Surprise: Innovators Prefer Android

The Nielsen chart below (sourced from Slashgear, Sept 1) shows that the further people are along the adoption curve the less sure they are about the operating system they want in their next smartphone (based on likely smartphone upgraders).   Only 7% of Innovators are unsure about what operating system they want …but 30% of Late Adopters are unsure.   That’s no surprise, though it may indicate opportunity for players to reshuffle their positions as the market matures.

What is surprising though, at least to me, is the bimodal pattern for Android preference.  I had assumed that the Android phone is perceived by consumers as “the poor man’s iPhone”, with user stereotypes in my mind similar to this piece…that could be summed up as Android: Cheesesteak, iOS: Sushi

But the Nielsen data at least partly contradicts this stereotype, which can be seen more clearly if you take out the “not sures” and base percentages on those who are sure.    Android preference increases as you move to the end of the adoption curve – to the later adopters – that’s  true.   But Android preference also pops up at the top of the curve, among those likely to be the first to adopt new technology.   Apple preference is relatively strongest…among Early Adopters and the Early Majority.

This may relate to a heated discussion on Stackoverflow about developer preference between the operating systems.     The original post and reported data suggest that Android preference is rising sharply among developers; that Android surpassed iOS preference around mid-year.   The many doubting comments point to the non-representativeness of the data (e.g., do iOS developers ask their questions on sites other than Stackoverflow?) and question what it means (e.g., do Android developers ask more questions on Stackoverflow due to the inferiority of Android documentation?)

But seeing two pieces of information from different sources (and contexts) pointing in the same direction makes me wonder…is Google in fact making headway against Apple at both the bottom and the top of the tech-savvy spectrum?

Are Heavy Online Streamers Watching Less TV?

Nielsen’s first quarter 2011 Cross-Platform Report shows that the top quintile of online video streamers, in terms of time spent, consume somewhat less TV than other groups.    We can’t assume causality from the findings; heavy online streaming may reduce TV viewing or heavy online streamers may be lighter TV viewers to begin with.    But it’s an interesting finding either way, as shown by the squiggly line charts in the Nielsen report that I’ve lifted below:

There are a couple of different threads that can be pulled out of this information; an alternate visual may help to tease them out.   What I’ve done below is plot the online streaming quintiles, ranging from lightest (5) to heaviest (1), on a scatter plot with average daily minutes of streaming and average daily minutes of TV as x and y axes.   I’ve put 4Q 2010 and 1Q 2011 on the same scatter plot and connected the dots for each time period.

The first thing to note from this reconfigured chart:  TV viewing for the first quarter is on a much higher plane than the fourth quarter.   The two periods seem so different, as far as media behavior is concerned, that we can’t really trend between the two; all we can do it see if there’s consistency to the story.

There seems a great deal of consistency in the behavior patterns reflected by the streaming quintiles:

  • Quintile 5 in 1Q 2011: very heavy TV with virtually no online video.  I bet if we dug into this group we’d find an older demographic profile.
  • Quintile 5 in 4Q 2010 and quintile 4 across both time periods:  relatively light TV viewers with little online streaming.  This light/light pattern may reflect an upscale group that skews toward print rather than video and/or young males who skew low across all media.
  • Quintiles 2 and 3 across both time periods:  heavy TV viewers who are also moderate online streamers.   This may represent the mainstream condition.   At this point in the story, online streaming and TV viewing are rising in tandem…
  • And then there’s quintile 1, the heaviest online streamers who, as the Nielsen report points out, show somewhat lower TV consumption than the other groups.

A couple of points about the heavy online streamers:

  • Streaming behavior is highly concentrated into this top quintile.   The graphic shows how sharply the heaviest users pull away from the other four groups in terms of time spent with streamed content.  My back-of-the-envelope from these numbers shows that the top quintile accounts for 80% of the total time spent with streamed content; in contrast the top TV quintile accounts for just 45% of total TV time spent.
  • The data begs for deeper drill-down into this quintile; demographic and behavioral characteristics.  Why are they consuming so much streaming content?  Are they sending online video over-the-top to their TV’s?
  • Yes, their TV consumption is lower than other groups but not by a whole heck of a lot.   The graphic shows, as their online streaming behavior shoots away from the pack, their TV behavior declines a bit, but nowhere near in proportion to the way their streaming behavior accelerates.

