KPMG Media and Entertainment 2010

Time is Money
The digital dilemma continues

KPMG’s Media and
Entertainment Barometer

KPMG LLP (UK)

Introduction
Consumer media spend is down but consumption has increased.

I am pleased to introduce the second KPMG Media and Entertainment Barometer,
our comprehensive six monthly report based on a KPMG commissioned YouGov
survey.

We asked over 1,000 UK consumers about their online and offline media
consumption and the results highlight the scale of the challenge the media industry
faces in halting declining revenues.

Consumer are spending less on traditional and digital media than six months ago,
David Elms but consuming more.

Average spend per UK consumer on traditional media fell from £9.19 in September
2009 when the first Barometer was undertaken, to £7 in March 2010 and spend
.46
on digital media also fell (from £1.99 to £0.98.) However the time we spend
consuming media has increased.

The average monthly consumption of traditional media has risen marginally from
11 hours 40 minutes in September 09, to 12 hours 13 minutes. Hours spent
consuming digital media increased even more from 6 hours 14 minutes to 7 hours
28 minutes.

The survey shows that spend has reduced across several parts of the media
industry for example:

• 21 percent of newspaper readers paid nothing for these over the past month,
compared with 15 percent six months ago. In London this almost doubled – 23
percent to 41 percent – highlighting the impact of the Evening Standard moving
to a ‘free’ model

• The situation is similar for print magazines with 19 percent of consumers saying
they had paid nothing for these over the past month compared with 12 percent
six months ago.

Accessing
Previous Introduction traditional media

Accessing more Prefer accessing Currently paying for
media now? online or offline? online content?

1 Time is Money - the digital dilemma continues © 2010 KPMG LLP a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network
,
of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.

• Of concern to those aiming to introduce pay walls for online newspapers, is the
increasing majority of respondents who said they paid nothing for accessing About the survey:
All figures, unless otherwise stated
online news portals - up 4 percent from 84 percent in September 2009 to 88
are from YouGov Plc. Total sample size
percent in March 2010
for the poll carried out in March 2010
was 1037 completes for wave 1 and
• Spend on video games was significantly down, quite possibly reflecting the 1034 for wave 2, people aged 16 years
release of popular titles in the month leading up to the first edition of the plus. The field work was conducted
Barometer. with members of YouGov’s online panel
between 11th and 14th September
These findings of the second KPMG Media and Entertainment Barometer 2009 (wave 1) and 15th and 18th March
illustrate the problem faced by the media sector in curbing the structural decline 2010 (wave 2). The figures have been
in revenues. However, online users are increasing. Online subscription models weighted and are representative of all
remain in their infancy and once more developed should provide a platform for GB adults (16+).
significantly higher online revenues.

There is considerable focus on driving digital media revenues and respondents
indicated they do access more media because of online availability, but the tide has
not yet turned as the majority of us still prefer consuming media offline. Only a
quarter favoured online media access compared with 43 percent who said offline
and a third who reported it didn’t make a difference.

However, with 24 percent of respondents using Video on Demand services, there
is a growing appetite for more dynamic and easily available content. Also, with a
marked increase on the time spent online, particularly on social networking and
online games, creating integrated business models which make the most of both
traditional and digital business models continue to be key for the sector.

Accessing Traditional vs. New Media:
new media some comparisons Next
FIFA World Cup 2010
3D viewing Betting
viewing plans

© 2010 KPMG LLP a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network
, Time is Money - the digital dilemma continues 2

Accessing
traditional media
Please indicate which if any of the following activities you have done
in the past month? (traditional media)

In March 2010, all respondents indicated they had engaged in one or more
of the listed traditional media activities during the past month.

Since wave 1 there had been an increase in the proportion watching TV.
This is likely to be due to seasonal factors, with the ﬁrst wave run at the
end of the summer (September) and the second during the winter (March),
when people are more likely to remain at home and watch TV.

