Might be a good idea to copy and paste this as it's great and long..but very valuable Dr. Philip J..
July 10, 2009
Media & Internet
How Teenagers
Consume Media
M O R G A N S T A N L E Y R E S E A R C HJuly 10, 2009 Media & Internet
Digital media is profoundly transforming consumer
behaviour and traditional media business models. While
creating new opportunities, its disruptive influence is
being accelerated by the global recession.
At the vanguard of this digital revolution are teenagers.
While their habits will obviously change (especially when
they start employment), understanding their mindset
seems an excellent way of assessing how the media
landscape will evolve. To this end, we asked a 15 year
old summer work intern, Matthew Robson, to
describe how he and his friends consume media.
Without claiming representation or statistical accuracy,
his piece provides one of the clearest and most thought
provoking insights we have seen. So we published it.
There are several issues that immediately jump out from
the piece. Teenagers are consuming more media, but
in entirely different ways and are almost certainly not
prepared to pay for it. They resent intrusive
advertising on billboards, TV and the Internet. They are
happy to chase content and music across platforms
and devices (iPods, mobiles, streaming sites). Print
media (newspapers, directories) are viewed as
irrelevant but events (cinema, concerts etc.) remain
popular and one of the few beneficiaries of payment.
The convergence of gaming, TV, mobile and Internet is
accelerating with huge implications for pay-TV.
For mobiles, price is key – both in terms of handset
prices – £100-200 – as well as taking pay as you go as
opposed to contracts. Mid-range feature phones still
dominate, meaning that Sony Ericsson does well as
that's their sweet spot. High-end smartphones are
desirable but too expensive. Most prefer to own
separate devices for music, and messaging. Texting is
still key and use of new data services limited due to cost.
Wi-Fi is more popular than 3G.
While these trends will not necessarily surprise, their
influence on TMT stocks cannot be underestimated.
Morgan Stanley does and seeks to do business with
companies covered in Morgan Stanley Research. As
a result, investors should be aware that the firm may
have a conflict of interest that could affect the
objectivity of Morgan Stanley Research. Investors
should consider Morgan Stanley Research as only a
single factor in making their investment decision.
Customers of Morgan Stanley in the US can receive
independent, third-party research on companies
covered in Morgan Stanley Research, at no cost to
them, where such research is available. Customers
can access this independent research at
www.morganstanley.com/equityresearch or can call
1-800-624-2063 to request a copy of this research.
For analyst certification and other important
disclosures, refer to the Disclosure Section,
located at the end of this report.
How Teenagers Consume Media
By Matthew Robson (Aged 15 yrs & 7 months)
Radio
Most teenagers nowadays are not regular listeners to radio.
They may occasionally tune in, but they do not try to listen to a
program specifically. The main reason teenagers listen to the
radio is for music, but now with online sites streaming music for
free they do not bother, as services such as last.fm do this
advert free, and users can choose the songs they want instead
of listening to what the radio presenter/DJ chooses.
Television
Most teenagers watch television, but usually there are points in
the year where they watch more than average. This is due to
programs coming on in seasons, so they will watch a particular
show at a certain time for a number of weeks (as long as it
lasts) but then they may watch no television for weeks after the
program has ended. Teenage boys (generally) watch more TV when it is the football
season, often watching two games and related shows a week
(totalling about 5 hours of viewing). A portion of teenagers
watches programs that are regular (such as soap operas) at
least five times a week for half an hour or so but this portion is
shrinking, as it is hard to find the time each day.
Teenagers are also watching less television because of
services such as BBC iPlayer, which allows them to watch
shows when they want. Whilst watching TV, adverts come on
quite regularly (18 minutes of every hour) and teenagers do not
want to watch these, so they switch to another channel, or do
something else whilst the adverts run.
The majority of teenagers I speak to have Virgin Media as their
provider, citing lower costs but similar content of Sky. A fraction
of teenagers have Freeview but these people are light users of
TV (they watch about 1 ½ hours per week) so they do not
require the hundreds of channels that other providers offer.
Newspapers
No teenager that I know of regularly reads a newspaper, as
most do not have the time and cannot be bothered to read
pages and pages of text while they could watch the news
summarised on the internet or on TV. The only newspapers that are read are tabloids and freesheets
(Metro, London Lite…) mainly because of cost; teenagers are
very reluctant to pay for a newspaper (hence the popularity of
freesheets such as the Metro). Over the last few weeks, the
sun has decreased in cost to 20p, so I have seen more and
more copies read by teenagers. Another reason why mainly
tabloids are read is that their compact size allows them to be
read easily, on a bus or train. This is especially true for The
Metro, as it is distributed on buses and trains.
