The Digital Home
The advancement of digital media is leading to a generation of always-on, permanently connected consumers. MediaTel INSIGHT’s Sarah Pearce looks at the implications for the marketing industry, which is being forced to face up to a digital future…
The consumer household is increasingly becoming enveloped in the digital arena. Advances in technology and cost cutting incentives from device vendors are enabling consumers to embrace this new form of media and transform their home into a digital haven.
A wealth of new technologies are saturating the broadcast market place, with personal video recorders (PVRs), video-on-demand (VoD) and high-definition television (HDTV) all entering into the media mix.
Advances in broadband penetration and uptake have opened the door to a multitude of new services for the user, with increased speed in broadband connections allowing service providers to offer consumers a variety of new services.
With so many new technologies on offer, the concept of the television is transforming beyond the traditional “box” in the sitting room to a digital device that is available on mobile phones, accessible on PCs, the list goes on.
The digital world allows consumers to access content where they want, when they want, resulting in more and more people submersing themselves in a round the clock media world.
According to Kurt Scherf, vice president and principal analyst at Parks Associates, 2006 looks set to be a “watershed year” for delivering consumers an array of “new entertainment experiences.”
Emerging technologies transforming households into a digital retreat include PVRs, which are causing up-roar in the advertising community.
Starcom forecast the strong up-take of the technology, predicting it will reach five million in the next four years, with penetration reaching 21% of the population by 2008, raises concerns for advertisers.
Giving consumers the ability to control their own advert viewing could result in nearly 10% of all television commercials being skipped by 2009 due to the fast forward technology, according to research firm Accenture.
VoD also allows consumers to pick and choose their media consumption, with the service becoming increasingly popular with younger viewers, giving a choice of content delivered straight to their chosen viewing medium.
In the UK, VOD remains a relatively small market, led by the likes of HomeChoice, ntl and Telewest. Across the pond, however, the medium is enjoying strong growth, with Parks Associates forecasting VoD revenues to increase by $6.6 billion over the next four years, driven by innovations in digital entertainment platforms and content services.
HDTV is another format that looks set to have a growing presence in living rooms over the coming years, with estimates from Informa Telecoms & Media, claiming the technology will reach 106.2 million homes world-wide by 2010.
Looking at the ever expanding digital world, one can see that the driving force behind operators rolling out more and more devices is the rising demand in consumers to have media whenever and wherever they want it.
According to an article in the Economist, the excitement by consumers and operators alike is not so much about content becoming digital, but about its delivery switching from physical transactions, to downloads or streaming. This switch requires consumers to buy more gadgets and thus fuel the highly competitive technology market.
Mobile phones are a prime example of a device undergoing a transformation as a result of digital uptake, with handsets not only able to make phone calls and text, but also download music, access radio streams, take photos, and now recieve television.
Demand for these services is rising, with Orange already having seven mobile TV channels accessible via 3G handsets, and Juniper Research predicting world-wide mobile TV revenues to hit $7.6 billion in 2010, up from an estimated $136 million this year.
Results from the Oxford Mobile TV Trial indicate a clear market for a commercial mobile TV service, with 83% of triallists satisfied with the end-to-end service provided, viewing mobile TV for an average of three hours per week.
Another offspring of the digital revolution is that people are becoming closer via technology, with devices allowing users to share downloaded files, connect to each other via the internet through gaming and generally break down the traditional barriers that more static media posed.
The digital world is also transforming the music industry, with widespread broadband adoption combined with the digitisation of music and the emergence of portable music players fundamentally changing the music sector.
Sales of MP3 players are fuelling this new market. Combined with music downloads via PCs and mobile phones have led PricewaterhouseCoopers (PwC) to predict a bullish annual growth of 89.1% for the digital music industry.
Despite legal issues, almost 40 million Americans, or 27% of internet users claim to have downloaded either music or video files from peer to peer (P2P) networks according to the Pew Internet & American Life Project.
As well as music downloads, podcasting is enjoying a surge of popularity, with data from Bridge Ratings showing that around five million listeners in the US downloaded at least one podcast in 2005. By 2010, Forrester Research expects podcasting in the States to reach 12.3 million household.
The uptake of broadband has fuelled this exciting, yet daunting advancement in the media world. For advertisers and customers alike it is a new era.
Consumers must get used to the various new technologies on offer, while advertisers need to face up to the increasing fragmentation of the industry and the pressures this puts on delivering their messages.
However, as Raymond Snoddy said at the MediaTel Insight Future of Digital TV seminar: “The advertising industry is not entirely full of stupid people – ultimately it will cope with this.”
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