94%
Watched TV (not online)
88%
79%
Listened to the radio
82%
80%
Read a print newspaper
81%
68%
Listened to a CD
72%
70%
Read a print magazine
70%
68%
Read a book
68%
53%
Watched a DVD/Blu-Ray
50%
34%
Played a console/video game
34%
27%
Visited the cinema
26%
18%
Music events/performances
18%
18% Wave 2 (Mar 2010)
Sporting events
15% Wave 1 (Sept 2009)

Accessing


,

Amongst those who had engaged in traditional activities during the past
month, the highest mean spend was on attending music events and
performances (£30.20) and sporting events (£29.68). These also had the
highest spend in wave 1, though the sum spent was marginally down for
wave 2, perhaps reflecting seasonal variation in spend.

Mean spend on newspapers, magazines and the cinema was broadly
in line with wave 1. Spend on video games was significantly down, quite
possibly reflecting the release of popular titles in the month leading up
to wave 1.

The proportion of newspaper readers who spent nothing on these
publications had increased since the last wave. In London this almost
doubled (from 23% to 41%), highlighting the impact of the Evening
Standard moving to a ‘free’ model.

Newspaper and magazine readers aged 16-34 continued to be
considerably more likely to spend nothing on newspapers and magazines
compared with the general population, suggesting this group are more
prone to reading free sheets only or copies purchased by others.

As before, respondents had spent more time watching TV in the past
month than any of the other activities (29 hours), followed by listening
to the radio (16 hours) and reading books (14 hours).

FIFA World Cup 2010
3D viewing Betting
viewing plans


Accessing new media

Please indicate which if any of the following activities you have done
in the past month? (new media)

50%
Social networking/blogging sites
47%
36%
Online news/RSS feeds
37%
27%
Online games
29%
24%
Used video on demand for TV
19%
21%
Downloaded music
22%
17%
Online magazines
17%
16%
Streamed online TV programmes
14%
16%
Streamed music
16%
14%
Streamed radio
15%
21% Wave 2 (Mar 2010)
None of these
22% Wave 1 (Sept 2009)

*Note: means calculated from a base of
less than 50 cases have not been quoted.

Accessing


,

Four-fifths (79%) had engaged in one or more of the listed new media
activities in the past month. No significant increase on wave 1.

Half had visited social networking/blogging sites. There had been an
increase in use of video on demand for TV.

Overall, men were more likely to have engaged in activities than women
(83%, 75%).

Those aged 16-24 tended to be more likely to engage in new media
activities than their older counterparts.

A notable exception was accessing online news portals/RSS feeds,
which was equally popular across groups.

Amongst those who had engaged in each of the listed new media
activities, the highest* mean spend was on downloaded music (£4.26),
as had been the case in the first wave.

Amongst those who had engaged in each of the activities, social
networking/blogging and playing online games consumed the greatest
amount of time (12 and 11 hours respectively).

FIFA World Cup 2010
3D viewing Betting
viewing plans


Traditional vs.New Media:
some comparisons
Fewer people had engaged in new media activities than traditional
(79 percent, 100 percent).

As we might expect, fewer people had engaged in new media activities than
traditional (79%, 100%). The gap had not narrowed since the last wave.

Those aged 55 plus were less likely to have used new media than other age
groups. There was also a signiﬁcant divide in level of use between the 16-
43s and 35+ groups.

People were around six times more likely to have watched traditional TV than
have streamed TV programmes (94%, 16%). They were also far more likely
to have listened to traditional than streamed radio (79%, 14%) and read a
print magazine than an online one (70%, 17%).

However, There had been an increase in the use of VOD for TV programmes.
This online activity had increased from 19% of all respondents in September
2009 to 24% in March 2010. This increase occurred amongst all age groups,
but was most marked amongst 18-24 year olds and 35-44 year olds.

There was a marked increase in the use of VOD services for TV shows
amongst men. There was only a slight increase amongst women - In
September 2009, 15% of women respondents said that they had used
VOD services for TV programmes, whereas in March 2010, 17% of
women respondents had said so. The comparable ﬁgures amongst male
respondents was 22% increasing to 30%, 6 months later.

