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Time is Money

The digital dilemma continues

KPMG’s Media and Entertainment Barometer

KPMG LLP (UK)

    Time is Money The digital dilemma continues KPMG’s Media and Entertainment Barometer KPMG LLP
David Elms
David Elms

I am pleased to introduce the second KPMG Media and Entertainment Barometer, our comprehensive six monthly report based on a KPMG commissionedYouGov survey.

We asked over 1,000 UK consumers about their online and offline media consumption and the results highlight the scale of the challenge the media industry faces in halting declining revenues.

Consumer are spending less on traditional and digital media than six months ago, but consuming more.

Average spend per UK consumer on traditional media fell from £9.19 in September 2009 when the first Barometer was undertaken, to £7.46 in March 2010 and spend on digital media also fell (from £1.99 to £0.98.) However the time we spend consuming media has increased.

The average monthly consumption of traditional media has risen marginally from

11 hours 40 minutes in September 09, to 12 hours 13 minutes. Hours spent

consuming digital media increased even more from 6 hours 14 minutes to 7 hours

28 minutes.

The survey shows that spend has reduced across several parts of the media industry for example:

21 percent of newspaper readers paid nothing for these over the past month, compared with 15 percent six months ago. In London this almost doubled – 23 percent to 41 percent – highlighting the impact of the Evening Standard moving to a ‘free’ model

The situation is similar for print magazines with 19 percent of consumers saying they had paid nothing for these over the past month compared with 12 percent six months ago.

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• Of concern to those aiming to introduce pay walls for online newspapers, is the
• Of concern to those aiming to introduce pay walls for online newspapers, is the

Of concern to those aiming to introduce pay walls for online newspapers, is the increasing majority of respondents who said they paid nothing for accessing online news portals - up 4 percent from 84 percent in September 2009 to 88 percent in March 2010

Spend on video games was significantly down, quite possibly reflecting the release of popular titles in the month leading up to the first edition of the Barometer.

These findings of the second KPMG Media and Entertainment Barometer illustrate the problem faced by the media sector in curbing the structural decline in revenues. However, online users are increasing. Online subscription models remain in their infancy and once more developed should provide a platform for significantly higher online revenues.

About the survey:

All figures, unless otherwise stated are fromYouGov Plc. Total sample size

for the poll carried out in March 2010 was 1037 completes for wave 1 and

1034 for wave 2, people aged 16 years

plus. The field work was conducted

with members ofYouGov’s online panel between 11th and 14th September

2009 (wave 1) and 15th and 18th March

2010 (wave 2).The figures have been

weighted and are representative of all GB adults (16+).

There is considerable focus on driving digital media revenues and respondents

indicated they do access more media because of online availability, but the tide has

not yet turned as the majority of us still prefer consuming media offline.

quarter favoured online media access compared with 43 percent who said offline and a third who reported it didn’t make a difference.

Only a

However, with 24 percent of respondents using Video on Demand services, there is a growing appetite for more dynamic and easily available content. Also, with a marked increase on the time spent online, particularly on social networking and online games, creating integrated business models which make the most of both traditional and digital business models continue to be key for the sector.

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94% 88% 79% 82% 80% 81% 68% 72% 70% 70% 68% 68% 53% 50% 34%
94%
88%
79%
82%
80%
81%
68%
72%
70%
70%
68%
68%
53%
50%
34%
34%
27%
26%
18%
18%
18%
15%
Wave 2 (Mar 2010)
Wave 1 (Sept 2009)
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Amongst those who had engaged in traditional activities during the past month, the highest mean
Amongst those who had engaged in traditional activities during the past month, the highest mean

Amongst those who had engaged in traditional activities during the past month, the highest mean spend was on attending music events and performances (£30.20) and sporting events (£29.68).These also had the highest spend in wave 1, though the sum spent was marginally down for wave 2, perhaps reflecting seasonal variation in spend.

Mean spend on newspapers, magazines and the cinema was broadly in line with wave 1. Spend on video games was significantly down, quite possibly reflecting the release of popular titles in the month leading up to wave 1.

The proportion of newspaper readers who spent nothing on these publications had increased since the last wave. In London this almost doubled (from 23% to 41%), highlighting the impact of the Evening Standard moving to a ‘free’ model.

Newspaper and magazine readers aged 16-34 continued to be considerably more likely to spend nothing on newspapers and magazines compared with the general population, suggesting this group are more prone to reading free sheets only or copies purchased by others.

