Second Screen market growth evidence: 53m Tablets ship, Twitter wins the Super Bowl and buys BlueFin
When a bird breaks through its shell to be born, the world shouts its a market "revolution", but the tiny bird itself has been making progress steadily for a long while--more of a "rapid evolution" with one very publicly acknowledged milestone.
Let's pretend for a moment you believe our research that estimates the current second screen companion experience consumer revenue at $490m in 2012. Keep in mind this is made up of m-commerce (including Amazon/eBay but also content syndication -- content people purchase like MLB's data-only feed for companion screen experiences) and advertising (the current global mobile/on-line video advertising market is $6B, the current TV advertising market is $200B).
So if you believe that figure, you say to yourself that "it must be being captured by existing large players (CBS, Twitter, MLB) in the market as clearly my company is not getting a huge share of that" (CBS, for example sold $10-12m of second screen advertising in the Super Bowl).
But then you start asking yourself if you believe the market will grow to $5.9B by 2017, and ask yourself if can you find a way to take a share of that market. If you believe you can, then you will be constantly asking yourself for evidence that the second screen market is moving on that kind of growth trajectory--because if you want for the egg shell to break, it is already too late to invest.
Evidence from the last 3 days:
- Twitter won the Super Bowl. As discussed in many articles and podcasts yesterday, Twitter was in 26 of 52 nationally televised commercials from kick-off to game ending. Facebook was mentioned 4 times and Google+ mentioned none. Why is this significant evidence? Before you can believe advertising revenue can transition from CPMs (cost per 1000 impressions/views) to CPCs (cost per click or action) you have to first get believe the individual consumer will participate. Advertisers clearly believe that Social TV, an important component of the second screen experience, is valuable enough to push its message to that platform. More importantly, it is instantly measurable. Oreo was smart enough to Tweet "You can still dunk in the dark." during the blackout and while 15,000 retweets are not as valuable at the 100m people reached during their commercial, having their brand be relevant and engaging in real-time with consumers might be. So the evidence is not only that consumers are grabbing their smartphones and Tweeting during the game, but that advertisers want to engage them in that manner because its engagement is very measurable.
- Twitter bought BlueFin. Remember the web in the late 1990s? Many of us sat around pondering the future of banner ads as click-thru ratios dropped from the 90% to 0.5% (where it sits today). I remember arguing that it was non-sensical for a marketing manager to move advertising dollars from print, radio and TV to the web. But then AdSense came along (whom Google wisely purchased), and it provided perhaps the most important catalyst to the growth of the online advertising market--measurable results. So in the first year, most marketing managers experimented and threw 1-2% of their budget "online". But as they measured the results, they could quickly and scientifically understand the cost of customer acquisition through various channels, only paying when someone was delivered to their store front. Keeping that in context with the first paragraph above, and you can see Twitter clearly believes they can accelerate the pace of investment from TV advertisers into some form of enhanced second screen or social TV-based experiences by giving them the tools to measure the results. Ask yourself the question again at the end of the first paragraph above? What is more valuable, 15k engaged retweets (in theory, from 15k social influencers) or 100m "impressions"? I guarantee BlueFin has a well-educated opinion on that question.
- 52.5m tablets shipped globally in Q4 2012. Keep in mind that at least in the forecast presented from the Second Screen Society and the intersection, we don't believe that some amazing consumer experience, some super ad-syncing technology, or some massively developed user base will be the catalyst to the growth of the market from $490m to $5.9B in 5 years (while I am sure some of that will come to pass and be helpful). We believe that it is the proliferation of tablets and smartphones and the consumer's apparent natural tendency to drift to them during lulls in programming that create the behavioral shift towards second screen companion experiences. But as intended consequences or not, we are rapidly approaching a day where just about every consumer with cash in their wallet will have a personal second screen device that they are using to engage in and around the first screen (in-sync with programming or not)--and that will drive advertisers and retailers to focus their efforts more and more to driving measure revenue opportunities in the second screen space.
