How is media consumption changing? The impact of convergence Peter Olaf Looms DR Ecom & Icomp...

How is media consumption changing?

The impact of convergencePeter Olaf LoomsDR

Ecom & Icomp Experts Address SeriesUniversity of Hong KongAdmiralty Centre27 September 2005

2

Structure of my presentation

1. How is media consumption changing?

2. What are the key underlying trends?

3. What are the implications for producing and distributing digital media and services?

4. The road ahead

3

1. How is media consumption changing?

4

Media - Supply Side

””A Niagara of supply”A Niagara of supply”Davies [2001]Davies [2001]

5

Media in the UK - supply side 1988/1989 1997 Increase %

Magazine titles 2,042 2,430 19%

Singles released 3,932 5,926 51%

Albums released 8,762 18,386 110%

Commercial radio channels 60 188 213%

Cinema multiplex sites 14 118 213%

TV-channels 4 60 1,400%

CD-ROM titles 380 16,762 4,199%

Web-pages 0 132 million Infinity

Media - Supply Side

6

Media - Demand

Media consumption in the USA(hours/week)

1995 2003 Percentageincrease

Television 30.4 33.2 9%

Radio 18.7 19.5 4%

Newspapers 3.2 2.3 -28%

Weekly magazines 2.2 2.4 9%

Internet 0.1 3.3 3200%

Video 0.9 1.3 44%

Console games 0.4 1.4 250%

7

Media - Demand

Media consumption in the USA(hours/week)

1995 2003 Percentageincrease

Television 30.4 33.2 9%

Radio 18.7 19.5 4%

Newspapers 3.2 2.3 -28%

Weekly magazines 2.2 2.4 9%

Internet 0.1 3.3 3200%

Video 0.9 1.3 44%

Console games 0.4 1.4 250%

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2. What are the key underlying trends?

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Key trends

1.Individualisation

• Us Me

• Convenience

TV: what and when the viewer wants......ultimately anything, anytime, anywhere and on any device

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Th

e v

iew

er

takes a

decis

ion

befo

re r

ele

ase

Th

e v

iew

er c

an

take a

decis

ion

afte

r rele

ase

Viewing on your own

Viewing with others

TIME SHIFT

”When you want”

ON DEMAND

”What you want When you want”

11

Podcasting On Demand (PC/mobile)

PVR

Mediacenter

Network-PVR On Demand

Handheld PVR

Th

e v

iew

er

takes a

decis

ion

befo

re b

road

cast

Th

e v

iew

er c

an

take a

decis

ion

afte

r bro

ad

cast

Mediacenter

PSP/HandheldMediacenter

PSP/HandheldMediacenter

Viewing on your own

Viewing with others FastWeb

12

Collective business models:

• Advertising• Subscription • Public Service

• State funding• Licence Fee

• Mixed modelsLOW RISKCONTENT DIVERSITY

Individual business models:

• Pay Per View (PPV)• Pay Per Play (PPP)• Pay As You Go

HIGHER RISKMAINSTREAM CONTENT

Key trends

13

Key trends

1. Individualisation

2.Demographics - more elderly and kids (although not Hong Kong!)

14

Key trends


2. Demographics - more elderly and kids

3.Globalisation

15

Key trends



3. Globalisation

4.Digitalisation

16

Key trends



3. Globalisation

4. Digitalisation

5.Fragmentation

17

Key trends



3. Globalisation

4. Digitalisation

5.Fragmentation

• Big growth in supply of content • Modest growth in consumption

(hours per week)• Consumption spread over more

channels/sites• Channel/site share under

pressure• Need to be most cost-effective

(more content for less)

18

Key trends



3. Globalisation

4. Digitalisation

5. Fragmentation

6.Convergence

19

But what isconverging?

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Convergence

From here....

Each media has All media on the its own device the same device

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Convergence in 1998

From here.... Device convergence

Each media has All media on the its own device the same device

We forgot We forgot the mobile phone!the mobile phone!