Gaming
Whilst the stereotypical view of gamers is teenage boys, the
emergence of the Wii onto the market has created a plethora of
girl gamers and younger (6+) gamers. The most common
console is the Wii, then the Xbox 360 followed by the PS3.
Most teenagers with a games console tend to game not in short
bursts, but in long stints (upwards of an hour).
As consoles are now able to connect to the internet, voice chat
is possible between users, which has had an impact on phone
usage; one can speak for free over the console and so a
teenager would be unwilling to pay to use a phone.
PC gaming has little or no place in the teenage market. This
may be because usually games are released across all
platforms, and whilst one can be sure a game will play on a
console PC games require expensive set ups to ensure a game
will play smoothly. In addition, PC games are relatively easy to
pirate and download for free, so many teenagers would do this
rather than buy a game. In contrast, it is near impossible to
obtain a console game for free.
Internet
Every teenager has some access to the internet, be it at school
or home. Home use is mainly used for fun (such as social
networking) whilst school (or library) use is for work.
Most teenagers are heavily active on a combination of social
networking sites. Facebook is the most common, with nearly
everyone with an internet connection registered and visiting >4
times a week. Facebook is popular as one can interact with
friends on a wide scale. On the other hand, teenagers do not
use twitter. Most have signed up to the service, but then just
leave it as they release that they are not going to update it
(mostly because texting twitter uses up credit, and they would
rather text friends with that credit). In addition, they realise that
no one is viewing their profile, so their ‘tweets’ are pointless.
Outside of social networking, the internet is used primarily as a
source of information for a variety of topics. For searching the
web, Google is the dominant figure, simply because it is well
known and easy to use. Some teenagers make purchases on
the internet (on sites like eBay) but this is only used by a small
percentage, as a credit card is required and most teenagers do
not have credit cards. Many teenagers use YouTube to watch
videos (usually anime which cannot be watched anywhere
else) and some use it as a music player by having a video with
the music they want to listen to playing in the background.
Directories
Teenagers never use real directories (hard copy catalogues
such as yellow pages). This is because real directories contain
listings for builders and florists, which are services that
teenagers do not require. They also do not use services such
as 118 118 because it is quite expensive and they can get the
information for free on the internet, simply by typing it into
Google.
Viral/Outdoor Marketing
Most teenagers enjoy and support viral marketing, as often it
creates humorous and interesting content. Teenagers see
adverts on websites (pop ups, banner ads) as extremely
annoying and pointless, as they have never paid any attention
to them and they are portrayed in such a negative light that no
one follows them.
Outdoor advertising usually does not trigger a reaction in
teenagers, but sometimes they will oppose it (the Benetton
baby adverts). Most teenagers ignore conventional outside
advertising (billboards etc) because they have seen outside
adverts since they first stepped outside and usually it is not
targeted at them (unless it’s for a film). However, campaigns
such as the GTA: IV characters painted on the side of buildings
generate interest because they are different and cause people
to stop and think about the advert, maybe leading to further
research.
Music
Teenagers listen to a lot of music, mostly whilst doing
something else (like travelling or using a computer). This
makes it hard to get an idea of the proportion of their time that is
spent listening to music. They are very reluctant to pay for it (most never having bought
a CD) and a large majority (8/10) downloading it illegally from
file sharing sites. Legal ways to get free music that teenagers
use are to listen to the radio, watch music TV channels (not
very popular, as these usually play music at certain times,
which is not always when teenagers are watching) and use
music streaming websites (as I mentioned previously).
Almost all teenagers like to have a ‘hard copy’ of the song (a file
of the song that they can keep on their computer and use at
will) so that they can transfer it to portable music players and
share it with friends.
How teenagers play their music while on the go varies, and
usually dependent on wealth –with teenagers from higher
income families using iPods and those from lower income
families using mobile phones. Some teenagers use both to
listen to music, and there are always exceptions to the rule.
