the converged lifestyle

8/3/2019 The Converged Lifestyle

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The ConvergedLifestyle

Consumers and Convergence 5

kpmg.com/convergence

KPMG INTERNATIONAL
http://www.kpmg.com/convergencehttp://www.kpmg.com/convergence


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Table of contents

2011 KPMG International Cooperative (KPMG International), a Swiss entity. Member rms o the KPMG network o independent rms are aliated with KPMG International. KPMG International provides no client services. All rights reserved.


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02Introduction

04The enabling landline

14The future of commerce10The cloud takes shape

26Ten key takeaways

for businesses

27Why KPMG?

06The device divide

08The trust and privacy

priority

28Demographics

29Methodology

12The reality of socialmediaFor retailers 16

For content providers 18

For advertisers 14

For television 24

For mobile operators 20

For banks 22



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Convergence is not new but theway consumers interact withtechnology is constantly changing.

We believe we are in a new phase o

convergence: the converged liestyle.

Get ready or some ast technology

and even aster consumer adoption.

Ever since our rst Consumers and

Convergence study in 2006, we

have been polling consumers in key

markets around the world to nd

out what devices, technologies andservices they are using and how they

are using them.

Not surprisingly, weve seen a lot

o change in just 5 years. In 2006,

our questions ocused on the use

o landlines, mobile texting, instant

messaging and internet browsing:

smartphones were not widely adopted

by consumers, and tablets did not

exist. Social media was still in its

inancy.

Today, consumers are talking about

how technology enables their liestyle.

From buying goods online to keeping

up with riends on social networks,

consumers seem to be more and more

reliant on a range o technologies that

perorm important although oten

overlapping tasks.

Our survey demonstrates that

convergence is alive and well in 2011.

Sure, consumers are now aced with

a bewildering array o devices. But

they all seem to increasingly serve one

purpose: to enable consumers to get

what they want, when they want it.

The speed o consumer adoption

also seems to be on the rise. In just

7 years, Facebook signed up more

than 800 million active users; and

in just 14 months Apple sold morethan 25 million iPad tablets. But

with rapid adoption comes rapid

change: business models are quickly

evolving or a range o businesses

including advertisers, retailers, content

providers, mobile operators and banks.

Many traditional businesses are acing

signicant challenges adapting to

this new world. The banking industry,

or example, was somewhat slow

to adopt online payments and as a

result lost their share o this growingmarket to companies such as PayPalTM.

Whats more, banks are now seen as

being somewhat new entrants into

the online and mobile markets, and

will need to reassert their security and

privacy leadership in order to build trust

with consumers online.

And while businesses will need to

evolve to meet the changing demands

o consumers, so too will regulators.

New business models oten spin o

supportive ecosystems and upstart

competitors that are important to the

continued vitality o the technology

industry. Regulators must ensure that

the rules promote privacy while still

providing the fexibility or companies

to innovate.

Our survey also highlights some keyconsiderations that seem to drive

consumer purchasing decisions.

For one, there is a growing level o

consumer concern regarding privacy

and security, particularly when using

new services or technologies. Indeed,

the virtue o trust may soon become

one o the biggest competitive

advantages or products and services

across almost all industry groups.

But the results also show that

consumers are xated on price, withmany saying that it trumps all other

considerations when selecting mobile

operators, television options and

internet service providers.

We believe these ndings and the

accompanying analysis demonstrates

a continuing but accelerated trend

towards greater integration o devices

within the consumer liestyle and a

rapid evolution o business models or

those that enable them.

We encourage you to contact your

local KPMG member rm to discuss

the implications o these trends on

your business.

Introduction

Sean Collins

Global Chair,

Telecommunications

& Media

Mark Larson

Global Chair, Retail


2 | T H E C O N V E R G E D L I F E S T Y L E


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T H E C O N V E R G E D L I F E S T Y L E | 3


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The enabling landline

Overthepast12months,around4percentofrespondentsseem

tohaveeliminatedtheirlandlinesbutmorethan80percentstill

believe their landline is important.

Althoughhalf(52percent)ofconsumersmaintaintheirlandlinefor

aninternetconnection,andjustlessthanhalf(47percent)maintain

oneoutofhabit.

AlmostaquarterofallrespondentsfromEurope,theMiddleEastand

Africahavenolandlineatall,versus17percentinAsiaPacicand22

percentintheAmericas.

While some pundits may believe that the traditional landline telephone isa thing o the past, our data shows that consumers are still committedto maintaining their landline connections. Globally, more than 80 percent o

respondents indicated that they have a landline, with the highest concentration

ound in Asia Pacic (83 percent) and the lowest (76 percent) in Europe, the

Middle East and Arica (EMEA).

That being said, global rates did all slightly overall (4 percent) rom last year

indicating the changing use o landlines in many regions. For example, 52 percent

o respondents reported that they maintained their landline as a means o

accessing the internet, while more than 10 percent also saw their landline as achannel or new services such as IPTV.

KEYFINDINGS





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0 10 20 30 40 50 60

By habit

A landline feels more reliable

More cost effective for

some/all services

For an internet connection

In preparation for newservices such as IPTV

Wireless coverage/infrastructure is limited

To be able to use afax machine

For security reasons

Other

2010 (n = 5267) 2011 (n = 9600)

45%

47%

38%45%

40%

54%

52%

18%

11%

14%14%

19%

0%

0%

16%

4%6%

32%

Reason for landline connection

Source: KPMG Consumers and Convergence 5, 2011

Note: Respondents could select more than one option.

n: number of respondents

The rate o decline o xed-line telecommunicationsservices is slower than manyexpected, says Malcolm

Alder, a Partner with KPMGin Australia. But a businesscase based on habit and theneed or internet connectionis clearly not a long-termstrategy.

Landlines clearly continueto be relevant or traditionalreasons such as reliabilityand security,saysCarlGeppert,GlobalTelecommunications &Media Advisory Lead.Butthey are also commonlyseen as the catalyst to newbroadband-based servicessuch as IPTV and streamedvideo services.

