Monday 9 May 2011

US decline in TVs heralds a new generation's choice

A new study from The Neilsen Company says that the number of homes in the United States equipped with a television set is expected to decline through 2012 - dropping to 114.7 million homes (96.7 percent) from 115.9 million (98.9 percent). This is first time US TV ownership has gone down in two decades and the snappily titled “2012 Advance/Preliminary TV Household Universe Estimate (UE)" puts the decline down to a number of factors – the recession being one, but the Report also cites ‘digital transition’ and more tellingly the increased use of ‘multiple viewing platforms’ for the decline.

The Report argues that the economic downturn has had an inevitable effect but the transition from analogue to digital broadcasting in 2009 has compounded this as it meant that viewers needed to have purchased a new digital TV or bought a digital-to-analog converter box to watch digital services and this marked the first decline in TV penetration as analogue households who could not afford new digital sets and antennas were no longer ‘connected’. But tellingly it is rise of alternative viewing platforms, such as computers and tablets and even mobile devices, that seems most likely to lead to a drop in TV ownership by 2012 as the USA catches up with consumer trends in other countries where for the younger generation the TV is no longer the dominant platform for viewing content. Market analyst ComScore estimates that in 2010 over 12 million smartphone owners in the UK, France, Germany, Spain and Italy watched videos online via their mobile device. Evidence of a similar change in US viewer habits is the rapidly shrinking number of new students who take a TV with them to University or College. Even this blogger has started using the BBC’s iPlayer on a regular basis to ‘catch up’ on the occasional missed programme, but I watched my first ‘live’ TV programme this weekend on my laptop, primarily as it was something I wanted to watch and the laptop seemed the easiest place to view (it was a lunchtime Championship soccer match on BBC1, Leeds United v QPR if you must know – and Leeds won!).

The last time TV ownership figures dropped was back in 1992 when the US economy was suffering, but in 2012 whilst the decline is more interesting and complex, it doesn’t necessarily mean that consumers are consuming less TV – just they are consuming it in different ways. This alone has prompted Nielsen to think about a redefinition of the term ‘television household’ to include Internet viewers. But more tellingly the shift is no doubt a worry for the TV networks, with the younger generation shifting away from TV subscriptions to free internet based access. They ARE watching content, just not in a linear traditional way.

The Report also indentifies other shifts in audience behavior and already sees another change, with evidence that hand held tablet owners such as the iPad are using their PCs and desktops less, cutting down on using e-readers and a quarter of respondents had cut down on use of their games consoles although tablets seem to have less effect on users of internet connected TVs and those with smartphones. Nielsen asked tablet owners how their usage of other devices had changed since they acquired the new devices and more than a third (35 percent) said they use their desktop computer less or not at all, while 32 percent said they use their laptop less. Nielsen reports 77 percent of tablet users use a tablet for tasks that they previously would have done on a laptop or desktop. The most popular reason cited for favoring tablets is unsurprising: they're easy to carry around. 31 percent of tablet owners responded that portability was the main reason for using a tablet over a laptop or a desktop with ease of interface or operating system and fast start-up and power-off times as the second and third most common reasons given.

A final report that will also set off alarm bells with content owners is a new report from the Digital Entertainment Group which showed that US sales of new DVDs had fallen a whopping 20% last year as consumers shift away from buying physical product to streaming movies using services such as Netflix. With DVD sales still underpinning big movie releases and still seen important in both the television and music industries, it is an alarming decline, unless content owners are quick enough to replace paid for DVD sales with paid for streaming or other revenue models. It is a difficult time for content owners as technology races ahead and consumer behaviour changes at an ever increasing rate of change, but as ever it offers new opportunities for both existing companies and new market entrants – but perhaps tellingly there seems to be no one model that solves all problems, and even ‘new’ business models can seem outdated after increasingly short periods of time.

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