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Presented by
Kurt ScherfVice President, Principal AnalystParks AssociatesApril 29, 2009
Entertainment Trends Research
Slide 2
Presentation Outline
Slides 3-5: Research Overview
Slides 6-14: Changes in Video Habits
Slides 15-21: Video-on-Demand Use and Appeal of New Features
Slides 22-25: Interest in BD-Live Features
Slide 3
Research Overview
Slide 4
Research Goals
1. Identify how video behavior is changing
2. Profile profiling of consumers to determine what demographics or other characteristics play a role in changing video habits
3. Correlate changes in video behavior to the following consumer electronics products or alternative video consumption habits, among them:
• DVR penetration• Online video • Video-on-demand use; and• Game consoles
4. Understand consumer demand and willingness to pay for video-on-demand
5. Quantify consumer demand for BD-Live features
Slide 5
TV 2.0: The Consumer PerspectiveStudy Overview
• TV 2.0: The Consumer Perspective survey fielded in July 2008 to a total of 2,729 heads-of-household in the United States and 1,161 in Canada.
• Respondents were from a panel recruited by a third-party vendor and interviewed via the Internet.
• All qualified respondents had equal or greater input in household decision making, are over age 18, and have broadband access at home.
• The demographic composition of the U.S. sample is based upon Parks Associates’ National Technology Scan and matches the demographics of U.S. households with broadband service.
• The base sample of 2,729 respondents (U.S.) and 1,161 (Canada) has a
+/- 2% and +/- 3% margin of variance, respectively, at a 95% confidence level.
Slide 6
Changes in Video Habits
Slide 7
How the Analysis was Conducted
• Are consumers trading some media habits for others? – Analysis of how certain entertainment activities may impact others – Focus on consumers reporting an increase in entertainment
activities in the past two years
• Do consumers have “digital distractions?”– Analysis of how the presence of game consoles, DVRs, home
theater systems, and other consumer electronics may be changing entertainment habits from outside the home to inside
– Analysis of how online video and online DVD rental services may impact other entertainment habits
Slide 8
Changes in Video Viewing Habits
Changes in Viewing Habits: U.S. (Q3/08)"How would you characterize the frequency at which the following
activities are taking place today compared to 2 years ago?"(Among broadband HHs surveyed, n=2,729, ±2%)
35%
25%
23%
23%
29%
18%
17%
16%
10%
52%
61%
61%
56%
43%
53%
52%
52%
52%
13%
14%
21%
28%
29%
31%
32%
37%
17%
0% 20% 40% 60% 80% 100%
Watching movies at a theater/cinema
Watching rented DVD television series
Watching purchased DVD television series
Watching purchased movies
Watching rented movies
Watching primetime television shows
Watching movies on VoD
Watching subscription VoD (HBO)
Watching free VoD
% Breakdown
Decreased Stayed the Same Increased
Source : TV 2.0: The Consumer PerspectiveSample base: 2,720 broadband HHs in the U.S., ±2%© 2008 Parks Associates:
Slide 9
Key Takeaways from the Analysis, I
• Is “primetime anytime” replacing movie theater habits? Notable declines in reported theater attendance among:– Consumers watching more primetime TV;– Lower-income households;– Respondents age 25-34; and – Consumers watching more free VoD
• Who’s watching more primetime TV?– Younger consumers (age 18-34);– Lower-income households (less than $50K); and– TiVo/DVR owners
• Declining frequencies of watching purchased movies are more pronounced among– Subscribers to Netflix or Blockbuster online rental services
• Declining frequencies of watching rented movies are more pronounced among:– Lower-income households (less than $75K)
Slide 10
What Accounts for Decreases in Theater Viewing?
Decreases in Entertainment Activities:Watching Movies in the Cinema/Theater
35%
44%
42%
41%
41%
39%
39%
39%
38%
0% 10% 20% 30% 40% 50%
Household income between $75K-$99.9K (n=352, ±5%)
Increase in watching rented movies (n=775, ±4%)
Increase in watching movies on VoD (n=481, ±4%)
One child at home (n=406, ±5%)
Increase in watching free VoD (n=587, ±4%)
Age 25-34 (n=497, ±4%)
Less than $50K household income (n=977, ±3%)
Increase in watching primetime television shows (n=783,±4%)
All respondents (n=2,720, ±2%)
Percentage of Respondent (%)
Source: TV 2.0: The Consumer PerspectiveSample base: 2,729 broadband HHs in the U.S., ±2%© 2008 Parks Associates:
Slide 11
Who is Watching More Primetime TV?