Many respondents also seem to hang on to their landline or reasons o comort: 47

percent said that they kept their landline out o habit, and 45 percent said a landline elt

more reliable. This may represent a massive opportunity or operators that can leverage

this stickiness to launch additional services over landlines that drive new revenue

streams and models.

Our data also ound that the propensity to maintain a landline depended on the age o the

consumer. Only 72 percent o people aged 16-24 report having a landline, versus about88 percent o those over 45 years o age.




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The device divide

Eighty-sixpercentofconsumersprefertobrowsetheweb

onaPC,versus8percentonasmartphoneand6percenton

a tablet.

Tabletsareprimarilybeingusedtoreadbooks(45percent

oftabletusers),conductsocialmediaconversations

(28percent)andwatchstreamedTV(26percent).

Rumors o the personal computers demise have been greatlyexaggerated. Indeed, the PC still dominates over all other devices: 88percent o consumers are most likely to conduct their online shopping on

a PC, 86 percent use their PC or internet browsing, and 84 percent use

their PC or email.

Yet although these numbers indicate a continued vitality o the PC, there

is evidence that its oothold as a preerred device is waning. Since our rst

survey in 2006, 20 percent o consumers have moved away rom the PC

or accessing news and inormation, 26 percent have shited their instant

messaging (IM) or chat activities to other devices (primarily mobile) and 18

percent have orsaken the PC or social networking.

Mobile devices have clearly eaten away into the PCs domain. Almost

our-in-ten consumers have used their mobile device at retail outlets to

access coupons, where they previously may have downloaded and printed

coupons, and one-in-ve consumers have done research or comparison

shopping right in-store, by using their mobile device to scan barcodes.

Another signicant area o growth or mobile devices, particularly due to

the web browsing capability o increasingly popular smartphones, has been

in accessing maps and directions. Only 4 percent o respondents to our

Asia seems set to leaprog the rest o the

world when it comes to the use o newtechnologies, commentsEgidioZarrella,a partner with KPMG in Chinas Clients andInnovation Practice. This Asian-led revolutionwill have a dramatic impact on the globalmarket and will largely infuence the uturedesign and sales o new technology products.

KEYFINDINGS




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Wil t PC is clal nt a, t is amplinc tat cnsums a gaitating twas

numus ics, ac wit ti wn bnfts anawbacks, suggsts Gary Matuszak, KPMGs GlbalCai Tcnlg, Mia an Tlcmmunicatins.But as tcnlg cntinus t imp, w will likls t PC bcm lgat t businss unctinstat un ig-unctining tasks.

What is your preferred device when conducting each of the following activities?

Device Personal ComputerMobile Phone /

SmartphoneTablet Other Device

Activity 07 08 10 11 07 08 10 11 07 08 10 11 07 08 10 11

Accessing maps/directions - 89% 75% 68% - 4% 23% 25%

*Option not available

5% - 7% 2% 2%

Accessing news and inormation 96% 95% 83% 76% 1% 2% 13% 14% 5% 2% 2% 4% 5%Banking/personal fnance (mortgage, stocks, etc.) - 96% 85% 84% - 2% 14% 10% 5% - 1% 1% 2%

Browsing the web/internet - - 93% 86% - - 6% 8% 6% - - 1% 1%

Chatting or instant messaging 93% 94% 70% 67% 6% 5% 29% 27% 5% 1% 1% 1% 1%

Emailing - - 89% 84% - - 10% 11% 5% - - 1% 1%

Education/training/webinars - - - 85% - - - 8% 6% - - - 1%

Playing games 72% 68% 77% 72% 6% 7% 17% 19% 6% 22% 25% 6% 2%

Reading a book - - 63% 62% - - 21% 15% 15% - - 16% 8%

Online shopping 98% 97% 90% 88% 1% 2% 5% 7% 4% 1% 1% 5% 1%

Researching products/services - - - 86% - - - 8% 5% - - - 1%

Social networking (Facebook, MySpace, Twitter, YouTube, etc.) 94% 96% 88% 76% 3% 1% 11% 16% 7% 3% 3% 1% 1%Accessing web-based services such as Spotiy, Gmail, Amazon music - - - 79% - - - 13% 7% - - - 1%

Voice conversations 15% 8% 70% 64% 57% 67% 29% 29% 6% 28% 25% 1% 2%

Watching TV programs/movies (streaming) 58% 63% 77% 76% 7% 5% 5% 5% 8% 35% 31% 18% 11%

Communications SMS 19% 13% - - 78% 82% - - - 2% 5% - -

Others - - 79% 73% - - 9% 19% 4% - - 11% 4%

Nt: nt all attibuts w ask in 2007, 2008 an 2010.

T h e C o N v e r G e d L I e S T y L e | 7

2011 KPMG Intnatinal Cpati (KPMG Intnatinal), a Swiss ntit. Mmb fms t KPMG ntwk inpnnt fms a afliat wit KPMG Intnatinal. KPMG Intnatinal pis n clint sics. All igts s.

su in 2008 a accss maps n ti mbil ic sus

25 pcnt ta. Mbil as als stat t mak awa int t gams

sgmnt wit almst n-in-f spnnts using ti mbil gams

an nttainmnt.

Sinc t launc t fst Appl iPa in Apil 2010, tablts a

als captu t mins cnsums. In t 18 mnts btwn t

intuctin tablts nt t makt an t tim u su,

15 pcnt cnsums w aing bks using ts nw ics.

Smwat supisingl, 6 pcnt spnnts als sai t p t

us ti tablts ic cmmunicatin. An wil tablts a sn

incasing aptin ats aun t wl, nw m s tan in Asia

Pacifc w n-in-tn spnnts sai t us ti tablts t watc

staming i (sus just 5 pcnt in t gins).


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90percentofrespondentsvoicedsomelevelof

concernaboutthesecurityoftheirpersonally

identiableinformation(PII)withalmosthalf

sayingtheywereveryconcerned.

However,62percentarestillwillingtohavetheir

onlineusagetrackedbyadvertisers.

