Harrison Group: "Devices, Consumption and the Digital Landscape"

Dr Jim Taylor

Vice Chairman

Harrison Group

CONFIDENTIAL, PROPRIETARY & TRADE SECRET INFORMATION

This document contains confidential, proprietary and trade secret information of Harrison Group, A YouGov

company and its subsidiaries and affiliates, and must not be disclosed whole or in part to any third parties

without prior written consent of Harrison Group, A YouGov company.

Devices, Consumption

and the Digital Landscape 2012

1

• Consumer: 1,890 U.S. Consumers

– 1,042 tablet owners; 1,114 Smart Phone owners

– Mean age 41; Median age 40

• The survey was fielded to produce a census-representative sample of U.S.

consumers, ages 18+.

• Survey oversampled tablet owners for sake of in-depth analysis; all data was weighted

to bring device ownership into U.S. population representative proportions

• Business: 1,252 U.S. Businesspeople

– Looks at tablet and other device use ―at work‖ — enterprise, SMB, and SOHO,

across industries

– 519 tablet owners/users

– 322 IT leadership and staff

– 620 people in the content creation, content distribution and publishing industries

Two surveys: Consumer and Business

2

Users are efficient in the allocation of

task to the most responsive

device

Smart-phones

-connections, co

mmunication and

consumption

Tablets

- content consumption

eReaders

- appreciation of reading

PC/Mac

- personal and work content creation and

storage

- productivity

It’s A Multi-Device World

3

75%

74%

70%

49%

27%

25%

4%

9%

12%

16%

22%

13%

21%

17%

18%

35%

51%

62%

Owners

Plan to acquire (next 12 months)

No interest in acquiring

Desktop

Computer

Laptop

Computer

Flat panel TV

Smartphone

Tablet Device

eReader

2012 Demand Outline

Device Ownership and Intent to Acquire

4

42%

20%

4%

2010 2012

―Digital Elite‖(Own a tablet,

smartphone& PC)

• Includes 73% of all tablet

owners

• 40% of smartphone owners

• 39% of eReader owners

(meaning they own 4 devices)

The Rise of the Digital Elite

2012 Affluent

Market

5

Cellular/wireless

phone/data service for

smartphone

Wireless data plan for

tablet device

Broadband Internet

Paid streaming video

(e.g., Hulu Plus, Netflix)

Cable TV (via cable

company)

Cellular/wireless phone for

basic cell phone

Satellite TV service

DVD/Blu-ray discs by mail

service

Home phone

Cable TV through

television company6%

6%

7%

7%

7%

8%

10%

11%

12%

15%

65%

74%

67%

67%

74%

69%

66%

79%

67%

76%

30%

20%

26%

26%

19%

23%

24%

10%

21%

9%

Expect to

spend moreSame

Expect to

spend lessCurrently

Use

Don’t Use, Plan

to Next 12 mos.

54% 12%

16% 15%

83% 4%

31% 12%

49% 4%

62% 4%

30% 6%

28% 10%

62% 2%

18% 5%

Price Pressure at Home

6

• Use of tablet at work lags well behind desktops, laptops, and smartphones

Desktop

Computer

Laptop Smartphone Multimedia

HH Device

Tablet

Device

Dedicated

eReader

Personal vs. Work Use

6% 4% 4% 7% 6% 7%

32% 38% 41%

15%24%

11%

62% 58% 55%

78%71%

82%

Personal Use Only

Both Work and

Personal Use

Only Use

This for Work

38%42% 45%

22%30%

18%

It’s Personal and Sometimes Work

7

56%Of consumers read digital

magazines, newspapers

and/or books

79%

Among

Tablet

Owners

30%

39%

29%

44%

53%

57%

% Read digital magazines

% Read digital newspapers

% read digital books

Total

Tablet Owners

The Reading Revolution Continues

8

“It seems

inevitable that all

forms of publications

will eventually be produced

almost exclusively in a

digital format.”

