Brits ‘would pay £26 a month for online entertainment’

The 2009 Digital Entertainment Survey, an independent online survey and audit of digital entertainment activity in the UK, is released today by specialist media lawyers Wiggin.

The research was designed and analysed for Wiggin by entertainment and music research experts Entertainment Media Research Ltd., and in association with paidContent:UK.

The research surveyed 1,512 UK consumers aged 15-54 in May 2009 and comprises a comprehensive analysis of digital entertainment consumption patterns, trends, preferences and attitudes across all forms of entertainment activity. The full report is available upon request.

The six key findings from the report are:

1. If ISPs were forced to regulate access to entertainment content (currently free or extensively pirated content) the average consumer spend with ISPs would increase by 70% to £34 per month

2. Internet on the TV is about to reach a tipping point in mass-consumer technology

3. Social network users offer the prospect of becoming a major new affiliate sales channel driven by pirates 63% of whom are interested in making money by selling music (64% for movies) to their friends via their profile

4. Is the social network balloon deflating? Membership of all major social networks are significantly in decline (apart from Facebook and Twitter)

5. No revenue in on-demand programming - only downloads and streams of recently released movies in the cinema and on DVD can attract a mass market. The massive growth in usage of free catch-up services such as the iPlayer is believed to be a key factor

6. Letters from ISPs alone will not be a sufficient deterrent in the piracy battle - direct action from ISPs would be an effective deterrent.

Details from these six key points are listed below:

If access to currently free or pirated content is restricted by ISPs consumers are prepared to increase their ISP spend by 70% from an average of £20 per month to £34 per month

The survey investigated consumer response to the scenario that in future all internet-sourced content might only be available by way of monthly subscription to an ISP for different entertainment packages. As expected the basic package of email and web browsing at £8 per month was the most popular single item for 8 out of 10 consumers but the average number of additional packages chosen by consumers was six as set out below. This implies that consumers are prepared to spend on average £26 per month on digital entertainment content that is currently available for free or is extensively downloaded from unauthorised sites and hence is currently unmonetised.

Table showing top packages selected

ISP Package item         % of respondents
selecting item
Email & internet only (£8/mth)     82%
Watch any TV/Movies in HD (£3/mth)    48%
Unlimited TV on demand (£8/mth)       48%
Ability to upload pictures (£1/mth)   44%
Music streaming - Audio & Video (£2/mth)      43%

Access to online gaming network (£3/mth)         36%


The greatest preparedness to spend is amongst males 20-34 who say they are willing to spend £48 per month on average (compared to £22 currently), females 25-34 £39 per month, first adopters £53 per month and those regularly pirating entertainment content £56 per month.

Russell Hart, Chief Executive of Entertainment Media Research commented, "The research  reveals that by fundamentally changing the relationship between customer and ISP and offering low cost packages of entertainment rather than crude internet access it is possible to monetise content that is currently consumed for free or stolen. In doing so consumers can benefit from greater pricing choice and revenues can be grown for the benefit of ISPs and rights holders." 


75% of people want to watch internet content on their living room television screens

The survey reveals that demand for converging the two technologies and bringing content from the internet onto the living room TV is considered the most desirable entertainment activity of the moment. This underlines the need for faster broadband speed across the UK
 
Key facts from the survey supporting the finding:

o This is a mass market proposition that appeals to all demographics; even amongst the 45-54 year old age group 77% of males and 61% of females are interested

o 17% of people already claim to be doing it (28% of teenage males)

o 33% of First Adopters claim to be doing it and a further 48% would like to be able to do it

o The forthcoming wave of consumer technology will need to address the obstacle that  it is currently considered too difficult by 1 in 2 consumers to connect content on their PC with  their main TV (49% agree)

 
 
Alexander Ross, Music and Technology Partner at Wiggin, says, "The distinction between the sit back experience of scheduled broadcasting and the sit forward experience of on demand access is becoming ever more blurred, and consumers are driving the convergence, If the technology becomes mass market it will place broadcasters in direct competition with digital service providers  for audience share."
 
