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| Volume: VI |  |
September, 2007 |
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Fast Forward
57. Switching On To Interaction – Nick McConnell
Broadsystem
Television is probably the world's most popular medium – currently only 1% of UK households do not have a television (National Office of Statistics) and viewing figures in Europe on average reach a staggering three hours and 33 minutes per person every day (Eurodata TV).
TV is compelling because of its richness of content. However, the media landscape is changing. TV is coming under increasing pressure from alternative activities – for example, BT (British Telecom) reached three million broadband connections by August 2004, and by 2007 the UK Government hopes all households will have broadband access. Further, it is estimated that one in three UK households owns a games console (National Office of Statistics) – and increased time spent on these activities is likely to be at the expense of television, either in terms of viewing time or concentration.
TV is increasingly becoming a 'wallpaper' medium, which viewers consume at the same time as other media, such as reading a magazine or surfing the net. As a result, over recent years we have experienced rapid growth of participation, or interactive, TV, which offers broadcasters an opportunity to engage with viewers more closely, providing a mechanism to lure viewers, drive growth and generate additional revenue.
History Of Interactive TV (ITV)
iTV was, surprisingly, established in the UK way back in 1950 with the introduction of children's programme Winky Dink, which encouraged children to draw on a special transparent sheet placed over the TV screen using ordinary crayons. In the 1980s the BBC launched What's your Story? a programme that viewers could direct via telephone. However, apart from these brief dabbles, interactivity really took off in the 1990s with the introduction of red button technology (where the pressing of a red button on your remote takes you to an interactive platform, with additional footage and information). Currently, the UK is leading the European digital revolution. Sky Digital launched its services in October 1998, followed in 1999–2000 by ntl, Cable & Wireless and ONdigital.
In 2000 the first SMS–TV technology was introduced in Finland and proved an instant hit. Now hardly an hour goes by on European TV without a channel encouraging viewer interaction by SMS, including SMS chat and voting, with the UK being one of the most voracious text-messaging nations.
These technological advances mean that since the early days of TV the role of the viewer has changed considerably, from passive onlooker to active participant.
Switching On To ITV
According to the Digital Video Broadcasting Project in 2004, nearly 44 million out of 144 million households in the EU (15 countries at the time) have iTV via satellite (30.3 million), cable (7.7) or terrestrial (6.0) channels. This equates to 31% of total TV households. By 2007, Strategy Analytics believes the numbers of iTV households in Western Europe will more than double, growing to over 100 million. While over half of UK households currently have access to digital TV and as we approach analogue switch-off, scheduled for 2012, the number of households with digital capability is growing rapidly.
As a result the growth in iTV has been a heavily discussed topic in the media. However, very little has actually been published about the current market. Consequently, customer communication and audience participation specialists Broadsystem commissioned MORI to survey 1,007 UK adults during July 2004 to provide real insight into the consumer behaviour driving participation television.
In this article, I investigate the key drivers for iTV, revealing when an iTV format is most effective. I also identify the main audience groups and opportunities for growth. Moreover, I compare the UK's current market situation with those of other iTV- leading European countries.
The MORI research revealed five clear findings, discussed in more detail below:
1. Certain audience groups are responding more than ever before
2. Offering a prize is a key response driver
3. Broadcasters can maximise response revenue by higher pricing
4. Several audience groups stand out as offering lucrative opportunities for participation TV
5. There is an increasing opportunity for response advertising.
The ITV Audience
TV is already the leading medium in terms of generating response and our research reinforced this, revealing that 40% of the UK population had responded to a TV programme or promotion in some manner (phone, SMS and so on) over a three-month period, compared to 10% responding to newspapers. However, the frequency of response to TV was broadly static: on balance, viewers who respond to TV are doing so at approximately the same level as last year – 18% claimed to be interacting more than they were a year ago, and 16% less. Yet underlying the overall trend there is a divide between groups that are responding more and those interacting less. High-level interactors are the group that are interacting more than last year, indicating that the more iTV forms part of the programme format, the more likely they are to increase their frequency of interaction.
The survey also identified young people (16–34 year olds) and small families as those most likely to increase participation. Further, viewers with Freeview were less likely than average to increase their frequency of response. By contrast, Sky homes were more likely to respond more than a year ago. This reflects the capabilities and history of both platforms, particularly the increased iTV response mechanism for Sky viewers. Moreover, the demographics of each customer base provide an interesting insight. Just under a half of Sky homes in the sample include children, in comparison to under a third of Freeview homes.
Reasons For Interaction
The survey shows that there is enormous scope to increase the number of participants and the frequency with which they interact by targeting the right mix of motivating factors for a programme's potential audience.
TV viewers are motivated to interact by a variety of incentives, ranging from winning a prize to supporting a charity. However, aspiration appears to be the dominant reason for response. Figure 1 shows that 41% claimed to interact because they wanted to win a prize, 38% 'just for fun' and 28% to vote for a reality show contestant'. This indicates an opportunity to develop more formats such as Who Wants to be a Millionaire? that trade on big-prize incentives. Currently viewers can play Millionaire from the sofa and send their results to the broadcaster via red-button technology, enabling them to compare results with other viewers and giving them the chance to win prizes.
The research also found that while charity donation is likely to boost a format's response rate, it is not essential for interaction. Charity is currently the most widespread response activity and is an important motivator for specific groups, but the majority of people appear ambivalent to it. Only 18% of those that had responded to TV claimed that charity had encouraged them to do so. Those with one child at home and the AB socio-economic group (23% and 21% respectively) were the most likely to be motivated to respond by charity. Least charitably encouraged were the C1 socio-economic group, of whom only 13% identified it as a reason to respond.