Another way to look at this is to compare TV viewing for the top streaming quintile against average TV viewing across all the quintiles.   We can see the shortfall is slight; the under-consumption of TV is far smaller than the streamed content that these consumers have added to their lives:

  •  In 4Q 2010, among P2+, the heaviest streaming quintile consumed 14.5 minutes of online streaming a day but only 4.3 minutes less TV than average
  • In 1Q 2011, among P2+, the heaviest streaming quintile consumed 18.8 minutes of online streaming a day but only 8.0 minutes less TV than average
  • There’s a much sharper equivalence between minutes of streaming and dampened TV viewing among 18-34’s specifically.   Among this demo, for 1Q 2011, the heaviest streaming quintile consumed 27.0 minutes of online streaming a day and 21.5 minutes less TV than average.   It may be, among this demo, that the sharper trade-off reflects cord cutting; I cited a J.D. Powers and Associates study in previous post that suggests perhaps 6% of younger consumers have cut the cord.

I think this analysis shows a truism about people and media; the more options we throw at them the more media they consume.   Yes, the heaviest online streamers may consume a bit less TV than other groups but, as streaming becomes a bigger part of their lives, they consume more video overall.  They don’t trade-off one medium for another to the degree that they layer them all together.    The question then becomes:  how do they make these integrations and what role does each medium play?


A Funny Thing About Cord Cutters

Much has been written about the Nielsen position on cord cutting…that it is, in fact, happening, but among segments that are not of core importance to the TV industry.  A key paragraph from the June 2010 Nielsen press release below:

“….shifting to online video mainly appears to be happening in small pockets of the population, including young, emerging households.  Households with no cable subscriptions at all, but who subscribe to a broadband service, also reflect a younger population of college graduates and lower to middle income consumers who may not be fully convinced of the need to pay for digital cable.  However, Nielsen data shows that these individuals are typically light TV viewers who watch 40% less TV per day than the national average.   And while they stream about twice the average amount of video, they still only stream about 10 minutes per day, hardly an indication of a monumental shift to online-only viewing.”

The delicious irony of this position:  according the the theory of disruptive innovation (Clayton Christensen, The Innovator’s Dilemma, 2003) it is precisely among non-core audiences that disruptive innovations gain their initial foothold.   Check out this quote from The Innovator’s Dilemma:

“First, disruptive products are simpler and cheaper; they generally promise lower margins, not greater profits.  Second, disruptive technologies are typically first commercialized in emerging or non-significant markets.   And third, leading firms’ most profitable customers don’t want, and indeed initially can’t use, products based on disruptive technologies.   By and large, a disruptive technology is initially embraced by the least profitable customers in a market…”

So…according to the Nielsen analysis, disruption of the TV business is proceeding more-or-less in textbook fashion.  Not what they intended I’m sure.

One niggle to applying the concept of disruptive innovation to cord cutting: disruptive innovations generally deliver a lower quality product (offset by other benefits).   At least at first.   While most cord cutters would likely argue that the quality of their viewing experience through their over-the-top devices is quite as good as they would get from multi-channel providers.

I’d argue, though, that cord cutters are sacrificing ease-of-use.  Not every mainstream consumer would know what over-the-top device to get or how to hook it up.  Lack of knowledge and a hassle factor keeps the disruption isolated among demographic pockets with greater economic need and some technological savvy…who are willing to go through a little trouble.

We’ll have to see, as going over-the-top gets easier for consumers, whether cord cutting expands beyond (and how far beyond) these initial demographic pockets:

  • Will exclusive content, only available through multi-channel subscriptions, become a critical barrier against the increased penetration of cord cutting?   Live sports, in particular, may be a key factor that keeps people from cutting the cord so long as there is no easy/legal way to get major sports events over-the-top.   If this is true we may see female-headed households and those who care less about sports become the next demographic frontier for cord cutting.
  • Is there a psychological barrier for a significant portion of TV viewers (particularly heavy viewers) against the on-demand only type of experience that cord cutting entails?   To the degree that there is an inherent need to surf channels…there may be an anti-cord cutting barrier for heavy viewers.
  • Will the TV Everywhere initiatives of the major TV players help forestall disruption of their business?

It will be fascinating how it all plays out…

But one thing we must not do is dismiss the phenonomenon based on its initial audience characteristics.   Quite the contrary.


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