Internet television poised to reach 60 percent of households by 2014, Far-reaching New Study of 3,000 consumers in Europe, the United States and Asia Finds Strong Interest in “Connected Content Experiences”

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INTERNET TELEVISION POISED TO REACH 60 PERCENT OF HOUSEHOLDS BY 2014

Far-reaching New Study of 3,000 consumers in Europe, the United States and Asia Finds Strong Interest in “Connected Content Experiences”

Paris—November 22, 2011—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 (“Connected Devices and Services: Reinventing Content”) presented today by global consulting firm Bain & Company 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.

“The permanent media revolution continues,” said Patrick Behar, head of Bain’s Media & Entertainment Practice in Europe and lead author of the study. “But media and entertainment companies must pursue aggressive content development and diversification strategies to unlock new consumer spending.”

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 percent 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 also lends itself particularly well to such a transition according to the survey, and our 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 percent 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.

“A majority of consumers expressed an interest in Internet video at the expense of traditional TV channels” said Laurent Colombani, head of Bain’s Media & Entertainment Practice in France and co-author of the study.

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 percent 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 percent of those under age 35 see themselves playing more on connected devices, fewer than 25 percent 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 percent 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,” concluded Behar.

Editor’s Note: For a copy of “Connected Devices and Services: Reinventing Content,” or to schedule an interview with Patrick Behar, French media please contact Caroline Detalle at caroline.detalle@bain.com or +33 1-4455-7703. International 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.

About Bain & Company, Inc.

Bain & Company is the management consulting firm that the world's business leaders come to when they want results. Bain advises clients on strategy, operations, technology, organization, private equity and mergers and acquisition, developing practical insights that clients act on and transferring skills that make change stick.  The firm aligns its incentives with clients by linking its fees to their results.  Bain clients have outperformed the stock market 4 to 1. Founded in 1973, Bain has 51 offices in 33 countries, and its deep expertise and client roster cross every industry and economic sector. For more information visit: www.bain.com.  Follow us on Twitter @BainAlerts.