Increases in Entertainment Activities:Watching Primetime Television Shows
29%
41%
39%
37%
35%
34%
34%
32%
30%
30%
0% 10% 20% 30% 40% 50%
Have digital cable (n=1,292, ±3%)
Household income between $50K-$74.9K (n=504, ±4%)
Have satellite (n=739, ±4%)
Less than $50K household inocme (n=977, ±3%)
Own TiVo/DVR (n=1,091, ±3%)
Own Xbox 360/PlayStation 3 (n=530, ±4%)
Age 25-34 (n=497, ±4%)
Own Blu-ray Player (n=167, ±8%)
Age 18-24 (n=203, ±7%)
All respondents (n=2,720, ±2%)
Percentage of Respondent (%)
Source: TV 2.0: The Consumer PerspectiveSample base: 2,729 broadband HHs in the U.S., ±2%© 2008 Parks Associates:
Slide 12
Who’s Watching Fewer Purchased Movies?
Decreases in Entertainment Activities:Watching Purchased Movies
23%
25%
25%
24%
0% 10% 20% 30%
Own Media Center PC(n=1,568, ±2%)
Increase in watchingprimetime television shows
(n=783, ±4%)
Netflix/Blockbuster TOTALACCESS subscriber (n=640,
±4%)
All respondents (n=2,720,±2%)
Percentage of Respondent (%)
Source: TV 2.0: The Consumer PerspectiveSample base: 2,729 broadband HHs in the U.S., ±2%© 2008 Parks Associates:
Slide 13
Key Takeaways from the Analysis, II
• Declining frequencies of rentals and purchases of TV series on DVD are most pronounced among:– Lower-income households (less than $50K)
• Digital products are not the problem– Increases in video consumption across the board are more likely with the
introduction of Xbox 360s and PlayStation 3’s.– Among digital products, DVR/TiVo is the only device that shows a statistically
significant, negative impact on the frequency of seeing movies in the theater.• Online video’s impact is negligible
– We can find no evidence to support the theory that online video is causing churn from traditional entertainment activities. It appears to be more of a complement for consumers already heavily engaged in video habits.
• Age is a strong determinant in both increases and decreases in activities.– As could be expected, older age groups start to move entertainment inside the
home, reflecting decreases in watching movies in the theater.– VoD becomes an important component of entertainment habits for consumers in
the 24-35 age range, reflecting marriage and the starting of families.
Slide 14
The Impact of Online Video on Primetime TV
Even among the most avid online video viewers – consumers who are actually paying for online video – there is not a decrease in the frequency at which they reportedly watch primetime television. Of course, we believe that consumers are shifting their viewing from the TV to the PC, which will impact ad revenue models long-term as online viewing becomes a substitute in some respects for TV viewing.
Even among the most avid online video viewers – consumers who are actually paying for online video – there is not a decrease in the frequency at which they reportedly watch primetime television. Of course, we believe that consumers are shifting their viewing from the TV to the PC, which will impact ad revenue models long-term as online viewing becomes a substitute in some respects for TV viewing.
Is Internet Video Decreasing the Primetime TV Audience?
(Q3/08)"How would you characterize the frequency at which you are watching primetime
television shows compared to two years ago?"(Percentage of U.S. Home Broadband Users)
29%36%
53%46%
18% 18%
0%
25%
50%
75%
100%
All Respondents Surveyed (n=2,720, ±2%) Monthly Paying Internet Video Users (n=544,±4%)
Pe
rce
nta
ge
of
Re
sp
on
de
nts
(%
) Watching More Primetime TV (%)
Watching about the Same Primetime TV (%)
Watching Less Primetime TV (%)
Source : TV 2.0: The Consumer PerspectiveSample base: 2,720 broadband HHs in the U.S. , ±2%© 2008 Parks Associates:
Slide 15
Video-on-Demand Use and Appeal of New Features
Slide 16
What Do We Know about VoD?
• Use is up significantly in digital cable households– 37% of U.S. digital cable households rent a VoD movie at least
monthly (up from 21% in 2004)• Active VoD use = high satisfaction
– 74% of weekly cable VoD users very satisfied with service, compared to 40% overall
Slide 17
What Do Consumers Want from their TV?
