New in-depth Bain & Company study of more than 6,000 consumers in US, UK, France, Germany, Russia, China, India and Brazil identifies five trends shaping digital innovations

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NEW IN-DEPTH BAIN & COMPANY STUDY OF MORE THAN 6,000 CONSUMERS IN US, UK, FRANCE, GERMANY, RUSSIA, CHINA, INDIA AND BRAZIL IDENTIFIES FIVE TRENDS SHAPING DIGITAL INNOVATIONS

Impacts of Trends on Content Industry are Key--Music Industry Recovers; Steep Tablet Adoption Heralds Age of Social TV; Digital Book Migration Driving Book Sales; Video Games No Longer for “Consoles Only”

Paris—November 15, 2012—An ever-growing appetite for content and new digital experiences will return the content industry to its pre-2008 level of economic output by the end of this year, with emerging markets as the driving force; this according to a new far-reaching report, “Creating Value in the Digital Age,” presented today by Bain & Company, the global business consulting firm, at the Forum d’Avignon in France.  This marks the fourth study of the global content industry presented by Bain at the Forum d’Avignon, which seeks to strengthen the ties between culture, media and the economy. 

“Our in-depth look at the state of the media and devices suggests that the field is as turbulent as ever, with innovation creating a fertile ground for new models,” said Patrick Behar, Paris-based Bain partner who heads the firm’s media practice in Europe, the Middle East and Africa, and co- author of the report.  “Far from reaching levels of maturity, content industry sectors show strong signs of a ‘seven-year itch’ looking for the next big thing.”

Bain’s global survey of more than 6,000 consumers highlights how innovations in the content industry remain largely shaped by five underlying trends:

  • Abundance—consumers want access to an “infinite shelf” of content.  Proof point:  size of book catalog on Amazon grew nine-times from 2.3 million in 2005 to more than 20 million in 2012
  • Personalization—consumers are increasingly segmented by their interests.  Proof point:  Movies selected on Netflix based on recommendation engine have grown 1.3-fold from 60 percent in 2005 to 75% in 2012
  • Aggregation—fragmented audiences converge toward powerful digital platforms.  Proof point:  Google share of online advertising revenues have grown 1.9-fold from 22 percent in 2005 to 42 percent in 2012
  • Community—social networks are becoming key to content choices.  Proof point:  Facebook active users have grown 167x from 6 million in 2005 to one billion in 2012
  • Engagement—consumers are actively involved in content discovery and curation.  Proof point:  Crowdfunding  raised on Kickstarter has grown 12-fold in two years, from 28 million in 2010 to 330 million in 2012

These five megatrends are affecting key sectors of the content industry in different ways:

  • Recorded music—several signs point to the stabilization of the music industry, including Bain’s prediction that digital sales will overtake physical sales in 2012 in most mature markets.  The socialization of music also marches on, as the percentage of consumers using social networks to get music selection recommendations climbs.  In the US and UK, that number rose from 40 percent in 2009 to 48 percent in 2012, and from 63 percent in China in 2009 to 70 percent this year
  • Video—tablets, such as the iPad, are changing the way consumers view video and are ushering in an age of social TV.  According to Bain’s survey of more than 6,000 consumers:
    • One-third of consumers in the US use their tablet to watch video, while that number climbs to approximately 40 percent in the UK, China and Brazil
    • Half of tablet owners using television have stopped using television to watch certain types of content, be it news or fiction
    • In terms of consumer appetite for innovative TV experiences, 54 percent of those surveyed in the US, UK, France and Germany say they would be interested in interacting with a program, such as providing views, voting, participating in quizzes, etc
    • The same number, 54 percent, in the US and UK would be willing to be exposed to advertising during new and innovative TV experiences. And 16 percent would be willing to pay an extra fee
  • Books—the digital transition of book publishing has only really begun in the US and UK according to Bain.  Nearly half of consumers in the US and UK have already read e-books, approximately three e-books per year on average. 
    • Market share varies, based on genre (40 percent of e-books read in the US are new releases of literature; 46 percent are other selections of literature), but e-e-books have an overall market share of 15 percent in the US and six percent in the UK.  That numbers wanes to two percent in France and one percent in Germany.  Several factors have hindered e-reader penetration in Europe, including consumer attachment to paper and healthier physical distribution networks
    • E-book clubs seem to attract most interest in Brazil, Russia, India and China, where 70 percent of consumers would be interested in annual subscription in exchange for a 10-20 percent discount of the e-book price.  That number drops to 50 percent in France and Germany, and 30 percent in the US and UK.  BRIC e-book readers are also more inclined to be exposed to advertising while reading an e-book, with three-quarters stating interest.  That interest drops to half of consumers in the US, UK, France and Germany
    • Forty-four percent of consumers in the US, UK, Russia and Brazil say that they have read more books (both digital and print) since starting their use of e-books.  That number drops to 32 percent in France and Germany, but jumps to 59 percent in China and India
  • Video Games—Bain predicts that connected consoles will penetrate up to 30 percent of households by 2014. 
    • While overall, gamers spend 12 percent of their time playing video games on smart phones (34 percent on video game consoles), that number jumps to 38 percent for those gamers who use smart phones as one device for video games, with video game consoles dropping to 27 percent of the time spent
    • Gamers who use portable devices spend more than one-third of their gaming time on casual games, mostly on social networks
    • Fifteen percent of gamers in the US and UK spend 50 percent or more of their time on social network-based games, while 31 percent spend between zero and 50 percent of their time on those games.  In France and Germany, only 10 percent of gamers spend 50 percent or more of their time on social network-based games; in the BRIC countries, the number drops to eight percent.  However, 35 percent of gamers in BRIC countries spend between zero and 50 percent of their time on social network-based games; while only 23 percent of gamers in France and Germany spend equivalent time on social network-based games

“Digital platforms not only increase the depth of content available to consumers, but also stimulates interest in new experiences,” concluded Laurent Colombani, Bain partner and co-author of the report.  “While satisfying this appetite present is a daunting challenge for content producers, it presents major opportunities for traditional publishers and digital platforms to become the curators of the digital chaos.”

For a copy of Bain’s “Creating Value in the Digital Age” or to schedule an interview with Patrick Behar or Laurent Colombani, French-language media, please contact Caroline Detalle at email:  caroline.detalle@bain.com or +33 63052257033, or Albane de la Hitte at email : albanedelahitte@bain.com  or +33 144557703.  English-language media please contact Dan Pinkney at dan.pinkney@bain.com or +1 646 562 8102.

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About the Forum d'Avignon

The Forum d’Avignon aims at strengthening the links between culture and the economy, suggesting subjects for reflection at global, European and local levels. The Forum d’Avignon was created after the ratification of the UNESCO convention on cultural diversity, and since its beginning, has been backed by the French Ministry of Culture and Communication. Each year the Forum organizes, with its partners, international meetings which provide opportunities for unique discussions and exchanges between actors from the worlds of culture, the creative industries, the economy and the media.