Motivators vary significantly according to socio-economic group, giving broadcasters the opportunity to tailor their programmes' response mechanisms to match viewers' motivations: for example, the over-55s do not to respond to charity, while the 16–34 age group does. In addition, young people are motivated by the chance to win a prize, while ABs were most likely to respond to have their viewpoints heard.
Several formats already closely match participation motivators with their audience – for example, the 'You Say, We Pay' competition on the chat programme Richard & Judy motivates its viewers by using prizes and fun because the teatime audience respond mainly 'just for fun'.
Pricing
The survey shows that UK broadcasters' pricing strategies are not always aligned with the market. Interestingly, it found that returns could be significantly improved by higher pricing (See Figure 2). The research reveals that interacting viewers would be prepared to pay more to respond, particularly the C1 social grade, Sky subscribers and competition entrants. Generally, response prices have remained low, usually between £0.25 and £0.50. Yet 40% of respondents claimed they would be happy to pay £1 per interaction. There would, however, be the risk that frequency of interaction would fall as a result of a price rise.
ITV Audience Groups
The survey found a wide difference between audience groups in terms of their relative value to broadcasters. Matching response elements to programmes with the appropriate audience gives broadcasters the opportunity to raise incremental revenue significantly.
The most lucrative audiences are those with one child at home, 16–34 year olds, C1 socio-economic groups and females. Women were found to be much more likely than men to vote (15% to men's 8%) and, to a lesser extent, enter competitions (13% and 11% respectively). But, interestingly, one and half times more men than women have ever used the red button to vote.
Families appear to be one of the most lucrative audiences, as they are much more likely than average to respond to TV programming. Participation TV seems to be a family or group activity, especially for competition formats. This implies that formats aimed at this audience, such as Saturday-night programmes like Pop Idol, are likely to be the most successful in generating response. The research revealed that on average 31% of those responding to a TV programme will discuss their response before 'interacting'. This is particularly true of those who do not work and those with one child at home.
Further, compared to other groups, families are more than three times as likely to request or subscribe to information, and more than twice as likely to purchase a product or service. However, families are no more likely to vote or comment or contribute to a programme.
Response Advertising
The survey findings support the view that advertisers have an opportunity to engage closely with viewers by building a response mechanism into advertisements. Broadcasters potentially have a role in this development by providing audiences primed for response activity.
A total of 18% of people claim to have responded to an advertisement in some way – 13% using interactive TV, 3% via telephone and 3% using SMS. Response rates are particularly high among younger people. as Figure 3 shows, and those in the C2 socio-economic group, 22% of whom have responded to an advertisement, 19% by iTV. In comparison, response rates in the AB socio-economic group were 16% overall, indicating that response advertising has been less successful in reaching the most affluent customer segments.
People who respond to TV programmes are far more likely to respond to advertising; 30% had responded toads, compared to 18% on average. This indicates that interactors among participation TV audiences are potentially valuable to advertisers. However, in general, those who request or subscribe to information are most likely to respond to advertising: 41% were found to have responded in some way, 30% through iTV, 15% via telephone and 11% by SMS. Factual programmes provide a good platform for this audience, because these are well suited to stimulating viewers to request information, and therefore potentially provide advertisers with a well-primed audience.
Those who regularly comment or contribute to a programme are also a fertile ground for advertising response. Debateor discussion-oriented formats, such as BBC's Question Time, would be well suited to stimulating response from this group.
Interactive Trends Across Europe
The research supports the view that the UK has the most advanced market in Europe. But how does it compare to other European countries?
After the UK, Finland probably has the next most developed market in Europe. It developed the first SMS-based games for TV and was among the first countries to launch iTV services, with the national launch date of August 2001. Since then penetration of iTV has reached approximately 400,000, equating to 19% of Finnish households. Penetration growth is strong and an optimistic estimate for selling iTV set-top boxes is 50,000 units per month. Further, the Finnish Government has set analogue switch-off for 31 August 2007, suggesting that growth should remain firm.
In contrast, Italy is a fairly new entrant to the iTV market, launching terrestrial iTV services only in January 2004. However, initial response has been very encouraging. Currently set-top boxes are selling at a rate of 2,000 a day and analogue switch-off has been set at 2007, five years before the UK. Consequently, to maximise digital penetration the Italian Government has significantly subsidised set-top boxes and coverage is predicted to reach 70% by the end of this year.
Evidently, the development of iTV is highly country-dependent: countries such as Turkey and Greece have barely scratched the surface. The story in the UK is very different. The research clearly demonstrates that digital technology has been embraced by many and has become part of our everyday lives. We are living in a multi-channel society, whereby consumers expect to be able to interact at the touch of a button.
The Future?
The possibilities, as they say, are endless. With the advent of 3G technology, allowing music and video downloads via mobile phone, there are opportunities for consumers to access exclusive content from their favourite TV programmes, films and music. This offers greater access and opportunity for more people to interact with their chosen media on a more personal level.
The challenge for the media is to deliver on their promise to consumers by providing relevant and useful information to encourage them to continue interacting. If not, consumers will become tired of the medium and it will become an irritating distraction, like junk mail. Our research suggests this will not be the case, but this is the beginning of a revolution in TV broadcasting and one that could determine its future.
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does not necessarily reflect the views of the company.
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