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Who's Consuming Multimedia Products?
Posted Jan 1, 2003 Print Version     Page 1of 1
  

In-Stat/MDR's recent Residential Technology Survey (RST) has produced findings that may dispel some common myths about the consumer electronics market and its future. On the other hand, it may confirm some of your most tightly held preconceptions.

The Scottsdale, Arizona-based market research firm has published the survey's findings in a report entitled: "Who Are Today's Multimedia Consumers: A 2002 Consumer Survey." The report offers a combination of surprising and not-so-surprising answers to the primary question (who are today's multimedia consumers?) as well as to companion questions: what products do they currently own, and what products are they interested in purchasing?

This annual In-Stat/MDR consumer survey asked more than 100 questions about multimedia devices and correlated the results with demographic and related product and service ownership. The survey indicated that the most common devices currently used by survey respondents include cable TV service, CD recorders, and DVD players. Here are some of the survey's other findings in their five major device categories.

Personal Video Recorders (PVRs)
Overall, the number of respondents who own a PVR increased slightly in the last year (from 5.1% to 6.5%), which may be influenced by the limited number of players in this industry, the price of the devices, and their availability. Prices have been steep—in the $300 range, according to In-Stat/MDR Analyst Cindy Wolf. PVRs have not been available in large quantities and have actually been "hard to buy," she says.

The PVR market has been hamstrung by privacy and digital rights issues. Also severely hurting the market has been a patent battle between the two major manufacturers—TiVo and SONICblue. That dispute has recently been settled with each side agreeing to drop its legal charges against the other. "Their decision to put aside their lawsuits is a step in the right direction toward the future development of PVR services," writes Wolf's fellow analyst Mike Paxton in another recent In-Stat/MDR market report that focuses specifically and in-depth on the PVR market.

Video Game Consoles
About 34% of 961 respondents indicated they own a video game console in comparison to 28% in 2001. The dominant brands here are the Sony PlayStation, Microsoft Xbox, and Nintendo GameCube. Of those people who have a console capable of online gaming now, or expect to have one in the near future, respondents are almost equally divided between "yes" and "no" in their interest in online gaming.

Low interest in online gaming may be partly due to the fact that "it's still so new," according to Wolf. "The numbers may be low because some of the services weren't available when the survey was conducted. Sony, for example, just started in August." She says that even now, you usually have to buy an extra adapter for your game console if you want to engage in online gaming. She believes that when game consoles come with online capabilities built-in (which probably won't be the norm until 2005), sales figures will go up. She doesn't expect the figures to skyrocket, however. There doesn't seem to be a big pent-up demand for online gaming, says Wolf. "It is clearly a niche market," she says.

Digital Audio Players
One of the survey's most interesting findings was in the digital audio player category, a niche traditionally thought to belong to the jaded youth of Generation Y. The survey showed that the percentage of respondents owning digital audio players has increased from 15.5% in 2001 to 20.3% in 2002, and it showed an increase in the average price that respondents are willing to pay for these MP3 devices. But most surprising is that the highest percentage of respondents with digital audio players are in the 35-54 age bracket.

Also surprising is the fact that more than 50% of respondents indicated that they have not downloaded music from the Internet in the last year. This will perhaps debunk the myth that these devices are solely used by adolescent, peer-to-peer pirates. The survey also found that the gender split of those who have downloaded music from the Internet is close to equal.

Wolf says that the recent success of digital audio players is due to the fact that there is a greater awareness of the products among age groups with higher disposable incomes (the older folks). And these players are "not as hard to buy as they used to be," she says. There is now a large variety of price ranges and models, which results in "something for everyone," according to Wolf. She attributes the broadening of this market to the pioneering efforts of Apple, whose iPod gave these products a jump start in the market. And she predicts continued growth as more age-segments find interest in these devices.

And although it may seem contradictory that sales begin to increase just as Internet music downloading decreases, Wolf says this may be partly explained by the rising popularity of car-based Digital Audio Players. These devices are very convenient for automotive audio systems because you can put so much music on them and they don't skip on every bump the way CD players do. After recording a whole lot of music to these players, mobile music lovers can simply push the play button, which leaves their hands free for driving (or cell phone use).

Home PCs
The RTS survey showed an increase in those owning one or more computers from 2001 to 2002. This may be due to the continued decrease in the price of PCs. The most popular devices that respondents connect to their USB ports are printers, a keyboards, mice, and scanners. The most popular devices connected to a FireWire (aka IEEE 1394) port are different, consisting of "funkier things" like camcorders and other digital imaging products, says Wolf.

While many respondents did not know what technology they would use to install a home network, a large percentage indicated an interest in wireless technology. This may be because people feel it will be easier to install than worrying about wiring issues.

DVD Players
The percentage of those owning DVD players has risen to 37.2% this year, up from 18.6% in 2001, clearly indicating that the DVD market is still growing. According to Wolf, this percentage jump is likely due to the decrease in price of players and increased availability of DVDs. The survey also found that the percentage of respondents with more than one DVD player has also increased to 34% compared to last year's 24%.

If there's an overall general conclusion to be drawn from the RST survey, Wolf believes it is that consumer education is key to the future success of new consumer electronics products. Even in today's uncertain economic conditions, consumers are still purchasing and continue to express interest in consumer electronics. Educating consumers is still necessary in order to drive increased growth, she says. Wolf points to the DVD player as a role model. It took a few frustrating years for DVD technology to reach the mainstream, and this will also be the case for newer products like PVRs, satellite radio, online gaming, and other multimedia consumer products that are in the early stages of their life cycles. They will need to pay some dues before they can hit the mainstream.
--Mark Fritz

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