entertainment trends research kurt scherf vice president, principal analyst

Entertainment Trends Research

Kurt Scherf

Vice President, Principal Analyst

AttributionAuthor: Kurt ScherfExecutive Editor: Brett SappingtonPublished by Parks Associates© February 2009 Parks AssociatesDallas, Texas 75230

All rights reserved. No part of this report may be reproduced, in any form or by any means, without permission in writing from the publisher.

Printed in the United States of America

DisclaimerParks Associates has made every reasonable effort to ensure that all information in this

report is correct. We assume no responsibility for any inadvertent errors.

Analyst: KS 2/4/09Exec Edit: BLS 2/4/09BD: RS 2/4/09

Attribution & Disclaimer

Slide Deck Outline

Slides 4-6: TV 2.0: Study Goals and Methodology

Slides 7-18: Baseline Numbers: Entertainment Users

Slides 19-28: Changes in Video Behavior

Slides 29-43: Analysis of Changes in Video Behavior

Slides 44-49: Consumer Interest in VoD Enhancements

Slides 50-54: Consumer Interest in BD-Live Features

TV 2.0: Study Goals and Methodology

TV 2.0: The Consumer Perspective Survey Methodology

• TV 2.0: The Consumer Perspective survey fielded in July 2008 to a total of 2,729 heads-of-household in the United States and 1,161 in Canada.

• Respondents were from a panel recruited by a third-party vendor and interviewed via the Internet.

• All qualified respondents had equal or greater input in household decision making, are over age 18, and have broadband access at home.

• The demographic composition of the U.S. sample is based upon Parks Associates’ National Technology Scan and matches the demographics of U.S. households with broadband service.

• The base sample of 2,729 respondents (U.S.) and 1,161 (Canada) has a

+/- 2% and +/- 3% margin of variance, respectively, at a 95% confidence level.

TV 2.0: The Consumer PerspectiveQuestionnaire Overview

• Section 200: Household Services

• Section 300: Internet Services

• Section 400: Product Ownership

• Section 500: Entertainment Habits

• Section 600: Television Services

• Section 700: New TV Features

Baseline Numbers: Entertainment Users

Video Entertainment Habits

Video Viewing Habits (Q3/08)"How many times per month do you complete the following activities?"

(Among broadband HHs surveyed, n=2,729, +2%)

14%

18%

49%

38%

43%

2%

2%

3%

12%

9%

9%

7%

0% 10% 20% 30% 40% 50% 60% 70%

Watch rented DVD televisionseries

Watch purchased DVDtelevision series

Watch movies at atheatre/cinema

Watch Rented DVD movies

Watch Purchased DVDmovies

% Performing Activity at Least Monthly

1-4 times/month

5-8 times/month

9+ times/month

Source: TV 2.0: The Consumer PerspectiveSample base: 2,729 broadband HHs in the U.S., ±2%© 2008 Parks Associates:

Surprisingly, respondents with children at home go to the cinema more than those without children. Two factors may explain why.

1) Senior adults (who do not typically have children at home) go to the cinema less frequently than their younger peers.

2) A significant number of respondents will have children old enough to temporarily care for themselves and allow the parents to go to the cinema.

Surprisingly, respondents with children at home go to the cinema more than those without children. Two factors may explain why.

1) Senior adults (who do not typically have children at home) go to the cinema less frequently than their younger peers.

2) A significant number of respondents will have children old enough to temporarily care for themselves and allow the parents to go to the cinema.

Establishing a Baseline: Premium TV Subscribers

Premium Video Service (Q3/08) "Which of the following do you have with your TV service?"

(Among BB HHs subscribing to video service, n=2,443, +2%)

8%

17%

25%

37%

39%

0% 10% 20% 30% 40% 50%

Additional packages ofspecified cultural

programming

Additional package ofsports channels

Additional package ofother premiumprogramming

High-definition TVchannels

Premium channels

% Subscribing to Premium Video ServiceSource: TV 2.0: The Consumer PerspectiveSample base: 2,729 broadband HHs in the U.S. , ±2%© 2008 Parks Associates:

The adoption of premium services generally correlates with income; i.e., those with higher incomes are more likely to have these services than those with lower incomes.

The adoption of premium services generally correlates with income; i.e., those with higher incomes are more likely to have these services than those with lower incomes.

Establishing a Baseline: TV and Movie Rental Sources

Consumers renting DVDs from retail rental stores may soon be a minority thanks to the growing popularity of alternatives. Respondents age 25-34 are more likely to use movies-by-mail services than those in other age groups.

Consumers renting DVDs from retail rental stores may soon be a minority thanks to the growing popularity of alternatives. Respondents age 25-34 are more likely to use movies-by-mail services than those in other age groups.

TV & Movie Rental Sources (Q3/08)"How does your HH get rented movies or television series on DVD?"

(Among BB HHs renting movies/TV programs, n=1,648, ±2%)

12%

14%

27%

58%

0% 10% 20% 30% 40% 50% 60% 70% 80%

A Kiosk at a retail store

Blockbuster Total Accesssubscription

Netflix subscription

Rental stores (Blockbuster)

% of Respondents


Netflix and Blockbuster Subscribers** Blockbuster’s sub count is an estimate

Millions of Subscribers:Netflix and Blockbuster Online Rental Services

(Millions of Subscribers)

0

5

10

15

Su

bs

cri

be

rs (

#M

)

Blockbuster (#M) 0.00 0.00 0.00 0.750 1.20 1.50 3.10 3.20

Netflix (#M) 0.456 0.857 1.49 2.61 4.18 5.66 7.48 9.39

2001 2002 2003 2004 2005 2006 2007 2008

Sources : Company financial reports

Online Video Trends

Nearly one-half of respondents age 18-24 download full-length movies from the Internet.

Conversely, only 5% of respondents age 55+ have ever done so.

Nearly one-half of respondents age 18-24 download full-length movies from the Internet.

