Consumers like free. It’s a great price. So, like over-the-air radio and television, many of the most successful sites on the Internet attract lots of people by offering free content, with advertisers footing the bill. It is not true, though, that no one will pay for Internet content. According to The NPD Group, a leading market research company, 38% of Internet-enabled households in the US subscribe to premium entertainment services for DVD delivery, music downloads, and/or gaming downloads.
By way of comparison, NPD Group noted, 55% of Internet-enabled households subscribe to newspapers or magazines, and 80% subscribe to premium television services such as cable, satellite or fiber optic.
"Despite the recession, there are dedicated consumers who remain committed to premium entertainment experiences," said Russ Crupnick, entertainment industry analyst for The NPD Group. "For just a few dollars a month consumers can get a vastly expanded library of movies, music or gaming options; and that represents real value, especially as many consumers are economizing by spending more time at home."
NPD’s "Entertainment Trends in America" tracking surveys reveal that 18% of Web-enabled households currently subscribe to a premium DVD service, such as Blockbuster Online or Netflix; 6% subscribe to an online music service, like Rhapsody or eMusic; 12% subscribe to satellite radio; and 12% subscribe to a premium gaming service, such as Xbox Live.
"These services have been reporting aggressive subscriber growth in the face of economic stress," said Crupnick. "Entertainment companies need to keep an eye on whether subscriptions begin to cannibalize purchases of packaged media, or if there are additional declines in moviegoing and other away-from- home entertainment."
NPD said its data was based on consumer surveys from a sample of more than 11,000 consumers, and results were balanced to reflect the U.S. population aged 13 and older.
RBR/TVBR observation: We’re not saying that radio and TV stations should try to collect subscription fees for their core offerings on the Internet. Ad-supported is still the way to go for mass market content. But don’t rule out opportunities to participate in the online subscription business. Gaming, sports, movie/music downloads and such have potential for partnerships where radio and TV websites serve as local portals to bring in subscribers. Some of the largest companies may even be able to develop some subscription-based services in-house. What’s not to like about multiple revenue streams?