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Convergence debate today

From here....

Each medium has All media on the its own network the same network

TelevisionTelevision

RadioRadio

InternetInternet

TelephoneTelephone

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Convergence debate today

From here.... Network convergence

TelevisionTelevision

RadioRadio

InternetInternet

TelephoneTelephone

Each medium has All media on theAll media on the its own network the same networkthe same network

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Device divergenceDevice divergenceDevice convergenceDevice convergence

Media convergenceMedia convergenceNetwork convergenceNetwork convergence

Market convergenceMarket convergence

Convergence: a layer cake...

Regulatory convergenceRegulatory convergence

Channels and servicesChannels and services

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3. Globalisation

4. Digitalisation

5. Fragmentation

6. Convergence

7.New/rebranded players

Key trends

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What are the implications for producing and distributing

digital media and services?

27

Intellectual Property

Rights

Distribution Retail Reader

BookProductionof content

of metadata

Classical Value Chain in Publishing

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Rights

User

Web-site


Rights

Distribution Retail User


of metadata


Rights

User

HandheldDevice


Rights

User

CD

Distribution BillingProductionof content

of metadata

Distribution RetailProductionof content

of metadata


of metadata

Vertical integration

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Rights

User

Web-site


Rights



of metadata


Rights

User

HandheldDevice


Rights

User

CD


of metadata


of metadata


of metadata

Horisontal concentration

30

AnalogueTV

DVB-T

DVB-S

DVB-C

DVB-S2

IPTVADSLIPTVFTTH

P2P

DVB-H

T-DMB

802.11

podcasting

From analogue to digital TV - many platforms!

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Rights

Aggregationinto

Channels orServices

AggregationInto

Packages

Contribution DistributionCanal DigitalMediaHiway

UserAccess

CA

UserDevice

DVB-S +TV screen

Productionof content

of metadata


Rights

Aggregationinto

Channels orServices

AggregationInto

Packages

Contribution DistributionDigiTVMHP

UserAccess

Free-To-Air

UserDevice

DVB-T +TV screen


of metadata


Rights

Aggregationinto

Channels orServices

AggregationInto

Packages

Contribution DistributionFTHTDC

UserAccess

DSL/FTTH

UserDevice

TV over IP +TV screen


of metadata


Rights

Aggregationinto

Channels orServices

AggregationInto

Packages

Contribution DistributionTDC

(OpenTV)

UserAccess

CA

UserDevice

DVB-C +TV screen


of metadata


Rights

Aggregationinto

Channels orServices

AggregationInto

Packages

ContributionDistribution

DigiTVMHP

TV-Anytime

UserAccess

Free-To-air

UserDevicePVR +

TV screen


of metadata


Rights

Aggregationinto

Channels orServices

AggregationInto

Packages

Contribution DistributionTDC

UserAccess

DSL/FTTH

UserDevice

TV over IP +PC screen


of metadata


Rights

Aggregationinto

Channels orServices

AggregationInto

Packages

Contribution DistributionVIASAT

(OpenTV)

UserAccess

CA

UserDevice

DVB-S +TV screen


of metadata

Convergence: strategic responses (1)

32


COPECOPECreateCreateOnceOnce

PublishPublishEverywhereEverywhereProductionProductionStrategyStrategy

forforContentContent

andandMetadataMetadata

CROSSCROSSPLATFORMPLATFORMDELIVERYDELIVERY

StrategyStrategy

(Media(MediaConvergence)Convergence)

33



Rights

User

Web-site


Rights



of metadata


Rights

User

HandheldDevice


Rights

User

CD


of metadata


of metadata


of metadata

34


CROSSCROSSMEDIAMEDIA

ProductionProductionStrategyStrategy

forforContentContent

andandMetadataMetadata

CROSSCROSSMEDIAMEDIA

DeliveryDeliveryStrategyStrategy

35

Convergence and copyright

• Whether media focus on vertical integration or horisontal concentration having a long-term intellectual property strategy is vital

• Getting rights for content for cross-media means getting an early start on contracts

• Give yourself time


3. Youth - are traditional media including books in danger of extinction like the dinosaurs?

37

DR has a problem...

