Consumer Trends

Global Watch is a DTI service managed by Pera

Exploiting the broadband opportunity: lessons from South Korea and Japan

Stella CreaseyHead of Audience ResearchBBC New Media

Global Watch is a DTI service managed by Pera

Exploiting the broadband opportunity: lessons from South Korea and Japan

Common cultural drivers of digital media uptake• Ethnically and linguistically homogenous countries

– Strong demand for indigenous content and services• Shared sense of social identity is important

– Success of online community services• High value placed on education

– Strong digital literacy programmes – especially for the ageing population

• Strong government policy to drive ICT adoption and usage within key public services– e-health, e-learning, e-procurement, e-transport

Global Watch is a DTI service managed by Pera

Exploiting the broadband opportunity: lessons from South Korea and Japan

Consumerism is strong

• Eager adopters of new technology – seek out innovative features or next ‘new’

thing• Well informed and demanding • Shorter product lifecycles • 15% penetration = likely to be mass

market

Global Watch is a DTI service managed by Pera

Exploiting the broadband opportunity: lessons from South Korea and Japan

New media consumption is displacing traditional media

KOREA Average Internet User Non internet user

Weekly Internet Use

12.9 hours

Weekly TV Watching

18.4 hours 16.3 hours 23.6 hours

Weekly Newspaper Reading

4.5 hours 4.3 hours 4.9 hours

Source: KISDI – Korean Consumer Behaviour

Global Watch is a DTI service managed by Pera

Exploiting the broadband opportunity: lessons from South Korea and Japan

Digital content is growing in otherwise flat or declining content market

• Music, games and advertising are driving digital content growth in Japan both on the internet and mobile.

• Surprise development is growth and popularity of community based social network services

Source: DCAJ: Digital Content Association of Japan

Content Type Internet content Mobile contentGames 1300% 350%

Music 700% 200%

Advertising 200% N/A

Text 0% N/A

Digital Content Sales Growth in Japan since 2001

Global Watch is a DTI service managed by Pera

Exploiting the broadband opportunity: lessons from South Korea and Japan

Huge opportunity remains for digital content growth• Digital distribution of content currently represents a very

small proportion of overall sales by content genre

– Online games are 1.8% and mobile games 3.3% of games content sales. Arcade games and software packages take lions share

– Internet video delivery is only 0.4% and mobile video delivery 0.7% of video content sales. Broadcast and DVD sales are the largest categories.

• Mobile TV and IPTV services are still in their infancy so it is unclear what the large scale impact will be.

Global Watch is a DTI service managed by Pera

Exploiting the broadband opportunity: lessons from South Korea and Japan

Games• In Korea the video games market is mainly PC based

– Massively Multiplayer Online Role Playing Games (MMORGs)– Thousands of players co-exist in a virtual world– The range of games genres is widening to attract broader

audiences• In Japan the games market is more console based, with

strong vertical industry collaboration– As a result the online games market has grown more slowly– This is changing as new generations of consoles incorporate

broadband connections• Games companies are exploiting the growth in community

sites by developing community services for their players

Global Watch is a DTI service managed by Pera

Exploiting the broadband opportunity: lessons from South Korea and Japan

Music• Music downloads to mobile lead the way in Japan

• Strong demand for indigenous music content • Domestic companies dominate – early deployment of

commercial download music services

99.8% to mobile phones

Music Downloads

0.2% to PCs and portable MP3 players

= 5m music download sales per day

Global Watch is a DTI service managed by Pera

Exploiting the broadband opportunity: lessons from South Korea and Japan

Community, Social Network Services and User Generated Content

• Most notable development was the growth of community or social network sites– Over 4m users of SNS in Japan– 50% of daily hits to Livedoor portal (Japan’s third largest

portal) are to its community sites– 90% of young people are addicted to Cyworld in Korea

• A virtual duplication of the real world– OhmyNews in Korea. ‘Every citizen is a reporter’. 10m

users and 6th most influential media.• 7.7m bloggers in Japan in September 2005

– Send and receive digital photos and movies– Creative expression and development

Global Watch is a DTI service managed by Pera

Exploiting the broadband opportunity: lessons from South Korea and Japan

Television• Much speculation about convergence of

telecommunications and broadcasting– How will IPTV, VOD and Mobile TV services evolve and what

impact will they have?• Variety of different models in development• Widespread service deployment delayed due to:

– Regulatory uncertainty– Online rights negotiations– Viability of business models– Merger and Acquisition activity

• Many services still in trial phase so too early to predict their success.

Global Watch is a DTI service managed by Pera

Exploiting the broadband opportunity: lessons from South Korea and Japan

Switchover from Analogue to Digital HDTV• Both Korea and Japan have set target dates for Digital

switchover to HDTV.• DTV market in Japan has seen moderate growth when

compared with broadband– Cable TV 23m– Digital Satellite 11m– Currently only 6m DTT homes, target to reach 48m DTT

homes by 2011• Government to further promote switchover for take-up

to accelerate and IP to be included in digital switchover.• NHK, Japan’s public service broadcaster is

repositioning itself with HDTV at the core

Global Watch is a DTI service managed by Pera

Exploiting the broadband opportunity: lessons from South Korea and Japan

Number of Digital HDTV sets

0

20

40

60

80

100

120

2004 2006 2008 2011

World Cup12 million

Beijing Olympics36 million

Switchover 100 million

million

Global Watch is a DTI service managed by Pera

Exploiting the broadband opportunity: lessons from South Korea and Japan

IPTV and VOD• Commitment to next generation broadband access

network is critical enabler for sufficient quality of service– NTT target of 30m FTTH customers by 2010

• Innovation and market development being held back by uncertain regulatory environments

• Demand could be tempered by dual screen environment rather than convergence

• Growing market for consumer electronics able to timeshift viewing may affect IPTV take up– Sales of DVD HDD recorders reached 5.5m in 2005– Sony X Video Station to launch this year. A PVR with 8

tuners and 2 terabytes of hard disk memory

Global Watch is a DTI service managed by Pera

Exploiting the broadband opportunity: lessons from South Korea and Japan

Mobile TV• In April 2006 KDDI to launch simultaneous broadcast to

mobile– Primarily another distribution platform for broadcasters– Opportunity to increase TV viewing time (which is in

decline)– Most likely to be used for killing time while waiting or

commuting– Network operators want to combine mobile TV viewing

with web browsing to make the business model viable.– Live programs will be used as triggers to direct the viewer

to sites for services/ e-commerce