Tier 1 TV 2.0 Features (Q3/08)(Percentage of U.S. broadband respondents, n=2,720, ±2%)
0%
20%
40%
60%
Pe
rce
nta
ge
of
Re
sp
on
de
nts
(%
)
% Rating Feature Highly Appealing (%) 55% 53% 42% 43% 36%
% Picking Features as Top Five (%) 38% 30% 30% 21% 18%
% Willing to Pay for Feature (%) 30% 21% 22% 16% 14%
% Indicating Feature is a Churn Trigger (%) 21% 15% 14% 11% 8%
Primetime AnytimeCatch-up/Start Over
PrimetimeCaller ID on the TV
ScreenMulti-room DVR
Channel Video Thumbnails
Source : TV 2.0: The Consumer PerspectiveSample base: 2,720 broadband HHs in the U.S. , ±2%© 2008 Parks Associates:
Slide 18
Enhancements to VoD: Where is the Demand?
• VoD enhancements tested:– Day-and-date (theater);– Purchase and burn movies to DVD;– $1 less with 1-3 minutes of ads;– Extended time for viewing rentals;– Day-and-date (DVD);– More HD titles;– Purchase title on DVD (mailed to home);– Extras (director’s cuts); and– Ability to purchase and download movies to PC hard drive
• The results for all of the VoD enhancements are very consistent, in that the groups showing statistically significant more interest are:– Respondents age 25-34– Households with children– Households with Xbox 360/Blu-ray players
Slide 19
Top VoD EnhancementsNearly 50% of respondents with 3+ children at home say they would watch more VoD if the titles were available on the same day as the theatrical release. This compares to just 30% of those without children at home.
Nearly 50% of respondents with 3+ children at home say they would watch more VoD if the titles were available on the same day as the theatrical release. This compares to just 30% of those without children at home.
Value of New VoD Enhancements (Q3/08) "How would you rate the following enhancements of VoD movies for increasing the
likelihood that you would watch them?" (Among digital video subscribers, n=2,020, +2%)
20%
22%
23%
24%
36%
0% 10% 20% 30% 40% 50%
Ability to rent movies on the day they are available topurchase on DVD
Extended time for viewing rented videos
The movie costs at $1 less with 1-3 minutes of ads
Ability to purchase & then burn movies to a DVD
Ability to rent movies for a fee on the same date it comesout in a theater
% Rating Features Valuable (i.e. 6-7 on a 1-7 scale, with 7=Definitely Would Watch More Often)
Source : TV 2.0: The Consumer PerspectiveSample base: 2,729 broadband HHs in the U.S. , ±2%© 2008 Parks Associates:
20% of these respondents willing to pay $20 for the VoD movie
20% of these respondents willing to pay $20 for the VoD movie
Slide 20
Next VoD EnhancementsYounger respondents are generally more likely to say viewing would increase if new features were added.
Younger respondents are generally more likely to say viewing would increase if new features were added.
Value of New VoD Enhancements, cont. (Q3/08) "How would you rate the following enhancements of VoD movies for increasing the
likelihood that you would watch them?" (Among digital video subscribers, n=2,020, +2%)
15%
15%
19%
20%
0% 10% 20% 30% 40% 50%
Ability to purchase & downloadmovies to PC hard drive
Availability of extra features with movies(e.g. director's cuts)
Ability to purchase movies for viewing on TV but aDVD copy is also mailed to you
More titles in HD format
% Rating Features Valuable (i.e. 6-7 on a 1-7 scale, with 7=Definitely Would Watch More Often)
Source : TV 2.0: The Consumer PerspectiveSample base: 2,729 broadband HHs in the U.S. , ±2%© 2008 Parks Associates:
Slide 21
Willingness to Rent VoD Movies with Features for $4.99/$5.99Younger respondents are more willing to rent VoD movies if new features are offered.
Early release of VoD titles is particularly likely to trigger rentals by respondents with 2+ children at home.
Younger respondents are more willing to rent VoD movies if new features are offered.
Early release of VoD titles is particularly likely to trigger rentals by respondents with 2+ children at home.
16% of all respondents16% of all respondents
12% of all respondents12% of all respondents
12% of all respondents12% of all respondents
8% of all respondents8% of all respondents
Willingness to Rent VoD Movies with Features for $4.99-$5.99 (Q3/08)
34%
36%
40%
50%
0% 20% 40% 60%
VoD movies with director's cut (n=491, ±4%)
VoD movies for an extended period of time(n=694, ±4%)
VoD movies in HD format (n=600, ±4%)
VoD movies available on the same day as theDVD release (n=634, ±4%)
% Willing to Rent VoD
"If a regular video-on-demand movie is available for $2.99-$3.99, would you be willing to rent... for $4.99-$5.99?"
