Transcript: Media Consumption Habits Across Generations - Rethinking What You Know

Host: Welcome to another edition of Deloitte Insights, a production of Deloitte LLP. Deloitte Insights is an audio news Podcast that looks on important business issues. Today’s program: Media Consumption Habits Across Generations: Rethinking what you know.

Digitization is radically transforming the way we interact with all sorts of media, from games and entertainment to news and information. But how much do we know about consumers’ behavior across generations and what are their future media preferences likely to be? To shed light on these questions and many more, Deloitte’s Technology, Media, and Telecommunications practice commissioned a fourth edition of its State of the Media Democracy Survey. The survey provides a look at how consumers are interacting with technology, purchasing products, and responding to advertising—and what they may want in the future.

Joining me today to discuss the implications of our survey results are Ed Moran and Cecily Cohen. Ed is the Director of Insights and Innovations for Deloitte Services, LLP. Cecily is the Head of Strategy, Planning and Insights for North America markets at Nokia. Welcome to the program.

Ed Moran: It’s a pleasure to be here.

Cecily Cohen: Thanks for having us.

Host: Ed, let’s start with you. Why choose the name Media Democracy? What does the title of the report say about the shift in consumer behaviors over the last four years and are there any standout trends?

Ed Moran: So, the reason we chose the Media Democracy metaphor is we think it’s a nice description of really what has taken place over the last five or ten years with regard to consumers’ use of media. There has really been a shift in control from the people who make content and historically have made content and then distributed it. You have seen a big opening up and the consumer now has much more control. The power has gone to the people so to speak, and they have the ability to decide where are they going to consume content, what kind of device they would like to use, if they are willing to accept advertising or not, what sort of pricing would they like to pay, do they want to own it or do they want to rent it, do they want to download or stream? There has been much, much more control really grabbed by the consumer as a function of lower technology prices and better technology prices, and the Internet and connectivity. So, we think it is a great metaphor for what’s taking place.

Then in terms of the trends that we have been seeing having done the survey now for, we are going into our fifth survey now, what we see is really a couple big trends. The first one is the real increased importance and enduring importance of television. I think a lot of people always pitch this in terms of “the internet is going to eat television, internet is going to kill television,” and to the contrary we see both continuing to grow. And television being a very, very resilient platform. People love the 30-minute sitcom, they will consume that programming on any device they can find it on, be it their mobile phone, be it on the laptop or their television set, they also find the advertising very, very impactful. The most impactful, as a matter of fact, of all advertising they’re exposed to—they rate television advertising number one. So, TV is still very strong notwithstanding what I think many pundits have said. The second big trend we see in the data is that broadband in all of its different forms, no matter how it is delivered to the home, is the most preferred, the most valuable subscription that Americans purchase on a monthly or annual basis. It trumps newspapers, magazines, cable television, satellite radio…you name it. When we asked Americans to rank the importance of subscriptions they put their broadband at the top of the list. And then the third really big trend we see is the rise of the smartphone. Mobile devices have always been important. Mobile phones have always been important, but when we asked the folks to differentiate between kind of a conventional cell phone—with limited functionality that has voice and a few other functions—and compare that with the larger screen, the greater computational power that is associated with smartphones, they are gravitating more towards smartphones now. When you add applications, downloadable applications, and you see what they are doing with those devices, they clearly prefer smartphones. We see growth happening there much faster than the regular cell phone market. And then underneath all of this, is the increasing importance and relevance of social media. We see it bubbling along—it actually drives behavior. We see people watching television shows because everyone is talking about the show on a blog. It actually drives people to watch the show in real time so they can comment in real time, so there are very subtle but important behaviors that are being driven by social media.

Host: It used to be that a mobile phone was just a phone and that was cool enough, but Cecily now the smartphone is a rapidly developing platform it seems no one can cope without one. Why do you think that is the case and what extent will these devices impact consumers’ purchase and use of media in the future?

Cecily: The rise of the smartphone has been tremendous in the last few years. In North America, we are seeing more than 40 percent of the phones being sold today are smartphones and that has largely been driven by combination of factors. I mean, one operator is making that easier with subsidies and strong marketing messages around smartphones, but you are also seeing changes in consumer behavior that Ed referenced. We are seeing consumers increasingly seeking more involved user experiences, they are emailing on their phone, they are IMing on their phones, they are gaming, they are creating and consuming content, whether it is video, or music, or photos. In the past, those were things that we primarily saw among either people who are style leaders or technology leaders, but what I think is really exciting and I think the report covers this perfectly with its title “Media Democracy,” is we are seeing more and more consumer segments involved in these types of services and applications. So, social networking on your phone, it is happening among people over 63 and baby boomers. I’m still in shock from the first time I saw my mother friend me on Facebook. The world has really changed quite a lot. We are seeing other kinds of consumers who we would have thought of as low involvement in the past, whether they are more mature, they’re juggling families or they’re simplicity seekers who are not looking for all the bells and whistles. And, not only are they buying smartphones but they are starting to use them more, you are starting to see them get on the Internet, email, and IM, get on social networks. And it’s interesting because what we are seeing is that one of the major drivers for the shift is actually the social networking, people connecting to other people. I think five or ten years ago, there were thoughts that it would be about getting information on your smartphone or having transactions, but it turns out that one of the biggest drivers for consumers these days is the ability to participate in social networking wherever they are.

