Tag: The NPD Group

$1,000 Is the Breaking Point For Most Phone Buyers

According to new data by The NPD Group, $1,000 is too expensive for the overwhelming majority of phone buyers.

NPD’s research shows that just under 10 percent of buyers are willing to pay $1,000 or more for a phone. This could pose a significant challenge for 5G adoption. On the one hand, 5G awareness and purchasing potential is very strong, especially for a technology that has not been widely deployed yet.

“In fact, awareness has reached nearly 3 out of 4 consumers, totaling 73 percent, at the end of the first half of 2019,” according to NPD. “This is up from 44 percent at the end of the first half of 2018. Alongside increasing awareness, 33 percent of smartphone owners report interest in purchasing a 5G-enabled smartphone.”

Unfortunately, however, most 5G phones are falling in the $1,200 price range, limiting how many customers will be able to make the jump.

“Overall awareness and purchase intent reported by consumers is high, but only a small segment of the market can afford these $1,000+ devices,” noted Brad Akyuz, executive director, industry analyst, NPD Connected Intelligence. “This provides an opportunity for both carriers and manufacturers to focus on diversifying their 5G portfolios by introducing more affordable mid-tier 5G models to enjoy faster adoption rates.”

It will be interesting to see if the revolutionary speed increases offered by 5G change the public’s perception of an acceptable phone price point, or if manufacturers will need to come out with cheaper models to entice buyers.

December 14, 2019
Tech Holiday Sales Down 5%

U.S. consumer technology holiday sales were down 5 percent in 2010 totaling $10.3 billion, according to a new report from The NPD Group.

Heavy sales promotions early in November, before Black Friday, did not convince shoppers to spend early as sales for the first three weeks of the month fell by 5 percent compared to the previous year. Overall NPD estimates that 2010 sales for the 9 week sales period will total $14.9 billion down 4 percent from last year.

"Record sales in 2009 across major categories such as notebook PCs and TVs, combined with a significant slowdown in the pace of price declines created a difficult headwind for the industry in 2010," said Stephen Baker, vice president of industry analysis at NPD.

"With retailers and manufacturers focused on price maintenance, tech consumers ignored early season promotions, and instead keyed in on the traditionally price-aggressive deals offered during Black Friday and the week before Christmas. As a result, sales for the first three weeks of November and the first three weeks of December were significantly weaker than the traditional bookmark shopping periods."

NPD estimated early this year that tablet cannibalization rates could be as much as 15 percent likely impacting the sales of close to 1 million PCs during the holiday season. Notebook unit volume fell 9 percent with little to no discounting.

Some of the categories that have traditionally lent themselves to gift-giving items experienced a rough holiday season. Point-and-shoot camera sales declined 9 percent in units, MP3 player unit sales dropped 8 percent, GPS fell 24 percent in units, and digital picture frame unit volume fell by 24 percent.

"The industry suffered during the 2010 holiday season as the high-volume categories such as cameras and MP3 players experienced unit volume declines," said Baker.

"Though more niche and converged devices were attractive to consumers looking to replace older products, the volumes to drive industry growth simply weren’t there."

January 6, 2011
Music Still Leads In iTunes Purchases

Almost all iPhone or iPod touch users have downloaded a free app, but 82 percent have actually made a music purchase from iTunes, according to a new survey from NPD.

More than half (56%) of iTunes buyers purchase music exclusively, and majority of iTunes user search time is focused on looking for music.

“Sales growth in digital music has been slowing, and some of that decline might be related to the distraction from apps; however, iTunes shoppers are still completely engaged with music, whether it’s about listening, discovering or buying,” said Russ Crupnick, vice president and senior entertainment analyst for The NPD Group.

“Apps and video certainly do compete for consumer dollars, but they can also be used to promote music and re-energize digital music and video download sales.”

The report also looked at the question if apps are valuable to users or mostly frivolous. Two out of three iPhone and iPod touch owners who have downloaded apps report using them regularly, instead of just using them briefly. In addition, nine out of 10 have downloaded a free app, which Crupnick says, “points to a major up-selling opportunity to paid versions of the same app.” Plus 69 percent of iPhone and iPod Touch owners who have not yet paid for an app told NPD they are interested in possibly doing so in the future.

August 31, 2010
Cloud Music Service Coming To iTunes?

More than a quarter of Apple iTunes users have a strong interest in a free cloud-based music option, and many would be willing to pay a subscription fee to access their own music libraries on multiple devices, according to a new report by The NPD Group.

NPD’s "iTunes Usage Report" asked consumers to report on their reactions to a music service offering free and unlimited streaming of content from the consumer’s own iTunes music library, and several paid options for music subscriptions offering combinations of music streaming, music downloads, and universal Web access to the consumer’s iTunes music library.

Between seven million and eight million iTunes users in the U.S. would have strong interest in one of the paid subscription options. These consumers said they would be willing to pay a minimum monthly fee of $10 for streaming music or access to their music libraries on multiple devices.

NPD estimates that there are 50 million iTunes users in the U.S. According to NPD’s music industry research, a model that offers iTunes users free access to their own music libraries would attract in the range of 13 to 15 million subscribers.

"After the service’s launch, user numbers could conceivably rise substantially, as they upgrade to newer connected devices and actually experience the benefits of cloud-based music," said Russ Crupnick, vice president and senior entertainment analyst for The NPD Group.

"If the consumers who indicated strong interest in a paid subscription actually adopted one of those services at $10 per month, the market opportunity is close to $1 billion in the first year, which is roughly two-thirds the revenue garnered by the current pay-per-download model."