Whenaskedwhotheytrustmostonlinewiththeir

data,56percentofrespondentssaidtheirnancial

institutions,30percentsaidsecurepaymentsitessuchasPayPalTM,and7percentweremostlikelyto

trusttheirretailers.

KEYFINDINGS

The trust and privacy priority




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As we have seen throughout th is survey, security and privacy concerns continue to bethe biggest barrier to the adoption o new business models. In particular, consumersseem wary about their security and privacy when using devices and interacting with third

parties. Indeed, nine-out-o-ten respondents said they were concerned about the security

o their personally identiable inormation (PII) and almost hal said that they were very

concerned about the thet o their PII. This represents a signicant increase in concern over

2010 when only 79 percent said the same.

In response, consumers suggested a number o approaches that organizations could take

to build trust, with three-quarters o respondents saying that better disclosure o measures,

brand reputation and independent audits would help to gain consumer trust.

Somewhat perplexingly, however, 62 percent o consumers also demonstrated that under

the right circumstances they are willing to have their online usage tracked by advertisers.

This is also an increase over 2010 when 58 percent o respondents signaled a similar

willingness.

Privacy and security are becoming ever moreimportant to consumers given the rise o mobilepayments and commerce, saysCarlGeppert.Mobile operators will want to promote their securityprotocols every bit as much as they do price andnetwork quality.

While consumers are slowly becoming accustomedto the negatives o technology such as spam andviruses, they are also keen to benet rom theconvenience and immediacy that comes with mobile

devices, notesSanjayaKrishna, Digital ServicesLeader, KPMG in the US. The company or group ocompanies that is able to crack the code o consumertrust in this emerging marketplace is sure to gainmassive dividends rom their online business.

Clearly, this represents a strange paradigm or consumers: increasing concern about

how their PII is being used and secured is tempered by a willingness to have their online

use patterns tracked and analyzed by advertisers. This indicates a signicant business

opportunity or organizations that are able to oer their customers greater value by

collecting their personal inormation in order to tailor their promotions to individual

consumers.

As noted earlier, 56 percent o consumers said that, when it comes to online purchases,

they placed their trust in their nancial institution, indicating that banks continue to be

the best placed organization to win consumers trust. At the same time, 7 percent said

they trusted their retailers most and 6 percent identied their internet service providers.

Interestingly, this survey also shows that consumers are very comortable with secure

payment sites such as PayPalTM, which were deemed to be the most trustworthy by

30 percent o respondents to our survey.




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KEYFINDINGS

While many may consider cloud technology to be a rather new innovation, a signicantmajority o individuals (65 percent) already store some level o personal inormationon the internet, particularly on social networking sites, photo sharing sites and web-based

email services.

In act, it seems that cloud technology has already embedded itsel into the popular psyche

with almost 13 percent o 16-24 year olds saying that they were not aware o web-based

services versus just 5 percent o those over 65 years o age. This indicates that, while the

younger generation use cloud technology on a regular basis, they do not see it as being a

unique service oering but rather an embedded part o the internet inrastructure itsel.

Cloud has already becomesomewhat ubiquitous in theconsumer technology environment,saysSanjayaKrishna. Manyconsumers dont realize how otenthey are accessing the cloud or

services like email, applications andsocial networking.

Sixty-vepercentofconsumersstoresomelevelofpersonalinformation

onaremoteserveraccessiblethroughtheinternet,orinthecloud.

Aquarterofallrespondentssaidtheywereconcernedabouttheirability

to retrieve their data from online services.

Nearlytwo-thirdsofconsumerssuggesttheywouldvaluetheability

toaccesstheirmedicalinformationthroughamobiledevice.

The cloud takes shapeThose that do not currently use web-based, or cloud, services tended to have a number

o concerns with the technology. Fity-seven percent said they were concerned about the

security o their data in the cloud and 52 percent said the same about their PII. A third o

respondents also elt that they had no need or cloud services, apparently content with

storing their data and inormation on local storage devices.

Cloud may gain signicant traction as a way to enable eHealth. When asked i they would like

the ability to access their personal medical inormation on a mobile device, nearly two-thirds

o respondents said yes. However, this sentiment ell signicantly in the over 65 age group,

perhaps refecting the more traditional paternalistic relationship between doctors and patients.




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Not aware of such

services

7%

Concerned about the security

of my data

57%

Concerned about the privacy

of my data

52%

No need for such

services

32%

Concerned about the ability to

retrieve my data

26%

Reasons for not using web-based services


n = 3325


T H E C O N V E R G E D L I F E S T Y L E | 1 1


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KEYFINDINGS

The reality o social media



Eighty-sixpercentofconsumersspendtimeonsocial

networkingeverydayandmorethanaquartersaytheydedicate

morethan2hoursperdaytosocialnetworkingactivities.

PCscontinuetobetheprimaryaccesspointforsocialnetworking

with76percentsayingtheyprefertoconducttheseactivitiesona

PC,versus16percentwhoprefertheirmobiledevice.

Whileathirdofconsumersadmittobeinginuencedbyfan

pagesonsocialnetworks,almosthalflooktoofcialcompany

websitesforrecommendationsandinformation.

Its not just hype: most people are likely to be using social networksto connect with riends, amily and brands. Eighty-six percent o theconsumers surveyed said that they actively engage in social networking on

a regular basis - with nearly hal (49 percent) o them spending at least one

hour on online social networking every day.

It should come as no surprise that three-quarters o respondents preer

to access social networks rom their PC, which may indicate an increased

prevalence towards checking in on their riends and amily while at


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Consumers are ahead obusiness by a breathtakingdistance in social media,saysMalcolmAlder,Partner with KPMG inAustralia. Too manybrands are absent romthe billions o hours oocused, infuential timetheir customers spend insocial media.

Social media is not onlyabout marketing, campaignsand brands, adds Alder.Over time, it has thepotential to help reshape thecustomer service cost basein many B2C sectors.



work or school. However, tablets have made signicant inroads here: already 7 percent

o consumers said they preerred to conduct their social networking activities on a tablet,

versus 16 percent who gain access through their mobiles.