Conversely, only 5% of respondents age 55+ have ever done so.

Monthly Broadband Users of Premium Internet Video(U.S. Adult Home Broadband Users)

15.1

2.20.745 0.465

26.6

3.8

1.3 0.816

0

10

20

30

Watch TV Shows (#M) Pay for TV ShowDownloads (#M)

Rent Movies (#M) Download Movies (#M)

Nu

mb

er

of

U.S

. Ad

ult

s (

#M

)

20072008

Source : TV 2.0: The Consumer PerspectiveSample base: 2,729 broadband HHs in the U.S. , ±2%© 2008 Parks Associates:

Expenditures for Online Video

Expenditure on Online Video (Q3/08)"How much money do you spend each month (on average)

for the following Internet services?"(Among BB HHs engaging in specified activities)

16%

22%

36%

$22

$17$15

0%

10%

20%

30%

40%

50%

Streaming/downloadingmovies

(n=857, ±4%)

Streaming/downloadingTV shows

(n=1,061, ±3%)

Streaming/downloadingother video content

(n=2,437, ±2%)

% P

ayin

g f

or

Vid

eo C

on

ten

t

$-

$5

$10

$15

$20

$25

$30

$35

$40

Av

g. M

on

thly

Ex

pe

nd

itu

re a

mo

ng

Sp

en

de

rs


Regardless of their age, a substantial portion of respondents do not pay to download/ stream movies. Those age 25-34 are the most likely to pay while those age 55+ are the least likely to pay.

Regardless of their age, a substantial portion of respondents do not pay to download/ stream movies. Those age 25-34 are the most likely to pay while those age 55+ are the least likely to pay.

Where is Online Video Being Viewed?

Devices Used for Watching Internet Video (Q3/08)"How do you watch Internet video? On a..."

(Among BB HHs downloading/streaming online video content, n= 2,454, ±2%)

5%

11%

12%

13%

31%

65%

0% 20% 40% 60% 80%

Portable multimediaplayer

Desktop PC at work

Laptop/notebook whileaway from home & work

TV

Home laptop computer

Home desktop computer

% Watching Online Video Content on...Source : TV 2.0: The Consumer PerspectiveSample base: 2,720 broadband HHs in the U.S., ±2%© 2008 Parks Associates:

There exists a direct correlation between age and computer/TV/PMP viewing habits. Younger consumers are much more likely to view content on a PMP or TV than are older consumers.

There exists a direct correlation between age and computer/TV/PMP viewing habits. Younger consumers are much more likely to view content on a PMP or TV than are older consumers.

How Interested are Consumers in “Over-the-Top” Set-top Boxes?

Appeal of Video-on-Demand Devices (Q3/08)"Products such as the Apple TV and VUDU provide a video-on-demand experience...

How appealing is this type of product on a 1-7 scale?" (Among broadband HHs surveyed, n=2,729, +2%)

Not appealing (Rating of 1-2),

44%

Neutral (Rating of 3-5), 42%

Very appealing (Rating of 6-7),

15%

Source: TV 2.0: The Consumer PerspectiveSample base: 2,729 broadband HHs in the U.S. , ±2%© 2008 Parks Associates:

Few consumers find over-the-top, VoD devices appealing. However among those planning to subscribe to a pay-TV service, nearly two-thirds rate the idea a 5+ (i.e., at least somewhat appealing). Such devices will find a market opportunity as familiarity spreads.

Few consumers find over-the-top, VoD devices appealing. However among those planning to subscribe to a pay-TV service, nearly two-thirds rate the idea a 5+ (i.e., at least somewhat appealing). Such devices will find a market opportunity as familiarity spreads.

Willingness to Spend on an “OTT” STB

Interest in Video-on-Demand Device (Q3/08)"Would you be interested in an alternative video-on-demand

device at a retail cost of… ?"(Among broadband HHs surveyed, n=2,729, +2%)

11%13%

29%

18%

$1,741

$1,626

$1,517

$1,583

0%

5%

10%

15%

20%

25%

30%

35%

$250 $200 $150 $100

% o

f B

B H

Hs

Inte

res

ted

in P

urc

ha

sin

g

a V

oD

de

vic

e b

y C

ho

os

ing

"Y

ES

"

$1,400

$1,450

$1,500

$1,550

$1,600

$1,650

$1,700

$1,750

$1,800

Imp

lied

Re

ve

nu

e A

mo

un

t (U

S$

M)


Factoring price points with interest levels suggests that OTT VoD devices will garner the most revenue if they are priced at $100 or less.

Today, demand is concentrated among consumers age 18-34.

Factoring price points with interest levels suggests that OTT VoD devices will garner the most revenue if they are priced at $100 or less.

Today, demand is concentrated among consumers age 18-34.

Important Features for an “OTT” STB

Important Features for VoD Box (Q3/08) "What would be the TWO MOST IMPORTANT FEATURES of

an alternative VoD box?" (Among broadband HHs surveyed, n=2,729, +2%)

42%

3%

5%

6%

6%

9%

9%

12%

12%

14%

35%

0% 20% 40% 60% 80%

No features would increase my interest

Ability to watch UGC video

Ability to listen to music stored on PCs

Ability to view photos stored on PCs

Offering adult-oriented content

A larger section of HD primetime TV offerings

Ability to watch TV shows available online

Ability to purchase a movieon the day it was released on DVD

The larger selection of high-def. movies

Ability to rent a movieon the day it was released on DVD

Ability to watch a movie on the dayit was released in the theaters

% Considering Features Important


Early release of movie titles will clearly be the strongest driver for OTT VoD device adoption. Predictably, early release is particularly important to respondents with children in the home. It is also relatively important to consumers age 18-34.

Early release of movie titles will clearly be the strongest driver for OTT VoD device adoption. Predictably, early release is particularly important to respondents with children in the home. It is also relatively important to consumers age 18-34.