(Among respondents interested in value-added VoD features)
Source : TV 2.0: The Consumer PerspectiveSample base: 2,729 broadband HHs in the U.S. , ±2%© 2008 Parks Associates:
Slide 22
Interest in BD-Live Features
Slide 23
Appeal of BD-Live FeaturesU.S.: Appeal of Blu-ray Player Features
"Q414a. If you were purchasing a Blu-ray high definition player, how appealing are the following features?"
(Among BB HHs, n=796, +4%)
14%
17%
17%
21%
22%
26%
35%
0% 20% 40% 60% 80% 100%
Virtual 'viewing party'
Access to content on Internet
Access to personal contentuploaded to sharing websites
Previews
Access to content on PCs
Music On-Demand Library
VOD Library
% Finding Feature Strongly Appealing (i.e. 6-7 on a 1-7 scale)
Source: Digital Media Evolution-Survey 11/15/08Sample: n=2,447 broadband HHs in the U.S. ; ±2%© 2008 Parks Associates
The PC/Internet access features hold relatively strong appeal among those age 18-24. The virtual viewing party feature appeals to those age 25-34 in particular.
The PC/Internet access features hold relatively strong appeal among those age 18-24. The virtual viewing party feature appeals to those age 25-34 in particular.
Slide 24
Appeal of BD Interactive Disc Features
U.S.: Appeal of Blu-ray Disc Features "Q415. How appealing are the following capabilities for Blu-ray, high definition DVD discs?"
(Among BB HHs, n=796, +4%)
9%
10%
13%
14%
15%
15%
15%
18%
20%
20%
29%
0% 20% 40% 60% 80% 100%
Fan chat rooms
Rate favorite scenes that have been shared
Online store with related merchandise
Related multi-player games
Download related content (pictures, ring-tones, clips, etc.)
Picture-in-picture commentary
Share favorite scenes with others
Movie info
Digital copies of a movie
Preview info
Electronic movie rental via player
% Finding Feature Strongly Appealing (i.e. 6-7 on a 1-7 scale)
Source: Digital Media Evolution-Survey 11/15/08Sample: n=2,447 broadband HHs in the U.S. ; ±2%© 2008 Parks Associates
Respondents age 25-34 generally express more interest in these features, except for the season preview feature. That particular feature appeals more to those age 18-24.
Respondents age 25-34 generally express more interest in these features, except for the season preview feature. That particular feature appeals more to those age 18-24.
Slide 25
Willingness to Pay for BD-Live-enabled Player
U.S.: Value of Blu-ray Player Features "Q416a. Assuming that the Blu-Ray HD Player you want to purchase is about $400...how
much extra you are willing to pay to get the (desired) features"(Among BB HHs, n=796; +4%)
41%
7% 7% 6%
4% 2% 2% 2% 2% 3% 3% 2% 2% 1% 1% 1% 1% 1% 1% 1%
7%
0% 0% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
0%
20%
40%
60%
80%
100%
0$
5$
10
$1
5$
20
$2
5$
30
$3
5$
40
$4
5$
50
$5
5$
60
$6
5$
70
$7
5$
80
$8
5$
90
$9
5$
10
0$
10
5$
11
0$
11
5$
12
0$
12
5$
13
0$
13
5$
14
0$
14
5$
15
0$
15
5$
16
0$
16
5$
17
0$
17
5$
19
0$
20
0
Amount Respondent is Willing to Pay
% o
f R
es
po
nd
en
ts
Source: Digital Media Evolution-Survey 11/15/08Sample: n=2,447 broadband HHs in the U.S. ; ±2%© 2008 Parks Associates
Of the tested features, electronic movie rental has, by far, the strongest relation to a willingness to pay more.*
Respondents will pay around $50 (on average) for new features.
Respondents age 18-34 and those with a HH income above $100K will pay more than other respondents.**
*Based upon a regression analysis of willingness to pay & feature appeal.
** At a 99% confidence level.
Of the tested features, electronic movie rental has, by far, the strongest relation to a willingness to pay more.*
Respondents will pay around $50 (on average) for new features.
Respondents age 18-34 and those with a HH income above $100K will pay more than other respondents.**
*Based upon a regression analysis of willingness to pay & feature appeal.
** At a 99% confidence level.