As a result, almost hal o respondents said they have downloaded a social networking

application (app) at some point in the past year; two-thirds o whom have downloaded

more than one app.

However, the infuence o social networking may suer rom a level o hype. Based on oursurvey, it seems that only about a third o respondents admit that they are infuenced in

their purchasing decision by an pages while almost hal say that they look to company

websites instead. This may merely indicate consumers desire to see the technical

specications o products, more typically ound on a companys web-site rather than on

an pages which are predominantly or brand-building.

Integratingmessagesforsocialviewing

With consumers increasingly starting to move towards multi-screen viewing o content

(where, or example, one screen is broadcasting a television show, while the other

screen is being used to discuss the show on social media), content owners now have a

new opportunity to ampliy their messages to consumers.

Content providers are already starting to work with brands to understand the most

appropriate and impactul way to capture the attention o the social viewer. A growing

number are looking at ways to generate additional revenue by partnering with brands to

drive content and increased viewership.


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Customer data is ast becoming the new gold rush. For advertisers and anyone else that has access to large amounts o customer data anew business is burgeoning. According to our survey, nearly two-thirds o

consumers are willing to have their online usage tracked by advertisers, up

rom just hal when this same question was asked in 2008. But there is a

caveat: consumers expect to gain some value rom sharing their data, such as

discounted or ree content or services.

Interestingly, consumers are particular about which device they receive

advertising on. Almost hal o all respondents said that they were willing to

receive ads on their PCs. But they were much more protective o their mobile

device with just 38 percent saying they preer ads to be distributed via thischannel.

The consumers age also makes a dierence in their acceptance o

advertising; more than three-quarters o respondents aged between 16 and

24 years indicated that they were wi lling to receive advertisements versus

less than hal (48 percent) o those over 65 years o age.

For advertisers

KEYFINDINGS

The uture o commerce

Almosttwo-thirdsofconsumersarewillingtohavetheir

onlineusagetrackedbyadvertisers,particularlywhen

trackingprovidesapayoff.

Consumersare10percentmorelikelytoaccept

advertisementsontheirpersonalcomputersorlaptops

than on their mobile devices.

Youngerconsumersaretwiceaslikelytobewillingto

receiveadvertisementsasareconsumersovertheageof65.




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2008 2010 2011

14% Very willing

36% Somewhat willing49% Not at all willing

14% Very willing


16% Very willing


Willingness to be tracked online in return for cheaper or free content

1%Other


n = 4190 n = 9600n = 5627

Collectingdatathroughprivacywalls

With consumers increasingly willing to be tracked

by advertisers, many companies are now looking or

ways to collect more valuable customer data romtheir digital assets.

One approach is to require ree registration to

access content. By compelling visitors to complete a

registration orm, companies can collect a wealth o

demographic inormation and preerences. Layering

this inormation over online tracking adds exponential

value to the data.

Rather than a paywall, where companies demand

subscription ees or one-o payments in return

or content, introducing a privacy wall trades a

consumers online behavior patterns and data or ree

or lower cost content.

Companies ollowing this strategy must ensure that

the content provided behind these privacy walls is

compelling. Otherwise, consumers will quickly eel

they are being exploited or their personal data.

Those companies that can accurately track and manage theircustomer inormation are increasingly looking to monetize their dataassets by sharing their ndings with others, says TudorAw, Head oTechnology, KPMG in the UK. It will be interesting to see what the

bigger players like Facebook and Amazon will do with the masses ocustomer inormation at their disposal.

It is worth noting that consumer acceptance o advertising

overall while still buoyant dropped two percent over last

year or both PCs and mobile devices.

As consumers show more willingness to have their

online activity tracked, advertisers will start to undergo

a undamental shit rom blast advertising campaigns

towards more personalized and value-added promotions.More importantly, it opens a new revenue stream or

any company that can own their customers data and

successully monetize it in the market (see the privacy wall

sidebar).




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KEYFINDINGS

Globally,consumersaremorelikelytopurchaseightsor

vacations,electronics,orphysicalCDs,DVDs,booksand

video games online than in a store.

Manyconsumersprefertoseeandfeelluxurygoodsand

groceriesbeforebuying,with41percentofrespondents

unlikelytopurchasefoodonline,and47percentpreferringto

purchaseluxurygoodsinperson.

Thirty-eightpercentofrespondentsusedtheirmobile

deviceatretailoutletstoaccesscoupons,andoneinve

hadscannedaproductbarcodetocomparepricesorfor

more information.

Is the weekly trip to the store about to become a thing o the past? For some retailers, theanswer seems to be a resounding yes. Across every category o goods, the majority orespondents said they preerred to purchase items online rather than at a physical outlet.

Almost 70 percent o consumers told us that they were most likely to buy fights and vacations

online and 65 percent said the same about physical CDs, DVDs, books and video games.

But this hardly spells the demise o the retail outlet, particularly or grocery and luxury goods

retailers. Almost hal o all respondents said they were not likely to purchase luxury goodsonline and our-in-ten consumers still seem to shun online grocery shopping. These trends are

particularly evident in the Americas where more than three-quarters o respondents said they

would book a fight online, but only 21 percent said they were likely to buy groceries without

visiting the store. Clearly, consumers are more likely to want to personal ly evaluate the quality

or authenticity o some products more than others. For these products, retailers will need to

continue to oer them in stores as they strive to build consumers condence and trust in their

online oerings.

For retailers

The integration o the various channels is

becoming increasingly important to retailersas they begin to see many o their customersmove to online purchasing, says Mark Larson,KPMGs Global Chair o Retail.





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The increasing use osmartphones and tablets bycoch

un

nsumers will represent a sea-ange or retailers who need to

derstand the opportunities andrisks that mobile devices mightpresent, adds Mark Larson.

Asian consumers led by China are doing more o their purchasingonline, notes EgidioZarrella.Asia has also seen exponentialgrowth in the use o mobiledevices or both purchases andpayments.

