Claritas' Convergence Audit Reveals Cable/Internet Consumers are Slow to Respond to Technological Advances; Study Also Shows Convenience is Important.

Business Editors and High-Tech Writers

SAN DIEGO--(BUSINESS WIRE)--Sept. 17, 2002

In the ever-developing world of telecommunications where technological advances seem to occur almost as quickly as the changing of the channel or the click of a mouse, the public is responding exactly the opposite -- continuing to take it slow.

But, for those who have converted, convenience appears to be a key factor, according to figures recently released by the Claritas 2002 Convergence Audit.

The audit, an annual survey of 38,000 households, covers the convergence industries of wireline and wireless telephony, cable television, Internet, satellite and energy, providing important insight into the attitudinal direction of the buying public.

The numbers from the telecommunications and cable sectors show that overall the Internet connection in the home pretty much remains old school, i.e. the dial-up, and high speed Internet access is, for the most part, a service of convenience. Further, consumers are treating digital cable with a degree of caution, as they are subscription video on demand (SVOD), while interactive television, if used, would be to predominantly skip commercials.

Nearly 80 percent of respondents still use a standard phone line to connect at home, while the use of a cable modem is a very distant second at 13 percent. However, cable leads DSL (seven percent) by nearly two to one. As for why consumers use a broadband connection, nearly six out of 10 respondents indicated they use high-speed access for convenience. Other categories in double figures were download large files -- 17 percent and unlimited online hours -- 10 percent.

The digital cable penetration figure remains low at 25 percent, but still up a marginal five percent over last year, the study showed. Chris Antis, Claritas' director of primary research and the manager of the audit, attributed growth in digital penetration to two simple factors: increased availability and awareness.

"However, 45 percent of the cable households surveyed that knew digital cable was available did not subscribe, up a percentage point from last year," Antis said.

Conversely, the percentage of cable households that didn't know digital was available, dropped four points since 2001 from 19 percent to 15 percent, the audit showed.

Elsewhere, SVOD, which is available in most major markets, is inching along in popularity with just 26 percent of the cable households indicating that they would "consider" subscribing to the service if it were available, said Antis.

Breaking it down by select cable programming, 15 percent of the respondents said they would use SVOD for both Lifetime and CNN on the high end, and at the bottom of the scale Cinemax and Nickelodeon garnered a 5.5 percent and 5 percent response respectively.

As for interactive television, the top response rate was from those who said they would use it to skip commercials -- 56 percent -- while at the low end, 18 percent said they would use it to change the camera angle.

The other responses were:

Easier recording TV programs--45%

Record shows relevant to interest--39%

Instant Replay--33.8%

Pause live TV shows--33.6%

Play along with game shows--27%

Search and record by actor, genre, etc.--20%

Antis pointed out that the large percentage of viewers who want to skip commercials gives rise to an industry dilemma -- measuring what consumers want against the need for advertising.

"The industry is divided. How can networks survive without having commercials?" queried Antis.

About Claritas

Based in San Diego, Claritas Inc. is regarded as the premier worldwide provider of precision marketing solutions, developed, in part, through intricate customer segmentation systems and other such marketing tools. Claritas is a division of VNU Marketing Information (MI), an established leader in providing a wide variety of industries with innovative precision-marketing solutions including geo-demographic information and qualitative audience research. VNU MI is a part of VNU, which also includes AC Nielsen, Nielsen Media Research, VNU Business Publications USA, Spectra Marketing Systems, Scarborough Research, VNU eMedia, and VNU Expositions. To learn more about Claritas' products and services visit its Web site at www.claritas.com.