Created by The Intersection, a research company owned by Parker and TV technology executive Renaud Fuchs, and published by the 2nd Screen Society, the report presents both the global market size and segmentation of the hundreds of consumer facing apps in the market place, the build-up of the market sizing, a deep-dive on the technology driving this space, the latest trends and case studies on the leading apps in the market. Additionally, the report will cover how consumers are using their 2nd screens as 1st screens both in and out of the living room, as TV Everywhere strategies come into full effect in the consumer market place. "With 35 million tablets sold during the holiday season in 2012 and an estimated 40% of all television viewers now enhancing the experience with a 2nd screen, this is clearly the trend to watch for 2013," Parker explains. "What can you expect to see in 2nd screen developments in 2013 and who are the current leaders? How will the giants of todayâs video industry respond to this challenge? We answer these questions and more in this report."
- The technology status and future developments: how ACR and the âsystem levelâ 2nd screen platform from Xbox SmartGlass will have significant impact on the marketplace
- A segmentation of the market and a scoring of hundreds of companion apps: that are used to control, discover, enhance, share and multi-task.
- An analysis of the players in the ecosystem: why studios and TV shows focus on enhancement and pay TV operators focus on control.
- A full-blown usage analysis, business models and market sizing with detailed data to 2017.
- A detailed review of the Top 50 apps: what works and what doesnât and identifying key feature sets
- A detailed look at trends and future state of the 2nd screen market
- An 18-month detailed forecast: describing trends we believe will have a short-term impact on this emerging marketplace for applications and 2nd-screen technologies.
- A deep review of second screen as a viewing device
More than three quarters of iPad owners (76%) use their iPads at least five days a week, while 55% of owners use the device everyday, according to Knowledge Networks. But these users are largely bringing a âfree Internetâ mindset to the iPad, with only a small portion of users willing to pay for content.
The research firmâs recent survey of 205 iPad owners and users shows a preference of an ad-supported model for content access over a pay model by nearly a 6-to-1 ratio. Additionally, six of the seven top reported iPad activities are familiar ones such as web surfing and email.
Some 70% of iPad users have read an e-book on the device, while 61% have read an electronic magazine or journal, and 51% have watched network TV programs. Yet only 13% of iPad users would be willing to pay extra for an iPad-friendly version of a print magazine or TV show that they already pay for in its conventional format (i.e., a magazine or pay-TV subscription).
Users who watch TV episodes or movies on their iPads most often learn about the content from branded apps created by services such as Netflix, SlingBox, or YouTube. Word-of-mouth comes in second in the Knowledge Networks survey, ahead of TV networksâ own apps and Appleâs iTunes store.
More than half of U.S. households (56%) now have a high-definition television â but a much smaller percentage actually watch HD programming, according to Nielsen.
Only 13% of total day viewing on cable and 19% of viewing on broadcast television is âtrue HDâ viewing of an HD channel via an HD tuner and set.
In other words, Nielsen writes, more than 80% of television viewing overall is still in standard def. Even for those with HDTVs, non-HD feeds comprise a full 20% of viewing.
The programming most likely to be watched in HD is cable sports networks, while childrensâs programming is the least likely to be watched in HD.
On-demand viewing of TV programs and movies in the U.S. will generate $10 billion dollars in annual revenue by 2014, according to a new In-Stat forecast.
The In-Stat figure includes transactional video on demand (VOD) purchases, such as movie rentals via pay-TV channels; subscription VOD, such as Netflixâs streaming service; and the download-to-own model of electronic sell-through. Of the three categories, subscription VOD will see the highest growth rate, as well as the most competition, the research firm predicts.
The rise of the VOD business and digital distribution will coincide with continued declines in DVD sales and rentals, In-Stat says. âRealistically, [electronic sell-through] cannot replace historic retail DVD video sales,â the firm adds. âHowever, the migration of DVD rentals to online T-VOD services, will help fill this revenue gap.â
Nearly one third of the adult online population in the U.S. â roughly 56 million people â have shifted the majority of their video viewing to non-live content sources, according to a new report from SAY Media, comScore and TRU (via MediaPost).
