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CONFIDENTIAL AND PROPRIETARY Copyright 2008 by Frank N. Magid Associates, Inc. Any duplication, reproduction, or usage of this document or any portion.

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Presentation on theme: "CONFIDENTIAL AND PROPRIETARY Copyright 2008 by Frank N. Magid Associates, Inc. Any duplication, reproduction, or usage of this document or any portion."— Presentation transcript:

1 CONFIDENTIAL AND PROPRIETARY Copyright 2008 by Frank N. Magid Associates, Inc. Any duplication, reproduction, or usage of this document or any portion thereof without the written consent of the firm is prohibited. Presentation to: Nielsen vs. Consumers Consumers Say New Media Usage Is Cannibalizing TV March 24, 2009

2 © 2008 Frank N. Magid Associates, Inc. 1 Frank N. Magid Associates, Inc. Frank N. Magid Associates has been the leading research-based strategic consulting firm in the media, entertainment and communications industries for 50 years. We interviewed over 1 million consumers by phone, online, and in-person in 2008. Conducted thousands of B2B executive and professional interviews. At the core of our work is our intense study of consumer behaviors and attitudes towards all aspects of communication and entertainment. These insights form the nucleus of our operational and strategic consulting services. Our staff also has deep operational experience in all media platforms. Magid has been instrumental in the success of hundreds of TV stations, networks, cable operators, wireless entities, newspapers, web sites and other media assets. Magid Advisors, the strategy and investment consulting group, has quickly been sought after by media, entertainment and communications companies and investment firms. We have worked with public and private media companies in overhauling corporate strategies, advising investment firms on prospective investments, and conducted major due diligence efforts. We have worked on over $7B in due diligence engagements. March 2008 Business and Technology January 22, 2006 Business and Finance October 19, 2005 Business and Finance 2005, 2006, 2007, and 2008 Various articles and snapshots

3 © 2008 Frank N. Magid Associates, Inc. 2 A Pioneer in Traditional Media TV Stations: Magid engaged its first TV station client in 1957. Magid works for over 120 TV stations in the U.S. today. TV Broadcast Networks: Magid works extensively for most of the major TV networks, starting with our work to develop Good Morning America in the 70s. Our work focuses on major branding and programming efforts, as well as strategic planning. Cable Operators: Magid has worked for many years with most of the top MSOs in product development and marketing. Cable Networks: Magid has helped launch new networks and worked with existing networks on programming, promotion, and branding efforts. Newspapers: Magid owns the nations leading newspaper consulting and research firm, MORI. Magid and MORI work for most of the countrys biggest newspapers, including online efforts. Magazines: Magid works with numerous magazines, including efforts to extend magazines to younger generations, as well as investment opportunities in the magazine space. Radio: In the 50s Magid started radio play research. We continue major radio-oriented engagements today.

4 © 2008 Frank N. Magid Associates, Inc. 3 On The Frontiers Of Digital Media Internet: Magid engaged its first Internet clients, AOL and Excite, back in 1995; over 2,500 Internet engagements completed. Wireless: Hardware and content development for application providers, carriers, and manufacturers, including extensive work on voice, video, and data services Satellite TV: Frank Magid was a founding director of the first satellite TV company in the U.S. Magid provided extensive consulting and research for USSB until they were bought by DIRECTV. DVR/PVR: Early research for TiVo and Procter & Gamble in 1999. DVR continues to be a major focus of Magid research and consulting. HDTV: Four years of ongoing tracking research for HDTV in the U.S. ITV: ACTV, Digeo, iOpen, RespondTV, WatchPoint VOD: Cox FreeZone, iNDemand, MagRack, TV Guide Channel, Comcast Games: Provide consumer-centric game development and marketing research and consulting to many major game companies. Work includes consoles, online, PC, handheld, casual games, download, and wireless.

5 © 2008 Frank N. Magid Associates, Inc. 4 TV Cannibalization Due to New Media – According to Consumers More Internet consumers rate the Internet as their favorite leisure activity than rate TV as their favorite leisure activity. That is a major shift in consumer attitudes toward leisure time entertainment in the few years the Web has been around relative to TV. Many consumers are reporting that new media is cannibalizing their viewing of TV. This self-reported reduction of TV viewing is across a broad range of Internet users – including those who watch online video, use social networks, and otherwise use their PC for entertainment. Over 92% of all Internet users say they use their PC for entertainment on a weekly basis – and 35% of them say they are watching less TV as a result. Over 25% of online video viewers (the great majority of Internet consumers) say their TV viewing is negatively affected by online video consumption. Almost 30% of social network users say they are reducing their TV viewing due to their use of MySpace, Facebook, etc. The TV industry seems to take solace in the fact that Nielsen ratings do not reflect this cannibalization. But at a minimum this self-reported behavior by consumers must mean a reduction in engagement in TV if not a reduction in actual hours the set is turned on, as measured by Nielsen.

6 © 2008 Frank N. Magid Associates, Inc. 5 INTERNET IS FAVORITE LEISURE TIME ACTIVITY OVER TV

7 © 2008 Frank N. Magid Associates, Inc. 6 Television And The Internet Are Important But Console Gaming Is Top Choice Among Younger Males BASE: Total sample 12-64, N=1,938. Q.1 You have the option of using your leisure time for a number of different activities. Which of the following is your favorite leisure activity? (SELECT ONE) Favorite Leisure Activities Total sample Total Males Males 12-1718-2425-3435-4445-5455-64 Using the Internet 21%19%12%19%20%21%23%17% Watching television18 31217212721 Reading books13924119818 Playing games on consoles like PlayStation3, Xbox 360, Wii, etc. 814451817840 Listening to music877125676 Playing sports or exercising79171496511 Watching DVDs or VHS tapes770671096 Playing free Web-based games (Pogo.com, Yahoo! Games, etc.) 42133132 Playing PC (CD/DVD) games35984412 Reading newspapers/ magazines21001123 Talking on your cell phone20.4111010 Talking on your home phone0.60.2000101 Other68424111012 None of the above11022220

