danielheaf.com

Just wow

 

See full article at BI

US Internet Usage Survey

Last week, Goldman Sachs published the results of their eighth annual internet usage survey. Here are a couple of the highlights (data for the US except where otherwise stated):

• Time spent online on the desktop is flat at 22.5 hours per week
• Time spent online on a smartphone is rising at a ‘teens rate’
• More people would consider cancelling their Pay TV service to save money than their ISP
• Consumers age 18-29 visit Facebook as much as Google on their mobile phones
• The dominant activities on social networks are messaging (72% of respondents), photo sharing (55%) and games (27%)
• 20% of those social gamers spend money, averaging at $35 per month
• The percentage of people who download or stream video content doubled to 25%
• Two thirds of consumers prefer pay per use revenue models, one third prefer subscription services
• Global ecommerce spend forecast to rise 21% this year due to a 14% increase in number of shoppers and single digit increase in spend per shopper

Technology & media predictions for 2010

Trend 1: Media companies will aggressively trial digital paid content models. Consumers are willing to pay but they are only willing to pay for what they value highly. Media companies need to offer the consumer increased value, a premium experience they can’t get in the free world. Consumers will pay for specialist / exclusive content (e.g. The FT’s Lex Column and The Media Guardian) and content delivered on the platform most convenient to them (e.g.  The Guardian’s iPhone App) but would always expect general national / international news for free. Just slapping up a hard pay walls without considerable thought and innovation around the gradations within it would certainly be a disaster.

Trend 2: The battle for IPTV will begin. Just like the mobile sector before it this year will be the year IPTV get serious. Larger PC manufacturers and new propriety boxes will enter the TV market for the first time. Consumers who now have a taste for catch-up TV will increasingly want to be able to download TV shows and movies on demand. In the UK Canvas will get the regulatory approval it needs but will face stiff competition from big players like Google and Microsoft.

Trend 3: Facebook will launch its own transactions service. iTunes may lack a “social graph” of active human relationships and doesn’t have the built-in communication channels that come with it but it does have one of the most successful transaction systems sround. This year Facebook will launch it’s own payment platform and will make the service widely available through Facebook Connect. Such a project is likely to go hand in hand with the launch of their own virtual currency which will allow standardised micro-payments inside Facebook’s growing range of social games and applications.

Trend 4: Virtual goods will thrive in Europe and North America. the virtual goods market in China is estimated to be tracking toward $5 billion for 2010, while our latest numbers show the virtual goods market to be heading towards $1.6 billion in the U.S. Direct payment by bank card still seems the most common way to pay. Apps on RenRen integrate with payments provider YeePay, which offers bank card payment, mobile payment via SMS, prepaid card and timed IVR, but NOT credit card payment. Most of the responses are along the same lines — the iPad is going to expand casual and mobile gaming. On the social front, the bigger screen, faster processing speed and Wifi and 3G connectivity means that the device could be especially good for multi-player games.

Trend 5: There will be an increase in technology IPOs. If the economy continues to improve then technology-related initial public offerings will likely increase. Eight venture-backed tech firms went public in 2009, compared to seven the year earlier, according to VentureSource. Those numbers are small compared to past years, and they’re definitely small compared to the numbers of medical and pharmaceutical companies lining up to go public. All that’s needed is a ‘Netscape Moment’ – a large highly publised IPO that represents the cohort of fast growing companies out where. It may start with Twitter, or Facebook, or Zynga or even Yelp, but an IPO wave is coming.

Trend 6: eBooks will start to make significant profits for publishers: Amazon's Kindle will continue to lead the pack but will come under pressure as other manufactures move into the space. The market could stall unless a common standard can be agreed. Publishers could leverage competing technologies to force up prices. 

Trend 7: Online marketing spend will outperform analysts expectations. This year will see increases in both search (direct) and brand (display) advertising above what analysists are forecasting. The leap will be most noticeable in display where last year, with the economy down, the display portion of the U.S. online advertising industry had a particularly difficult time. Total revenues in 2009 were down 5.2 percent to $7.5 billion, estimates JPMorgan analyst Imran Khan. But he forecasts that in 2010 U.S. display advertising will rebound 10.5 percent to $8.3 billion. Khan expects U.S. search advertising to grow an even brisker 13.2 percent pace in 2010 to $16.6 billion, after virtually flat 0.8 percent growth in 2009.

Trend 8: Boxed games sales will deign to decline: 2009 was probably the high water mark in terms of boxed games products. With competition from the console download market and from social games the industry will rely increasingly heavily on huge game productions with even larger marketing budgets.

Trend 9: The Android install base will grow quickly leading to a surge in applications: iPhone will continue to be the gold standard and will offer superior device / software integration. Towards the end of the year penetration of the Android OS will increase as the number of devices using it increases. This demand should fuel development of Apps. 

Trend 10: Consolidation of traditional media companies will continue apace: Regulation allowing this will have to happen in the UK. I predict BSkyB leading the charge. They have the deepest pockets and with their duel revenue streams will be keen to take advantage of competitors that rely wholly on advertising faltering.

