Strategy Analytics’Digital Consumer Practice
An Overview of the US Consumer Electronics Market: Now Getting
Connected
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SuccessOffices in US, UK, France, Germany, India, China, South Korea and Japan
Global client list including technology leaders, service providers, investment bankers, VCs and government agencies
Expert Analyst Teams focused on:
Wireless, Connected Home and In‐Vehicle
Technologies: Components, Devices, Applications, Networks
80 Employees
More than 40 years consulting and strategic advisory
experience in the technology and communications
industries
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ConsumerBehavior
Media & Entertain‐ment
Service Providers
ConsumerElectronics
•How much traffic will OTT video bring onto the
networks?
•Is pay TV doomed or will 3D TV save the day?
Service Providers
•How is the television industry changing?
•What industry challenges is this new TV
paradigm creating?
Media & Entertainment
The Digital Consumer Practice Delivers a 360° Research Perspective – A Holistic View of the Digital Ecosystem
•How many connected TV devices will be sold in the
coming years?
•What are the CE vendors strategies for OTT video?
Consumer Electronics
•What is driving early adopters to seek out
Connect TV experiences?
•How are they changing their behavior around what TV they watch?
Consumer Behavior
DIGITALECOSYSTEM
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Current Macro Trends in CE
DigitalAnalogue Connected
• Consumer Trends– Connectivity
– Mobility
– Personalization
• Device Trends– Rise in software and services (in hardware)
– Evolving command and control
• Technology Trends– Ubiquitous Wi‐Fi
– Embedded 3G, From “why?” to “Why not?”
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OEMs Need to Add‐Value to Offset Falling Prices.US Consumer Electronics Market: Retail Sales(US$ Billions)
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One of the Key Drivers for Connected CE Devices is Broadband Penetration: 100 million homes by 2015
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US Digital TV homes are another key driver:Steady low‐single digit growth, mid 80% HH penetration
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US Digital TV Homes (M)s
Telco IPTV
DigitalTerrestrial
DigitalCable
DigitalSatellite
• Driven by analog switch‐off, US digital TV homes grow to over 100 M
• Telco TV growing in importance
• DTT and DTH will increasingly deploy hybrid solutions using the broadband channel for VOD
• All platforms will increasingly offer web video “TV Anywhere”options for accessing content while outside the home
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U.S. Market Moves Inexorably to Connected Devices
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A US Installed Base of >1 billion IP-Network-Enabled Consumer Devices by End 2014Connected Convergent
Devices
Connected TV Devices
Connected Gaming Devices
Connected Audio Devices
Connected Ad-Hoc Devices
Connected Imaging DevicesSource: Strategy Analytics Connected
Home Devices service
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Three Big Waves Lifting the TV Industry
2. 3D Television1. High Definition 3. Hybrid (OTT) TV
1. HD is now mass market in most developed regions. Especially the US.
2. 3D TV Ready sets have appeared in 2010 but content is still missing. The bubble is bursting already
3. In Retail, Cable & Satellite, Set‐Tops are appearing to blend broadcast services with Web services.High interest in this area
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DVD Players
Blu‐ray
GamesConsolesFPTV
HDTV
HDTV – Driving Penetration Growth in Video: US Household Penetration
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Will US Consumers adopt 3D?Some Barriers to Overcome First
Source: Strategy Analytics Connected Home Devices Service
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Consumer Devices bring 3D to the mass market and provide 3DTV set opportunities. Gaming 1st.
Source: Strategy Analytics Connected Home Devices Service
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Profile of the 3DTV Buyer
• Younger, more affluent.
• Avid consumers of TV shows and movies.
• 43% of these individuals have seen a 3D movie in the theater in the last 12 months.
• 57% of those planning to buy within the next 3 years consider themselves early adopters of technology.
Source: CEA
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Get Ready for Connected TV!• 140 million connected TV
devices already in use in the US at end 2010– Games consoles– Blu‐ray– Media players and STBs
• Connected TVs add momentum from 2010 onwards– Almost 400 million connected TV
devices installed by 2014
CONNECTED VIDEO DEVICES, US INSTALLED BASE (M)
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Younger age groups are rapidly turning to the Internet for watching TV content
66%76%
47%
59%
8%
33%
2008 2010
Ever Watched At least once a month At least once a week
Trend in watching TV via the Internet among US 15‐24 year olds
SOURCE: Strategy Analytics’ 2008 and 2010 Digital Media & TV Survey
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What are youngsters watching online?
34%
40%
44%
47%
49%
60%
65%
70%Catch‐Up TV Episodes
Older TV Episodes
Movies / Feature Films
Entertainment Shows
News / Current Events
Factual / Documentary
Sports
Upcoming TV Shows
US 15‐24 year olds Watching Online Video Every Month
SOURCE: Strategy Analytics’ 2010 Digital Media & TV Survey, N=2,000, n=324
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Keeping Things in Perspective: TV is PopularLots of Potential for LCD and Plasma TVs
The Average American Spends 20% of Their Day Watching TV
020406080
100120140160180
TV DVR Netflix Hulu YouTube
Hou
rs per M
onth
Source: Neilsen & Strategy Analytics Connected Home Devices Service
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At ~3 TVs per US Household, Still plenty of room for growth
US FPTV Unit Sales (M)s
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Plasma
LCD
US Installed Base of FPTV
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2014
Source: Strategy Analytics Connected Home Devices Service
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Blu‐ray Still provides OEMs and Retailers with opportunities to drive new sales growth
US Blu‐ray Sales ExpandingUnit Sales in Millions
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35
2008 2009 2010 2011 2012 2013 2014
Blu‐ray
DVD
Source: Strategy Analytics Connected Home Devices Service
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It’s clear to see why OEM and retailers want US consumers to upgrade to BD.
US Blu‐ray increasing Share of Retail Market Value
56%33% 24% 18% 13% 11% 11%
44%67% 76% 82% 87% 89% 89%
2008 2009 2010 2011 2012 2013 2014
Blu‐ray
DVD
Source: Strategy Analytics Connected Home Devices Service
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Get Ready for Connected Convergent Devices: Tablets a Disruptive Force
•Compelling, “Connected” experiences driving evolution
• Consumers will think hard about usage, some products feel immediate impact, others not so much, yet.
General Computing Dedicated / Optimized Multimedia
Apple iPad
HP Touchpad
Lenovo ThinkPad X120e
Sony VAIO E Series Notebook
Amazon Kindle 3G
Barnes & Noble Nook Colour
Asus Eee Pad
RIM Playbook
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Tablets: Universal appeal, at the right price‐point.Significant growth forecast.
• US leads the World in Tablet consumption
• Innovative and compelling user experience, particularly for browsing and media consumption.
• Plenty of room for growth in verticals, enterprise, education and connected home.
Source: Strategy Analytics Tablet & Touchscreen Strategies (TTS) service
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Apple’s iPad Tablets challenged by Google’s Android from H2 2011
Source: Strategy Analytics Tablet & Touchscreen Strategies (TTS) service
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US: 2011 Conclusions
• US Retail Sales of technology products have clearly rebounded
• Sales revenue reaches a record $140 billion this year
• Innovation Inspires;– Connected TV with rich content from Web as well as traditional Pay TV
– 3D OEMs trying to overcome consumer dis‐interest
– Tablets become the 2nd TV screen
• Other highlights:– LED TVs, cooler, thinner, Internet and App ready
– Motion Gaming; Kinect the fastest selling CE product of all time.
– Wi‐Fi enabled devices replacing the need for wires
– 3G devices spreading beyond the handset into multiple CE Devices
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Thank YouQ&A
Peter King
Director: Digital Consumer Practice
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