Olswang Consumer Convergence Survey

November 28, 2007

The Olswang Convergence Consumer Survey 2007 is an online survey of 1,793 GB consumers, aged 13 to 55. What follows is an edited version of its Executive Summary and a link to the full survey appears below. Currently in its third year, the annual survey was conducted for Olswang by international polling agency YouGov Plc, between 19 and 29 October 2007. The figures for the adult respondents (1,539) have been weighted and are representative of the Online GB population, although responses from those under the age of 18 (254) have not been weighted.


The survey findings revealed the following trends:

As consumers become increasingly connected using a range of connected devices at home and on the move, they are demanding more rich media content but are still reluctant to pay. To secure free content consumers are willing to tolerate online advertisements which they would normally go out of their way to avoid. Some are even willing to deliberately break the law to secure free content, while others simply don’t understand the law.


Convergence is taking hold of UK households as a large number of homes have networks installed and the computer is becoming a true entertainment device, with, every month, over 30% of respondents streaming or downloading movie and TV content and even greater numbers watching the range of free content that is already available on websites such as YouTube (63%) as well as streaming music (42%) and accessing podcasts (33%).


Do you use your desktop or laptop computer at home for any of the following activities (excluding work-related activities) at least ONCE A MONTH? Base: All with desktop computer/laptop at home connected to the Internet


99% Generally browsing the internet


85% Accessing news and sport websites


64% Accessing social networking sites


63% Watching free User Generated Content on YouTube or similar sites


42% Streaming Music


33% Accessing Podcasts


32% Steaming or downloading movie and TV content


28% Playing games online versus other people


Selected responses only – for a copy of the full chart see survey report Figure 14


However, people are unwilling to pay for audiovisual content, with free content being consumed by approximately three times as many people as paid content and those not yet consuming also being around three times more interested in free content.


The survey provides strong endorsement for those looking to make advertising, rather than payment, the business model for online content. While 84% of respondents said they found online adverts intrusive and 75% claim to actively try to avoid pop up adverts, consumers are prepared to suppress this antipathy in their quest for free content, with 46% of respondents willing to put up with adverts if this means they can get TV or movies for free.


Computers as entertainment devices and the rise of the streaming device


Connecting several devices to one network is popular among consumers of all ages, with 51% saying it is easy or very easy to transfer content between devices on the network. Consumers are now connecting a range of devices to their home networks, including computers and the next generation of gaming consoles (Xbox 360, PS3, Wii), which are also being used to view photos and to play DVD’s and music as well as games.


Which if any of the following do you share between devices on your home network? Base: All who have a network


48% Photos


42% Music


25% I only use the network to enable more than one device at the same time


22% Videos


16% Games


Selected responses – for a copy of the full chart see survey report Figure 10


Although the lion’s share of current regular viewing is free content from user generated content sites and TV clips and movie trailers, each month nearly one in seven (14%) respondents download or stream free TV programmes to keep each month. Even more consumers (18%) download or stream free programmes for a limited time (e.g. from time-limited “catch-up” TV services) each month, although movies are more likely to be acquired permanently (12%) than temporarily (9%). 12% of respondents who use the computer to obtain audiovisual entertainment already play this back through the main television screen, not a computer monitor, by plugging the PC into the television screen (9%) or through a dedicated streaming device (3%).


By contrast, those not yet viewing content on a computer still perceive it to be incompatible with traditional “lean-back” TV entertainment. They are happy watching TV the way it is, or see the computer as alien to watching content in the environment of a comfortable chair/bed, with family and friends and on a big screen. The survey explores the potential of the technology which is hailed as bridging this gap, so called streaming devices, the best known of which is the Apple TV, a dedicated streaming device. However, streaming functionality is also built into a range of other popular devices, notably the Xbox 360.


„hƒnWhen offered the prospect of a streaming device to take content from their computer onto the main TV set, 5% of the sample claimed already to have such a device, and of the remainder, just under half (46%) stated that they were interested in such a device (at the right price). 78% of those interested believed that this might then lead to them streaming or downloading more movies or TV content to their computers, suggesting that if the market for these products can be stimulated, this may well set the demand for online content alight.