Even within the store, the customer experience is rapidly changing. More

than a third o consumers surveyed use their mobile devices to store, access

and redeem coupons or in-store purchases, and retailers can expect this

trend to increase. More than one in ve scanned a product barcode or quick

response (QR) code to obtain more inormation about the specic product

or campaign. So while display ads and fyers are still an important part o

the retail promotional mix, mobile innovations are also rapidly capturing theimagination and attention o consumers. Retailers are also investing more

in location-based marketing, so that coupons can be sent to a consumers

mobile device when they are in the proximity o the retailers store.




20/32

The future of commerce

For content providers

W it coms to slli cott oli, cosumssm lal uwilli to pa up. St-t pctsai t o ot pa o a cott o a wbsit t

isit, a 56 pct sai t woul look lsw at

ta pa o cott. O tos tat o pa o oli cott,

almost al sm willi to pa o books, wil 46 pct

woul pa o io a 44 pct o music.

Iomatio pois, ow, ma ac mo ifcultis i

coti ti cott ito us. Ol 30 pct sai

t woul pa o busiss ws, wil lss ta o-i-f

iicat tat t woul b willi to pa o itatioal o

atioal ws, tal iomatio o spots ws.

Itstil, w ask w t a willi to pa o

oli cott, 44 pct sai tat t up pai

oc a tial laps, poi tat ma o t taitioal

tciqus o aii subscibs a aluabl i t oli

wol as wll. Mo ta al (55 pct) also sai tat t

woul pa i t bli t qualit o t cott was

btt oli.

A wil mobil apps sm to b a uawa succss, mo

ta six-i-t cosums sai t w mo likl to pa

o cott o ti PC o laptop a ol o-i-t sai t

woul pa o cott o a tablt. Tis fu ma is as

tablts t mo wispa i t makt.

O cous, oli subscibs also o cott pois

wit a w u stam i t om o custom ata. I

muc t sam wa as atiss (s pas 14/15), tis ic

souc o ata ca ot b collct a sa wit ot

oaizatios tat l o ti a moapic ata. A

umb o cott pois a ala looki at appoacs

o motizi ti iital siu (s call out box o pa

19) to i w soucs o u.

Key Findings

Only6percentofconsumersarewillingtopay

forfullaccesstoawebsite,asignicantdrop

from16percentin2010. Almostthree-quartersofrespondentscurrently

donotpayforanyoftheonlinecontentthatthey

access.

Iffacedwithanewpaywall,lessthanhalfof

consumerssaytheywouldbewillingtopayfor

continuedaccesstocontent.

18 | T h e C O n v e r g e d L I e S T y L e

2011 KPMg Itatioal Coopati (KPMg Itatioal), a Swiss tit. Mmb fms o t KPMg twok o ipt fms a afliat wit KPMg Itatioal. KPMg Itatioal pois o clit sics. All its s.


21/32

Recycling digital residue

Whas tatal ata cllct lagl ls pt tackg custm actt, th cllct

gtal su (aaltc ata cllct sts t a wbst) t happs th backgu a s

al cuct wth cst.

Clal, ths statg ps bussss a csums up t a ag w challgs. Tm a aga

thugh ths su, csums ha cat a sgfcat cc abut th uapp us th

psal ata. F cmpas, takg stwashp th ata that maks up th gtal su qus

sus plag a csat; th cllct a sal gtal su has b th subjct much ma scut a lgslat act ct mths.

As a sult, cmpas a xplg w appachs t cllctg a usg gtal su.

McStatgs Gatwa puct, xampl, gs bas ct accss t csums scal gaph

Facbk, allwg bas t psalz th ptchs a cuct ch aaltcs csum

pcs a ts.

Bulg a stg a sustaabl u

stam ctus t b th bggst challg mst ctt ps, bls PaulWissmann, Ha Ma, KPMG th US.Th a a umb u mls bgtst th makt but ultmatl t s thcsum that wll c what th a wllgt pa a wh.

T H e C o n v e r G e d L i F e S T y L e | 19

2011 KPMG itatal Cpat (KPMG itatal), a Swss tt. Mmb fms th KPMG twk pt fms a aflat wth KPMG itatal. KPMG itatal ps clt scs. All ghts s.


22/32

For mobile operators

When it comes to consumer selection o mobileoperators, it seems that the availability o populardevices and access to exclusive content mean less to

consumers than the basics: coverage, service and price.

The quality o an operators coverage (cited by 80 percent

o respondents), the level o customer service (78 percent)

and price (77 percent) were almost universally identied

as the most important actors. Perhaps surprisingly, less

Not important at all2 3 4

Very important

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

Others (n = 113)

If you changed

or lost your job

Ability to use mobile

phone outside my country

Device (phone)

selection

Opportunity to

unbundle services

Opportunity to

bundle services

Access to exclusive

content/services

Quality of

network/coverage

Quality of

customer service

Price 4% 5% 15% 27% 50%

2%

4% 17% 29% 49%

4% 14% 29% 51%

8% 13% 30% 27% 22%

8% 13% 34% 26% 19%

9% 13% 35% 26% 18%

8% 11% 28% 30% 24%

13% 13% 24% 26% 25%

28% 13% 27% 17% 15%

11% 4% 19% 13% 53%

2%

Factors driving consumers to change mobile service provider

*Percentages might not add up to 100 due to rounding off Source: KPMG Consumers and Convergence 5, 2011 n = 9562

1 5


KEYFINDINGS

Whenselectingamobileoperator,consumers

weremostinuencedbytheoperatorscoverage

(80percent),qualityofcustomerservice(78

percent),andprice(77percent),ratherthanthe

availabilityofaspecicdevice(54percent).

While88percentofrespondentsreported

downloadingamobileapplication(app)totheirmobiledevice,41percentdidnotpayforany

ofthemand39percenthadpaidforlessthana

quarter.

Almosthalfofallrespondentscitedaveryhigh

levelofconcernregardingsecurity(48percent)

andprivacy(48percent).