What are Consumers Willing to Pay to Get Content at an “OTT” STB?

Consumers are willing to pay a premium, on average, in order to see films sooner. However, many respondents reported a willingness to pay exorbitant amounts (>$100). These respondents must be assumed to be either outliers or commercial pirates hoping to profit from early release of the film. Once they are removed, average amounts remain at a premium, albeit a smaller one.

Consumers are willing to pay a premium, on average, in order to see films sooner. However, many respondents reported a willingness to pay exorbitant amounts (>$100). These respondents must be assumed to be either outliers or commercial pirates hoping to profit from early release of the film. Once they are removed, average amounts remain at a premium, albeit a smaller one.

Willingness to Pay for Movie Features (Q3/07) "The movie options that you selected may cost more than a typical movie

experience. What would you be willing to pay for the following movie features?" (Among BB HHs Selecting Specified Feature)

$21

$30

$30

$9

$15

$16

$- $10 $20 $30 $40

Ability to rent a movie thesame it came out on DVD

(n=391, ±5%)

Ability to watch a moviethe same day it came out

in the theater(n=958, ±3%)

Ability to purchase amovie the same day it

came out on DVD(n=315, ±5%)

Average Amount Willing to Pay

Avg. Cost Excluding those responding above $100

Avg. Cost among all Respondents


Changes in Video Behavior

Notes on Changes in Video Behavior

• Economic factors are dampening cinema attendance.

– Respondents with an income under $100k are more likely than those with higher incomes to report that their cinema attendance has dropped in the past two years.

• Movie downloading is popular among young broadband users for a variety of reasons.

– Nearly one-half of respondents age 18-24 download full-length movies from the Internet.

– Those age 18-34 download nearly 4 movies per month, on average.

– Among those age 18-24, downloading & streaming movies:

• 53% do so because the movies are free

• 44% feel it is more convenient than alternatives

• 40% feel the selection online is better.

Summary: What Entertainment Trends are Gaining and Which are Losing Ground?

Changes in Viewing Habits: U.S. (Q3/08)"How would you characterize the frequency at which the following

activities are taking place today compared to 2 years ago?"(Among broadband HHs surveyed, n=2,729, ±2%)

35%

25%

23%

23%

29%

18%

17%

16%

10%

52%

61%

61%

56%

43%

53%

52%

52%

52%

13%

14%

21%

28%

29%

31%

32%

37%

17%

0% 20% 40% 60% 80% 100%

Watching movies at a theater/cinema

Watching rented DVD television series

Watching purchased DVD television series

Watching purchased movies

Watching rented movies

Watching primetime television shows

Watching movies on VoD

Watching subscription VoD (HBO)

Watching free VoD

% Breakdown

Decreased Stayed the Same Increased

Source : TV 2.0: The Consumer PerspectiveSample base: 2,720 broadband HHs in the U.S., ±2%© 2008 Parks Associates:

Cinema viewing is taking the hardest hit in terms of reduced video viewing. Respondents with moderate incomes (under $100K) are more likely to report decreased viewing, presumably due to economic factors.*

Consumers age 25-34 also appear to be polarizing into high and low viewing groups. 42% said viewing was decreasing while 19% said viewing was increasing. Both figures are above the overall average.

*In the past 2 years, cinema tickets have increase $0.50 on average per the National Association of Theater Owners.

Cinema viewing is taking the hardest hit in terms of reduced video viewing. Respondents with moderate incomes (under $100K) are more likely to report decreased viewing, presumably due to economic factors.*

Consumers age 25-34 also appear to be polarizing into high and low viewing groups. 42% said viewing was decreasing while 19% said viewing was increasing. Both figures are above the overall average.

*In the past 2 years, cinema tickets have increase $0.50 on average per the National Association of Theater Owners.

VoD Use Notes

• VoD is very important to households with children.

– Households with 2+ children are more likely than other HHs to watch VoD, feel VoD features are important, and say their VoD use is increasing.

– Nearly 50% of respondents with 3+ children at home say they would watch more VoD if the titles were available on the same day as the theatrical release.

– Early release of VoD titles is particularly likely to trigger rentals by respondents with 2+ children at home.

Changes in VoD Habits

VoD usage is increasing in general, particularly so among HHs with 2+ children. More eyeballs at home translates into more usage.

VoD usage is increasing in general, particularly so among HHs with 2+ children. More eyeballs at home translates into more usage.

Changes in Video-on-Demand Service Usage (Q3/08)"How would you characterize the frequency at which the following household activities are

taking place today compared to two years ago?"(Among digital video service subscribers, n=2,028, +2%)

24%

24%

29%

38%

40%

41%

12%

13%

8%

26%

23%

22%

0% 20% 40% 60% 80% 100%

Watching subscriptionon-demand channels

Watching pay-per-viewservices

Watching any othervideo on demand

channel

% Breakdown

Increased Stayed the Same Decreased Not applicable


Premium VoD Use is Growing:Percentage of Digital Cable Subscribers

Monthly Use of Premium VoD/PPV - MoviesU.S. Digital Cable Subscribers

(Percentage of U.S. Digital Cable Subscribers, %)

21%

28%

37%

0%

10%

20%

30%

40%

Q4 2004 Q1 2007 Q3 2008

Pe

rce

nta

ge

of

Dig

ita

l Ca

ble

Su

bs

cri

be

rs (

%)

Sources : Global Digital Living I and II; TV 2.0: The Consumer Perspective© 2008 Parks Associates

VoD is the Biggest Variable in Determining Customer Satisfaction

Satisfaction with Digital Cable Service (Q3/08)(Percentage of U.S. broadband respondents rating satisfaction as a 6-7 on a 7-point

scale, where "7" means "extremely satisfied", n=2,720, ±2%)

40%44%

74%

37%

0%

25%

50%

75%

100%

All Digital CableSubscribers

(n=1,292, ±3%)

Monthly VoD Users(n=644, ±4%)

Weekly VoD Users(n=238, ±6%)

Non-VoD Users(n=627, ±4%)

Pe

rce

nta

ge

of

Re

sp

on

de

nts

(%

)

Source : TV 2.0: The Consumer PerspectiveSample base: Broadband HHs, n=2,720 ±2%© 2008 Parks Associates

What Value Does VoD Add to TV Services?