As before, respondents had spent more time watchingTV in the past month than any of the other activities (29 hours), followed by listening to the radio (16 hours) and reading books (14 hours).

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50% 47% 36% 37% 27% 29% 24% 19% 21% 22% 17% 17% 16% 14% 16%
50%
47%
36%
37%
27%
29%
24%
19%
21%
22%
17%
17%
16%
14%
16%
16%
14%
15%
21%
22%
Wave 2 (Mar 2010)
Wave 1 (Sept 2009)

*Note: means calculated from a base of less than 50 cases have not been quoted.

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Four-fifths (79%) had engaged in one or more of the listed new media activities in
Four-fifths (79%) had engaged in one or more of the listed new media activities in

Four-fifths (79%) had engaged in one or more of the listed new media activities in the past month. No significant increase on wave 1.

Half had visited social networking/blogging sites.There had been an increase in use of video on demand forTV.

Overall, men were more likely to have engaged in activities than women (83%, 75%).

Those aged 16-24 tended to be more likely to engage in new media activities than their older counterparts.

A notable exception was accessing online news portals/RSS feeds, which was equally popular across groups.

Amongst those who had engaged in each of the listed new media activities, the highest* mean spend was on downloaded music (£4.26), as had been the case in the first wave.

Amongst those who had engaged in each of the activities, social networking/blogging and playing online games consumed the greatest amount of time (12 and 11 hours respectively).

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21% of C2DE respondents said that they had usedVOD services forTV programmes, whereas in March
21% of C2DE respondents said that they had usedVOD services forTV programmes, whereas in March

21% of C2DE respondents said that they had usedVOD services forTV programmes, whereas in March 2010, 23% of this social grade had said so. The comparable figures amongst ABC1 respondents was 17% increasing to 24%, 6 months later.

There had only been a slight increase in the use of streaming of services for TV programmes – increasing from 14% of all respondents in September 2009 to 16% in March 2010.This increase occurred amongst all age groups, but was once again (as with the use ofVOD services forTV shows) most marked amongst 18-24 year olds; 35-44 year olds; and, amongst male respondents.

There seemed to be most change in online behaviour amongst the 18-24 year old age group over the past 6 months, as the use ofVOD services for audio visual increased above average.The use ofVOD for film increased slightly amongst all respondents from 3% in September 2009 to 4% in March 2010. However, it more than doubled amongst the 18-24 age group, from 4% to 9%

The use of social networking / blogging sites has remained the online activity carried out by most respondents.This online activity had increased from 47% of all respondents in September 2009 to 50% in March 2010.The increase amongst the 45-54 age groups was the greatest, increasing from 37% to

45%.

Predictably, male respondents continued to view sporting events online at much higher levels than women.The difference between the sexes continued to be around 17% versus 3% in favour of males for this online activity.

17% versus 3% in favour of males for this online activity. Accessing new media 3D viewing
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media 3D viewing FIFA World Cup 2010 viewing plans Traditionalvs.NewMedia: some comparisons Next Betting
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media 3D viewing FIFA World Cup 2010 viewing plans Traditionalvs.NewMedia: some comparisons Next Betting
Consumption of media without paying had increased in prevalence in both online and traditional formats
Consumption of media without paying had increased in prevalence in both online and traditional formats

Consumption of media without paying had increased in prevalence in both online and traditional formats since the last wave.

For example, 19% of print magazine consumers said they had paid nothing for these over the past month compared with 12% in the first wave. Newspapers: 21% compared with 15% the first wave.

Consumers of new media continued to be several times more likely to say they had spent nothing on these activities than consumers of similar types of traditional media.The 19% of respondents who had read print magazines said they spent nothing on this compared with four-fifths (85%) of online magazine readers. A similar story was evident for print newspapers compared with online news portals (21%, 88%).

Amongst those who had engaged with traditionalTV, streamedTV, traditional radio and streamed radio, mean spend over the past month tended to be much lower for new media.

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89% 80% 60% 19% 14% 8%
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19%
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Only a quarter (26%) said they favoured online media access, compared with 43% who said offline and a third (31%) who reported it didn’t make a difference. Results were broadly consistent with wave 1.

