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NPD: Connected-Device Use Still a Novelty

28 Sep, 2010 By: Erik Gruenwedel

Despite a surge in consumer electronics products enabling access to entertainment and related content from the Internet, consumer adoption remains in its infancy, according to a new report.

The NPD Group found that 75% of U.S. consumers (age 13 and older) did not connect or download content in the previous three months, while 15% connected and downloaded content via PC or Mac computer; 6% connected with a video-game player; 4% connected via smartphone; and 2% connected via a Blu-ray Disc player or a digital video player, like Apple TV or Roku.

“What we learned in our research is that while some people already experience the world in a connected way, most do not,” said Russ Crupnick, VP and senior entertainment analyst for NPD.

The analyst said most consumers are not motivated by the latest app, but rather more about the fundamentals, such Web browsing and e-mail. The promise of the connected experience is growing, Crupnick said, as prospective Blu-ray owners want their players to come with connectivity, and half of game consoles are already connected.

“The doors are also opening wider for music, video, gaming and other forms of entertainment,” he said.

Indeed, Les Moonves, CEO of CBS Corp., said distribution channels for entertainment content have grown exponentially in the past two years. He said alternative distribution platforms for content — such as Hulu.com, Apple TV and Netflix — are generating much of the hype, if not necessarily much incremental revenue.

“Obviously, the watchword of today for all the media companies is ‘How do I maximize my revenue for the content?’” Moonves said last week at an investor event.

Ross Rubin, executive director of industry analysis for NPD, said the advent of the connected device is the most significant step in the evolution of consumer electronics and content since the beginning of the digital revolution three decades ago.

The report found that lower priced media players and Blu-ray players represent “prime” avenues to deliver broadband content to the consumer’s living room. Connected televisions are also experiencing increasing penetration, particularly among large-screen televisions.

In addition, diversity of content is key to pushing connectivity among the general population, in addition to devices with associated services, such as XBox Live and Amazon’s Kindle store, which drive content associated with particular types of devices and users.

“Discoverability … is key to content exposure,” said Anita Frazier, industry analyst for toys and video games for NPD. “Today’s gamer might be a hard-core teen-ager playing games online with his friends, a 40-something female playing Farmville on Facebook, or everything on either side of that spectrum. We would not have seen this type of audience diversification and expansion if it weren’t for connected Internet, smartphone, and online gaming options.”

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