Value of Video-on-Demand Services (Q3/08) "On a 1-7 scale... how valuable do you consider each of the following on-demand

channels as part of your TV overall service ? (Among BB HHs watching programs using specified VoD service)

38%41% 43%

0%

20%

40%

60%

On-demand movies(n=1045, ±3%)

Any other video on demandchannel

(n=1,010, ±3%)

Subscription on-demandchannels

(n=745, ±4%)

% R

atin

g V

oD

Ser

vice

Val

uab

le

(i.e

. 6-7

on

a 1

-7 s

cale

wit

h 7

= E

xtre

mel

y V

alu

able

)


Compare Satisfaction of VoD Users to Subscribers to HD Services

Satisfaction with Video Service by Service Type (Q3/08) "Please rate your satisfaction with your current television service using a 1-7 scale"

(Among HD video service subscribers with specified video service type)

45%

48%

49%

61%

62%

0%

-6%

-4%

-3%

-1%

-20% 0% 20% 40% 60% 80%

Digital CATV service(n=616, ±4%)

Basic cable service only(n=23, ±20%)

All HD subscribers(n=910, ±3%)

Satellite TV service(n=280, ±6%)

IPTV service(n=37, ±16%)

% of HD Subscribers

Low satisfaction(Ratings of 1s & 2s)

High satisfactionlevel (Ratings of 6s& 7s)


74% of active VoD users are highly satisfied


Compare Satisfaction of VoD Users to Subscribers of Additional Video Packages

Satisfaction with Current Video Service by Premium Video Service Subscribers (Q3/08)

"Please rate your satisfaction with your current television service using a 1-7 scale.(Among BB HHs subscribing to specified premium video service)

47%

49%

50%

51%

51%

-5%

-4%

-5%

-4%

-4%

-10% 10% 30% 50% 70%

Premium channels (n=950, ±3%)

High def. TV service (n=910, ±3%)

Additional package of sports(n=418, ±4%)

Additional packages of otherpremium programming (n=606, ±5%)

Additional packages of specified cultural programming (n=190, ±7%)

% of Premium Video Service Subscribers

High satisfaction(Rating of 6-7)

Low satisfaction(Ratings of 1-2)




Analysis of Changes in Video Behavior

Notes on Video Changes Analysis, I

Parks Associates analyzed the variables that would possibly impact a reported decrease of video and entertainment habits

– The analysis examined how video and entertainment habits may be decreasing as a result of consumers trading time from established to newer entertainment habits

– The analysis first reviewed reported changes / increases among video and entertainment habits (i.e., examining whether consumers are trading time from one habit for another habit):

• Increase in watching rented movies (n=775, ±4%)

• Increase in watching purchased movies (n=575, ±4%)

• Increase in watching movies at a theater/cinema (n=343, ±5%)

• Increase in watching rented DVD television series (n=395, ±5%)

• Increase in watching purchased DVD television services (n=456, ±5%)

• Increase in watching primetime television shows (n=783, ±4%)

• Increase in watching subscription VoD (HBO) (n=480, ±4%)

• Increase in watching movies on VoD (n=481, ±4%)

• Increase in watching free VoD (n=587, ±4%)

Notes on Video Changes Analysis, II

Parks Associates analyzed the variables that would possibly impact a reported decrease of video and entertainment habits

– The analysis also examined how video and entertainment habits may be decreasing as a result of consumers adopting new digital consumer electronics products and using digital media services:

• Own DVR (n=1,091, ±3%)

• Own high-definition TV (n=1,400, ±3%)

• Own home theater system (n=969, ±3%)

• Own Xbox 360/PlayStation3 (n=530, ±4%)

• Own Media Center PC (n=1,568, ±2%)

• Own Blu-ray player (n=167, ±8%)

• Netflix/Blockbuster TOTAL ACCESS subscriber (n=640, ±4%)

• Watch online movies at least monthly (n=508, ±4%)

• Watch online TV at least monthly (n=640, ±4%)

• Xbox LIVE monthly user (n=108, ±9%)

Key Takeaways from the Analysis, I

• Seeing movies in the theater/cinema is most impacted by trade-offs with new entertainment experiences, particularly increases in the frequency of:– Movie rentals;– Primetime television viewing;– Watching movies on VoD; and– Watching free VoD.

• Buying DVD movies is most impacted by:– Increases in the frequency of primetime television viewing; and– Having a subscription to Netflix or Blockbuster TOTAL ACCESS; and

• Renting DVD movies is most impacted by:– Increases in the frequency of primetime television viewing; and

• Digital products are not the problem.– Increases in video consumption across the board are more likely with the

introduction of Xbox 360s and PlayStation 3’s.– Among digital products, DVR/TiVo is the only device that shows a statistically

significant, negative impact on the frequency of seeing movies in the theater.

Key Takeaways from the Analysis, II

• Online video’s impact is negligible.– We can find no evidence to support the theory that online video is causing churn

from traditional entertainment activities. It appears to be more of a complement for consumers already heavily engaged in video habits.

• Age is a strong determinant in both increases and decreases in activities.– As could be expected, older age groups start to move entertainment inside the

home, reflecting decreases in watching movies in the theater.

– VoD becomes an important component of entertainment habits for consumers in the 24-35 age range, reflecting marriage and the starting of families.