23/32

Provingprivacycredentials

The vast majority o consumers are concerned about their data getting into the wrong hands. Around 90

percent o respondents indicated that they were either somewhat or very concerned about the potential ortheir credit card inormation to be intercepted rom their mobile phone and an equal number voiced some

level o concern about the threat o unauthorized parties accessing their personally identiable inormation

when using their mobile devices.

But by developing, deploying and promoting robust security and privacy controls, organizations can

instead build trust with consumers so as to encourage more sharing and allow more tailored service.

From our experience, customers tend to have greater trust or organizations that meet or exceed

regulations. This might include compliance to the EU Cookie Directive, or certication against

international standards like ISO27001. Regardless, mobile service providers that can prove their

credentials will ultimately gain more trust rom customers and i security is tightly managed

enhance their online reputations.

than hal o all respondents suggested that the opportunity to bundle or unbundle ser vices

(45 percent) was an important actor when changing mobile service providers. For mobile

businesses the message seems clear: unique content may dierentiate your service, but it

will not drive customer acquisition in the same way that price will.

And while many mobile service providers are using apps to drive revenue and customer

retention, it seems most customers are simply not willing to pay or them. There is no

doubt that consumers love apps: almost nine-in-ten report having downloaded at least oneto their mobile device recently. But getting consumers to pay or the apps is anything but

simple: 41 percent say they have never paid or an app (up rom 36 percent in 2010) and a

similar number (39 percent) say they paid or only one-in-our.

However, it is also clear rom evidence in the market that when oered the right app at

the right price consumers are willing to pay. Rovios Angry Birds recently surpassed

the 500 million download mark.

With new regulation andindustry standards now

coming to the ore, mobileoperators will need to redenetheir uture business models,says CarlGeppert. It is nolonger a case o i you buildit they will come. Today itis a matter o i you build itwho will come and more

importantly who will pay?




24/32

For banks

I

n our rst Consumers and Convergence survey in 2006,

the majority o respondents indicated that they did not

have access to mobile banking services and even i

they did were reluctant to utilize such a service. This has

changed dramatically over the last 5 years, and now

62 percent o respondents are aware that their bank oers

mobile banking ser vices. Whats more, more than hal o

respondents to our survey indicated that they had used

mobile banking services within the past 6 months, proving

that consumers are very open to using their mobile devices

to conduct every-day transactions.

This is particularly true in developing world countries where

vast portions o the population are unbanked and have

adopted mobile payments as a quick and reliable way totranser money across geographies. In Arica, or example,

Saaricom took advantage o rapid mobile adoption rates

and a strong demand or saer, more convenient ways to

send remittances by launching M-Pesa, a mobile payment

service. By the start o 2011, M-Pesa had signed up more

than 8 million customers in Kenya, equivalent to 40 percent

o the adult population.

One o the biggest barriers to the broader adoption o mobile

banking seems to be concerns over security and privacy. O

the respondents who had not used mobile banking, almost

hal (48 percent) cited this as a barrier to their own personal

adoption o mobile banking. This echoes the ndings o a

recent KPMG survey o banking executives (The Evolution of

Mobile Payments)where 71 percent said that security was a

leading concern when developing their mobile service.

Trust also continues to be a major challenge or the nancial

services industry. When asked who they trust the most with

their data, a majority (56 percent) o respondents identiedtheir banks, but 30 percent said they trust secure payment

sites such as PayPalTM rather than their traditional nancial

service provider.

While many banks have launched mobile banking services, ew are ready orthe change that mobile payments will bring, saysDavidSayer, Global Heado Retail Banking at KPMG. Banks will need to work with retailers, mobileoperators and technology companies to develop a mobile payment solution tomeet the growing demand o consumers.

KEYFINDINGS

In2011,morethanhalfofallrespondentssaid

theyhadusedsomeformofmobilebankingin

thepast6months,anincreasefromaround40

percentin2010andjustunder20percentin2008.

Thirty-eightpercentwereunawarethattheir

bank provided mobile banking services.

SecurepaymentsitessuchasPayPal TM are a more

preferred method of online payment than credit

cardsforconsumersinEuropeandtheMiddleEast.





25/32

(n = 612)

(n = 2315)

(n = 5021)

2008

2010

2011

0%

10%

20%

30%

40%

50%

60%

19%

41%

52%

BANK

Have used mobile banking in the past 6 months


Interestingly, while security and privacy was by ar the most-oten cited reason or not

using mobile banking in 2010, this years survey indicated that consumer behavior might

also be impacted by device preerence rather than security: more than hal o those who do

not use mobile banking say that they preer to conduct their banking on their PC rather than

mobile device. However, this data may also indicate that consumers might continue to pay

their bills and conduct transers on their PC, yet preer to use their mobile devices or retail or

other on-the-go transactions.

One should anticipate that in our next Consumers and Convergence report new

technologies will be introduced that will urther revolutionize the banking and payments

industry. Near Field Communications (NFC) capabilities a technology that enables

contactless payments through mobile devices are widely anticipated to be embedded

in uture smartphone releases, and m-Wallet initiatives have already been introduced by

both traditional and non-traditional players alike. Clearly, much change is still ahead or the

banking industry.

Trust is a signicant issue or banks as they moveinto the digital world, saysDavidSayer. A growingnumber o banks are looking to social media toenhance their brand reputations and build strongerrelationships with their customers.

Onlinebankingbecomesmoresecure

According to a recent study by Financial Fraud Action UK, the incidence o online banking

raud in the UK has signicantly dropped in the past 2 years. Online raud in the UK ell by

36 percent in 2010, and dropped a urther 32 percent in the rst hal o 2011.

This shows that banks have made signicant progress in combating the risks

associated with online banking and i they are able to translate these gains into the

mobile world should be well placed to tackle mobile banking raud as well.

O course, there is anecdotal evidence showing that part o this reduction may also be

a result o the changing ace o cyber-crime. Many o the more sophisticated organized

crime syndicates seem to have set their sights on companies that hold large volumes

o personal data and payment credentials, but do not maintain the same rigorous

security o most banks.