By March 2010, ABC1s had caught up with other social grades in the use
of VOD services for TV programmes. In terms of social grade, there was a
marked increase in the use of VOD services for TV shows amongst ABC1s.
There was only a slight increase amongst C2DEs - In September 2009,

Accessing


,

21% of C2DE respondents said that they had used VOD services forTV
programmes, whereas in March 2010, 23% of this social grade had said so.
The comparable ﬁgures amongst ABC1 respondents was 17% increasing to
24%, 6 months later.

There had only been a slight increase in the use of streaming of services for
TV programmes – increasing from 14% of all respondents in September 2009
to 16% in March 2010.This increase occurred amongst all age groups, but
was once again (as with the use of VOD services forTV shows) most marked
amongst 18-24 year olds; 35-44 year olds; and, amongst male respondents.

There seemed to be most change in online behaviour amongst the 18-24 year
old age group over the past 6 months, as the use of VOD services for audio
visual increased above average.The use of VOD for ﬁlm increased slightly
amongst all respondents from 3% in September 2009 to 4% in March 2010.
However, it more than doubled amongst the 18-24 age group, from 4% to 9%

The use of social networking / blogging sites has remained the online activity
carried out by most respondents.This online activity had increased from 47%
of all respondents in September 2009 to 50% in March 2010.The increase
amongst the 45-54 age groups was the greatest, increasing from 37% to
45%.

Predictably, male respondents continued to view sporting events online
at much higher levels than women. The difference between the sexes
continued to be around 17% versus 3% in favour of males for this online
activity.

FIFA World Cup 2010
3D viewing Betting
viewing plans


Consumption of media without paying had increased in prevalence in both
online and traditional formats since the last wave.

For example, 19% of print magazine consumers said they had paid nothing
for these over the past month compared with 12% in the first wave.
Newspapers: 21% compared with 15% the first wave.

Consumers of new media continued to be several times more likely to say
they had spent nothing on these activities than consumers of similar types
of traditional media. The 19% of respondents who had read print magazines
said they spent nothing on this compared with four-fifths (85%) of online
magazine readers. A similar story was evident for print newspapers
compared with online news portals (21%, 88%).

Amongst those who had engaged with traditional TV, streamed TV, traditional
radio and streamed radio, mean spend over the past month tended to be
much lower for new media.

Accessing


,

Accessing more
media now?

A majority of respondents agreed that the ability to access media online
(e.g. newspapers music, video and radio) meant they now accessed more
media than in the past: almost two-thirds (63%) agreed that they accessed
more, while 14% disagreed. The proportion in agreement had increased
since the last wave (when it stood at 58%).

Around four-ﬁfths of those aged 16-34 agreed compared with just 45%
of those aged 55 plus.

Men were signiﬁcantly more likely to indicate they were accessing more
media compared with their female counterparts (70%, 56%).

FIFA World Cup 2010
3D viewing Betting
viewing plans


Prefer accessing
online or offline?
Despite a high, and increasing, proportion saying they now accessed
more media because of online availability, people still tended to prefer
consuming offline.

You said that you prefer to consume media OFFLINE.
Which, if any, of the reasons below apply?

Rather read something physical 89%

Rather watch TV / films 80%
on TV than computer
Prefer experience of
traditional media 60%

Don’t have fast enough internet
connection to make it enjoyable 19%

I don’t want to make payments
online due to security concerns 14%

Don’t trust the quality of online media 8%

Only a quarter (26%) said they favoured online media access, compared
with 43% who said offline and a third (31%) who reported it didn’t make a
difference. Results were broadly consistent with wave 1.

Those who preferred offline access were asked to indicate why. As per
wave 1, the most popular reasons related to a preference for reading
physical copies or watching on a television set (rather than on a computer
screen). Technical and security concerns troubled relatively few, though the
proportion citing the speed of their internet connection as a barrier rose
slightly (19%, 13%).

Accessing


,

You said that you prefer to consume media ONLINE.
Which, if any, of the reasons below apply?