Youth and television

15-24 year olds have never watched much TV.Currently 20% of them watch less than 15 minutes a week TV(TV drama in Danish)

Source: Gallup TV-meter 2004

38

DR has a problem...

Youth and televisionYouth and radio

Radio is on the decline

There are many other radio-like options...

Source: DRWhole population 12-19 year-olds

Figures from 1998-2003

Average weekly listening in 2003:

21 hours 54 mins.

39

DR has a problem...

Youth and televisionYouth and radioYouth and other digital media

81% of all 8-12 year-olds Play PC games daily

52% play console games

The average kid spends nearly an hour a day playing electronic games

Source: Gallup (2002) for Børnerådet/Youth Council

40

DR has a problem...

Youth and televisionYouth and radioYouth and other digital mediaYouth and mobiles

Youth have a varied and voracious appetite for all things digital - but we know too little about it

The mobile is the most ubiquitous personal device - 96% of all 15-24 year olds have one

A typical user sends 20 SMS messages a day

Source: Gallup Telekom Index, 2005,Center for Ungdomsforskning, Århus

Translation:1 billion SMS for HKD 130/monthif you sign up for the free SMS service

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DR’s problem is legitimacy

Licence-fee funded Public Service broadcasting= Something for everyone

It’s a problem is DR has nothing to offer the youth

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But publishers have problems too

43

But publishers have problems tooYear 7-9 10-12 13-15 total

Yes, I read 2004 78% 94% 90% 88%

now and 1998 62% 93% 90% 80%

again 1993 64% 92% 91% 83%

I can’t read 2004 20% 0% 1% 6%

yet 1998 27% 1% 0% 11%

1993 19% 2% 0% 10%

No, I never 2004 2% 6% 9% 5%

read 1998 11% 5%% 11% 9%

myself 1993 7% 6% 8% 7%Source: Bille, Trine et al. Danskernes kultur- og fritidsaktivititer 2004 – med udviklingslinier tilbage til 1964 [the Danes’ cultural and leisure activities 2004 – with trends back to 1964]. Published by AFK for the Danish Ministry of Culture

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DR’s problem is legitimacy

Two hypotheses: A.If DR loses the young as viewers, listeners or users of public service then they are lost for good

B. Media consumption patterns are a reflection of phases in life. The young will return to the fold as they get older

As yet we do not know which of the two is right.

Dare we run the risk that it will be A?

45

DR’s problem is a global one

What Do we know about young people?

How Can we reach a better understanding of what makes them ”tick” as media users?

Isthere anything we can do as a result?

46

D¿gnrytme

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%0-

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1-2

2-3

3-4

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10-1

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Intensitet

dr.dk

DR1 TTV

RADIO

TV

Kilde: RedMeasure/TV-meter/Radioindex

Intensity Diurnal rythmn

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Quiz

Media Analog tv DTV FM DAB Internet Mobile

TV

Radio

Web

Distribution

Votes

Community

Legitimacy - a question of reach

Services

1. More and better offerings on ”old” media

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Quiz

Media Analog tv DTV FM DAB Internet Mobile

TV

Radio

Web

Distribution

Votes

Community

Legitimacy - a question of reach

Services

2. New offerings - media and services on the platforms the young use - to maintain reach

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Boogie TV

form. fascinationcontent. identificationmusic. 60-70%VTRlifestylefilm fashion friends games parties sport dating stars - but also current affairs etc.

competitionsguestsEvents - tie-ins to things around the country

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Boogie - video clips on TV/web

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adio

Boogie - radio on FM (P3)

Monday-Friday from 2-3 pm

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Boogie - digital radio on the Net 24/7