Ed: That’s why I think, Cecily, mobile phones and smartphones specifically are so key to social networking because they really are personal. They know who you are, they have all of your contacts inside of them, it is very easy to reach out to the people who you know and who you want to reach out to. So that’s a key point, that social aspect of it. We forget—you know, it’s interesting we call the computer a PC, right? Personal computer. And when you think about it, there is no more personal computing device than really your phone.

Cecily: That’s absolutely right, I mean you always got it with you and it is not just contextuality about your personal social network, but I think we will increasingly see more and more contextuality around the phone. It is going to be aware of what I have heard called “the network of you” or it will be a “you-aware” phone where it will know who your social network is, what you do or say with those people; it will be aware of your location and where you are, and offer you services and applications that are tailored to both your personal network and your location.

Ed: You know we saw that in our data. When you ask folks, do they use their GPS function for finding directions to a location, the use of that feature hasn’t been that high historically in our data, but when you ask folks do they use the location aware services to find things around them like banks or restaurants, then the use really spikes. When it is really showing them in context to what they are looking for, they seem to gravitate to it much more than when they use it a navigation device defined to a specific address.

Cecily: Absolutely and I think what will be really interesting. I mean, we are seeing some of the early examples of when you have this marriage of both the location and the personal social network, so already you got location-based social networks like Foursquare and Gowalla start to take off and a lot of interest in how those can be used for offering services for advertising. You are also seeing things like games that marry physical location and the virtual world, so a lot of exciting new applications and services that will leapfrog off of this.

Ed: Yeah, I mean, I think a lot of us fear the creepy factor that folks would think it was creepy that their friends of the social network knew where they were and could find them, but it is interesting that at least for some people, it actually seems to be a desirable characteristic of the mobile phone that it allows them to log in where they are in relation to their friends.

Cecily: I think that’s right, I think consumers are still weighing that balance between privacy and the benefits of location aware services, and it is interesting because when you look at younger consumers, their concerns about the privacy are much lower than people in maybe my age group or older. And so there are real, true digital natives who have grown up with having their life more public in the digital space and so there seems to be more embracing of these kinds of technologies among younger consumers.

Host: You both have been mentioning social media; it is clearly one of the most important cultural and technological developments of our time. Cecily, from your perspective, what’s the impact of social media on purchasing behavior from mobile devices and the content consumers access on their devices, and does this behavior change depending upon how old you are?

Cecily: Great question. Social media is absolutely important for seeing large numbers of consumers at all different age groups and all different demographics participate in social media, so it is where consumers are and very important for us to be there. I read somewhere that when you use social media, every encounter that you have with a consumer is a micro interaction that makes a deposit or withdrawal into their rational and emotional subconscious and some of those interactions leave them a particular feeling about a brand or solution and that’s certainly the case. Being present in social media to impact consumers’ feelings is very important. I think one of the things social media has done that’s really interesting is, it has given consumers much greater control of how they make purchasing decisions and how they interact with companies after they have purchased products. So, there are now an infinite number of touch points, thanks to social media, for companies to interact with consumers and consumers are going out into these multiple touch points and getting information to help them inform their purchasing decision. They are definitely shifting from much more passive consumption to more active consumption. That’s kind of exciting; I think it requires a mind shift for companies. We have got a shift from a sort of more traditional command and control approach to marketing and communications, and be a little bit looser, a little bit more free, about how we let our employees and fans communicate with consumers. It is a little bit more of a chaotic environment, but I think it is much richer environment and consumers are getting a much better picture of what they are going to be purchasing. It is also important for us from the perspective of listening. It provides a great direct channel to consumers where we can get feedback about how they are using our products, how they feel about our products, and what improvements we can be making in our solutions, and so we are certainly using it for that from a product and services development perspective. And then finally, it gives us a really great channel to consumers for providing them with care throughout the lifecycle of the products that they have, so whether it is problems or challenges they run into, or helping them understand better ways to use the product that will enhance their experience, social media is a great channel for doing that.

