Success factors

Content is of crucial importance to the growth of the broadband market, and “Deutschland Online 3” attributes great significance to the question of which factors are likely to promote or hamper the success of this segment. The brands of content providers play a huge role. Brands are designed to attract customer attention and convey a particular image, such as high quality or security. Brands contribute to attracting customers in the first place as well as achieving long-term customer retention by strengthening confidence in a product, service or even a particular content item.

In the view of broadband experts, strong brands are therefore an important success criterion in the sale of broadband content (Figure 15). Over 58% of people surveyed say brands are of high to very high importance in this context.

Figure 15:		Importance of brands in the sale of broadband content (broadband experts)

The important role brands play in the sale of broadband content is also indicated by the results of the consumer survey: almost half the people surveyed (47%) were of the view that broadband content offered under a familiar brand name is more secure than content offerings from unknown providers.

According to three quarters of the broadband experts surveyed, another important factor in the success of broadband content offerings is the scope of the offering, i.e. its breadth and depth (Figure 16).

Figure 16:		Importance to consumers of various features of broadband content offerings (broadband experts)

Flexibility as to when the broadband content can be used is categorized as being a high or very high success factor by around 70% of the experts. What this means is that the customer can freely choose the time it is used. An example of this is Video on Demand. The user can immediately access a movie of his or her choice. This is a vital convenience feature compared with conventional offerings, for example, TV channels or video rental stores with fixed opening hours. Around 47% of experts believe the option of using advertising-free content is of high to very high importance to consumers. A much lower proportion of experts — around 28% and 22% respectively — believe that personalization opportunities and additional functions, such as slow motion or pausing movies, will be seen as a key feature of broadband content offerings.

The results of the consumer survey point in the same direction (Figure 17): the majority of people surveyed said that the attractiveness and price of movies (77% each), flexibility as to when a movie can be used (around 76%) and the range of offerings (around 60%) were of high to very high importance in the Video on Demand segment. Additional functions and personalization options on the other hand were seen as less vital. However it is very important for consumers that the content can be enjoyed advert-free. Almost 79% of consumers see that as a crucial argument in favor of Video on Demand content. For 59% of consumers surveyed, it was important to very important that new movies be available simultaneously on DVD and as Video on Demand offerings.

Figure 17:		Aspects driving the use of pay-to-view Video on Demand offerings (consumers)

Offline content can also support the circulation of online content. The consumer survey showed that users enjoy using offline and online content in a complementary way, for example, online together with print or broadcast media. Almost 60% of those surveyed agree to a high or very high extent with the statement that there should be an online offer of additional information with every magazine. Around 53% of consumers say that with print media and radio broadcasts they use offline and online offerings in parallel to a great or very great extent. That is important information, primarily with regard to the interaction of online and offline media: parallel use by consumers supports the other respective medium. Around 48% of consumers have frequently to very frequently become aware of offline content such as TV programs or magazine articles through an online offering (Figure 18).

Figure 18:		Integration of off-line and on-line content (consumers)

There are also a number of factors which, to a considerable extent, are hampering the growth of the broadband content market (Figure 19). A mature digital rights management system (DRM) is something that almost half the experts feel is missing. The dearth of appropriate technologies is having a negative influence on the content market.

Figure 19:		Obstacles to the continued growth of the broadband content market (broadband experts)

The absence of collaboration between content and access providers is considered by around 42% of broadband experts to be a factor impeding the development of the market. Similarly disruptive is the so-called cannibalization effect on classic offline sales channels. Cannibalization in this context means when the sales volume of offline products (e.g. movie rentals from the video store) decreases because of online offerings (Video on Demand), and the growth rate of new online sales is at the expense of classic offline sales.

For 39% of the experts surveyed, too little bandwidth and users’ reluctance to pay for content are high to very high obstacles standing in the way of market development. However it cannot be inferred from this that the market potential for broadband content is fundamentally too small; only a minority (around 14%) see this as an obstacle for the market.

On the other hand it can be stated that the experts view applications like Music on Demand, Video on Demand and Games on Demand as important segments in the area of broadband content. The highest growth rate by 2015 is to be expected for the area of Video on Demand. A key aspect of online content offerings compared with offline offerings is the availability of the content at any time. In the opinion of consumers, price also plays a major role along with download speed. The latter is not a huge problem for providers given the development of the broadband market. Other essential success factors are the strengths of providers’ brands and the scope of the content offering.

But there are also factors hampering the development of the market, particularly the lack of a widely accepted digital rights management system. It is of extreme importance to the content market that these obstacles be overcome and that factors contributing to success be driven forward in a targeted fashion.