26/32

For television

A owi umb o coum m a to jttio ti taitioal tlviio vic. Ala, o-

i-t pot tol u tat t o ot cutl ubcib to a TV vic at om, a 52 pct

ai tat t ala it owloa cott oli o viwi lat o acc ti avoit tlviio

ow tou itt tami vic. Ti pt a at oppotuit o poamm tat a

abl to liv vio to ti cutom aco a vait o mium a vic.

Ou uv iicat tat coum a icail app wit t qualit o oli vio cott. I

ou uv i 2010, litl mo ta 35 pct o pot wo w coii cutti ti

TV vic cit t qualit o itt cott a t pim motivato; toa, mo ta 60 pct a

t am. Clal, coum av ow xpic t impovi qualit o itt vio optio

a i o t oppotuit to ai at covic, pic o qualit wi ll likl mov awa om

taitioal tlviio vic i t utu.

A a ca i poit, 16 pct o to wo cutl av TV vic at om ai tat t pla to

tmiat ti ubciptio witi t xt a.

T mc o altativ to tlviio utilit coum i to acc t cott twat, w t wat it, o ti coic o vic,commt Carl Gpprt. Ti ial a iifcat it icoum bavio tat ma av a-aci implicatioo vio vic povi.

Key FindinGs

Sixteenpercentofrespondentsthatcurrentlypayfortelevision

subscriptionssaytheywillcanceltheirsubscriptionswithinthe

nexttwelvemonths,withthemostsignicantnumbersinIndia

andChina.

Morethan60percentofconsumerssaytheyarehappywiththe

qualityofthevideocontenttheyreceiveontheinternet,upfrom

around35percentin2010.

ConsumersarestartingtoseemorevaluefromtheirTV

subscriptions,withonly40percentcitingvalueasareason

fordiscontinuingservicesversusmorethan50percenttwelve

monthsago.

The future of commerce

24 | T h e C O n V e r g e d L I e s T y L e

2011 KPMg Itatioal Coopativ (KPMg Itatioal), a swi tit. Mmb fm o t KPMg twok o ipt fm a afliat wit KPMg Itatioal. KPMg Itatioal povi o clit vic. All it v.


27/32

0%

4%

3%

21%

18%

33%

38%

48%

39%

54%

40%

61%

36%

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

Other

Change in household

composition

Do not watch enough

Bundling

Value

Happy with video contenton the internet

2010n = 339

2011n = 1379

Reasons for eliminating home TV subscription


With more consumersstarting to watch TV throughnon-traditional channels,content-providers will needto rethink their businessmodels, says CarlGeppert.

We will likely see muchmore experimentation withad-supported models such asbrand-ready content and on-airproduct placements.

Pricing is clearly a driver in the move rom cable

subscriptions. But the survey shows that the majority o

consumers may not be willing to pay or videos or programs

accessed online either. Only 31 percent o respondents say

they pay or videos they download or later viewing, and 41

percent pay or access to video streamed on the internet.Juxtaposed against the 84 percent that say they pay or their

cable TV service, it becomes clear that driving revenues

rom online video will require TV companies to rethink their

business models.

There is every indication that this trend will continue as

seamless internet content viewing becomes a reality and

content aggregation and navigation is simplied. However,

pricing will also be a concern as these new business models

develop. To maintain their dominance, existing providers wil l

need to nd ways to dierentiate themselves, likely based

on quality o content, ease o use and price.




28/32

Ten key takeaways or businessesThere should be no doubt that technology is rapidly reorming the way businesses

interact with their customers. Throughout our report, we have identied trends and

shits in consumer preerences that are already changing the very undamentals o

revenue creation and generating new opportunities or businesses to expand their

ootprint and drive exponential growth.

At the same time, traditional business models particularly in the music, publishing,

advertising and broadcast television sectors are ast evolving. Any business that is not

already preparing or signicant change will almost certainly nd the next ew years to

be challenging, to say the least.

So how will businesses adapt to the constantly changing environment? Based on our

experience and ndings in this report, we have identied ten key takeaways that will

be critical to businesses across every sector and geography.

1. Privacy and trust:

Organizations engaging with customers over digital channels mustocus on building trust and ensuring the security and privacy o their

customers personal data. Trust will soon become the most signifcant

dierentiator or online businesses.

2. Willingness to pay:

Across all sectors, customers are looking or ways to reduce

the cost o their technology without jeopardizing quality. From

television service providers to mobile operators and ISPs,

businesses will need to rethink their revenue models and price

points.3. Impact of mobile devices:

From mobile coupons to location-based advertising, mobile devices

oer a wealth o new opportunities to businesses. Far rom simply

optimizing web assets or the mobile platorm, businesses will need to

rethink the way they interact with their customers.

4. Value of data:

As customers increasingly start to expect customized services, businesses

will ocus more and more on identiying, capturing and analyzing customer

data to gain greater insight into their preerences and demands. The

challenge will be in fnding the right price to both appeal to customers and

achieve proftability.

5. Owning the customer:

As more technologies converge, businesses are fghting to decide

who owns the customer (and their data). The issue is particularly

raught in the banking and retail sectors, where businesses hope to

establish themselves as a conduit to a range o other services.

I am astonished when I see that dataprivacy and security is not only themost critical issue among consumersworldwide, but that year over year thoseconcerns increase, says TudorAw.This is a key issue that should have

been addressed by now.




29/32

The pace o change is quickening. Emerging technologies,

shiting customer demands, evolving regulations and new

revenue streams are all bursting onto the business scene

at an astounding speed. KPMG rms understand thecomplexities o change. We work closely with business

leaders, government agencies and technology providers

to identiy and develop new approaches to business that

help our clients cut through the complexity o the change

around them. And with hands-on experience across multiple

industries and deep insight into consumer trends, we know

what it takes to thrive in this rapidly changing and highly

volatile environment.