Can access content when I want

Can access the content I want for free online 80%

Spend lots of time on my computer so more convenient 73%

Easier to find content that I’m interested in 63%

Wider choice of content online 56%

More environmentally friendly 31%

Can access the content I want at better price 14%

Those who preferred online access were also asked for their reasons.

The most important reason, selected by around nine-in-ten (93%), was
availability of ‘on-demand content’. This suggests the importance of
convenience for consumers of online media. Access to free content was
the second most important reason. Almost a third cited the environmental
merits of online media consumption.

FIFA World Cup 2010
3D viewing Betting
viewing plans


Currently paying
for online content?
One-in-ten (10%) currently pay for online content, unchanged from wave
1. Seven per cent pay for content when they want it and 3% subscribe.

Those aged 16 to 24 years were more likely to pay for online content than
older age groups.

Of those accessing online news portals / RSS feeds, a majority of all
respondents continued to pay nothing. Of concern to those aiming to
introduce pay walls for online newspapers, was the fact that an increasing
majority of respondents said that they paid nothing in March 2010 (88%) than
in September 2009 (84%)

The average mean time spent accessing online news portals / RSS feeds had
increased from 5.1 hours per month in September 2009 to 6.6 hours in March
2010.The increase was most marked amongst social grade ABC1, and 35-54
year olds.

There was a noticeable increase in the use of VOD services forTV
programmes, and the streaming of onlineTV shows in the March 2010
survey when compared to September 2009.This probably reﬂects seasonal
consumption patterns, as generally households watch more audio-visual
programmes during October to March. Amongst those that used VOD
services, the mean average in March 2010 was 6.2 hours over the past month,
1.5 hours more than those who used VOD services in September 2009.The
rise was across the board, but most marked amongst 18-24 year olds

There was a noticeable increase in the playing of online games in the March
2010 survey when compared to September 2009. Once again this probably
reﬂects seasonal consumption patterns.The increase was from an average of
just over 9 hours played in the past month during the September 2009 survey
to just over 11 hours played in the month during the March 2010 survey.
The increase was most marked amongst C2DE social grade - an increase

Accessing


,

of around 4 hours and amongst the 45+ age group, also an increase of
What content would you be
approximately 4 hours. prepared to pay for?
Those who were not currently paying
Our surveys found that increasingly more respondents paid nothing over for online content but thought they
the past month for social networking / blogging sites in March 2010 than in would possibly / definitely become a
September 2009. Of those that said that they paid for social networking / paid subscriber over the coming 12
months were asked what they would be
blogging sites, the amount respondents said they paid, decreased markedly prepared to pay for.
from £16.50 per month in September 2009 to £2.38 per month in March 2010.
As per wave 1, people were most
In March 2010, the mean average number of hours that younger members commonly prepared to pay for music
(55%) and film (45%). They were less
of society (16-24 year olds) spent per month on social networking / blogging
prepared to pay for TV (30%) and online
sites was around double the amount of time spent by older members (45+ newspapers/magazines (31%).
aged groups). 18-24 year olds spent just over 18 hours per month in March
2010, whereas, 45-54 year olds spent around 8 hours per month.

There was no marked difference in the amount of hours spent per month on
social networking / blogging sites between the sexes (around 12 hours per
month). However, social grade C2DE spent more time per month than other
social grades – just over 15 hours per month.This was also a marked increase
since September 2009, when C2DEs had spent around 11.5 hours per month
on social networking

People who did not currently pay for online content were asked whether they
thought they would become a paid subscriber over the coming 12 months. In
total, 10% indicated they would possibly become a paid subscriber while none
indicated they would definitely do so.This suggests that the market for online
subscriptions is unlikely to grow greatly over the coming 12 months.

FIFA World Cup 2010
3D viewing Betting
viewing plans


3D viewing

With 3D films andTV becoming more prevalent this year, respondents were
asked about their viewing habits and opinions on this growing medium.

More than a quarter (27%) of respondents had viewed a 3D film at the
cinema during the past 12 months. This rose to 42% amongst the 18-24s
and 45% amongst the 25-34s. By contrast, only 29% of 35-44s, 19% of
45-54s and 12% of those aged 55+ had viewed such films at the cinema.