83%(Up from 69% in 2010)

80%

69%

59%

59%

85%

83%

64%

49%

“If I pay for a print newspaper or

magazine, I should be able to read it

digitally for free”

“It seems inevitable that all forms of

publications will eventually be produced

almost exclusively in a digital format”

“If I could select my own television

content and have it streamed to a digital

device for viewing either on the device

or on my home TV, I would give up my

cable or satellite subscription”

“When travelling, I typically bring

several different magazines

with me to read”

2011

2010

% Agree Strongly/Somewhat

The Growing Ubiquity of Digital

9

14%

22%

24%

17%

9%

20%

10%

17%

20%

18%

11%

7%

14%

—

15%

15%

17%

18%

26%

22%

37%

15%

17%

17%

24%

29%

35%

—

Flat-panel HD TV

Multimedia Handheld Device

Desktop Computer

Laptop/Netbook

Smartphone

Dedicated eReader

Tablet

Tablet non-owners Tablet owners

Will use device MORE: Will use device LESS:

Consumption Continues to Grow

10

66%

64%

63%

62%

60%

58%

58%

58%

57%

57%

54%

52%

52%

46%

43%

35%

23%

36%

44%

24%

25%

9%

24%

3%

21%

6%

8%

15%

Publishers

Consumers

The reading experience isn't as enriching as holding the actual

paper publication in their hand

They are emotionally attached to the printed word

They don't want to have to pay for this kind of content

They don't want to have to sign up and pay for another

wireless service

It's just isn't their style

They don't need another portable electronic device in their

lives

Reading electronically strains their eyes

They don't have devices that provide a good digital reading

experience

It's not something they have seriously considered yet

They are reluctant to adopt any more technology

They say reading would be more expensive when you factor

in the cost of the device

They don't trust digital devices to store all their files

They are not aware of good ways to do this yet

They can't read digital publications in as many places as they

could read printed publications

Consumers and Publishers Do Not Agree;

The Case For Reading

11

2010

2012

Plan to acquire in

next 12 months(22%)

Asymptotic over next 2 years

5%

27%

50%

60%

Survey Data Adoption

Estimate Based

on Intent

Tablet Ownership Curve

12

Device Ownership and Intent to Acquire

75% 74% 70%

50% 49%

27% 25%

4% 9% 12%

11% 16%

22%13%

21% 17% 18%

39% 35%51%

62%

Desktop Computer

Laptop Computer

Flat panel TV DVR Smartphone Tablet Device eReader

Owners Plan to acquire (next 12 months) No interest in acquiring

Nearly half of all consumers will likely

own a tablet by 2013

13

56% / 42%

40% / 49%

50% / 33%

Current Tablet Owner

19%

7%

12%

41%

40%

Total Millennials

Trailing Millennials

Leading Millennials

Xers

Boomers / Matures

Current Tablet Owners / FutureOwners (non owners who plan to purchase in the next 12 months)

FutureTablet Owner

23%

12%

11%

38%

39%

Where Will Likely Purchase

(% Brick & Mortar / Online)

Generations and Tablets

14

Predicting Future Media and Technology Trends:

Things I believe will happen within two years…Total

Consumers

Publishers/

Marketers Gap:

More newspapers will be read digitally than are read in

traditional printed paper form63% 50% -13

More magazines will be read digitally than are read in

traditional printed paper form51% 43% - 8

More books will be read digitally than are read in traditional

printed paper form49% 35% -14

Digital devices with tablet technology will be an integral part of the

in-school learning experience for children48% 51% +3

Most children will learn to read on a digital device 44% 38% - 6

Most well-known authors will publish their work through a direct

channel to consumers44% 27% -17

People will be charged for much of the information they can

now get for free on the Internet42% 32% -10

Most television programs will be transmitted to

households for private viewing using a digital tablet device36% 31% - 5

Children will exclusively use digital textbooks 27% 47% +20

Where Are We Going Next?

