Tablet users willing to pay for digital content

FTI Consulting has found in a new consumer survey that tablet users in the US are not only ardent consumers of digital content but also are more willing to pay for online subscriptions.  These results suggest that well-formulated digital media strategies may offer new revenue prospects to traditional media.

In a study, FTI Consulting compares the digital media consumption habits of people who own tablet computers – such as the Apple iPad, Samsung Galaxy or Motorola Xoom – against those individuals who use only smartphones, laptops or desktops.

Among all survey respondents, 74 per cent say they read news online, but only 21 per cent pay for that online news access – and just 7 per cent who do not currently pay say they would be willing to do so.  Fifty-three per cent of tablet users (and 35 per cent of non-tablet users) indicate they could be induced to pay for some features: for example, about half of users ages 18 – 45 indicate they might pay for a digital and print combination subscription if bundled together.

“If you are asking whether people who currently refuse to pay for online newspapers will begin to pay, then you are focused on the wrong opportunity.  Media companies may win a small number of converts focusing on ‘new’ customers; but the real opportunity exists among individuals who currently have print subscriptions or are regular newsstand purchasers. It’s these individuals who can be enticed to pay for a bundled print/digital subscription that offers special features unavailable to non-subscribers,” said Bruce Benson, a Senior Managing Director and Global Leader of Communications, Media and Entertainment Solutions at FTI Consulting.

More broadly, the report demonstrates that when a person becomes a tablet user, there is a clear difference in the way he or she consumes online and offline content, whether that’s news and magazines or television and movies.  Key findings of the report for specific media formats are:

Television: The FTI Consulting report reveals that tablet users of all ages are significantly more likely to upgrade their cable or satellite subscriptions compared with non-tablet users. Some groups especially are eager to upgrade their TV subscriptions: 30 per cent of tablet users ages 18 – 24 years and 31 per cent of tablet users who earn between $100,000 and $149,000 upgraded their TV or satellite TV subscriptions in order to be able to access increased programming through their tablet.

Movies: Seventy per cent of tablet users who earn between $50,000 and $74,000 and 80 per cent of tablet users between the ages of 18ˆ24 years purchase movies on DVD/Blu-ray/VHS or other physical formats and also consume online video. While more than half of respondents have not changed their behavior regarding purchases and rentals of movies because of online access, roughly one-third state they have stopped or reduced their theater going, DVD purchases and/or rentals.  The feature most worth paying for among all age groups is content that still is in theaters.

Music: More than 50 per cent of all respondents (and more than 60 per cent of respondents under 45 years of age) are willing to pay for music online if that music easily can be shared across the various devices they own.

“Tablets offer an important new front to woo consumers who already have shown a willingness to consume and pay for content.  While tablet devices are not the panacea for the ills of the consumer entertainment and news media industries, these devices clearly can provide a valuable and viable boost for revenue-challenged content production and media companies,” added Benson. “Tablets must be understood for the potential they offer.  A key element in stemming the decline of traditional revenue streams and monetizsng digital revenue is to focus on what tablet users consume and want to consume and to provide that content to them with a reasonable value proposition.”

One other interesting finding of the report is that while tablet users consume more digital media than do non-tablet users, tablets are not the favoured device for social media interactions or communication. Instead, tablets are used primarily for consumption and appear to serve as “discovery devices” for video content online, possibly driving some users to increase TV subscription expenditures after becoming a tablet owner. The report also reveals that both tablet and non-tablet users show strong willingness to substitute digital for conventional media when they have online alternatives available.

Posted by on Sep 28 2011. Filed under Articles, Consumer Behaviour, Mobile, Portable Media, Premium, Research, VOD.

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