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Top 3 Digital Consumption Trends for 2014: Subscriptions, Showrooming and Social Saturation

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Euromonitor International has identified the top three digital consumption trends for 2014. Internet users will consume more video-based media online as offerings expand and enter the mainstream; consumer trends such as showrooming and sofa shopping will see e-commerce activities migrate to smartphones; and the usage of new social media and rapidly expanding mobile messaging services will appeal to younger consumers. The continued expansion of home broadband services, especially into rural areas still underserved by infrastructure, and the establishment of 4G LTE as a mainstream mobile data service will increase speeds for consumers and thereby facilitate greater consumption of digital goods and services in general in 2014.

Global Mobile Internet Subscriptions and Internet Retailing: 2008-2013

Source: Euromonitor International from trade sources/national statistics

1. Digital media enters more homes as a subscription service

2013 was a breakthrough year for digital media providers, as Video-on-Demand (VoD), IPTV and other web-based programming became not something exclusively used by the tech-savvy youth. In part, this was driven by more Internet Service Providers (ISPs) entering the pay-TV markets, the growing popularity of Netflix and Apple TV as in-trend offerings, and various organisations using social media to stream content. For example, mixed martial arts promotion the UFC utilised Facebook to deliver live streams of events throughout 2013. In 2014, subscription-based digital media consumption is set to enter the mainstream, especially in emerging regions such as Latin America and Asia Pacific, as well as the Middle East. Consumers are increasingly shunning the additional costs of traditional pay-TV services, such as satellite dishes and cable boxes, and this is reflected in declining uptake of such services in developed digital media markets. For example, in developed economies household possession of cable TV declined from 46.0% to 44.6% over the 2008-2013 period.

Challenges: The reversal of Net Neutrality principles in the USA in early 2014, which pave the way for a metered bandwidth system, are a threat to digital media provision. However, firms are countering this by signing deals with ISPs, such as Netflix's agreement with Comcast concluded shortly after.

Opportunities: Providing cost-conscious consumers with competitive bundled deals that include IPTV remains a strong promotion tool to lure customers for providers. The development of acclaimed original programming, as demonstrated by Netflix throughout 2013, will also provide opportunities for VoD platforms to attract new consumers hungry for fresh material.

2. Showrooming and sofa shopping to drive e-commerce to the smartphone

E-commerce is a well-established form of consumption globally, however, how consumers shop online and where from is a growing factor in its development. The proliferation of smartphones and the growing focus of Internet retailers on mobile apps, with sites offering discounts for first-time users, have encouraged more consumers to purchase or browse either on the move or from home. 2014 will thus see more people buying goods from their handheld devices. Trends such as sofa shopping, when consumers ignore their PCs to shop on their mobiles at home for convenience, and showrooming, when shoppers compare or order goods they see in brick-and-mortar stores via their smartphones, will be the main drivers of mobile retail.

Challenges: Mobile broadband penetration outside of developed economies remains limited, obstructed by weak disposable incomes and poor infrastructure outside of urban areas. Opportunities to access mobile retail platforms are therefore limited for a large proportion of the global population. However, Wi-Fi access is growing and is likely to offer the most efficient method of web access in shopping centres and other public areas for emerging-market consumers. Home mobile phone possession among developing nations was significantly below the 94.1% penetration in advanced markets in 2013.

Opportunities: Consumer appliances and food and drink are some of the most vibrant e-commerce segments in uptake and potential. The home appliances segment is especially suitable for showrooming, as consumers are able to test the goods in-store before making a price-comparison purchasing decision on their handset. Grocery shopping via a mobile app offers a time-efficient option for busy consumers and this trend will likely expand as more females, traditionally the grocery decisionmakers, concentrate on careers and dedicate fewer time to physical shops for necessities. Consumer appliances will be the fastest growing global Internet retailing category in 2014, expanding by 24.2% in annual real terms.

3. Consumers seek out new offerings in social media and mobile messaging

The social media landscape has reached saturation point. Much like Myspace before it, Facebook is rapidly losing its "cool" factor as more users, especially younger ones, are migrating to alternative platforms. Amongst a trend-setting developed-market youth, finding a social network that is not used by relatives and mainstream advertisers is becoming key. This has partly been the reason behind the growing success of Vine and Instagram, and more niche social start-ups are likely to appear on the mainstream radar in 2014 as Facebook’s influence begins to wane. Similarly, under-30s are abandoning traditional messaging tools such as emails, SMS and social media, instead preferring the user-friendly interfaces of mobile messaging apps such as WhatsApp and Viber. As a result, such apps are expected to see dramatic increases in users over 2014, and will play a more influential role in the global telecom landscape. A quarter of the world’s population had a mobile broadband subscription in 2013.

Challenges: Despite rapid expansion, there remains the question of how to successfully monetise mobile messaging apps. Their attraction for most consumers is low cost and no advertising, limiting potential for revenue expansion. This business model will likely change however, as services become more mainstream and consumers value them on a par with a mobile subscription.

Opportunities: Social networking is becoming more streamlined and interconnected with other online segments, such as video-sharing and e-commerce, and less about personal profiling and creating one's story. Therefore social platforms that can deliver discreet services with various retail and media add-ons are likely to appeal to social shoppers.

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