The report further divides this âoff the gridâ segment of the television viewership into âopt outsâ and âon demanders.â âOpt outs,â comprising 13% of online consumers, consume 21 hours of video content a week â exclusively via streaming services, DVRs or DVD/Blu-ray discs. âOn demanders,â 20% of online consumers, consume 30 hours of video a week; some of the video among these viewers is from live TV, but the amount is less than last year.
The number of European households with a connected TV will grow from roughly 4 million in 2009 to 47 million in 2014, according to a new forecast from Parks Associates. Meanwhile, the number of European households with connected Blu-ray players will jump to approximately 66 million in 2014, from 5 million in 2010.
The research firm presents its forecast at a technology summit in Amsterdam, the Netherlands next month. Stateside, Parks Associates is at the Digital Hollywood conference in Santa Monica, Calif. today, relating household connectivity datapoints including:
â˘ 19% of U.S. broadband households are paying to watch TV shows and movies on their PC on a monthly basis, paying on average $4.90 per month; and
â˘ 5% of U.S. broadband households are paying to watch TV shows and movies on a connected game console on a monthly basis, paying on average $6.50 per month.
To date, mobile data consumption among American teens (ages 13-17) has not reached levels of activity seen amongÂ young adults, according to Nielsen. However, it is sharply on the rise, with average data consumption surging to 62 MB in the second quarter of 2010 (up more than fourfold from 14 MB in Q2 2009).
Nearly all teen mobile subscribers (94%) self-identify as advanced data users, turning to their cellphones for messaging, Internet, multimedia, gaming, and other activities like downloads, Nielsen says.
Teens are downloading a wider range of applications as well. Approximately four in 10 teen subscribers who use apps (38%) have downloaded software such as Facebook, Pandora or YouTube.
Texting still lay at the center of teensâ mobile usage, Nielsen reports. American teens (ages 13-17) send or receive an average of 3,339 texts a month â more than six per every waking hour. The text data usage represents an increase of 8% from last year.
Young adults (ages 18-24), in comparison, exchange less than half as many texts per month, on average (1,630). However, they consume much more data via mobile devices, averaging at more than 160 MB during the second quarter of 2010.
Blu-ray penetration has doubled since July 2008, with 17% of all U.S. households owning at least one Blu-ray device in July 2010, according to research firm Centris.
Using the most recent household data from the U.S. Census Bureau â in January 2010, the agency reported a total of 117 million households in the country â the Centris estimate would put Blu-ray in roughly 19.9 million homes. That number, in turn, would compare favorably with Netflix’s total U.S. subscriber base of 15.0 million (reported through the second quarter of 2010).
Equal proportions of households have a standalone Blu-ray player and a PlayStation 3 console (45% and 47% of Blu-ray households respectively), Centris says. The research firm also noted that while overall DVD purchases and rentals continue to lead Blu-ray, âeach Blu-ray household rents and buys discs in greater numbers than DVD households.â
An earlier published estimate from Centris had at least one Blu-ray player in 18.1% of U.S. households (representing 21.2 million homes, using U.S. Census Bureau data) through the second quarter of this year.
In its Sept. 29 note, Centris cautions that Blu-rayâs continued adoption may be slowed âby the availability of several competing formats,â viz. digital distribution and video-on-demand. But the research firm estimates that 13% of Blu-ray homes have downloaded a movie in the past month, compared to 6% of DVD homes (via Home Media Magazine).
Those movie downloads donât necessarily come through Blu-ray players or PS3 consoles, however. Earlier this week, the NPD Group reported that just 2% of U.S. consumers age 13 or older downloaded content via a Blu-ray player or a digital video player (such as a Roku set-top box) over the past three months, while 6% connected to the Internet and downloaded content via a videogame console.
Research Firm: Despite âModerateâ Growth in Digital Game Distribution, Physical Retail Remains Relevant
Eight in 10 gamers (80%) do not purchase games digitally; but the 20% that do purchase more games at retail than their non-downloading counterparts, according to research firm Interpret.