The original Internet playerIn 2002

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Boogie - www.dr.dk/boogie

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Boogie Teletext s. 505

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Boogie tv crawler - SMS

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Boogie TTV crawler

Our attempt to make ALLViewer contributions available

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SMS chat on TTV

No longer in use by Boogie

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Boogie club/community

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Boogie club/community

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SMS-greetings

Media Analog TV TTV FM radio Internet

boogie TV video clipsTV

P3 boogie net radioRadio

Web boogie site

Distribution

Boogie-list

TTV-crawler

TV-crawler

Community boogie community

Services

Boogie - what do we offer on our platforms?

Mobiles initially a mechanism for participationParticipation rates upto 30% for kids and teenagers

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Cross media format

Boogie is an integratedformat on the platformsYOU use

Synergies

Boogie is there for youwhen YOU want it:

What you want When you want it Where you want it

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Boogie 24/7 (Mon-Fri)

• Accessibility• Participation

Network with other members of Boogie community at www.dr.dk

Find info at www.dr.dk

Listen to Boogie on P3 (FM)

Check out Boogie Top 10 on TTV

Send a greeting - SMS

Watch Boggie on TV

Listen to Boogie radio (Web streaming)

6 am 12 noon 6 pm midnight

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The road ahead

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I believe too many of us editors and reporters

are out of touch with our readers. Too often, the question we ask is

‘Do we have the story?’ rather than

‘Does anyone want the story?’

As an industry, many of us have been remarkably,

unaccountably, complacent’

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Speech by Rupert Murdoch to the American Societyof Newspaper Editors. April 13, 2005.

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What is happening is, in short, a revolution in the way young people are accessing news.

They don’t want to rely on the morning paper for their up-to-date information.

They don’t want to rely on a god-like figure

from above to tell them what’s important.

And to carry the religion analogy a bit further, they certainly don’t want news presented as gospel.

Instead, they want their news on demand, when it works for them.

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The challenge of convergence

Content is King• It is not enough to have good content...

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Content is King• It is not enough to have good content...

Context is Queen

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Context is Queen• We need to understand user needs and the physical and social setting of media use

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SMS

Mobile audience segments

Source: Gallup Telecom Index 3 kvt 2004Base: Har personligt mobiltelefon

Activeusers

PassiveUsers

BasicPhone

AdvancedPhone

Intensive technologybuffs

Technologyignoramus

Basics

10%

40%22%

28%

= ?= ?

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Video for handhelds

GRPS

EDGE

UMTS

4G

DVB-T

DVB-H

T-DMB

Media-FLO

802.11

Mobisodes

72

Video for handhelds

GRPS

EDGE

UMTS

4G

DVB-T

DVB-H

T-DMB

Media-FLO

802.11

Sport highlights

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Video for handhelds

GRPS

EDGE

UMTS

4G

DVB-T

DVB-H

T-DMB

Media-FLO

802.11

...or just TV?

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Video for handhelds

PPV

Subscription

Free-to-air(licence)

Free-to-air(sponsored)

...or just TV?

BusinessModelsandPriceElasticity

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Content is King, Context is Queen

• Understanding people as consumers - especially the young- is central to survival in the long term

• Vertical integration is an option but horisontal concentation (cross media and cross promotion) is a way of hedging bets

• Multiple platforms require a good copyright strategy - start early!

Strategy

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Content and Metadata

• If content cannot be found, it does not exist! The importance of metadata

• Plan for a COPE infrastructure for producing:• Content for multiple platforms and

cross media• Metadata that can be transformed to

multiple platforms accurately, quickly and cheaply

Infrastructure

77

Thank you for listening!

Peter Olaf LoomsDR/Danish Broadcasting CorporationTV-Byen DK-2860 SoborgDENMARKUntil 4Q 2006 when we move toDR-Media Village

How is media consumption changing? The impact of convergence Peter Olaf Looms DR Ecom & Icomp...

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