A number of people use the music service iTunes (usually in
conjunction with iPods) to acquire their music (legally) but
again this is unpopular with many teenagers because of the
‘high price’ (79p per song). Some teenagers use a combination
of sources to obtain music, because sometimes the sound
quality is better on streaming sites but they cannot use these
sites whilst offline, so they would download a song then listen
to it on music streaming sites (separate from the file).
Cinema
Teenagers visit the cinema quite often, regardless of what is on.
Usually they will target a film first, and set out to see that, but
sometimes they will just go and choose when they get there.
This is because going to the cinema is not usually about the
film, but the experience –and getting together with friends.
Teenagers visit the cinema more often when they are in the
lower end of teendom (13 and 14) but as they approach 15 they
go to the cinema a lot less. This is due to the pricing; at 15 they
have to pay the adult price, which is often double the child price.
Also, it is possible to buy a pirated DVD of the film at the time of
release, and these cost much less than a cinema ticket so
teenagers often choose this instead of going to the cinema.
Some teenagers choose to download the films off the internet,
but this is not favourable as the films are usually bad quality,
have to be watched on a small computer screen and there is a
chance that they will be malicious files and install a virus.
Devices
Mobile Phones
99% of teenagers have a mobile phone and most are quite
capable phones. The general view is that Sony Ericsson
phones are superior, due to their long list of features, built in
walkman capability and value (£100 will buy a mid-high range
model). Teenagers due to the risk of it getting lost do not own
mobile phones over the £200 mark. As a rule, teenagers have
phones on pay as you go. This is because they cannot afford
the monthly payments, and cannot commit to an 18-month
contract.
Usually, teenagers only use their phone for texting, calling.
Features such as video messaging or video calling are not
used –because they are expensive, (you can get four regular
texts for the price of one video message). Services such as
instant messaging are used, but not by everyone. It usually
depends whether the phone is Wi-Fi compatible, because
otherwise it is very expensive to get internet off the phone
network. As most teenagers’ phones have Bluetooth support,
and Bluetooth is free, they utilise this feature often. It is used to
send songs and videos (even though it is illegal) and is another
way teenagers gain songs for free. Teenagers never use the
ringtone and picture selling services, which gained popularity in
the early 00s. This is because of the negative press that these
services have attracted (where the charge £20 a week with no
easy way to cancel the service) and the fact that they can get
pictures and music on a computer –then transfer it to their
phones at no cost. Mobile email is not used as teenagers have
no need; they do not need to be connected to their inbox all the
time as they don’t receive important emails. Teenagers do not
use the internet features on their mobiles as it costs too much,
and generally, if they waited an hour they could use their home
internet and they are willing to wait as they don’t usually have
anything urgent to do.
Teenagers do not upgrade their phone very often, with most
upgrading every two years. They usually upgrade on their
birthday when their parents will buy them a new phone, as they
do not normally have enough money to do it themselves.
• Televisions: Most teenagers own a TV, with more and
more upgrading to HD ready flat screens. However, many
are not utilising this HD functionality, as HD channels are
expensive extras which many families cannot justify the
added expenditure. Many of them don’t want to sign up to
HD broadcasting services, as adverts are shown on
standard definition broadcasts, so they can’t see the
difference. Most people have Virgin Media as a TV
provider. Some have sky and some have Freeview but
very few only have the first five channels (BBC One, BBC
Two, ITV, Channel Four and Channel Five).
• Computers: Every teenager has access to a basic
computer with internet, but most teenagers computers are
systems capable of only everyday tasks. Nearly all
teenagers’ computers have Microsoft office installed, as it
allows them to do school work at home. Most (9/10)
computers owned by teenagers are PCs, because they
are much cheaper than Macs and school computers run
Windows, so if a Mac is used at home compatibility issues
arise.
• Games Consoles: Close to 1/3 of teenagers have a new
games console, 50% having a Wii, 40%
with an Xbox 360 and 10% with a PS3. The PS3 has such
a low figure because of its high price (£300) and similar
features and games to an Xbox 360, which costs less
(£160). The Wii’s dominance is due to younger brothers
and sisters, they have a Wii and parents are not willing to
pay for another console.
What is Hot?
•Anything with a touch screen is desirable.
•Mobile phones with large capacities for music.
•Portable devices that can connect to the internet (iPhones)
•Really big tellies
What Is Not?
•Anything with wires
•Phones with black and white screens
•Clunky ‘brick’ phones
•Devices with less than ten-hour battery life
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