Ed: In addition to those uses that Cecily just mentioned, which I think are great and that is very progressive just speaking from a general perspective, watching what is taking place in the market place that comfort what Cecily called the chaotic nature of social media. It is a hard skill for companies to acquire because they have been used to working in a much more structured environment and also that customer experience aspect you mentioned, it’s a little deposit or it’s a little withdrawal every time the company interacts with a consumer through social media. Again, that is something I think very challenging and many companies aren’t comfortable with. And what we are seeing on the media side, which is really interesting and it is not something that is talked about very widely, but, there are actually companies in the media space actually using social media to develop media, to develop the content. So many of these shows on television that we watch and think are unscripted or reality, in reality what is happening is social media is informing those scripts very significantly. And I know that the public, mass media has picked on this recently has started to report on it, but for a while now our content that was unscripted really was scripted by input from social media coming into the company. So the company and the producers were very in tune with what people were saying and were really producing great content because it’s exactly what the people wanted to see; it is exactly the experience the people wanted. So, I think social media has a very, very broad kind of cross-enterprise impact that is just going to grow. And more and more companies—Cecily mentioned customer care, Cecily mentioned project development and listening to the consumer—we are going to see that happening in more and more. We will actually see the consumer developing their own content hand-in-hand with the company based on what they are telling the company.

Host: What does the future hold for the evolution of mobile devices?

Cecily: I think our idea what a device is, is going to change significantly in the coming years. We are already starting to see the emergence of what is called emerging devices, whether they are netbooks, or tablets, or e-readers—they may even be wearable devices, but what you are seeing is, there are multiple screens that are going to be available to consumers. And they are going to serve different purposes throughout the consumers’ day depending on what they are doing and where they are. And so, I expect that what you will also see as a result of this is that consumers will increasingly expect to see their content available in a pretty consistent fashion and form wherever they are and whatever device they are using and so we will see a rise in cloud services. We will see an expectation from consumers that they will be able to pull their content—the same content—out of the cloud down to their smartphone or onto their tablet or onto their e-reader or onto their television or PC. The second area I think where we can expect some interesting things in the future is around contextuality again having this ability to marry location and your personal network and also information—metadata that is out there—to provide a really contextually aware experience for you. One of the exciting trends coming along is around augmented reality, which allows you to impose metadata over what you are seeing in front of you with your own eyes, and so there are a couple of great examples out in the market right now. There are some services that allow you to point your phone up at the sky and your phone will show you what you are viewing through the lens but also show you the names of the constellations, superimposed on top of the images that you are viewing in real time in real life. You will see a marriage of things like information about pricing, or information about shopping, or information even about people superimposed over the reality that you are seeing right in front of you. So, some really exciting opportunities to marry all these massive amounts of information that is out there and make it relevant and immediate for consumers.

Ed: I am glad you mentioned augmented reality, Cecily, because I think that is a really cool aspect of the smartphone: the bigger screen, the ability to have computation and internet connectivity, and pull down information, and overlay it on the real world, what you are seeing through your camera lens. I encourage listeners to try it out. It is extraordinarily powerful and I think a great glimpse of the future. When you mentioned the cloud, the desire to reach into the cloud and pull content out, that is actually one of the top requests we see in our Media Democracy data. There is a great frustration expressed by a majority of Americans that they can’t get access to all their content, so some of their music is on one device, some of their videos is on yet another device, their photos are sitting on yet another device. And gee, if these are all digitized, why can’t I access them wherever I am from my phone? So, we see the demand there. So, as the devices and services begin to provide that to consumers, I agree with Cecily; I think that is going to be a watershed moment for many consumers. And then I guess it really ties into the last point, which is at some point there will be some kind of substitution taking place. They will be some kind of cannibalization taking place. And we see early indications of it now, and in some research we see that folks actually say they leave their laptop behind when they have their smartphone, not all of them, but there is a measurable number of people who actually will use their smartphone as a replacement of their laptop in day-to-day life. As the cloud gets more accessible and the devices get more powerful, we have to wonder how many devices will people carry in the future, right Cecily? What is that going to look like?

Cecily: I think there is a real debate whether you will see the rise of multifunctional devices or dedicated devices. My guess it will be probably be a mix. I think there will be an increasing expectation that all devices have a certain level of functionality, whether it is being able to access all of your content or Internet browsing. I think for some experiences, there will be dedicated devices that optimize that experience. I think reading is a great example. If you look at e-readers, you do have some tablets coming up which could potentially cannibalize e-readers and I think it probably will to some degree, but for that segment of consumers that really have e-readers who really want an optimized visual experience, who may be wanting a richer reading experience that enables video and interactive content; for those consumers a dedicated device may be what fits the bill when they’re curled up on their sofas at home, wanting to read a good book. For many other use cases, an all purpose device, whether it is a smartphone or tablet or some other device that’s a size in between that, maybe what suits the majority of needs.

Ed: Yes, I think probably the game consoles are a great proof point on that, right?

Cecily: Yes, that's right. 

Ed: You can game on a lot of platforms, but people still are buying a lot of single use gaming platforms that only permit them to game. And they are not gravitating to the multiuse PC, they are instead buying the one trick pony gaming console, so I agree with you.

Host: You have given us a lot to think about and look forward to today. Thank you for joining us.

Cecily: Thank you for having us.

Ed: Thank you.

Host: Visit deloitte.com/us/realitycheck to access Deloitte’s State of the Media Democracy report and other insights on today’s discussion.

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