Those who preferred offline access were asked to indicate why. As per wave 1, the most popular reasons related to a preference for reading physical copies or watching on a television set (rather than on a computer screen).Technical and security concerns troubled relatively few, though the proportion citing the speed of their internet connection as a barrier rose slightly (19%, 13%).

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You said that you prefer to consume media ONLINE. Which, if any, of the reasons
You said that you prefer to consume media ONLINE. Which, if any, of the reasons

You said that you prefer to consume media ONLINE. Which, if any, of the reasons below apply?

Can access content when I want

Can access the content I want for free online

Spend lots of time on my computer so more convenient

Easier to find content that I’m interested in

Wider choice of content online

More environmentally friendly

Can access the content I want at better price

80% 73% 63% 56% 31% 14%
80%
73%
63%
56%
31%
14%

Those who preferred online access were also asked for their reasons.

The most important reason, selected by around nine-in-ten (93%), was availability of ‘on-demand content’.This suggests the importance of convenience for consumers of online media. Access to free content was the second most important reason. Almost a third cited the environmental merits of online media consumption.

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of around 4 hours and amongst the 45+ age group, also an increase of approximately
of around 4 hours and amongst the 45+ age group, also an increase of approximately

of around 4 hours and amongst the 45+ age group, also an increase of approximately 4 hours.

Our surveys found that increasingly more respondents paid nothing over the past month for social networking / blogging sites in March 2010 than in September 2009. Of those that said that they paid for social networking / blogging sites, the amount respondents said they paid, decreased markedly from £16.50 per month in September 2009 to £2.38 per month in March 2010.

In March 2010, the mean average number of hours that younger members of society (16-24 year olds) spent per month on social networking / blogging sites was around double the amount of time spent by older members (45+ aged groups). 18-24 year olds spent just over 18 hours per month in March 2010, whereas, 45-54 year olds spent around 8 hours per month.

What content would you be prepared to pay for?

Those who were not currently paying for online content but thought they would possibly / definitely become a paid subscriber over the coming 12 months were asked what they would be prepared to pay for.

As per wave 1, people were most commonly prepared to pay for music (55%) and film (45%).They were less prepared to pay forTV (30%) and online newspapers/magazines (31%).

There was no marked difference in the amount of hours spent per month on social networking / blogging sites between the sexes (around 12 hours per month). However, social grade C2DE spent more time per month than other social grades – just over 15 hours per month.This was also a marked increase since September 2009, when C2DEs had spent around 11.5 hours per month on social networking

People who did not currently pay for online content were asked whether they thought they would become a paid subscriber over the coming 12 months. In total, 10% indicated they would possibly become a paid subscriber while none indicated they would definitely do so.This suggests that the market for online subscriptions is unlikely to grow greatly over the coming 12 months.

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You said you were unlikely to purchase a 3D television next time you buy aTV.
You said you were unlikely to purchase a 3D television next time you buy aTV.

You said you were unlikely to purchase a 3D television next time you buy aTV. Why is this?

Don’t see the need

Likely to be too expensive

I don’t like the idea of wearing the 3D glasses

It’s a gimmick

Lack of programmes available

Will wait for improved version to be launched Quality likely to be poor

None of these Not sure

63% 59% 49% 41% 33% 19% 12% 4% 0%
63%
59%
49%
41%
33%
19%
12%
4%
0%
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FIFA World Cup 2010 in 3D

Amongst those who plan to watch World Cup games, 39% indicated they would watch games in 3D if it were an option (with a further 29% unsure).

This suggests a substantial potential market exists.

This summer’s FIFA World Cup will be a viewing favourite with over half (53%) planning to watch games this summer, with a further 8% unsure. Men were more likely to say they would watch than women (66%, 40%).

Respondents were asked to indicate the locations in which they expect to view the games. Among those who plan to watch, the vast majority plan to watch some games at home (94%). Around half (48%) said they would watch some games at the pub. The number of us who plan to view any games on our computer or smart phone are much lower.

You said that you intend to watch some of the FIFA World Cup this summer. Where do you expect to watch these?

On TV at home/friend’s home

 

94%

At pub

 

48%

On computer at home/friend’s home

On computer at home/friend’s home 7%

7%

On my smartphone

1%

At cinema

1%

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Contacts

David Elms Partner, Head of Media

Claire Le Masurier PR Manager

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Designed and produced by KPMG LLP (UK)’s Design Services Publication name: New vs. Traditional Media Publication number: RRD-193125 Publication date: April 2010