8 © 2008 Frank N. Magid Associates, Inc. 7 Favorite Leisure Activities Total sample Total Females Females 12-1718-2425-3435-4445-5455-64 Using the Internet 21%22%28%22%32%14%22%16% Watching television18 61319251428 Reading books131810715242520 Playing games on consoles like PlayStation3, Xbox 360, Wii, etc. 831132130 Listening to music8913219565 Playing sports or exercising74674431 Watching DVDs or VHS tapes76787557 Playing free Web-based games (Pogo.com, Yahoo! Games, etc.) 46381894 Playing PC (CD/DVD) games32023122 Reading newspapers/ magazines22021225 Talking on your cell phone231122111 Talking on your home phone0.61211210 Other664428610 None of the above11013122 Womens Favorite Leisure Activities Are Also Television And The Internet; Older Women Are Strong In Reading BASE: Total sample 12-64, N=1,938. Q.1 You have the option of using your leisure time for a number of different activities. Which of the following is your favorite leisure activity? (SELECT ONE)

9 © 2008 Frank N. Magid Associates, Inc. 8 USE OF PC FOR ENTERTAINMENT

10 © 2008 Frank N. Magid Associates, Inc. 9 92% Of Respondents Spend At Least Some Time Per Week Using Their Computer For Entertainment 0 hrs/week 3-5 hrs/week 11-20 hrs/week 21 or more hrs/week 1-2 hrs/week 6-10 hrs/week BASE: Total 12-64 sample, N=1,938. Q.39 How many hours per week do you spend using a computer for any form of entertainment? Mean: 12.2 hrs/week

11 © 2008 Frank N. Magid Associates, Inc. 10 Over A Third Of Those Who Use Their Computer For Entertainment Report Watching Less TV Watching television Talking on your home phone or cell phone Listening to music Other Reading newspapers/magazines Sleep BASE: Those who use their computer for entertainment, N=1,791. Q.42 Because you use your computer for entertainment, which of the following do you do less of? Check all that apply. Playing games on consoles Playing sports or exercising Watching DVDs or VHS tapes on TV Spending time with family and friends Work None, using a computer for entertainment has not affected the time I spend on other activities

12 © 2008 Frank N. Magid Associates, Inc. 11 SOCIAL NETWORKING

13 © 2008 Frank N. Magid Associates, Inc. 12 Over A Third Of 12-64 Year Olds Regularly Participate On Social Networking Sites Such As MySpace, Facebook, etc. BASE: Total sample 12-64, N=1,938. Q.31: Which of the following activities do you do online regularly? Check all that apply. (Participate on social networking sites such as MySpace, Facebook, etc.) Mean: 1.2 hrs/day

14 © 2008 Frank N. Magid Associates, Inc. 13 Over A Quarter Of SNS Users Agree That They Watch Less TV Since They Started Using SNS BASE: Those who participate on social networking sites, N=735. Q.33.1: To what extent do you disagree or agree that you watch less TV since you started using social networking sites? Skews for top 2 box agree Equals 10% of total sample

15 © 2008 Frank N. Magid Associates, Inc. 14 ONLINE VIDEO

16 © 2008 Frank N. Magid Associates, Inc. 15 Half Of Respondents View Some Type Of Online Video Weekly; More Than 1 In 10 View Online Video Daily BASE: Total 12-64 sample, N=1,938. Q.35 About how often would you say you view any type of video content online on a computer?

17 © 2008 Frank N. Magid Associates, Inc. 16 Over A Quarter Of Those Who Watch Online Videos Indicate They Watch Less Television Since They Started Watching Videos Online BASE: Those who ever watch online video content, N=1,541 Q. 36.5: Which of the following activities are you doing less of as a result of watching videos online? Check all that apply. Watching television Watching DVDs or VHS tapes on TV None Playing PC(CD/DVD) or free online games Playing games on consoles like PlayStation 3, Xbox 360,Wii, PlayStation 2, Xbox, etc. Other M18-34, F12-17 M18-24, F12-17 M18-24

18 © 2008 Frank N. Magid Associates, Inc. 17 AND JUST IN CASE, YOU ARE NOT WORRIED ABOUT TRADITIONAL MEDIA DISTRIBUTION, SEE HOW READILY PIRACY IS ACCEPTED

19 © 2008 Frank N. Magid Associates, Inc. Acceptability Of Using Unauthorized Web Sites For Online Video Viewing 18 Based on total mention 12+, N=1,103 Q.34.10 Some people are using Web sites where TV shows or movies are available to watch online, free of charge and without commercials. Sites like this are typically unauthorized sources for these movies and TV programs, unaffiliated with the studio or network that produced or distributed the content. How acceptable is the use of these types of sites to watch TV shows and movies for free and without commercials? Using these sites is acceptable

20 © 2008 Frank N. Magid Associates, Inc. 46% of Online Video Viewers Anticipated Using Unauthorized Sites the Same or More Often Over the Next Year Based on those who watch video online monthly, N=399 Q.34.8(A-E) Please indicate how often you expect to use each of the following sources to watch TV shows or movies online in the next 12 months. Forwarded Video Files of Free Unauthorized Content TV Network Site With Commercials Unauthorized Free Sites (Bit Torrent) Streaming Video Site (Hulu) 46% expect to use these unauthorized sources the same or more often 19

21 © 2008 Frank N. Magid Associates, Inc. 20 Mike Vorhaus President, Magid Advisors 818-231-9110 mvorhaus@magid.com


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