Video/Entertainment Habits on the Decrease:Watching Movies in the Theater/Cinema

Group of Consumers Percentage Noting Decrease

All respondents (n=2,720, ±2%) 35%Increase in watching rented movies (n=775, ±4%) 39%Increase in watching purchased movies (n=575, ±4%) 33%Increase in watching movies at a theater/cinema (n=343, ±5%) n/aIncrease in watching rented DVD television series (n=395, ±5%) 38%Increase in watching purchased DVD television services (n=456, ±5%) 34%Increase in watching primetime television shows (n=783, ±4%) 44%Increase in watching subscription VoD (HBO) (n=480, ±4%) 38%Increase in watching movies on VoD (n=481, ±4%) 39%Increase in watching free VoD (n=587, ±4%) 41%


All respondents (n=2,720, ±2%) 35%Own DVR (n=1,091, ±3%) 36%Own high-definition TV (n=1,400, ±3%) 35%Own home theater system (n=969, ±3%) 33%Own Xbox 360/PlayStation3 (n=530, ±4%) 34%Own Media Center PC (n=1,568, ±2%) 34%Own Blu-ray player (n=167, ±8%) 20%Netflix/Blockbuster TOTAL ACCESS subscriber (n=640, ±4%) 35%Watch online movies at least monthly (n=508, ±4%) 32%Watch online TV at least monthly (n=640, ±4%) 33%Xbox LIVE monthly user (n=108, ±9%) 27%

By Ownership of Digital Products and Use of Digital Services

Watching Movies in the Cinema/Theater

Source : TV 2.0: The Consumer PerspectiveSample base: 2,720 broadband HHs in the U.S., ±2%

By Increases in Other Entertainment Activities

Decreases in Entertainment Activities:

© 2008 Parks Associates

Variables that came out as statistically significant in generating a decrease in watching movies in the theater/cinema are:





Ownership of digital products and use of digital media services do not provide statistically significant variances.

Age is a significant factor in the the frequency of watching movies in the theater. Younger consumers (age 18-24) are more likely to report an increase, whereas consumers age 25-34 are more likely to report a decrease.

Variables that came out as statistically significant in generating a decrease in watching movies in the theater/cinema are:





Ownership of digital products and use of digital media services do not provide statistically significant variances.

Age is a significant factor in the the frequency of watching movies in the theater. Younger consumers (age 18-24) are more likely to report an increase, whereas consumers age 25-34 are more likely to report a decrease.

Video/Entertainment Habits on the Decrease:Watching Rented DVD Television Series

Variables that came out as statistically significant in generating a decrease in watching rented DVD television series are:

• Ownership of a Media Center PC

Variables that came out as statistically significant in generating a decrease in watching rented DVD television series are:

• Ownership of a Media Center PC


All respondents (n=2,720, ±2%) 25%Increase in watching rented movies (n=775, ±4%) 14%Increase in watching purchased movies (n=575, ±4%) 19%Increase in watching movies at a theater/cinema (n=343, ±5%) 18%Increase in watching rented DVD television series (n=395, ±5%) n/aIncrease in watching purchased DVD television services (n=456, ±5%) 13%Increase in watching primetime television shows (n=783, ±4%) 25%Increase in watching subscription VoD (HBO) (n=480, ±4%) 22%Increase in watching movies on VoD (n=481, ±4%) 21%Increase in watching free VoD (n=587, ±4%) 25%






Watching Rented DVD Television Series



Video/Entertainment Habits on the Decrease:Watching Purchased DVD Television Series

Variables that came out as statistically significant in generating a decrease in watching purchased DVD television series are:

• Ownership of a Media Center PC (and this is a very minor increase)

The use of mail-order movie rental services (Netflix) and the use of Xbox LIVE are two variables that are statistically correlated to increases in the frequency of watching purchased DVD television series.

Variables that came out as statistically significant in generating a decrease in watching purchased DVD television series are:

• Ownership of a Media Center PC (and this is a very minor increase)

The use of mail-order movie rental services (Netflix) and the use of Xbox LIVE are two variables that are statistically correlated to increases in the frequency of watching purchased DVD television series.


All respondents (n=2,720, ±2%) 23%Increase in watching rented movies (n=775, ±4%) 18%Increase in watching purchased movies (n=575, ±4%) 12%Increase in watching movies at a theater/cinema (n=343, ±5%) 16%Increase in watching rented DVD television series (n=395, ±5%) 8%Increase in watching purchased DVD television services (n=456, ±5%) n/aIncrease in watching primetime television shows (n=783, ±4%) 21%Increase in watching subscription VoD (HBO) (n=480, ±4%) 20%Increase in watching movies on VoD (n=481, ±4%) 20%Increase in watching free VoD (n=587, ±4%) 22%






Watching Purchased DVD Television Series



Video/Entertainment Habits on the Decrease:Watching Purchased Movies

Variables that came out as statistically significant in generating a decrease in watching purchased movies are:

• Consumers reporting an increase in watching primetime television shows.

• Use of movie rental services such as Netflix.

• The presence of a Media Center PC in the household.

Younger consumers (18-35) are significantly more likely to report an increase in the frequency in which they are watching purchased movies.

Variables that came out as statistically significant in generating a decrease in watching purchased movies are:


• Use of movie rental services such as Netflix.


Younger consumers (18-35) are significantly more likely to report an increase in the frequency in which they are watching purchased movies.


All respondents (n=2,720, ±2%) 23%Increase in watching rented movies (n=775, ±4%) 18%Increase in watching purchased movies (n=575, ±4%) n/aIncrease in watching movies at a theater/cinema (n=343, ±5%) 15%Increase in watching rented DVD television series (n=395, ±5%) 19%Increase in watching purchased DVD television services (n=456, ±5%) 11%Increase in watching primetime television shows (n=783, ±4%) 25%Increase in watching subscription VoD (HBO) (n=480, ±4%) 19%Increase in watching movies on VoD (n=481, ±4%) 20%Increase in watching free VoD (n=587, ±4%) 19%






Watching Purchased Movies



Video/Entertainment Habits on the Decrease:Watching Rented Movies

Variables that came out as statistically significant in generating a decrease in watching rented movies are:



As in the case with movie purchases, the frequency with which consumers report an increase in watching rented movies is most notable among younger consumers, particularly the 18-24 (39%) and 25-34 (40%) age ranges. Importantly, 28% of the total sample reported an increase in the frequency of watching rented movies.