Russell Hart, Chief Executive of Entertainment Media Research commented, "Internet on the main television is set to become a mass market reality within a short period. The speed of uptake from early adopters to mass market will be determined largely by the retail pricing of the next wave of consumer technology, installation simplicity and the effectiveness of communication to consumers."


Is the social network balloon deflating? With the exception of Facebook, the major social network sites appear to be in decline.

The popularity of the major social networks (excluding Facebook) would appear to be in decline with the proportion of people with profiles down year on year on Myspace by 18% points, Bebo and Friends Reunited 11% points and MSN Groups 5% points. The one major growth spot is Twitter which has come from almost nowhere to attract membership from over 1 in 10 respondents to the survey.

A key reason may be the finding that 40% of respondents with a social network profile agree they prefer one social network site for everything. This might serve to explain the resilience of Facebook which best fits with the reasons consumers use social network sites, namely keeping up to date with friends' news (56%), interacting with personal friends (54%), looking at friends' photos (51%) and uploading photos to share with friends (37%)

% with profile on site       2008     2009     % pts diff
Facebook       55%      54%      -1%
YouTube       32%      27%      -5%
Friends Reunited      36%      25%      -11%
Myspace      39%      21%      -18%
Bebo         24%      13%      -11%
Yahoo! Groups        14%      11%      -3%
Twitter       N/A      11%      N/A
MSN Groups    15%      10%      -5%

To further add to the strength of Facebook, just under half (46%) of Facebook users say they check their profile at least once a day, and a further 17% check it whenever they receive a notification.

Alexander Ross, Music and Technology Partner at Wiggin, says "The social network market is settling down, and there appears to be a distinct gravitational effect towards a single network, and right now that network is Facebook."

Russell Hart, Chief Executive of Entertainment Media Research commented, "As the network power of Facebook increases so it becomes ideally positioned to foster and benefit from massive consumer interest in selling entertainment content to friends for a financial reward"

Social network members can become a major affiliate platform for the sale of digital entertainment content

39% of those with a social network profile say they would be happy to become sellers and distributors of music using their social network profiles as a platform to reach their friends. A slightly smaller proportion (36%) would be happy to sell movie downloads to their friends.

Selling to friends is not considered a problem with 52% of social network users stating they are comfortable to do so for a reward

o Preparedness is particularly high amongst 15-19 year old males (74%) and teenage females (59%)  Only males over 45 and females over 35 show particular apprehension in selling content to their friends

o The motivations are both altruistic and self-interested. 72% of those interested say this is a good way to expose great music and movies to a new audience and 68% say they would only do this if appropriately rewarded. Indeed, 48% say they can see this as a way of making some serious money

o Straightforward cash reward is the most popular incentive and the majority (54%) would prefer to keep this exclusively for themselves compared to those who would share the reward with their friends (34%)

o NB, regular pirates are highly enthusiastic of the affiliate sales model; 63% say they would sell music or movies to friends. Interestingly, there is an equal divide on whether they would keep the reward for themselves or share it with their friends (35% for both).

        Interested in selling music      Interested in selling movies
Total        39%      36%
M15-19        69%      62%
M20-24        49%      46%
M25-34        44%      46%
M35-44        44%      42%
M45-54        28%      24%
F15-19        59%      48%
F20-24        39%      36%
F25-34        41%      38%
F35-44        22%      22%
F45-54        18%      15%
Regular pirates       63%      64%


  
Russell Hart, Chief Executive of Entertainment Media Research commented, "With 52% of people who use social networks comfortable with the idea of using their profile to sell digital entertainment to their friends the combination of peer to peer recommendation and financial self-interest could lead to the emergence of a valuable new affiliate sales channel"
 
Alexander Ross, Music and Technology Partner at Wiggin, says, "Before now viral sales technology has come and gone with no real interest from media companies, but these findings show that there is real consumer appetite if the right form of service can be found."
 