5% had watched a 3D film on TV. Gender and social grade had no impact
on likelihood to watch 3D films either at the cinema or at home.

Despite fairly high levels of 3D viewing, relatively few indicated they were
likely to buy a 3D TV next time they purchase a television set (15%).

Amongst those who said they were unlikely to buy a 3D TV, almost two-
thirds (63%) indicated they did not see the need and 59% expected it to
be too expensive.

Interestingly, four-in-ten (41%) thought 3D TV was a gimmick.

Only a quarter indicated they would prefer to watch TV in 3D if it was
available, with a third (33%) saying they would not and 42% unsure. Levels
of uncertainty suggest that little is known about 3D TV. Appetite for 3D TV
was higher amongst younger age-groups, males and lower socio-economic
groups.

Accessing


,

You said you were unlikely to purchase a 3D television next
time you buy a TV. Why is this?
Don’t see the need 63%

Likely to be too expensive 59%

I don’t like the idea of wearing the 3D glasses 49%
It’s a gimmick 41%
Lack of programmes available 33%

Will wait for improved version to be launched 19%
Quality likely to be poor 12%

None of these 4%
Not sure 0%

FIFA World Cup 2010
3D viewing Betting
viewing plans


FIFA World Cup 2010
viewing plans

This summer’s FIFA World Cup will be a viewing favourite with over half
FIFA World Cup 2010 in 3D
Amongst those who plan to watch World
(53%) planning to watch games this summer, with a further 8% unsure.
Cup games, 39% indicated they would Men were more likely to say they would watch than women (66%, 40%).
watch games in 3D if it were an option
(with a further 29% unsure). Respondents were asked to indicate the locations in which they expect to
This suggests a substantial potential view the games. Among those who plan to watch, the vast majority plan
market exists. to watch some games at home (94%). Around half (48%) said they would
watch some games at the pub. The number of us who plan to view any
games on our computer or smart phone are much lower.

You said that you intend to watch some of the FIFA World Cup
this summer. Where do you expect to watch these?

On TV at home/friend’s home 94%

At pub 48%

On computer at home/friend’s home 7%

On my smartphone 1%

At cinema 1%

Accessing


,

Betting

More than half (56%) had placed a bet on a sporting event in the past.
This was higher for men than women (63%, 49%).

Amongst these, over a third (36%) had placed a bet online. Again this was
more prevalent amongst men than women (44%, 27%).

Amongst the whole population, 12% indicated they plan to place a bet on
the forthcoming World Cup. Around three quarters (76%) said they did not
plan to place any bets on the tournament. One-in-twenty-ﬁve (4%) were
unsure.

Those who said they were likely to place bets on the tournament were
asked the ways in which they plan to do so. The most popular method was
online, 60% indicated they planned to place some bets online, 57% said
they would place some at the bookmaker and 3% via telephone.

FIFA World Cup 2010
3D viewing Betting
viewing plans


kpmg.co.uk
Previous

Contacts
David Elms
Partner, Head of Media
Tel: +44 (0)20 7311 8568
E mail: david.elms@kpmg.co.uk

Claire Le Masurier
PR Manager
Tel: +44 (0)20 7694 8639
E mail: claire.lemasurier@kpmg.co.uk

The information contained herein is of a general nature and is not intended to address the circumstances of any © 2010 KPMG LLP a UK limited liability partnership,
,
particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no is a subsidiary of KPMG Europe LLP and a member
guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the firm of the KPMG network of independent member
future. No one should act on such information without appropriate professional advice after a thorough examination firms affiliated with KPMG International Cooperative, a
of the particular situation. Swiss entity. All rights reserved.
KPMG and the KPMG logo are registered trademarks
of KPMG International Cooperative, a Swiss entity.
Designed and produced by KPMG LLP (UK)’s
Design Services
Publication name: New vs. Traditional Media
Publication number: RRD-193125
Publication date: April 2010

KPMG Media and Entertainment 2010

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