Gamers that digitally download titles also purchase 2.7 games, on average, every 6 months at retail locations â 20% more retail purchases than those who never buy digitally.
âWhether or not all game sales are digital in 10 years, right now the virtues of the retail environment, including convenience, trained sales staff, and the opportunity to encourage impulse buys, are as important as ever,â says Interpretâs Brenton Lyle.
The amount of time that American audiences spend watching live video streams from sites such as Justin.tv and Ustream has grown 648% year-over-year to more than 1.4 billion minutes, according to comScore.
âThough the amount of time spent watching live video is still only a small fraction of the total time spent watching online video, its sharp growth indicates viewersâ growing comfort with the content,â says the research firmâs Andres Palmiter in a blog post.
Those who tune into live streams watch them for slightly longer than online videos: the average live streamed video view is 7% longer than the average online video view, comScore says.
Live streaming sites Justin.tv, Ustream, and Livestream have all experienced particularly strong growth over the past year. In July, Ustream attracted more than 3.2 million unique viewers, topping both Justin.tv (2.6 million) and Livestream (2.4 million). Livestream, comScore points out, led the pack in the number of videos served: more than 160 million, compared to roughly 130 million from Justin.tv and 20 million from Ustream.
One fifth of the U.S. population ages 6 and older â some 56.8 million consumers â has played a game on a social network in the past three months, according to NPD.
More than one third of social network gamers (35%) are new to gaming, never having participated in any other type of gaming before they started playing games on social networks, NPD says. Females and older age groups are more likely to be new gamers than other groups measured in the study.
NPD finds that social network gamers more are evenly divided between genders than popular perceptions would hold, at 47% male and 53% female.
âAlthough 35% of social network gamers are new to gaming, itâs clear that a lot of existing gamers have been drawn into the social network gaming arena as well,â says NPDâs Anita Frazier. âThis impacts both the time they spend with other types of gaming, as well as the amount of money theyâre spending on gaming. As more players are drawn into these games, the entire games industry is going to feel, and have to adjust to, the impact.â
The research firm adds that 10% of social network gamers have spent real money playing these games and 11% indicate that they are likely to make a future purchase.
The number of people who watch broadcast TV programming on the Internet has doubled in the last year, according to a new survey by management consultancy Altman Vilandrie & Company and market research firm Peanut Labs. But the growth has not translated to cord-cutting. Instead, the research study posits that the market is one of opportunity for cable operators and others to add new services, such as mobile video.
(That conclusion doesnât necessarily jibe with the findings of research firm SNL Kagan, which faults the economy for the first pay-TV subscriber downturn ever. See below.)
Among the Altman Vilandrie/Peanut Labs surveyâs findings:
â˘ Broadcast TV viewing is age-related, with less than half of 18-34 year olds (42%) watching TV shows daily during their normal broadcast time â versus 60% of those 35 and older.
â˘ 16% of 18-34 year olds watch full TV broadcast episodes on the Internet daily, versus 6% of those 35 and older. Overall, 10% of survey respondents say they watch full TV episodes on the Internet daily, versus 5% in a similar 2009 study.
â˘ 13% of 18-34 year olds view video on a mobile phone daily, versus 5% in 2009.
â˘ Despite their adoption of new technology, only 3% of 18-34 year olds have cancelled their cable service. Yet 25% of 18-34 year olds âhave seriously considered dropping my subscription TV service because Internet video services meet most of my needs.â
Sixty-four percent of console owners prefer to purchase physical copies of videogames over digital ones, according to a new survey from Ipsos MediaCT. The strength of the used game market continues to set the category apart from other entertainment sectors such as music or film â both of which have lower proportions of consumers preferring physical media, Ipsos says.Â Gamasutra has more on the study.
