Adoption of New Media

Supplementary Material for Chapter 1 in When Media Are New

Copyright 2010, John Carey and Martin C.J. Elton

Average Annual U.S. Household Expenses Selected Expenditures

Type of Expense Average Annual Spending ($)

Food at Home 3,465

Health Care 2,853

Entertainment 2,698

Food Away From Home 2,668

Gasoline and Motor Oil 2,384

Utilities (gas, electricity, water) 2,217

Clothing 1,881

Telephone 1,110

Source: US Dept of Commerce, Statistical Abstract of the US, 2010 (data are projections for 2010)

Television $ 407 1,607

Home Video 106 59

Consumer Books 110 108

Videogames 75 125

Internet Content 67 *197

Recorded Music 43 184

Newspapers 44 155

Magazines 44 124

Movie Attendance 39 12

Mobile Phone Content

27 NA

Media Spending and Hours of UseConsumer Spending Hours of Use

Per Person Per Year

Source: US Dept of Commerce, Statistical Abstract of the U.S. 2010 (data are projections for 2010)

* Does not include video

Historical Patterns

Rogers’ Categorization of Adopters

Source: Rogers

Innovators Early Adopters

Early Majority

Late Majority

Laggards

Average Price of Selected Electronic ProductsRadio B&W TV Color TV VCR CD DVD

1925 $ 83

1930 78

1935 55

1940 38

1947 40 $ 279

1950 190

1955 138 $ 500

1960 132 392

1965 356

1970 317

1975 341 $ 1,140

1980 1,122

1983 572 $ 733

1985 494 310

1989 382 218

1993 180

1997 $ 760

1999 360

2001 210

2003 145

Source: Sterling and Haight; Carey, EIA .

In Current Dollars

Average Price of Selected Electronic Products Radio B&W TV Color TV VCR CD DVD

1929 1.8*

1930

1935

1940

1947 5.3

1950 3.3

1955 1.8* 6.6

1960 4.1

1965 3.1

1970 1.9*

1975 6.2

1980 3.3

1983 1.4 1.8

1985 1.1* 0.7

1993 0.2*

1997 0.8

2001 0.2

2003 0.1*

in Weekly Household Income

*The point at which each of these technologies entered half of US households

Note: successive rows do not advance by a constant number of years

Average Price Of Fax Machines

Dollars

Sources: Dataquest; US Dept of Commerce; CEA

$185

$4,429

Average Price Of Home Computers

Dollars

Sources: Dataquest; US Dept of Commerce

Pricing of Telephone ServiceNew York to Chicago - 3 Minute Call(Current Dollars)

Source: Historical Statistics of the U.S.; FCC

Price Dropped Over Time Price Did Not Drop Over Time

Long Distance Telephone Cable TV

Dial-Up Online Satellite TV

Broadband DSL Satellite Radio

Mobile Phone Service Video-on-Demand

DVR Service

Services Where The Price Dropped or Did Not Drop Over Time

S-Curve Pattern of Adoption

Time

Sources: Sterling and Haight; US Dept of Commerce;

Cable Growth, 1950 – 2005Percent of TV Households Subscribing to Cable

Year

Enhancements vs New Services

APPLICATIONOR

EXPERIENCE

TECHNOLOGY IN HOME OR OFFICEAlready In Place New

EnhancedSoftware Update Color TV

Touchtone Telephone

NewAutomated Voice ServicesStreaming Audio/Video on Web

Videotex*Interactive TVPre-recorded Videocassettes

New/Existing Technologies for New/Enhanced Applications

* Videotex is a generic term for an important family of online services before the Web.

Replacement Cycles For Electronic Products

Product Average Life Cycle

Cordless Telephone 8 YearsColor TV 8DVD Player 7CD Player 6Telephone Answering Machine 6Camcorder 5Fax 4Digital Camera 3Personal Computer 2Mobile Phone 1

Source: Appliance Magazine

Number of Years to Reach 50% Penetration of U.S. Households

Source: Sterling and Haight; US Dept. of Commerce

Newspapers 100+Telephone 70Phonograph 55Cable Television 39FM Radio 30Color Television 17Personal Computer 17Cell Phone 16VCR 10CD Player 10AM Radio 9Black & White Television 8DVD 6

Advantages and Pitfalls of Being First

“First In” Strategy...

AM Radio

HBO

Broadcast Networks

But…

HDTV in Japan

Early Videoconferencing

1950s Pay TV (Zenith)

Early DBS

Killers Appsversus

Confluence

Share of Radio Audience

Source: Statistical Research Inc.

FM Radio

% of Audience

AM Radio

Technology Pushversus

User Demand

Transitions As Standards ChangeShipment of Recorded Media

LPs

Cassettes

CDs

Millions of Units

Source: Recording Industry Association

Download Single

Mobile Song

Download Album

Demographics and Adoption

U. S. Population 1950 - 2010

Millions

Source: U.S. Census Bureau

Mobility: Percentage of U.S. Households That Move Each Year

Source: U.S. Department of Labor

Average Household Size

Sources: Historical Statistics of the US; American Demographics

Percentage of U.S. Population 65 or Older: Actual and Projected

Source: US Census Bureau

U.S. Population – Languages Spoken

People who speak a language other than English at home - 2007

English Only80%

Other Language20%

Source: U. S. Census Bureau

Other Patterns…..

• Failures

• Fads

• Cyclical Technologies

• Replacement

• Piggybacking

• False Starts

VCR Market ShareVHS Beta

Source: Klopfenstein

Desktop vs. Laptop Computer Sales

Desktop Laptop

Source: Appliance Magazine

Obsolescence

Sales of VCR Decks

Thousands of Units

Source: Appliance

Product Development Mortality

“Of the 30,000 new consumer products launched each year, over 90% of them fail.”

The Wall Street Journal

Subsidies – When First Launched

PS3 MSRP Sony Cost to Build

Subsidy by Sony

$499 $806 $307

Xbox ’05 MSRP Microsoft Cost to Build

Subsidy by Microsoft

$399 $525 $126

Source: Financial Times

Videogame Console Hardware & Software Sales, 1980 to 2009

Source: NPD Group, cited in the NY Times, WSJ and Video Business

Billions of Dollars

Trojan Horse Strategy