Presented by Kurt Scherf Vice President, Principal Analyst Parks Associates April 29, 2009...

Presented by

Kurt ScherfVice President, Principal AnalystParks AssociatesApril 29, 2009

Entertainment Trends Research

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

Research Overview

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

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.

Changes in Video Habits

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

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:

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)

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:

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%)



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%)



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.

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:

Video-on-Demand Use and Appeal of New Features

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

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


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

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)


20% of these respondents willing to pay $20 for the VoD movie

20% of these respondents willing to pay $20 for the VoD movie

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)


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




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)


Interest in BD-Live Features

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.

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)


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.

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


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.

Contact Information

[email protected]

www.parksassociates.com

Presented by Kurt Scherf Vice President, Principal Analyst Parks Associates April 29, 2009...

Documents

Transcript of Presented by Kurt Scherf Vice President, Principal Analyst Parks Associates April 29, 2009...