Where's the money in online video?

• Online video advertising is continuing to grow but is a nascent sector
• Industry watchers are cutting their expectations for growth and there is little to be made in the short term
• There is huge variation in video CPM ($10-$100 CPM) depending on the content
• As traditional broadcasters enter the game the amount of inventory is growing pushing down average CPM
• Lean forward audiences don't like adverts and are more likely to mute or block adverts
• Advertisers are still uncomfortable with UGC
• Online video advertising is a growth market but will be subsequent to adjustments as the market matures

See also:

GigaOM

NewTeeVee

Business Week

Television of Tomorrow

Cartoon genius Tex Avery produced this short in 1953, showing off TVs for smokers, water drinkers, and those afflicted by airplanes overhead.

The future of entertainment is a tricky subject and we're probably no more likely to end up with the right answer about where the future is leading us than Tex Avery did in his toon. Yet, if we look closer at this 1953 cartoon we see a number of trends we recognise today; the challenges of simplifying the technology and the audiences expectations of that technology is introduced into their homes, examples of customisation and specialised devices, the disruption of ordinary social life and it's reconfiguration in response to the media and towards the end of the cartoon we see new forms of interaction that reminding us of the Wii remote. The ideas of games and television are there from the very beginning - at least in the popular imagination.

Mobile: future trends

"It's the recreation of the Internet, it's the recreation of the PC (personal computer) story and it is before us -- and it is very likely it will happen in the next year"

Eric Schmit Jan 2008 [Reuters]

More from my trends presentation last week. Mobile is going to be huge the 'mother of all markets' of Steve Jobs is to believed. According to Jupiter Research, made-for-mobile content will drive mobile entertainment revenues to $47.5 billion by 2010.

While grossly oversimplified this graph from Jason Grigsby's presentation illustrates just how large the opportunity is. The size of mobile (3.3B handsets, one for every two people on the planet) is staggering, and well known (see Communities Dominate Blogs for description of other media's relative penetration).

Other number of note:

• iPhone sold 1 million units in its initial 74 days [Apple]. According to Cloud4 95% of iPhone customers regularly surf the internet.
• Apple claim to be on course of 10 million by the end of the year [Fortune]. This is particularly significant because Google sees 50 times the number of searches using the iPhone than any other devise.
• Mobile gaming is expected to generate $9.6 billion in global revenues by 2011 [Gartner]
• Data services revenue increased from $2.7 billion in 2005 to $6.9 billion in 2007 [Cellular News]
• Location based services are driving this growth. Last year, Google’s Marissa Meyer told us that the Google Maps usage from iPhone was off the charts. The new iPhone with Google Maps married to GPS will give location based services a further boost. [GigaOM]
• China adding 6 million subscribers / month [Cellular News]
• More than 100,000 iPhone developers downloaded the beta iPhone Software Development Kit (SDK) in the first four days since its launch on March 6.

These number reveal the following trends:

• Mobile broadband will become pervasive in established and emerging markets
• Media to mobile will become the dominant delivery and compute platform
• There will be a broad array of user friendly devices
• User experience will be highly personalised and targeted from the device design to the content consumed
• Location based applications will receive more funding that ever before

Games: future trends

From my presentation to BBCW this week where I summarised the current economics of the game industry and possible trends.

By 2010, the worldwide video game market should grow to $46.5 billion [PWC]

GTAIV sold six million copies in it's first week far surpassing top album debuts [NYT]

World of Warcraft now has 10 million subscribers [RW Web]

Spending on advertising within video games in the U.S. is expected to increase from $295 million in 2007 to $650 million in 2012 [eMarketer]

The casual game industry is a USD 2.25 billion a year market, currently growing by 20 per cent annually [Games Industry Biz]

Given these numbers I expect the following trends to emerge:

• games will largely become free delivered over IP
• monetisation through in-game advertising, sponsorship and virtual goods will grow rapidly but not reach the profits currently reached by disc sales
• MMOG will grow in popularity and extend in the the casual games market

UK internet trends

Some trends and statistics to bear in mind:

• The UK is far ahead of other European countries in terms of online spending, and online spending peaks amongst 35-54 year olds

• Few visitors click on online ads (c.5%) but online ads do increase awareness

• Sending email via mobile phone has increased significantly over past 6 months (Blackberry effect)

• Those who use mobile internet see it as useful but not particularly easy to navigate nor an enjoyable experience

• People still spend (a little) more time per week watching TV than using the internet (personal use). Age is a significant factor here, with 16-24’s spending more time online (personal use) than watching TV.

• Users spend more time watching TV, online, listening to radio, reading paper newspapers or playing video games than they do reading paper magazines each week

• Personalization of portals is yet to take off - 50% have never tried to, and only 18% have and use it frequently

• 15% say they use social networking sites everyday

• Downloadable music is the most popular paid-for content (25% have). 4% have paid to download TV programmes (rising to 8% of 15-24 year olds)