Variables that came out as statistically significant in generating a decrease in watching rented movies are:



As in the case with movie purchases, the frequency with which consumers report an increase in watching rented movies is most notable among younger consumers, particularly the 18-24 (39%) and 25-34 (40%) age ranges. Importantly, 28% of the total sample reported an increase in the frequency of watching rented movies.


All respondents (n=2,720, ±2%) 29%Increase in watching rented movies (n=775, ±4%) n/aIncrease in watching purchased movies (n=575, ±4%) 24%Increase in watching movies at a theater/cinema (n=343, ±5%) 18%Increase in watching rented DVD television series (n=395, ±5%) 11%Increase in watching purchased DVD television services (n=456, ±5%) 26%Increase in watching primetime television shows (n=783, ±4%) 32%Increase in watching subscription VoD (HBO) (n=480, ±4%) 26%Increase in watching movies on VoD (n=481, ±4%) 28%Increase in watching free VoD (n=587, ±4%) 30%






Watching Rented Movies



Video/Entertainment Habits on the Decrease:Watching Primetime Television Shows

The only variable that is statistically significant in its impact on the decrease in watching primetime television viewing is gender. Twenty percent of males indicate that they are watching less primetime television.

The only variable that is statistically significant in its impact on the decrease in watching primetime television viewing is gender. Twenty percent of males indicate that they are watching less primetime television.


All respondents (n=2,720, ±2%) 18%Increase in watching rented movies (n=775, ±4%) 16%Increase in watching purchased movies (n=575, ±4%) 17%Increase in watching movies at a theater/cinema (n=343, ±5%) 17%Increase in watching rented DVD television series (n=395, ±5%) 16%Increase in watching purchased DVD television services (n=456, ±5%) 18%Increase in watching primetime television shows (n=783, ±4%) 12%Increase in watching subscription VoD (HBO) (n=480, ±4%) 16%Increase in watching movies on VoD (n=481, ±4%) 15%Increase in watching free VoD (n=587, ±4%) 15%






Watching Primetime Television Shows



Video/Entertainment Habits on the Decrease:Watching Primetime Television Shows

Even amongst the most avid online video viewers – consumers who are actually paying for online video – there is not a decrease in the frequency at which they reportedly watch primetime television. Of course, we believe that consumers are shifting their viewing from the TV to the PC, which will impact ad revenue models long-term as online viewing becomes a substitute in some respects for TV viewing.

Even amongst the most avid online video viewers – consumers who are actually paying for online video – there is not a decrease in the frequency at which they reportedly watch primetime television. Of course, we believe that consumers are shifting their viewing from the TV to the PC, which will impact ad revenue models long-term as online viewing becomes a substitute in some respects for TV viewing.

Is Internet Video Decreasing the Primetime TV Audience?

(Q3/08)"How would you characterize the frequency at which you are watching primetime

television shows compared to two years ago?"(Percentage of U.S. Home Broadband Users)

29%36%

53%46%

18% 18%

0%

25%

50%

75%

100%

All Respondents Surveyed (n=2,720, ±2%) Monthly Paying Internet Video Users (n=544,±4%)

Pe

rce

nta

ge

of

Re

sp

on

de

nts

(%

) Watching More Primetime TV (%)

Watching about the Same Primetime TV (%)

Watching Less Primetime TV (%)


Video/Entertainment Habits on the Decrease:Watching VoD Movies

Consumers’ age is a significant variable in both increases and decreases in the frequency of watching VoD movies. The youngest consumers surveyed (age 18-24) are the most likely to report a decrease.

As for increases, consumers age 25-34 are more likely than other age groups to report watching more VoD movies.

Households with digital cable are more likely than non-digital cable households to report an increase in watching VoD movies, confirming the trend that we have seen from the cable MSOs that VoD is starting to become a much more significant component of their businesses.

Consumers’ age is a significant variable in both increases and decreases in the frequency of watching VoD movies. The youngest consumers surveyed (age 18-24) are the most likely to report a decrease.

As for increases, consumers age 25-34 are more likely than other age groups to report watching more VoD movies.

Households with digital cable are more likely than non-digital cable households to report an increase in watching VoD movies, confirming the trend that we have seen from the cable MSOs that VoD is starting to become a much more significant component of their businesses.


All respondents (n=2,020, ±2%) 17%Increase in watching rented movies (n=775, ±4%) 10%Increase in watching purchased movies (n=575, ±4%) 9%Increase in watching movies at a theater/cinema (n=343, ±5%) 10%Increase in watching rented DVD television series (n=395, ±5%) 7%Increase in watching purchased DVD television services (n=456, ±5%) 6%Increase in watching primetime television shows (n=783, ±4%) 11%Increase in watching subscription VoD (HBO) (n=480, ±4%) 6%Increase in watching movies on VoD (n=481, ±4%) n/aIncrease in watching free VoD (n=587, ±4%) 8%


All respondents (n=2,020, ±2%) 17%Own DVR (n=1,010, ±3%) 12%Own high-definition TV (n=1,185, ±3%) 14%Own home theater system (n=832, ±3%) 12%Own Xbox 360/PlayStation3 (n=435, ±5%) 13%Own Media Center PC (n=1,223, ±3%) 13%Own Blu-ray player (n=145, ±8%) 9%Netflix/Blockbuster TOTAL ACCESS subscriber (n=491, ±4%) 13%Watch online movies at least monthly (n=380, ±5%) 14%Watch online TV at least monthly (n=479, ±4%) 14%Xbox LIVE monthly user (n=89*, ±10%) 13%




Watching VoD Movies



Video/Entertainment Habits on the Decrease:Watching Subscription VoD

Age is again a determinant in how the frequency of watching subscription VoD programming has changed. There are no age ranges where statistically significant evidence of a decrease can be found. However, the 25-34 age range is significant for showing an increase. On either side of this age range, both the 18-24 and the 35-44 age ranges both show slightly higher percentages of consumers who report an increase.

