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Online Entertainment Not A Strong Broadband Driver

23 Apr, 2002 By: Hive News

While just 16 percent of U.S. online households subscribe to broadband, more than 24 percent of dial-up consumers are considering signing up for a broadband service within the next 12 months, says a new study from analyst firm Jupiter Media Metrix.

Dial-up access consumers favor utility over entertainment, even though companies catering to a broadband audience emphasize entertainment and rich-media applications, the survey indicates.

The findings concur with an In-Stat survey released two weeks ago that found sharing broadband access, not entertainment, is the key driver for home networking.

The top motivator of dial-up users planning to switch to broadband is an “always on” connection (59 percent), according to Jupiter's report, “Broadband Audience: Maximizing Revenue from the New Mainstream.” Less important are entertainment-related features such as the ability to view quality video (26 percent) and listen to audio (15 percent).

Broadband household subscriptions in the United States nearly doubled last year, from just over 5 million to 10.4 million. Moreover, individual broadband users, including those at work, totaled 38 million in 2001 – 32 percent of at-home and at-work Internet users.

While the wealthiest households remain the most likely to have a broadband connection, lower income groups are increasingly entering the fold. Jupiter Consumer Survey data reveal that nearly one-third of broadband households have annual incomes lower than $50,000, up from only 26 percent two years ago.

In an August 2001 Jupiter Consumer Survey, broadband consumers said self-initiated research and recommendations from friends were relatively important factors in choosing providers. However, no single influencer drove even 15 percent of broadband users to make a selection.

In fact, almost 40 percent of broadband users said that they were not sure if any single factor influenced their decision to sign with a specific service provide, leading Jupiter analysts to suggest that costly ad campaigns may be ineffective tools for acquiring new customers. Instead, companies with high Web site traffic or a strong word-of-mouth from satisfied customers, will prove most successful in garnering broadband subscribers.

“Broadband service providers now face the challenge of selling a complex product to an audience that is increasingly mainstream,” said Jupiter senior analyst Joe Laszlo. “By using the Web as a sales channel, broadband providers can educate consumers about broadband's benefits, while at the same time control customer acquisition costs. With these costs running upwards of $500 to $700 per customer, broadband providers must place greater emphasis on the Web channel this year.”

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