The rise of the Digital Elite:
Consumers are mastering the technology and dictating the content.
Digital consumers ahead of producers
It is a well-established phenomenon that consumers are mastering the technology of the computers, mobile phone and the internet and thereby dictating its content to those who provide services, products and content. Interestingly consumer seems to be ahead of providers. One survey has shown that while 60% of respondents feel all Newsmedia content will be digital within two years only 43% of Newsmedia publishers share this view. This difference poses real challenges for the content producers. Recent surveys and related studies by Deloitte and McKinsey reveal this consumer-led dynamic, which is reflected by expert and user comments on dedicate sites, forums and social networks.
Nowhere is this trend more evident than in the ownership and use of platforms, principally; smart phones, tablets and laptops. The critical segment is the “Digital Elite”: those who own and use all three platforms. The estimate for the size of the Digital Elite segment varies from 4-20% (as defined by platform).
Exhibit 1: Digital Elite and Minutes spent per day – source McKinsey & Co
Consumer behaviour changing: smartphones – tool, tablets – consumption
Smartphones now equal laptops in number but are consider by consumers to be much more as a means of creation and a tool. Tablets trail these two and remain primarily a platform for consumption. Each platform has distinctive utilities across user-cohorts. The adoption of these platforms is also changing habits, attitudes and behaviors. Regular internet usage is now the norm for over 50% of European consumers. Most amazingly the average member of the Digital Elite spends 244 minutes (4 hours) a day on these devices. In surveys, over 48% users claim that their tablets are more important than their TVs. Tablets are used primarily for entertainment and internet grazing. This user affection is even stronger for smartphones. It affects behavior.
Exhibit 2: Tablet activities – source Deloitte
Browsing and Emails dominate as the leading activity (83%), followed by Social Networking and Gaming (at the 50% level) with Newsmedia and others below 45%.
Consumers are demanding more tailored products. It has been shown that on average 20% of consumers are willing to pay for digital content; this percentage varies by cohort/segment and product. It is most prevalent for tablet users. This average has increased in the last two years, putting “free” to rest.
Over 60% of consumers use their telecommunications triangle of devices to research products and services on-line before they buy them. A staggering 8% actually use their smartphones in-store when making their purchase decision; with an even higher percentage using it as a payment tool (a percentage that varies by product category and spend level, but that has grown across the board).
Implications – producers must focus and raise their game
What are the implications? Those companies, that are using the internet as a distribution channel (such as retailers of clothing and consumer products) or as an integral part of their product/services (such as Newsmedia, Games, Mobile phone operators), must get ahead of their consumers. They need to recognize that their old parallel brick& mortar and web-based systems must be fused together – with the smartphone as the core platform for the foreseeable future.
Such a fused approach allows for an improved experience and hence more intelligent use of resources and remunerative pricing. It seems that news media providers are most exposed at the moment as they struggle with content definition and paywall strategies. Other sectors, such as gaming, video and even music suppliers, seem to closer to the pace currently being set by consumers. The producers that can match their consumers’ pace will be rewarded, the laggards penalized.