We encourage you to contact your local member rm or the

authors o this study to learn more about KPMG rms service

oerings and experience.

6. Multi-channel convergence:

Many consumer-acing businesses are putting increased ocus onintegrating their various channels to create a consistent and compelling

brand presence across multiple mediums. Multi-screen viewing will

oer new opportunities to converge messaging or businesses.

7. Mobile payments:

The introduction o mobile payments will undamentally redraw the

relationship between banks, retailers, telecom providers and device

manuacturers. Adoption by retailers and banks will only increase as

more customers demand the convenience o mobile payments.

8. Social media:There is ample evidence that businesses utilizing social media to

communicate with customers are building stronger, more trusting

relationships. With consumer use outpacing business use, many

organizations will need to play catch-up i they hope to meet the

expectations o their consumers.

9. Online viewing:

The move towards viewing video content online is changing

the business model not only or content providers, but also or

advertisers and technology companies. Businesses operating in this

arena would be wise to rethink their mix o traditional versus online

oerings.

10. Meeting customer demand:

The converged liestyle has empowered consumers who are increasingly

vocal about their preerences and demands. Businesses that are able to

gauge and respond to this evolving consumer relationship will ultimately

build stronger relationships and gain critical trust with their customers.

Why KPMG?




30/32

Demographics

Not employed

Full-time student

Full-time stay at homeparent or caregiver

Self-employed

Employed full-time

Employed part-time

Employed but work from home(full-time or part-time)

Employment status

63%7%

6%

3%

8%

4%5%

3%

Region

55%

28%

17%

EMEAASPACAmericas

25-34 years old

35-44 years old

45-54 years old

55-64 years old

65 years old and above

16-24 years old

Age

30%

12%

6%2%

30%

20%

Retired


n = 9600




31/32

MethodologyThis survey was conducted in the summer o 2011 and included 9,600

consumers across 31 countries. All surveys were conducted online,

except in Nigeria and Saudi Arabia where telephone interviews wereconducted. All respondents had to own either a laptop/notebook

computer, tablet computer, smartphone or mobile phone. Data was

weighted against mobile phone subscribers in each country to provide a

more relevant population sample. Results have been compared across

regions and age groups, and to prior year surveys where applicable.

Participating countries

Australia Ireland

Brazil Philippines*

Canada Poland

China Portugal*

Czech Republic Romania

Denmark* Russia

Dubai* Saudi Arabia*

France Singapore*

Germany South Arica

Hungary South Korea

India Spain

Italy* Sweden

Japan Switzerland*

Mexico* UK

Netherlands US

Nigeria*

*markets that are new to the survey this year

2011 KPMG International Cooperative (KPMG International), a Swiss entity. Member frms o the KPMG network o independent frms are afliated with KPMG International. KPMG International provides no client services. All rights reserved.

AcknowledgementsWe would like to thank the ollowing people or their valuable contribution to this

study:

All survey respondents, the Evalueserve research and design teams. Charles

Garbowski and Hasan Dajani rom KPMG in the US, and Mark Hartley rom KPMG in

the UK.

The KPMG project team: Natalie Cousens, Peter Schram, Ines Meier, Elaine Pratt,

Joanna Wells, Jennier Samuel, Ryan Dunshea, Dane Wole and Sarah Vella.

All KPMG frms partners who provided their insight, including Sanjaya Krishna, Car l

Geppert, Paul Wissmann, Mark Larson, Jennie Cull, Malcolm Marshall, Stephen

Bonner, Malcolm Alder, David Sayer, Egidio Zarrella, Sean Collins, and especially

Stephen Baird in Canada and Tudor Aw in the UK.


32/32

Contact usFor urther inormation about this publication and our frms services, please contact:

Gary Matuszak

Global Chair, Technology, Media and

Telecommunications

T: +1 650 404 4858

E:[email protected]

Sean Collins

Global Chair, Media and Telecommunications

T: +6 56 597 5080

E:[email protected]

Willy Kruh

Global Chair, Consumer Markets

T: +1 416 777 8710

E:[email protected]

Mark LarsonGlobal Chair, Retail

T: +1 502 562 5680

E:[email protected]

Technology, Media & Telecommunications

Regional Contacts

Europe, Middle East and Arica

Joe GallagherT: +44 20 7311 3044

E:[email protected]

Tudor Aw

T: +44 20 7694 1265

E:[email protected]

Americas

Gary Matuszak

T: +1 650 404 4858

E:[email protected] m

Asia Pacifc

Yoko Hatta

Head o Technology

T: +81 36 22 98 350

E:[email protected]

Peter Mercieca

Head o Telecommunications & Media

T: +61 2 9455 9155

E:[email protected]

Consumer Markets

Regional Contacts

Europe

John MorrisT: +44 20 7311 8522

E:[email protected]

Americas

Patrick Dolan

T: +1 312 665 2311

E:[email protected]

Asia Pacifc

Nick Debnam

T: +852 2978 8283

E:[email protected]

The views and opinions expressed herein are those o the sur vey respondents and do not necessarily represent the views and opinions o KPMG International or KPMG member frms.

The inormation contained herein is o a general nature and is not intended to address the circumstances o any particular individual or entity. Although we endeavor to provide accurate and timely

inormation, there can be no guarantee that such inormation is accurate as o the date it is received or that it will continue to be accurate in the uture. No one should act on such inormation

without appropriate proessional advice ater a thorough examination o the particular situation.

2011 KPMG International Cooperative (KPMG International), a Swiss entity. Member frms o the KPMG network o independent frms are afliated with KPMG International. KPMG International

provides no client services. No member frm has any authority to obligate or bind KPMG International or any other member frm vis--vis third parties, nor does KPMG International have any such

authority to obligate or bind any member frm. All rights reserved.

Any trademarks or service marks identifed in this document are the property o their respective owner(s).

The KPMG name, logo and cutting through complexity are registered trademarks or trademarks o KPMG International.

Designed by Evalueserve. Publication name: The Converged Liestyle. Publication number: 111227. Publication date: December 2011

kpmg.com
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