BOSTON, February 10, 2013—U.S. consumers derive more value from media online—net of the associated costs—than they receive from offline media, according to new research by The Boston Consulting Group.
BCG calculates that the average U.S. connected consumer, or online user, receives a “consumer surplus” from online media of approximately $970 per year—or about 2.5 percent of the average U.S. annual income—compared with approximately $900 for offline media. Consumer surplus is defined as the value consumers themselves place on a media-related activity or product over and above what they pay for it.
The BCG study—detailed in the report Follow the Surplus: How U.S. Consumers Value Online Media—examined the surplus consumers derive from each of seven categories—books, radio and music, U.S. newspapers and magazines, TV and movies, video games, international newspapers and magazines, and user-generated content (UGC) and social networks.
The highest consumer surplus ($311), accounting for about one-third of the online total, comes from UGC and social networks accessed through such platforms as Facebook and YouTube. Books fall at the opposite end of the spectrum: they generate the greatest offline surplus, even taking into account fast-selling e-books.
“The fact that the consumer surplus is already higher for online media is somewhat extraordinary, given that online revenues represent less than 15 percent of the total media industry pie,” said John Rose, a BCG senior partner and coauthor of the report. “This surplus will only continue to grow, driven by consumers’ appreciation for an expanding array of high-quality content and the proliferation of devices.”
The BCG study found that device ownership is increasing, with proliferation driven first by the desire for mobile access, then by fragmentation of use—that is, consumers using different devices for different purposes in different situations throughout the day.
The average consumer today owns 2.9 devices—almost double the figure from three years ago—and expects to own 4.1 devices in three years’ time. The number of hours spent consuming online media jumps 50 percent when people start using a second connected device, which is often their first mobile device. It rises again for consumers owning five or more devices, by as much as 25 percent. Owners of multiple devices report big increases in value from online media consumption.
“Shrewd media companies that build effective digital capabilities will enjoy opportunities to extract some of this growing consumer surplus for themselves,” said Neal Zuckerman, a BCG partner and coauthor of the report. “They will need to develop products that work across the growing range of devices and capitalize on both new and existing models of commercialization, including advertising, new products and services, an increasing ability to charge for online content, and the still-evolving ecosystem for monetizing the massive volumes of consumer data that the Internet serves up.”
Among the other findings:
More than two-thirds (68 percent) of consumers say they have more access to higher-quality online content today than three years ago.
Nearly two-thirds (62 percent) cite the unique nature of such content as a major reason to go online.
The same percentage believes that the Internet promotes U.S. culture abroad.
More than three-quarters (77 percent) feel that it is their own responsibility to filter for accurate online content, and they believe they have the capability to do so effectively.
By a margin of some five to one, U.S. consumers are more excited about the Internet’s potential rewards than they are worried about the potential risks.
The patterns of media consumption in the U.S. are remarkably consistent—especially for online media—across age, gender, and region. But what people are doing while they are online can vary. For example, men and women consume the same amount of online media—12 hours a week (men consume slightly more offline media)—but men listen to significantly more music online while women enjoy more online interaction through UGC and games.
Follow the Surplus, released today, builds on BCG’s prior analyses of the Internet’s economic and business impact on countries and companies. It’s also part of the firm’s 50th anniversary “Game Changing Program,” which throughout the year will pull together the firm’s best ideas, insights and practical recommendations for navigating the seismic shifts in today’s global economy.
A copy of the report can be downloaded at www.bcgperspectives.com.
To arrange an interview with one of the authors, please contact Alexandra Corriveau at +1 212 446 3261 or firstname.lastname@example.org.