Objective of the survey
The goal of the two INDICARE consumer surveys was to gather reliable data on the preferences and behaviour of European consumers with respect to digital goods and on their awareness and acceptance of DRM. The first INDICARE survey was published in May 2005 (Dufft, et. al. 2005) and covered digital music usage and DRM. The current survey’s focus is on digital video content: the extent to which European Internet users already use video content from the Internet, the channels through which they obtain it, their willingness to pay for certain usage rights, as well as their knowledge and attitude towards DRM. Included in the survey is the usage of digital video files from various sources. Explicitly excluded are watching videos from physical media such as DVDs or Video CDs on the computer and video games.

The survey was conducted among 2,731 Internet users in five European countries: Spain, Germany, France, the United Kingdom (UK) and Sweden. These countries account for about 64% of GDP and 55% of the total population in the 25 member states of the European Union (Eurostat 2006). Results are representative for all Internet users from age 15 in the respective countries with regard to age, gender, as well as Internet usage frequency.

Digital video usage is not yet very widespread in Europe
Results from the second INDICARE survey show that usage of digital video content is still at a relatively early stage in Europe: even though many Internet users (61%) have made first experiences with watching digital video content from the Internet on their computer, only less than a quarter (22%) do so frequently. This compares to 34% of European Internet users that frequently listened to digital music on their computers in 2005.

Downloading video content from the Internet is even less common: 38% have tried to download content, but only 14% do so frequently. However, a quarter of all Internet users show interest in downloading video content from the Internet in the future. This indicates that there is potential for future video download services.

Portable video content does not play an important role to date. However, two results might point towards commercial potential for mobile offerings: first, a comparatively high share of mobile video users frequently consumes video content on the go (once tried, they stick with it). Second, almost a quarter of all Internet users – younger users as well as older ones – are interested in using mobile video content in the future.

A lack of knowledge and awareness is the most important reason for not consuming digital video content. A shortage of sufficient bandwidth and high costs are currently not perceived as important barriers, except in Germany.

Significant differences between countries exist
Analysing digital video usage at the country level shows significant differences between the five European countries covered in this survey (Spain, Germany, France, the UK, and Sweden). Spain has the highest proportion of frequent digital video users (46% of all Internet users), followed by France, Sweden, and the UK. Germany has by far the lowest proportion of Internet users frequently consuming digital videos (12%).

These differences can partly be attributed to differences in the Internet population in each country: while Spain has, for example, a relatively low overall share of Internet users in percent of total population, the majority of these users are heavy (i.e. daily) users. Germany, in contrast, has a large Internet population overall, but among these more than half use the Internet only on a weekly basis or less frequently.

Types of video content and channels to obtain it are very diverse
Survey results reveal that the consumption of digital video content is characterized by a high degree of diversity. This diversity relates to the types of video content consumed as well as to the channels accessed to obtain it.

First, we can see that users are trying out many different types of video content and that there is not the single “killer content”. Music videos are presently the most popular content category, but they are very closely followed by private content (e.g. family and holiday videos), as well as movie previews and advertisements. TV shows and amateur content are currently the least popular content categories. The relatively low importance of amateur content such as video blogs or podcasts contrasts the high attention that this type of content is attracting in the media at present.

Second, there is no single most important channel where users obtain digital video files. Instead, the sources are rather diverse with company websites being the most important source, followed by ripping DVDs and using P2P networks. Service offerings by download portals, mobile operators or TV stations do not yet have a large market penetration.

Diversity needs to be reflected in differentiated usage rights and DRM systems
This diversity in digital video consumption is further aggravated when we look at the different usage rights that consumers are willing to pay for when offered commercial services. A considerable share of users is, for example, willing to pay extra for the right to burn or time-shift full-length movies, while the same is true for a much lower share of users in the case of music videos or TV shows.

The diversity of different content types, distribution channels and expectation of usage rights results in a complexity for content providers and (DRM) technology providers alike, because the diversity needs to be reflected in differentiated service offerings for different content types and channels – particularly with respect to the usage rights granted and the technological measures applied to enforce usage restrictions. As a result, the complexity will affect the way DRM protection is designed, applied and accepted, as the number of technological challenges (e.g. interoperability) is likely to increase.

