Consumer Intelligence Series: Seeing it now: The hidden value of digital rights lockers

Transcription

1 Cnsumer Intelligence Series: Seeing it nw: The hidden value f digital rights lckers

2 Seeing it nw: The hidden value f digital rights lckers Cnsumer discvery sessins held in March Overview Thrugh PwC s nging cnsumer research prgram, we gain directinal insights n cnsumer attitudes and behavirs in the rapidly changing media landscape. Our series explres Digital Transfrmatin in the Entertainment, Media and Cmmunicatins industry. As traditinal DVD sales cntinue t decline, we recently explred cnsumer interest in the ptential use f Digital Rights Lckers fr film distributin. This reprt summarizes ur learnings frm tw discvery insight sessins held in Santa Mnica, CA., with cnsumers aged and Summary Fr tday s tech-savvy cnsumers, the shift frm physical media t nline distributin is all abut gaining the ability t access and manage cntent n demand. They want t access cntent frm multiple devices: mbility is key. They als wantand expect-the ability t dwnlad, share, and stre everything frm vides and music files t full-length mvies. Enter digital rights lckers (DRLs). Based n clud strage technlgy, DRLs have unlimited strage capacity, allw fr lightning fast dwnlads, and imprve the ability t access and share cntent acrss multiple devices. Yet even tech-savvy cnsumers appear t have little awareness and understanding f prpsed cmmercial uses f DRLs t manage media and entertainment cntent. Many dn t see the benefits, while thers express cncern ver security, privacy, and quality. Businesses have an pprtunity t reach cnsumers by clearly demnstrating the value prpsitin fr DRLs with respect t quality, interperability, and the threat f technlgical bslescence. Key findings 1. Cnsumers have little awareness and understanding f digital rights strage: There is a basic need fr businesses and marketers t clearly explain the value f DRLs. While cnsumers appear t be smewhat familiar with the cncept f clud strage, they d nt have a slid understanding f the benefits and advantages. Hwever, they appear t be interested in learning mre, especially related t: Unlimited strage capacity. Cnsumers expressed an interest in the pssibility f strage beynd their current hard drives but haven t made the cst/benefit cnnectin t limitatins n their existing hard drive capacity. As ne cnsumer put it, Yu can always update yur hard drive. Speed. The ability t rapidly access and dwnlad t multiple devices is highly appealing. ( Having smething that s instantly saved and archived, ready fr yu, is great. ) PwC 2

3 If yu lad up yur lcker with all srts f stuff, wh s t say that yu re nt ging t start selling yur user name t give ther peple access t all f this stuff that yu bught? Cnsumer, Unlimited ability t access/share cntent and imprved interperability f devices. This is critical t prmtin f digital rights lckers. Fr mst, the ability t share cntent especially acrss multiple platfrms is a huge benefit. Digital rights lckers shift the burden f transcding and string extremely large vide files away frm individual users. When asked t envisin the future f mvie wnership, cnsumers cnsistently identify several key themes, including: One place t stre everything Ability t share cntent with peers (especially imprtant amng yunger grup) Ability t dwnlad instantly t any and all devices withut restrictin Ability t access anywhere mbility remains key Quality is undiminished and nt restricted by device Cnsumers still have cncerns and questins abut digital rights strage. Key cncerns include: Ownership: Wh is respnsible fr maintaining the lcker? Obslescence: What happens t the cntent f yur lcker if the next big strage ptin cmes alng? Will they have t pay fr their cntent all ver again? Interperability: What if all the majr studis and device manufacturers dn t participate in a cmmn DRL apprach? Will we have anther platfrm battle like Blu-Ray/HD-DVD r VHS/Beta? Malware? As ne cnsumer said, What if smebdy uplads a virus? Then yu d have a virus n a multitude f things. Theft: Cncern that smene culd amass cntent in a lcker, then sell the passwrd. PwC 3

4 It wuld be a lt cheaper than actually buying the tangible DVD, and it wuld have t be cheaper than ging t the mvies. Cnsumer, Cnsumers have mixed reactins t advertising and pricing mdels. Mst cnsumers resist certain advertising mdels, and simply d nt see cst reductins n cntent r subscriptins as an incentive if it means they have t endure advertising especially if it interrupts their mvies. Advertising Advertising is mre palatable n free cntent: Sme lder cnsumers said advertising wuld be acceptable if the cntent is free, but mst said that if they re paying fr cntent, they shuldn t have t watch ads. The yunger grup was mre receptive t an ad-supprted mdel if they culd select the ads they want t view. The mdel exists: Cnsumers can watch mvies n Hulu r Pandra fr free, but still see ads. The reality is that they accept an ads fr cntent mdel, but d nt assciate the lwer price with the presence f ads. Only free makes advertising relevant. Pricing Sme yung cnsumers can envisin paying a ne-time fee that wuld give them unlimited usage/rights t cntent, if it were less than what they pay nw fr n-demand services, such as Netflix. Paying fr extras, such as directr s interviews, appears t be less appealing because cnsumers feel they can already get that kind f material nline fr free. Overall, perhaps as a direct result f cnfusin and dubts abut the technlgy, specific price pints were referenced in terms f limits. There was strng agreement that price wuld be paramunt. Fr thse wh were willing t pay fr a digital rights lcker apprach, several reference price pints were suggested: Nt mre than their mnthly spend n mvie theater tickets. Nt mre than their current Netflix subscriptin rates. Nt mre than what they wuld spend fr increasing laptp strage. 3. Cnsumers are increasingly interested in getting earlier access t new film releases. Same-day is highly appealing: Cnsumers said they d pay a subscriptin t access mvies the same day they becme available in the theater. Hwever, a tw-week delay between theatrical and hme vide release dates seemed t be f little value: If yu re ging t wait tw weeks, what s ging t stp yu frm waiting three r fur weeks t get it fr free? In fact, the yunger grup we interviewed suggested that they wuld wait 72 hurs, at mst, fr access t new mvie releases. Many referenced sites where they can dwnlad r stream films after the first weekend f release fr free and withut ads. PwC 4

