Summary

Internet-connected televisions, consoles, over-the-top (OTT) boxes and tablets could be present in 60 percent of households by 2014, according to a survey conducted by Bain & Company, adding a new chapter in the "permanent revolution" that is shaping the media, entertainment and cultural landscapes.

The survey of 3,000 consumers in the US, Europe and Asia suggests strong interest in what we call “connected content experiences”—that is, content accessed through the next generation of Internet-connected devices and services. While video and gaming activities remain top of mind among consumers, sizable interest exists in other kinds of connectable experiences, including those involving live entertainment and cultural content.

Video consumption will be most transformed. Fifty percent of surveyed consumers are committed to using search engines and social networks to access a broad range of content. This content-finding behavior creates distribution and format opportunities for the video industry, while presenting challenges for incumbent platforms and brands. For video games, connected devices will fuel the emergence of a new generation of casual and social gamers, as well as low-cost and “freemium” business models. Live entertainment could benefit from broader, over-the-top distribution, but the segment represents a more limited opportunity due to the smaller markets and consumers’ low willingness to pay. In terms of the visual arts and heritage segments of the cultural market, consumers could gravitate toward experiences that blend physical and virtual presence remotely from home, around town or while on the move through a museum. Such experiences open up creative possibilities, particularly among existing enthusiasts, but they will have limited appeal for the mass market.

Media and entertainment experiences also face competition from other online activities on connected devices, and in particular from social networks. Price sensitivity and a sluggish advertising market will combine to limit the incremental value that can be created. Significant change lies ahead for the media and entertainment industry as content platforms, new entrants and incumbents battle for profits and market share. More than ever, leading media companies and cultural institutions will need to embrace new business models and support their brands through investments in ambitious content. In turn, these experiments could disrupt the delicate economic equilibrium on which content creation relies. But they could also foster innovation across the industry and the broader creative ecosystem.