IBM’s Institute for Business Value is at it once again, giving its annual ‘crystal ball’ view of TV markets and trying to make the world’s major broadcasting enterprises sit up and take notice.
It was back in February 2006 that IBM first joined the Faultline bandwagon and predicted the ‘end of TV as we know it’ saying that it would drop $18 billion of advertising revenue by 2009. It has now changed that message, instead issuing a calls to arms to everyone involved in the advertising industry to go and explore the new media that are taking over from broadcast TV.
This has come in the form of an online survey, which can be downloaded free of charge, looking at global entertainment habits. It points out that audiences are more in control than ever and they are becoming increasingly savvy about filtering marketing messages, which should be read as ‘avoiding advertising.’
The survey makes a lot of good points, most of which we have made ourselves from time to time in these pages, but it is a little suspect in its statistical validity, being skewed in each country towards different age groups and mostly towards females, and trying to suggest that just because some people spend 6 hours a day on the internet, that they prefer it to TV. The truth is that many of the working age people interviewed spend that amount of time on the internet because they are information workers that sit on it all day. Because it is an online voluntary survey it is also skewed towards people who spend more time on the internet.
But having said that, we think that the surveys, involving 2,400 households conducted in the US, the UK, Germany, Japan and Australia, make many interesting points, like documenting the huge uptake in MP3 players and gaming consoles globally, ahead of all other technologies, in every territory, including Media Center PCs, HDTVs, portable gaming platforms and DVRs.
The types of conclusions we are invited to draw are that Internet time is rivaling TV viewing for the first time ever, and that consumers spend their time trying to take control of their entertainment needs, that control being more important and that they are moving to a point where they are just as happy to consume content on a PC, or a mobile as rely on a TV set. They are particularly drawn to interactive content the survey claims.
IBM then concludes that advertising has to move where the viewing goes, and that advertising agencies need to go beyond the traditional creative roles and invites them to become brokers of consumer insights and it calls for ‘permission based’ advertising services.
The survey shows that 81% of consumers have watched or want to watch PC video, and 42% want to watch mobile video.
It also shows that 23% of respondents are using a portable music service, 7% have a video content subscription for their mobile phones, 11% have a PC-based music service; and 18% read an online newspaper.
Saul Berman, IBM Media & Entertainment Strategy and Change practice leader, said, “The Internet is becoming consumers’ primary entertainment source. The TV is increasingly taking a back seat to the cell phone and the personal computer among consumers age 18 to 34. Just as the ‘Kool Kids’ and ‘Gadgetiers’ have replaced traditional land-lines with mobile communications, cable and satellite TV subscriptions risk a similar fate of being replaced as the primary source of content access.”
The survey endorses the idea that DVR owners do not watch adverts, and that this has reached 24% penetration in the US, which is used for at least 50% of TV viewing in those homes.
Most US homes report watching more TV, which is not surprising, because a DVR let’s you watch more TV in less time, because it gives you back the time that adverts used to take up. In the UK the survey shows that consumers prefer VoD services because the penetration of DVRs is far lower, while in Australia respondents prefer live television and use the DVR for less than 25% of viewing.
Below is the graph of device ownership for the US, which shows that over the past two years MP3 players have surged ahead as the device everybody wants to own, overtaking even the games console. The MP3 penetration numbers for Australia and the UK are even higher at 56%, and in Germany it is 69% while in Japan it is neck and neck with the portable gaming platform in the high 30s.
Every country has high usage for social networking and user generated websites, and very low uptake of eBook readers. There was virtually universal agreement that the most attractive thing to make consumers increase their loyalty to a particular content provider was either the lowering of prices for a single service or for a specific triple or quad play bundle.
This consumer study is a component of the upcoming report “The end of advertising as we know it,” co-authored by Saul Berman and Bill Battino, planned for the fall.
The truth is that first and foremost video consumption is fragmenting. There are more sources of video, more ways of getting it to people, on an increasingly bewildering number of device types. This really does present a challenge to any company that maintains a big brand, that needs sustaining, and the emergence of advertising platforms that can reach across all of these entertainment experiences, with promotional approaches that don’t ruin them, is going to become the holy Grail going forwards.