ideas

TV channels Broadcaster

consumerEntertainment

Information

Productioncompanies

Empoweredconsumer


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.)


Empowerment cascades down the four C’s

Couch potatoesCouch potatoes

CollectorsCollectors

CriticsCritics

CreatorsCreators










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


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


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


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:


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


Agenda





Agenda





“Content” versus distribution

Objectivejournalist

Newsorganization

Broadcaster/ publisher

Source Filter Aggregator Distributor

News

Scripts/ideas

TV channels Broadcaster

consumerEntertainment

Information

Productioncompanies

empoweredconsumer


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


And the PC is starting to evolve


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


Social, connected devices

Sony Mylo

Microsoft Zune Nintendo DS

Sony PSP


Sophisticated TV devices driving consumer empowerment


Rich interaction: next-generation game consoles

Around 8-9million were online aroundthe globe at the end of 2006

Wii

Xbox 360PlayStation 3


The telco rush to video: BT / AT&T / Glowria


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


Agenda





Agenda





Not well in general…


BSkyB + myspace


Warners, Universal etc


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


Asset Management

• Digitisation of catalogues

• Trancoding for different devices and channels

• Allows global production workflow


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


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


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


Paul Jackson

+31 20 305 4882

[email protected]

www.forrester.com

Thank you

Documents

How the Empowered Consumer Impacts the Media Industry Paul Jackson Principal Analyst Forrester Research February 9, 2007