Would you be interested in buying such a streaming device (at a suitable price) in order to use your TV set to watch movies or TV programmes stored on your desktop or laptop computer at home? Base: All that do not have a streaming device


15% Yes, and if I had such a device, I would be A LOT more inclined to stream or download movies and TV on my computer


21% Yes, and if I had such a device, I would be A LITTLE more inclined to stream or download movies and TV on my computer


10% Yes, and if I had such a device, it wouldn’t influence my decision to stream or download movies and TV on my computer


Selected responses – for a copy of the full chart see survey report Figure 24


Can pay, won’t pay?


The pattern from last year’s survey regarding consumer demand for free content continues in this year’s results, as respondents become even more determined not to pay and frustrated at the lack of free content. This year, only 12% of respondents state that they either already pay or are willing to pay for downloaded or streamed movies or TV shows, with 49% only prepared to consume free content and 30% not interested at all. Interestingly, among the respondents who admit to illegal downloading of film and TV content, the survey reveals a notable divergence. Among such illegal downloaders, a greater proportion are already paying or willing to pay for content (20% as against the 12% in the overall sample). These are presumed to include “content junkies” who just want whatever content they can lay their hands on.


Even those few consumers who are already spending or are willing to spend money on online content will not bring new money to the overall entertainment market as, the survey suggests, spending on other forms of entertainment will suffer. When asked what will happen to their other entertainment spending over the next two years if they paid for content, only 32% said it would not change (with 5% don’t knows). The remainder indicated that they would spend less in a variety of other areas, with the largest numbers expecting to spend less on DVD purchases (43%), renting DVDs (39%) and Pay TV (21%).


You said that you already pay or would pay a small sum to stream and/or download TV programmes and/or movies to your desktop or laptop computer at home. What effect do you think this will have on your other entertainment spending over the next 2 years? Base: All respondents that already pay or would pay a small sum to stream/download content to their desktop computers / laptops


43% I will spend less on purchasing DVDs


39% I will spend less on renting DVDs


32% It won’t change my other entertainment spending


21% I/my parent/ guardian will spend less on Pay TV


15% I will spend less on going to the cinema


Selected responses – for a copy of the full chart see survey report, Figure 32


The survey does not make encouraging reading for those seeking to persuade consumers to buy online content. People generally won’t pay and, where they will, this is at the expense of other media, principally DVD.


This consumer reluctance to pay for content is clearly evident from looking at what is currently consumed online, compared with what people who do not currently consume content online would like to consume. Today, the most commonly downloaded/streamed content is free user generated content, with 58% of respondents accessing this short form material every month. However when asked for viewing preferences if everything were free, the most popular form of content (amongst 59% of respondents) was full length movies. The second most popular category was catch-up TV (i.e. programmes that have been on TV in the last 7 days ¡V selected by 55% of respondents), closely followed by older programmes that are no longer on TV (which 54% of the sample want to watch), providing yet another validation of the “long tail” theory.


Assuming that you did NOT have to pay to receive them, which if any of the following would you want to stream or download over the Internet to watch or listen to on your desktop or laptop computer at home? Base: All with desktop computer/laptop at home connected to the Internet


59% Full length movies


55% Older TV programmes which were shown on TV within the last seven days which you missed


54% Older TV programmes that are not on TV anymore


39% Individual music videos


30% Music concerts which are being shown on TV at the same time


29% Live radio programmes


27% Movie clips/ trailers


23% Live sports events which are being shown on TV at the same time


Selected responses – for a copy of the full chart see survey report, Figure 21


Advertising ¡V an alternative to payment?


A surprising result from the survey was that online adverting creates more consumer antipathy than traditional forms of advertising. Even though advertising spend in online media is at an all time high and growing fast, 84% of respondents find online adverts annoying when it intrudes on their activities and 76% claim to have actively taken steps to avoid online advertising.