5 If I culd actually watch them at hme whenever I was free and didn t have t g t the mvies anymre (and) pay anther $10 if I just had that ne fee t watch all thse mvies that came ut, whenever I was free t watch them that wuld be very gd. Cnsumer, Mre persnal flexibility is appealing: The lder grup appeared mre willing t entertain different scenaris fr new releases, but increased flexibility made the idea mre appealing. Waiting tw weeks t view a mvie an unlimited number f times within a certain time perid is acceptable, but they dn t want t be cnstrained by a specific time perid t watch it. Fr example, while a 24- t 48-hur windw f unlimited viewing is fine, they wuld like t pick the 24 t 48 hurs that best fits their schedule. Quality is imprtant but nt critical t all cnsumers: Older cnsumers described mvie watching as an experience, where quality f the vide file cpy is very imprtant. The yunger grup claimed they are fairly satisfied with the quality they get nw frm bth dwnladed and streamed surces including pirated cntent). Bth grups said vide quality requirements depend bth n the device (cell phne viewing typically means less quality) and n the cntent (sme mvies require better reslutin than thers). Cnsumers recgnize the tradeffs between dwnlading and streaming films: They are interested in dwnlading mvies they might want t watch again, share with friends, r view n multiple devices. Hwever, if they nly intend t watch a film nce, they are mre likely t just stream the cntent n their laptps. Implicatins t yur business The value prpsitin fr DRLs must be very clearly cmmunicated by highlighting key benefits relevant t the cnsumer, including: Unparalleled strage capacity ability t view vide cntent n multiple devices f the cnsumers chice, with the same high quality acrss devices. Time savings there s n need t wait fr dwnlading t yur device. Marketing effrts and mnetizatin ptins (in bth advertising and pricing mdels) need t address the technlgy generatin gap and market accrdingly: Yunger cnsumers are mre savvy and receptive t technlgy develpments. In general, they are mre willing t accept the idea that the next big thing is smething they will prbably want and it will be better than what they have nw. > They are viewing n multiple devices. DRLs have mre inherent benefits fr them. > Many illegally stream r dwnlad mvie cntent frm pirate sites. Films distributed via DRLs will have t cmpete with this frm f free just like ther nline vide mdels (such as Netflix and ITunes) already d. PwC 5

6 > They generally watch mvies nly nce. Marketing arund repeat viewing will likely resnate less. > They actively share cntent with their peers and want their peers t reciprcate. Tuting ease f sharing will likely resnate. > Quality nly needs t be decent r gd enugh nt great. Cnsistent r high definitin-style quality is nt the lead-in selling pint fr this demgraphic. > They are mre willing t accept advertising as a way t reduce csts. Persnalized ads make the idea even mre acceptable. Older cnsumers have different viewing behavirs and a greater appreciatin fr the experience f mvie viewing. > This grup sees quality as a key benefit. Marketing effrts arund quality will likely resnate. > They dn t view mvie cntent n mbile devices. Small screens inhibit the quality and may impact the pleasure f the viewing experience; thus, interperability may draw less interest. > They have mre cncerns abut safety, privacy, and security, as well as technlgical bslescence. > They are less receptive t advertising even if it means a cst savings t them because f perceived intrusin n the viewing experience, which they see as paramunt. They are als wary f persnalized ads, as that may require revealing persnal infrmatin. There is a willingness t pay fr early-release f cntent: The industry has taught the cnsumers that nline cntent is free (legal r nt). This means the ante f what they are willing t pay fr keeps increasing. Cnsumers expressed a strng interest in getting same day ( day-anddate ) access t mvies released in theaters. Althugh it may nt be feasible frm an industry standpint, cnsumers are interested in and willing t pay fr early access t cntent, prvided it s available befre they can find it n the Internet (legally r illegally). PwC 6

7 Fr mre infrmatin: Debrah Bthun This dcument is fr general infrmatin purpses nly, and shuld nt be used as a substitute fr cnsultatin with prfessinal advisrs. The cnsumer qutatins in the dcument d nt necessarily represent the views f PricewaterhuseCpers PricewaterhuseCpers LLP. All rights reserved. PwC refers t the United States member firm, and may smetimes refer t the PwC netwrk. Each member firm is a separate legal entity. Please see fr further details.