There is indeed potential for commercial digital video services
Our findings also indicate that there is future potential for commercial digital video content offerings, given that consumers’ expectations of what they can do with the content are met. First, a considerable share of consumers indicate that they are interested in watching digital movies and TV shows in the future. Second, many digital video users are interested in services from TV stations, download portals or mobile operators. And third, a significant share of consumers is actually willing to pay for extended usage rights such as burning, time-shifting or sharing.

Digital channels do not necessarily cannibalize existing channels. A considerable share of users are actually watching or downloading digital versions of a specific video via the Internet that they had already consumed through other channels, for example TV. This indicates that digital video offerings could be well suited as a complement and as a means to exploit the commercial value of movies and TV shows in different stages of their life cycle.

Consumers apparently prefer active over passive content consumption
There are two major advantages that consumers associate with digital video usage: first, being able to watch content wherever and whenever they want (time-shift), and second, being able to avoid commercials. Users are obviously annoyed by the way commercials are placed in traditional media channels today.

At the same time, the high popularity of movie previews and advertisements offered on company websites shows that consumers actively choose to watch smart and entertaining advertisements. This emphasizes, on the one hand, that the Internet can be a very efficient channel for marketers (particularly for the movie industry) to place commercials. On the other hand, consumers increasingly seem to prefer pull (as opposed to push) advertisement.

Consumers’ attitude towards content consumption is apparently about to change from passive to more active consumption behaviour, where viewers are in control of their own schedules and content preferences.

P2P networks play a less prominent role for digital video than for digital music
P2P networks play a less prominent role as a source for digital video than is the case for digital music. 27% of the digital music users, but “only” 14% of the digital video users frequently use P2P networks. However, P2P usage has reached a very significant share in certain countries (e.g. 67% of digital video users in Spain compared to only 11% in Germany).

But we also find that P2P still needs time to be accepted by active P2P users as a legal distribution channel. Even though half of all digital video users appreciate the importance of copyright (i.e. they care if a file is copyrighted or not), only a minority of P2P users would continue to use their network after it was transformed into a licensed offering. Given a significant proportion of users that would be willing to pay extra for extended usage rights, we conclude that the absence of usage restrictions is one of the most important factors besides costs that make P2P networks so popular today.

Consumers are not aware of DRM and usage restrictions
Despite the wide application of DRM technologies that restrict usage rights of digital content today, a large majority of consumers has never heard of DRM and does not know that these technologies are applied. This finding confirms results from the first INDICARE survey among digital music users. In addition, the majority of users that have downloaded digital video content were not informed whether usage rights of the respective videos were restricted or not.

Of those users that know about DRM, almost half were not aware of privacy issues related to DRM, e.g. the fact that DRM technology has the potential to monitor uses of digital content and profile consumption behaviour. One third knows about potential privacy issues but does not mind or simply accepts it.

Bottom line
The results show that digital video content is gaining popularity in Europe. However, many users do not use digital videos on a frequent basis. This has a number of reasons, the most important being a lack of information about offerings and prices. We found that there is no single “killer content” in sight, as was the case, for example, with ringtones for mobile phones. The diversity of the digital video ecosystem (i.e. players, types of content, usage rights, distribution channels) is very likely to add complexity to the respective DRM systems, especially concerning interoperability. Although DRM was more broadly discussed in the recent past, we did not find a rise of awareness for DRM on the side of the consumers.

Sources
  • Dufft, Nicole, et al. (2005): Digital Music Usage and DRM – Results from an European Consumer Survey, Berlin, May 2005; online available at: http://www.indicare.org
  • Dufft, Nicole, et. al. (2006): Digital Video Usage and DRM – Results from a European Consumer Survey, Berlin, February 2006; online available at: http://www.indicare.org
  • Eurostat (2006), http://epp.eurostat.cec.eu.int

About the author: Nicole Dufft is a senior analyst at Berlecon Research. She has been analysing a variety of ICT topics ranging from mobile computing and application service providing to DRM. Currently, she works in the field "digital consumer". She is a member of the INDICARE project team. Contact: nd@berlecon.de

Status: first posted 23/02/06; licensed under Creative Commons
URL: http://www.indicare.org/tiki-read_article.php?articleId=178