4 January 2011

Online content, what are you yanks buying really? - by T Ta

/media/Files/Reports/2010/PIP-Paying-for-Online-Content_final.pdf

The survey talks about only-digital product. So not buying physical items online, but actual digital content online. And who wins? Music!

 33% of internet users have paid for digital music online
 33% have paid for software
 21% have paid for apps for their cell phones or tablet computers
 19% have paid for digital games
 18% have paid for digital newspaper, magazine, or journal articles or reports
 16% have paid for videos, movies, or TV shows
 15% have paid for ringtones
 12% have paid for digital photos
 11% have paid for members‐only premium content from a website that has other free       material on it
 10% have paid for e‐books
 7% have paid for podcasts
 5% have paid for tools or materials to use in video or computer games
 5% have paid for “cheats or codes” to help them in video games
 5% have paid to access particular websites such as online dating sites or services
 2% have paid for adult content

The majority of people only purchase 3 different types of online content. Only 16,5 % buys more then 5 types of online content. People like using one and only one method of payment.

Some segment correlations were made as well. There's no significant difference in purchase behavior between men and women, except with software (on games, the sexes are almost tied). There is a correlation in regards of age. People between 30- 49 are most likely to buy, followed by the 18-28 age group. Also a correlation in education. People with or following a college education are more likey to purchase online content. Final correlation is income leven. Higher income levels are more likely to purchase online content then lower ones.

What does this mean for videogames? That there is still room for a lot and a lot of improvement. I mean, we're only a bit ahead of ringtones...ringtones! Also, notice, 81% of the people that buy online content are not buying videogames. This shows a mid-term growth-limit that everyone should consider from now on. Extrapolating, this means that 81% of the app-buying people with i-devices do not buy videogames. You could say "hey, growth-oppurtunity!" but that would very naïve. These devices are only used to buy 1 to 3 types of online content by the large majority. Videogames fall just short on this. Also consider that seemingly at least a quarter of the people that buy videogames also buy cheats and tools. Add some music, an app or software and you quickly see that videogames aren't so hot in the online content bussiness as some would portray it.

Why is this? Simple, PC's, notebooks, i-devices are not gaming devices, people do not buy them to play videogames. There's no move from Apple to sweep in or other, videogames are just an added checkbox in the option list. The growth now experienced trough the i-devices and Androids is beause they are new themselves. The ceiling is already set and it is similiar as that one to the PC. In other words, the app-games market is growing because the i-devices and Android market grows, not because these games are finding new audiences. And that is the real weakness of the app-game market.

Personally, I feel a new 1983 coming on in the sense that investments in the new market will be much higher based on the high expectations while the actual growth is much lower, making the bubble burst. How to counter this? Developers who are now making good money on the online content market should hoard their profits as cash-reserves and do moderate invesments in new potential market ventures.

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Kyle Roucis
3 Jan 2011 at 10:38 am PST

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