Apart from New Movies there's virtually no revenue in on-demand programming

The survey reveals consumer demand for on-demand programming delivered online is potentially huge. The clear content leaders are New Movies recently released in the cinema (80% interested and 46% definitely interested) followed by Top Movies just released on DVD (79% and 43%) and Recent movies not yet released on DVD ( 78% and 42%). Comedy is also popular with 76% interest and TV drama 73%.

However, this strong demand does not convert into a willingness to pay. When confronted with three options - a flat rate subscription fee, PPV and free ad-supported models - the free model wins comprehensively. For brand new movies, where propensity to pay is highest, 58% would still rather watch with ads than pay for the content.

The only content for which there is seemingly a mass market is movies. The top attraction is New movies just released in cinema which would attract 20% of all people to pay to watch on demand, Recently released movies (14%) and Top movies just released on DVD 12%. Thereafter there is no content that attracts a fee-paying market of more than 5% which implies that the business model for video on demand beyond the film industry will have to compete for advertising revenues.

Content   % Interested in content % Definitely consider paying
(all respondents)
New movies just released in cinemas         80%      20%
Top movies only just released on DVD 79%      12%
Recent movies not yet out on DVD      78%      14%

TV comedy programmes     76%      5%
TV drama programmes    73%      4%

The survey reveals a massive increase in the usage of free video on demand services from 2008 to 2009. Usage of the BBC iPlayer (regularly / occasional) is up from 13% to 46%; 4OD 16% to 28%; ITV Player 12% to 25% and Sky Anytime from 11% to 14%.  With growth in consumption of this explosive nature it is no wonder that consumers are disinterested in paying for content.

On-demand service        Total 2008       Total 2009
BBC iPlayer    13%      46%
4OD   16%      28%
ITV Player    12%      25%
Virgin Media 20%      16%
Sky Anytime   11%      14%
BT Vision     4%       8%

 
Alexander Ross, Music and Technology Partner at Wiggin, says, "What these findings demonstrate is that the real value in content lies not so much in what it is, as when and how it's delivered. Consumers clearly attach a premium to watching films at the moment of release, and no doubt that sense of value applies also to other media."
 
  

Letters from ISPs alone will not be a sufficient deterrent in the piracy battle - direct action from ISPs would be an effective deterrent.

The 2008 Digital Entertainment Survey asked respondents who admitted to unlawful filesharing whether they would stop if they received a communication from their ISP. In 2008 70% of respondents agreed that a communication would be effective to stop them filesharing.   The figure in 2009 is down to only 33%. 

This drop appears to be explained by the fact that respondents this year were asked to consider the possibility of a communication containing no specific threat. Last year's figure of 70% can only be explained by an assumption by the respondents that the communication was a prelude to further action. It is apparent that much more targeted action is required if filesharers are to be persuaded to stop.  The 2009 Digital Entertainment Survey suggests that if a graduated response model is introduced (similar to the French model) where the ultimate sanction is the withdrawal of internet access, this would be effective in 80% of cases.
 
This finding comes at a crucial time as Government prepares to release its final Digital Britain report. Government is considering whether to require ISPs to take targeted action to stop unlawful filesharing, or whether an obligation to send letters will be sufficient. Our survey finding suggests that targeted action by ISPs will be necessary if Government is to achieve its target of reducing unlawful filesharing by 70-80% by July 2011.
 
Simon Baggs, Litigation Partner at Wiggin LLP says "The findings of this report show that letter sending alone will not be enough, and that much more needs to be done if there is to be a real reduction in unlawful filesharing. That reduction is crucial if the business models identified in this report are to be allowed to develop".

The 2009 Digital Entertainment Survey was commissioned by specialist media lawyers Wiggin and was carried out online in May 2009. The research was designed and reported for Wiggin by entertainment and music research experts Entertainment Media Research Ltd. The sample comprised over 1,500 consumers aged 15-54, representative of UK national demographics.

 
Sources:

www.wiggin.co.uk

www.entertainmentmediaresearch.com

 
www.paidcontent.co.uk

**************************************

Follow Netimperative on Twitter