Following what it calls âdisappointing hardware and software sales in key international territories in 2009,â Screen Digest says it expects Blu-ray to come up short in offsetting DVD spending declines. The research firm now predicts international consumer spending on packaged media to decline from $17.1 billion in 2009 to $14.5 billion by 2014, a compound annual growth rate of -3.3%. Screen Digest
Ron Spears, chief of AT&Tâs Business Solutions unit, told an investor conference yesterday that enterprise customers make up a full 40 percent of current iPhone sales. As All Things D notes, the stat cuts down the notion that the iPhone cannot compete with the Blackberry for business users. But the number could prompt entertainment analysts to revise their estimates for average content downloads across the general-consumer iPhone base. By All Things D
U.S. gamers ages 2 and older spend 13 hours per week playing games, up from 12.3 hours in 2009, according to new research from NPD. Time spent playing console games is up 9 percent year-over-year, while time spent playing PC games has increased 6 percent. But the number of hours gamers spend playing games on portable systems such as the PSP is down 16 percent. By NPD
Via research firm Piper Jaffrayâs new âTaking Stock With Teensâ report: Teens represent 35 percent of videogame players, and videogames represent 8 percent of teen budgets. Piper Jaffray says while its latest survey results reflect the continued maturation of the current videogame cycle, teens are willing spend on non-traditional game consumption.
More than half (53 percent) are willing to pay for downloadable console content, while 38 percent are willing to pay for cell phone games, and 25 percent play games through social websites. Piper Jaffray
The evolving entertainment ecosystem poses five “dilemmas” for content companies and service providers:
â˘ How to dramatically improve how content is created and managed using a âleanâ approach;
â˘ How to protect intellectual property as new usage models come into vogue;
â˘ How to guarantee that the consumer experience brings customers back for more;
â˘ How to manage a wide variety of business models to optimize revenues; and
â˘ How to leverage what is learned as these new approaches are implemented.
So says a new white paper, âThe Digital Entertainment Revolution,â produced by Capgemini and In-Stat.
The paper offers up the story of the U.S. home entertainment industry as a microcosm of changing business models. While In-Stat expects U.S. DVD disc sales to decline from $13.3 billion in 2008 to $3 billion in 2013, it looks for Blu-ray sales to rise from $750 million in 2008 to $8.4 billion in 2013. Video-on-demand distribution on Pay TV, meanwhile, will grow from $554 million in revenues in 2008 to $3.9 billion in 2013. Irrespective of new business models, however, overall U.S. movie sales and rentals will post negative growth of 1.2% over the next three years.
âU.S. movie studios,â the report says, âare going to need to re-engineer their internal operations to reduce costs, and manage their investments in new technologies very carefully if they are to deliver increasing profits in what is, overall, a flat-growth market.â
The study examines content creation and distribution, while profiling shifting consumer preferences as well. Capgemini offers the white paper for download at its website.
Global TV shipments in 2009 exceeded analystsâ recession-minded expectations, growing by 2% as consumers snapped up discounted products.
Overall shipments grew to 211 million units, according to research firm DisplaySearch. Whatâs more, LCD and other flat panel TV technologies enjoyed higher growth in 2009 on a unit basis than during 2008, rising 37% vs. 34%, respectively. Thanks to accelerated price erosion, flat-panel TVs accounted for 90% of 2009 TV revenues. DisplaySearch
According to tech shopper site Retrevo, 48% of consumers had heard rumors of the iPad one week before its Jan. 27 unveiling. At the time, 61% said they would not be interested in buying such a product. That number increased to 70% in the wake of Appleâs announcement, even as awareness of the product increased to 82%. By Retrevo
Despite the growing amount of video available online, less than 8 percent of U.S. broadband households are considering canceling their pay-TV services in favor of online video, according to research firm Parks Associates.
The firmâs âAll Eyes on Videoâ report is in line with previous Parks Associates studies, which do not show an appreciable likelihood of subscriber churn in favor of online video services. A 2008 study reported 11 percent of U.S. broadband households were considering canceling pay-TV services, and in an earlier 2009 survey, the number was 10 percent.
