Streaming Continues to Grow, But Physical Media Still Wins Out
As final touches are put on gift lists and preparations are made to wind down for the end of the year, an interesting set of studies shows that consumer habits are still split when it comes to streaming and ownership.
The consultancy Deloitte, which will premiere the results of its annual "State of the Media Democracy, Third Edition" report the first week of January at the Consumer Electronics Show (CES) in Las Vegas, released preliminary findings this week. Deloitte took a look at the usage habits of a group of consumers between 13 and 75 years of age, both in the United States and abroad, and found several key trends are solidifying.
Mobile devices are primary entertainment channels for a group Deloitte dubs the Millennials. Spanning the ages of 14-25, this group spend more time than other groups in a given week with all types of media, with the exception of, and at the expense of, television, even though television is still the overall preferred type of media for the aggregate of the 2,000+ consumers that Deloitte surveyed. This younger age group had no distinct primary medium, as the study revealed they found the Internet to be of equal preference to TV and movies.
While television advertising was considered, according to the study, the most impactful and influential advertising medium across all age groups, including Millennials, when it comes to online advertisements, pre-roll ads were considered more influential than overlay ads. We'll have to wait for the final survey results to be published on January 6, 2009, but it will be interesting to note whether Deloitte used the term "influential" to connote appealing or effective, as many viewers anecdotally prefer not to have an overlay ad pop up during their viewing, but may not mind an interstitial similar to traditional television advertisements.
Regardless, when it comes to streaming content, the number of respondents willing to pay for content—if also given the choice to view ads—dropped from 37 to 26 percent in the last year. As fewer are willing to pay for content in exchange for an ad-free environment, the trend of pre-roll and interstitials (and perhaps less obtrusive overlay ads) will continue to grow.
Continuing the trend of ad-driven content bearing a strong similarity to traditional broadcast advertisements, a majority of respondents expressed a desire to connect their TVs to the Internet. For Millennials, whose online viewing tends toward more user-generated content than professionally-produced content, the number interested in watching online content on a big screen was 70% compared to 58% of overall respondents.
Most interestingly, Deloitte and another research firm, Ipsos, also found that streaming and downloading are being split into two primary consumer camps that are based on usage scenarios. Note that both firms lump progressive downloading in with streaming, putting only download-to-own services like iTunes in the "downloading" category.
The traditional wisdom that downloads make more sense for long-form content appears to be unraveling, as 57% of Ipsos respondents have streamed video in the past 30 days, compared to 50% in the same timeframe at the end of 2007. Ipsos notes that 22% have downloaded video in the past 30 days, a decrease from the previous year.
It appears this trend for long-form content, however, may be due as much to economics as it is to a preference for streaming versus downloading. Ipsos notes that digital downloads cost the equivalent of their physical media counterparts, and that consumers are "seeking other alternatives rather than paying the current prices associated with a movie or TV show download."
In fact, if the choice comes down to download versus buying physical media, the physical wins out. Deloitte found that 67% of its respondents would use their purchasing dollars to buy a physical DVD, even as streaming usage increases. Ipsos went a bit further and reported that the differentiation is pricing: since purchases of movies and TV shows would make more sense as downloads than as streams, the explanation of the trend toward streaming is that subscription services offer a lower price per viewing if the viewer doesn't intend to purchase.
In consumers' minds and emerging habits, according to Ipsos, the way to drive digital downloads is to drop the price below that of physical media. Deloitte corroborated the findings somewhat, noting that only 15% of respondents would tend toward downloading versus physically purchasing a DVD.
Finally, lest you streaming is something that only the young males on your year-end list are interested in, Ipsos also notes streaming has reached a trend tipping point in a demographic that changed the face of general internet usage when it was reached a few years ago: Ipsos reported that 45% of female respondents had streamed content in a thirty-day window in late 2007, but that level has reached 54% in late 2008. Not only is this usage pattern for a majority of female respondents a record for the demographic, but it also puts female respondents almost at usage parity with the number of male respondents (54% versus 58% respectively). In addition, the number of adults aged 35-54 who’ve streamed video in the last 30 days has risen from 49% to 60% year-over-year, driven heavily by female user adoption.
"It appears the prevalence of streaming video online among younger males may be approaching a ceiling today," said Adam Wright, Director at Ipsos MediaCT, "whereas the other demographic groups are driving the audience growth here. The implication for those in the video entertainment industry is that online video—as a medium—appears to be tapping into later stage adopter segments that were perhaps reticent to embrace it even just a year ago."
Deloitte will release the final findings of its report during a January 6, 2009 "Super Session" at CES, moderated by Deloitte's Director of Product Innovation, Ed Moran. The session is titled "How Digitization and Changing Consumer Behaviors are Revising the Entertainment Industry’s Script" and is open to all CES attendees.