15

18%Regularly look at

advertising while

using their digital

device

Yet consumers

remain

attitudinally

positive toward

ads if delivered

in an engaging

context

54%

39%

34%

59%

47%

44%

58%

42%

38%

I’d love to be able to

purchase things directly

from a digital magazine

I’d be willing to provide

more personal

information if ads could

be targeted to my

needs/interests

I’ve noticed

brands/products used in

a show or movie that

increased my interest in

the product

Total

Tablet

Smartphone

Total

Tablet

Smartphone

Total

Tablet

Smartphone

OUCH; Adverting in Context

16

Advertising via

Dedicated Apps

Publishers 26%

Marketers 34%

Advertising via

Web Browsers

Publishers 17%

Marketers 16%

OR

Both are Equal

or

Not Sure

Publishers 57%

Marketers 50%

Which is more effective…?

Advertising Effectiveness:

Publishers vs. Marketers

17

Dynamic

Advertising

Publishers 52%

Marketers 56%

Static

Advertising

Publishers 11%

Marketers 9%

OR

Both are Equal

or

Not Sure

Publishers 37%

Marketers 35%



Advertisers vs. Marketers

18

Ads Customized to

Part-Audience

Publishers 40%

Marketers 46%

Ads Same for

All Consumers

Publishers 60%

Marketers 54%

OR



Publishers vs. Marketers

19

As more and more content

becomes available on digital

platforms, potential growth of

those devices will continue to

grow as well

Publishers

82%Engaged in

Digital

Publishing

Marketers

63%Engaged in

Digital

Publishing

• 24% early stages

• 26% fully engaged

• 32% have successfully

launched digital initiatives



• 15% have successfully

launched digital initiatives

Publishers

18%Not Engaged in

Digital

Publishing

Marketers

37%Not Engaged in

Digital

Publishing





Digital Engagement

20

Among total U.S. consumers Total


%

Leading Millennials

%Xers

%Boomers

%Matures

%

I have paid TV service (cable, satellite, fiber

optic, etc.) and have no plans to cancel or

change my paid TV service within the next

12 months

66 51 51 65 75 79


optic, etc.) and am considering changing to

another paid TV service provider within the

next 12 months (NOT cancelling altogether)

12 11 15 13 12 10


optic, etc.) and am considering canceling

my service within the next 12 months (I am

considering cancelling my service altogether)

4 4 4 5 2 3

I have canceled my paid service (cable,

satellite, fiber optic, etc.) in the last 12

months ( I no longer have any paid TV

service at my home)

2 3 3 3 1 –

I do not have paid TV service (cable,

satellite, fiber optic, etc.) and have not had

paid TV service within the last 12 months15 31 27 14 9 7

Q. Which of the following statements best describes you/your household with regard

to paid TV service (cable, satellite, fiber optic, etc. — service other than over the air

broadcast services)?

Loyalty to paid TV services

21

Among U.S. consumers who are

considering changing or cancelling

paid TV service, have cancelled in the

last 12 months, or had no service in

the last 12 months Total


%

Leading Millennials

%Xers

%Boomers

%Matures

%

Although I can afford paid TV service, I am

not satisfied with the value and pricing of

paid TV services

41 13 33 46 53 *

I am not satisfied with the programming

availability from paid TV services14 18 6 14 14 *

I am not satisfied with the user experience

and user interfaces that come with paid

TV services

4 4 5 3 5 *

I am not satisfied with the customer service

of paid TV services4 5 6 4 2 *

I am able to get TV content I want or need

through Internet/Streaming sources19 27 32 16 10 *

I am not presently interested in

TV content19 32 18 17 16 *

Q. Which of the following statements best describes your reasons for changing and/or

canceling and/or not having paid TV service?

* Base too small to analyze

Reasons for changing or cancelling –

By generation

22

Q. Which of the following statements best describes your reasons for changing

and/or canceling and/or not having paid TV service?

