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Internet TV in 60% of homes by 2014; new business, content models needed

An anticipated surge in the household penetration of next-generation Internet-connected devices indicates solid consumer interest in new content to experience on these devices, according to a new study by global consulting firm Bain & Company presented at the Forum d'Avignon.

The study finds however that while consumers are inclined to increase their adoption of online content for video consumption, video games, live entertainment and cultural activities, media companies and cultural institutions face stiff competition for incremental consumer spending unless new business models and "ambitious content" are created.

Bain's survey of 3,000 consumers in France, the United Kingdom, the United States, China and India suggests that a high degree of consumer enthusiasm may have limited incremental profit potential for businesses unless new innovative ways for experiencing content are developed.

Bain finds that the biggest shift in the connected content experience will come in video. Half of respondents in the US and UK intend to rely more on search engines to find content, while one-third plan to use their network of friends to choose their favorite "must-see TV."
The latter figure jumps to 45% for consumers in India and China, although lack of infrastructure will limit the ability of many to view video on connected devices, particularly in India.

Fictional programming lends itself particularly well to such a transition, according to the survey, and the increasing connectedness with the Internet could also accelerate the development of short formats born on the web. Both amateur and professional webisodes have attracted sizeable, albeit still limited, audiences online.

Thirty to 45% of those surveyed in Western markets expressed interest in such formats on connected devices, though nearly two-thirds are not willing to pay. In contrast, approximately three-quarters of those surveyed in India and China expressed interest in webisodes.

Video games are fertile ground for creating innovative content experiences. Forty percent of those surveyed in Western markets use a connected console or terminal and more than 60% of the occasional players surveyed said that they were likely to increase their game playing. Yet, a generation gap will remain amongst gamers; while 60% of those under age 35 see themselves playing more on connected devices, fewer than 25% of those older than 55 agree.

Other cultural and entertainment activities, such as live entertainment and visual arts, currently have limited online options. While approximately two-thirds of Western consumers expressed strong interest in connected cultural experiences, fewer than one-third envision spending more time on such activities. Many live performances attract only small, niche audiences, which restricts the availability of options that can be produced profitably.

Along similar lines, three-quarters of those planning to visit museums more frequently due to connected content are already regular visitors, whereas fewer than 18% of non-visitors intend to allocate more time to cultural institutions due to connected experiences.

That said, roughly four times as many people said that they were willing to pay for a smart phone/tablet application as an improved museum audioguide than those paying for a museum audioguide today.

"Significant change lies ahead for the media and entertainment industry as content platforms, new entrants, and incumbents battle for profits and market share," the report.

Story filed 28.11.11

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