Given that consumers will not pay for content, advertising is a natural alternative, allowing free consumption at the point of use. Whilst it might be expected that consumer antipathy towards online adverts would damage this potential, the survey suggests otherwise. Despite the dislike of online advertising, 44% of respondents with computers at home connected to the internet would be happy to have some (or more) adverts included at the beginning of a programme if it meant that streaming/ downloading of films or TV shows could be free. This is a clear indication to rights holders and online businesses that consumers are open to different business model propositions and companies need to consider alternatives to direct consumer payments.


Confusion over legal downloading


The survey revealed a degree of confusion surrounding what content consumers are legally allowed to use on their home computers. Possibly due, at least in part, to a significant amount of national press coverage, 75% of respondents recognise that downloading music from an unofficial file sharing site to a computer is illegal, with similar results for downloading movies (73%) or TV shows (67%). However, once people have a disc in their hand, or a track on their computer, there is greater uncertainty – only 33% believe taking the content from a DVD and putting it onto a computer (“ripping”) is unlawful. Once on the computer, only 26% believe copying that content to a portable device is illegal. These activities are currently illegal in the UK (in most cases), at least in theory, although the Government is currently considering whether to introduce a “format shifting” exception in line with the recommendation in the Gowers’ Report.


Which, if any, of the following do you think is against the law? Base: All respondents


75% Obtaining music for free from unofficial file-sharing websites


73% Obtaining movies for free from unofficial file-sharing websites


67% Obtaining recent TV programmes for free from unofficial file-sharing websites


33% Copying (ripping) DVDs onto a computer


30% Copying (ripping) CDs onto a computer


26% Taking music or video which has been copied onto a computer from CDs or DVDs and transferring it to a personal device


Selected responses – For a copy of the full chart see survey report Figure 47


Copyright owners continue to face an uphill battle to persuade consumers that rules on content use (enforced by Digital Rights Management (“DRM”)) are “fair”. However, it is clear that consumers are also still confused about the purpose and effect of DRM. Whilst a third of respondents support DRM to protect content from people who haven’t paid for it, 71% of people surveyed believe that, once they have bought some content, they should have the freedom to transfer that content between all of their personal devices. At the same time, only 12% think that once they have bought something they SHOULD be entitled to give it away to their friends. Only 8% of respondents support the use of DRM to control what happens to content once they have paid for it.


Even with heightened illegal downloading, consumers are not concerned about getting caught and the main reason for not illegally downloading is moral guilt, with 34% of respondents believing it’s wrong, with the second most common reason being the consumer’s desire for quality authorised files (33%), this reason being especially common among 16 and 17 year olds.


The full report also examines the following:


Mobile TV


65% of respondents have a general lack of interest in watching TV channels or TV or movie clips on mobiles.


Respondents are more likely to use their mobile phones to share content with their friends, with 30% receiving photos and 17% receiving videos on their phones from friends at least once a month.


Respondents who are not already streaming to their mobiles show the most interest in sideloading music or podcasts from their computers, with 15% being definitely or possibly interested in this latter activity, rather than acquiring content through the mobile network.


Video On Demand


There is substantial take up of Video on Demand (“VOD”) with 17% of respondents using this emerging technology, with a further 25% of respondents expressing interest in such a service.


The key reasons given for their disinterest by the 29% of respondents who say they are not interested in VOD are that they already have plenty of choice (45%), are not willing to pay any more for TV content (41%) and are happy to watch broadcast television at the time it is scheduled (40%).


Social Networking Sites


Social networking sites are very popular amongst respondents, with 68% of respondents registered with a site. Clear leaders in this area are Facebook (44%), Friends Reunited (32%), Myspace (26%) and Bebo (16%). 43% of Facebook users use it every day.


The reasons why respondents use their preferred site are very varied; 50% using a site to view and share photos, 13% to see or share videos and 12% to see what music friends like.


For further information on the Olswang Convergence Consumer Survey 2007, visit www.olswang.com/convergence07