Age is again a determinant in how the frequency of watching subscription VoD programming has changed. There are no age ranges where statistically significant evidence of a decrease can be found. However, the 25-34 age range is significant for showing an increase. On either side of this age range, both the 18-24 and the 35-44 age ranges both show slightly higher percentages of consumers who report an increase.


All respondents (n=2,020, ±2%) 16%Increase in watching rented movies (n=775, ±4%) 10%Increase in watching purchased movies (n=575, ±4%) 6%Increase in watching movies at a theater/cinema (n=343, ±5%) 8%Increase in watching rented DVD television series (n=395, ±5%) 8%Increase in watching purchased DVD television services (n=456, ±5%) 6%Increase in watching primetime television shows (n=783, ±4%) 10%Increase in watching subscription VoD (HBO) (n=480, ±4%) n/aIncrease in watching movies on VoD (n=481, ±4%) 5%Increase in watching free VoD (n=587, ±4%) 7%






Watching Subscription VoD



Video/Entertainment Habits on the Decrease:Watching Free VoD

Among the crosstabs and analyses examined, no variables jump out as statistically significant in determining a decrease in activity. However, increases are noted for:

• Consumers age 25-34;

• Lower-income consumers; and

• Digital cable subscribers.

Among the crosstabs and analyses examined, no variables jump out as statistically significant in determining a decrease in activity. However, increases are noted for:

• Consumers age 25-34;

• Lower-income consumers; and

• Digital cable subscribers.


All respondents (n=2,020, ±2%) 10%Increase in watching rented movies (n=775, ±4%) 6%Increase in watching purchased movies (n=575, ±4%) 4%Increase in watching movies at a theater/cinema (n=343, ±5%) 4%Increase in watching rented DVD television series (n=395, ±5%) 5%Increase in watching purchased DVD television services (n=456, ±5%) 4%Increase in watching primetime television shows (n=783, ±4%) 6%Increase in watching subscription VoD (HBO) (n=480, ±4%) 1%Increase in watching movies on VoD (n=481, ±4%) 1%Increase in watching free VoD (n=587, ±4%) n/a






Watching Free VoD



Consumer Interest in VoD Enhancements

Top VoD Enhancements

Value of New VoD Enhancements (Q3/08) "How would you rate the following enhancements of VoD movies for increasing the

likelihood that you would watch them?" (Among digital video subscribers, n=2,028, +2%)

20%

22%

23%

24%

36%

0% 10% 20% 30% 40% 50%

Ability to rent movies on the day they are available topurchase on DVD

Extended time for viewing rented videos

The movie costs at $1 less with 1-3 minutes of ads

Ability to purchase & then burn movies to a DVD

Ability to rent movies for a fee on the same date it comesout in a theater

% Rating Features Valuable (i.e. 6-7 on a 1-7 scale, with 7=Definitely Would Watch More Often)


Nearly 50% of respondents with 3+ children at home say they would watch more VoD if the titles were available on the same day as the theatrical release. This compares to just 30% of those without children at home.

Nearly 50% of respondents with 3+ children at home say they would watch more VoD if the titles were available on the same day as the theatrical release. This compares to just 30% of those without children at home.

Next VoD Enhancements

Value of New VoD Enhancements, cont. (Q3/08) "How would you rate the following enhancements of VoD movies for increasing the

likelihood that you would watch them?" (Among digital video subscribers, n=2,028, +2%)

15%

15%

19%

20%

0% 10% 20% 30% 40% 50%

Ability to purchase & downloadmovies to PC hard drive

Availability of extra features with movies(e.g. director's cuts)

Ability to purchase movies for viewing on TV but aDVD copy is also mailed to you

More titles in HD format

% Rating Features Valuable (i.e. 6-7 on a 1-7 scale, with 7=Definitely Would Watch More Often)


Younger respondents are generally more likely to say viewing would increase if new features were added.

Younger respondents are generally more likely to say viewing would increase if new features were added.

Willingness to Rent VoD Movies with Features for $4.99/$5.99

Willingness to Rent VoD Movies with Features for $4.99-$5.99 (Q3/08)

8%

12%

12%

16%

0% 10% 20% 30%

VoD movies with director'scut

VoD movies in HD format

VoD movies for anextended period of time

VoD movies available onthe same day as the DVD

release

% Renting VoD Movies with FeaturesSource: TV 2.0: The Consumer PerspectiveSample base: 2,729 broadband HHs in the U.S. , ±2%© 2008 Parks Associates:

"If a regular video-on-demand movie is available for $2.99-$3.99, would you be willing to rent... for $4.99-$5.99?"

(Among digital video subscribers, n=2,028, +2%)

Younger respondents are more willing to rent VoD movies if new features are offered.

Early release of VoD titles is particularly likely to trigger rentals by respondents with 2+ children at home.

Younger respondents are more willing to rent VoD movies if new features are offered.

Early release of VoD titles is particularly likely to trigger rentals by respondents with 2+ children at home.

(Among respondents saying day & date VoD releasewould increase their usage, n=939, +3%)

Willingness to Rent a Day & Date VoD Movie for $20

(Q3/08)"If a regular adult ticket price for a movie playing at a theater is $10, would you be willing to rent a VoD movie of the same kind for $20?"

Yes, 20%

No, 67%

I’m not sure, 13%


Younger respondents are more willing to purchase day & date VoD movies than older respondents.

Younger respondents are more willing to purchase day & date VoD movies than older respondents.