"I have paid TV service (cable, satellite, fiber optic, etc.) and am considering

canceling my service within the next 12 months"

Among U.S. consumers who have paid TV service and am

considering cancelingmy service within the next 12 months

Total - 2012Multi-

Device Media

Consumption Pattern Survey %

TotalMillennials

%Xers

%Boomers

%Matures

%

Although I can afford paid TV service, I am not satisfied

with the value and pricing of paid TV services 48 * * * *

I am not satisfied with the programming availability

from paid TV services 21 * * * *

I am not satisfied with the user experience and user

interfaces that come with paid TV services 5 * * * *

I am not satisfied with the customer service of paid

TV services 4 * * * *

I am able to get TV content I want or need through

Internet / Streaming sources 15 * * * *

I am not presently interested in TV content 8 * * * ** Base too small to

analyze

Reasons for Considering Canceling

23

Q. Which of the following statements best describes your reasons for changing

and/or canceling and/or not having paid TV service?

"I have canceled my paid service (cable, satellite, fiber optic, etc.) in the last 12

months ( I no longer have any paid TV service at my home)"

Among U.S. consumers who have canceledmy paid service

in the last 12 months ( I no longer have any paid TV service

at my home)

Total - 2012Multi-Device

Media Consumption

Pattern Survey %

TotalMillennials

%Xers

%Boomers

%Matures

%

Although I can afford paid TV service, I am not satisfied

with the value and pricing of paid TV services 37 * * * *

I am not satisfied with the programming availability

from paid TV services 13 * * * *

I am not satisfied with the user experience and user

interfaces that come with paid TV services - * * * *

I am not satisfied with the customer service of paid

TV services 9 * * * *

I am able to get TV content I want or need through

Internet / Streaming sources 35 * * * *

I am not presently interested in TV content 6 * * * *

* Base too small to

analyze

Reasons for Canceling

24

• The vast majority of consumers view the complete transition to digital formats as inevitable

• Attitudes, expectations and behavior are continuing to shift

80%

69%

59%

59%

85%

83%

64%

49%

“If I pay for a print newspaper or

magazine, I should be able to read it

digitally for free”

“It seems inevitable that all forms of

publications will eventually be

produced almost exclusively in a

digital format”

“If I could select my own television

content and have it streamed to a

digital device for viewing either on the

device or on my home TV, I would

give up my cable or satellite

subscription”

“When travelling, I typically bring

several different magazines

with me to read”

% Agree Strongly/SomewhatIn just 2 years, 14%

more respondents

believe that all

publications will

eventually be

produced almost

exclusively in a digital

format

2012

2010

Key

Consumers habits and attitudes towards

digital content are changing rapidly

25

“Digital Elite”

• 73% of all tablet owners

• 40% of smartphone owners

• 39% of eReader owners

(meaning they own 4 devices)

Smart phone

Laptop

Tablet

20%

“Digital Elite”

Smart

phone

Laptop

Tablet

Total Owners

74%

49%

27%

The “Digital Elite” (owners of a laptop, smartphone and

tablet) has grown from 4% to 20% in the last 2 years

26

•It’s a Five Screen World and Most People Want Them All

•It’s About Information Management… Personal and Business

•The Industry Haven’t Caught on to How Digital Revolutionizes Information

Seeking, Reading and Multi-tasking

•Advertising Works In Context

•People Engage All Functions

•The Revolution Is Not About Technology; It’s About Cosmopolitanism

•Demand Will Continue To Escalate Through 2012 Without Regard to the

Economy

•Disenchantment With Signal Cost Is Building

So What Have We Learned

27

•Relational Applications

•Multi-Device Digital Casting

•Displacement of TV

•Proprietary Networks

•Suite Sales

•Application/Utility Agencies

What Might the Future Hold?

28

Order Today!

www.digitalrevolutionresearch.com

29

For Information About the Digital ReportPlease Contact:

www.digitalrevolutionresearch.com

or

Christina [email protected]

www.HarrisonGroupInc.com

Dr Jim Taylor

Vice Chairman

Harrison Group

http://www.digitalrevolutionresearch.com/