Approximately 5.5 million homes would be open to canceling pay TV due in part to the availability of online video, according to the new report. At the same time, one-half of these households are also considering a switch to a new pay-TV provider, indicating the primary threats to companies such as Verizon, Comcast, DirecTV, and Cablevision are still their traditional competitors.
The households likely to switch or cancel their services watch a 10 hours of online video each week, much higher than typical video consumers. They express strong interest in having online access to pay-TV channels (e.g., TV Everywhere), which highlights an opportunity for traditional pay-TV providers to solidify their base through the deployment of such features. Offline video consumption is also higher. Their median number of DVD rentals from the last six months is 18, compared to two rentals among other households.
âThe threat of cannibalization is real but misunderstood,â says John Barrett, Director of Research, Parks Associates. âNobody is going to rely on online video alone â households likely to cancel their TV services are going to use a mixture of online video, free-to-air broadcasts, and DVDs, including rental services such as Netflix and redbox.â By Parks Associates
High-volume shipments of Blu-ray players, most of which feature network connectivity, are finally making inroads into the broader disc player and recorder market, reports In-Stat.
By 2013, Blu-ray player shipments will still lag slightly behind the 90 million DVD player unit shipments. However, higher average selling prices will put Blu-ray player revenue at more than four times as large as DVD player revenue.
âIn North America, significant price drops of Blu-ray players drove unit shipments to triple in 2009,â says Michelle Abraham, In-Stat analyst. âThe cost differential between standard definition DVD and Blu-ray is becoming much smaller and new features such as IP/network connectivity are becoming increasingly important. Blu-ray is finally starting to make significant advances market.â
Recent research by In-Stat found the following:
â˘ Shipments of network-enabled Blu-ray players/recorders will approach 80 million units by 2013.
â˘ Eight percent of US survey respondents with at least some interest in purchasing a Blu-ray player cited cost as a barrier.
â˘ Japan dominates the market for Blu-ray recorders, while Europe is the largest revenue market for Blu-ray players. In-Stat
More than a quarter of all recorded music industry revenues worldwide are now coming from digital channels, as music companies license music in partnership with ISPs and mobile operators, subscription services, streaming sites and hundreds of download stores.
However, despite the continuing growth of the digital music business – with trade revenues up 12% to an estimated US$4.2 billion in 2009 – illegal file-sharing and other forms of online piracy are eroding investment and sales of local music in major markets. By IFPI
Kids and teenagers aged 8-18 devote an average of seven hours and 38 minutes to using entertainment media in a typical day, and more than 53 hours a week, according to the Kaiser Family Foundation. The amount of time spent with media increased by an hour and 17 minutes a day over the past five years. Young people, the research firm says, now spend more time listening to music, playing games, and watching TV on their cell phones (a total of 49 minutes daily) than they spend talking on them (33 minutes daily). By the Kaiser Family Foundation
Packaged media still rules over the videogame market, but gamersâ adoption of digital distribution platforms continues to climb, according to NPD.
Nine in 10 paid console videogame acquisitions in the third quarter of 2009 were in the physical format, whfirefoxile 79% of games acquired for all other platforms which include portable, PC/MAC, mobile and smartphones, were via new and used disc sales, rentals, and other physical formats.
Seven in 10 gamers (70%) who purchase games via both physical and digital media are under the age of 35. While such âdual-formatâ purchasers represent 19% of all videogame buyers, they provide 40% of dollar volume, the research firm says. Via NPD
The overall spending outlook for entertainment for the remainder of 2009 is âreasonably stable,â according to the NPD Group. Two-thirds (66%) of consumers reported that they planned to spend the same amount or more on entertainment products and services in the coming 12 months than they did the prior year. That proportion, taken from NPDâs August 2009 consumer survey, is three percentage points higherÂ than when the same question was asked in 2008. Projected spending on individual entertainment categories is variable, however: consumers are more inclined to spend money on digital music and movies in the theater, and somewhat less willing to spend money on CDs and DVDs. ByÂ NPD Group