Willingness to Rent a Day & Date VoD Movie for $20

Willingness to Purchase TV Season via VoD

Willingness to Purchase TV Season via VoD (Q3/08)"If an entire season of a TV show is available for a video-on-demand download... "

(Among digital video service subscribers, n=2,028, +2%)

18%

25%

29%

0% 10% 20% 30% 40% 50%

Download the entireseason of TV shows viaVoD at the same price as

retail

Download the entireseason of TV shows via

VoD at a discount, but theshows include 5+ minutes

of ads

Download the entireseason of TV shows via

VoD at a discount, but theshows include 1-2 minutes

of ads

% Willing to purchase a TV Season on VoDSource: TV 2.0: The Consumer PerspectiveSample base: 2,729 broadband HHs in the U.S. , ±2%© 2008 Parks Associates:

Interest among lower income HHs (<$50K) does not disproportionately increase when discounted VoD titles are offered.

Interest among lower income HHs (<$50K) does not disproportionately increase when discounted VoD titles are offered.

Consumer Interest in BD-Live Features

Appeal of BD-Live Features

U.S.: Appeal of Blu-ray Player Features "Q414a. If you were purchasing a Blu-ray high definition player,

how appealing are the following features?"(Among BB HHs, n=796, +4%)

14%

17%

17%

21%

22%

26%

35%

0% 20% 40% 60% 80% 100%

Virtual 'viewing party'

Access to content on Internet

Access to personal contentuploaded to sharing websites

Previews

Access to content on PCs

Music On-Demand Library

VOD Library

% Finding Feature Strongly Appealing (i.e. 6-7 on a 1-7 scale)

Source: Digital Media Evolution-Survey 11/15/08Sample: n=2,447 broadband HHs in the U.S. ; ±2%© 2008 Parks Associates

The PC/Internet access features hold relatively strong appeal among those age 18-24. The virtual viewing party feature appeals to those age 25-34 in particular.

The PC/Internet access features hold relatively strong appeal among those age 18-24. The virtual viewing party feature appeals to those age 25-34 in particular.

Appeal of BD Interactive Disc Features

U.S.: Appeal of Blu-ray Disc Features "Q415. How appealing are the following capabilities for Blu-ray, high definition DVD discs?"

(Among BB HHs, n=796, +4%)

9%

10%

13%

14%

15%

15%

15%

18%

20%

20%

29%

0% 20% 40% 60% 80% 100%

Fan chat rooms

Rate favorite scenes that have been shared

Online store with related merchandise

Related multi-player games

Download related content (pictures, ring-tones, clips, etc.)

Picture-in-picture commentary

Share favorite scenes with others

Movie info

Digital copies of a movie

Preview info

Electronic movie rental via player

% Finding Feature Strongly Appealing (i.e. 6-7 on a 1-7 scale)


Respondents age 25-34 generally express more interest in these features, except for the season preview feature. That particular feature appeals more to those age 18-24.

Respondents age 25-34 generally express more interest in these features, except for the season preview feature. That particular feature appeals more to those age 18-24.

Ranking the Top BD Interactive Disc Features

Access to movie rentals dominates by 4X any other feature in rankings.

Access to movie rentals dominates by 4X any other feature in rankings.

U.S.: Most Desired Blu-ray Disc Features "Q416. Please rank the following features... "

(Among BB HHs, n=796; +4%)

5%

3%

6%

6%

7%

5%

21%

7%

9%

2%

4%

2%

3%

4%

4%

5%

4%

7%

5%

5%

8%

5%

6%

5%

4%

0% 20% 40% 60% 80% 100%

Fan chat rooms

Rate favorite scenes that have been shared

Online store with related merchandise

Share favorite scenes with others

Download related content (pictures, ring-tones, clips, etc.)

Related multi-player games

Picture-in-picture commentary

Movie info

Digital copies of a movie

Preview info

Electronic movie rental via player

% Ranking Feature

Most Desired

2nd Most Desired

3rd Most Desired


Willingness to Pay for BD-Live-enabled Player

U.S.: Value of Blu-ray Player Features "Q416a. Assuming that the Blu-Ray HD Player you want to purchase is about $400...how

much extra you are willing to pay to get the (desired) features"(Among BB HHs, n=796; +4%)

41%

7% 7% 6%

4% 2% 2% 2% 2% 3% 3% 2% 2% 1% 1% 1% 1% 1% 1% 1%

7%

0% 0% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

0%

20%

40%

60%

80%

100%

0$

5$

10

$1

5$

20

$2

5$

30

$3

5$

40

$4

5$

50

$5

5$

60

$6

5$

70

$7

5$

80

$8

5$

90

$9

5$

10

0$

10

5$

11

0$

11

5$

12

0$

12

5$

13

0$

13

5$

14

0$

14

5$

15

0$

15

5$

16

0$

16

5$

17

0$

17

5$

19

0$

20

0

Amount Respondent is Willing to Pay

% o

f R

es

po

nd

en

ts


Of the tested features, electronic movie rental has, by far, the strongest relation to a willingness to pay more.*

Respondents will pay around $50 (on average) for new features.

Respondents age 18-34 and those with a HH income above $100K will pay more than other respondents.**

*Based upon a regression analysis of willingness to pay & feature appeal.

** At a 99% confidence level.

Of the tested features, electronic movie rental has, by far, the strongest relation to a willingness to pay more.*

Respondents will pay around $50 (on average) for new features.

Respondents age 18-34 and those with a HH income above $100K will pay more than other respondents.**

*Based upon a regression analysis of willingness to pay & feature appeal.

** At a 99% confidence level.

Contact Information

[email protected]

www.parksassociates.com

entertainment trends research kurt scherf vice president, principal analyst

Documents

qualified respondents

age groups

entertainment habitssection

entertainment usersslides

household servicessection

internet servicessection

video behaviorslides

children old