"We don’t yet know what, if any, effect these services might have on the traditional pay-per-download music model, or whether consumers will ultimately spend more on digital music overall, if or when any of these options eventually rolls out," Crupnick said.

Apple is in a good position to launch a cloud-based service since it purchased music website Lala and eventually shut it down in May, leaving many to wonder what the company’s next move will be.

July 15, 2010
Extreme Gamers Spend 48 Hours Per Week Gaming

Extreme gamers, which represent 4 percent of the total U.S. gaming population, spend 48.5 hours a week playing games, according to a new report from The NPD Group.

Overall, U.S. gamers spend 13 hours per week playing games, up from 12.3 hours in 2009.

When looking at the number of hours gamers spend per week playing video games, hours spent playing both console and PC games showed a marked increase over last year’s study, with console games increasing 9 percent and PC games increasing 6 percent. The number of hours gamers spent playing portable games saw a decline of 16 percent.

"With these kinds of shifts in the composition of the gaming consumer and changes in gaming behavior, it’s clear that the need to understand gamers and their purchase patterns remains critical information to those that develop, market and sell games," said Anita Frazier, industry analyst, The NPD Group.

The average age of gamers increased slightly over last year from 31 years of age in the 2009 study to 32 years in this year’s study. Avid PC Gamers and Offline PC Gamers, comprising 11 percent and 8 percent of the gaming population, respectively, are the oldest segments with an average age for both of 42 years.

May 29, 2010
iPhone And iPod Touch Users Lead In Downloading

Only 16 percent of Americans over the age of 13 are using devices besides their home computers to download software apps, music, video, and other entertainment content from the Internet, according to a new report by The NPD Group.

The report found three-quarters (75%) of iPhone and iPod Touch users are connecting to the Internet to download entertainment content and apps, compared to 19 percent of game console users and 17 percent of Blu-ray Disc (BD) set-top users.

"It’s not surprising that Apple users are ahead of others when it comes to downloading Web-based content, given the breadth of the company’s app catalog and the head start iTunes had selling music for the iPod," said Russ Crupnick, entertainment industry analyst for NPD.

"Like other groups of early adopters, consumers downloading entertainment content are mostly younger and male; however, as app stores expand beyond Apple, as connected devices become more commonplace, and as connectivity is simplified we expect to see more activity on other devices and platforms."

Among iPhone and iPod Touch users who downloaded content, free apps were the most popular download category, followed by video-game apps, and music downloads. Among consumers who connected via game consoles, game add-ons were the most popular category, followed by purchased downloads of games, and movie rentals.

"Music now competes with games and other apps for share of device, share of wallet, and share of time," Crupnick said.

"Entertainment companies need to start to thinking of apps in broader terms, not only as a way of garnering direct sales from downloads, but also as a pathway to paying for additional entertainment content. For example, an app that reviews movies could also be a direct channel for purchasing DVDs, BDs, or digital forms of video."

May 4, 2010
Apple Owners Show Most Interest In Buying An iPad

Awareness of Apple’s upcoming iPad release is highest among current Apple owners, (82%), consumers with $100,000 or more income (80%), and 18-34 year olds (78%), according to a new report by The NPD Group.

Those demographic groups are the ones with the most interest in buying an iPad. Only 18 percent of all consumers indicated a real interest in owning an iPad while 27 percent of 18-34 year olds and 24 percent of Apple owners said they were extremely or very interested.

One of the main reasons Apple owners are interested in the iPad is because it’s an Apple product. Thirty-seven percent cited "liking the Apple brand" as a top reason for their interest in the iPad. That tied with "multi-touch screen," which was also the number one reason driving interest among 18-34 year olds. The 18-34 year old demographic is also the most likely to play music and access the Internet on the iPad.

"The most interested potential iPad customers see it primarily as a music device, or for its internet access capabilities," said Stephen Baker, vice president of industry analysis at NPD. "Considering what people are planning to use the iPad for, it’s not hard to understand why people who have these capabilities on other devices, such as the iPod Touch or a notebook/netbook, may not want to spend $500 or more on a similar device.

"This points to the need for Apple to close the content deals that focus the iPad on what is likely to be its best long-range value proposition around high quality media consumption."

For some consumers, and Apple owners, spending $500 or more for a new device that does not yet have a clear advantage over other devices is not appealing. Among the tech-savvy 18-34 year old demographic, 57 percent cited price as the number one reason they aren’t ready to buy; that’s 25 percent more than the overall percentage of non-interested buyers. Among Apple owners, 43 percent felt that the pricing was too expensive. But it’s not the price tag alone that’s making the iPad seem too expensive to these non-interested buyers.

The other factor is that they are equating the iPad to a notebook or netbook replacement. Among 18-34 year olds and current Apple product owners "rather use a notebook or netbook instead" was cited by 51 percent and 44 percent respectively of those demographics as a reason not to buy.

Even those demographics who have the most interest in the iPad are not making a strong commitment to buy an iPad in the near future and that reflects what overall consumers are saying.

When asked what the likelihood of purchasing an iPad in the next six months was, 9 percent of all consumers surveyed said they were "extremely or very likely" to do so, as did 10 percent of 18-34 years olds and 9 percent of Apple owners. But there were a greater number of consumers who were "not very likely" or "not likely at all" to purchase an iPad in the next six months. Sixty-six percent of both the all consumers surveyed and 18-34 year olds don’t foresee an iPad purchase in their future, and 60 percent of Apple owners felt the same way.

March 29, 2010
Online Gaming Growth Up 10%

The average number of hours spent each week on online gaming has climbed 10 percent since 2009, while an average of 20 percent of all games purchased were digitally downloaded up from 19 percent in 2009, according to a new report from The NPD Group.

Among those reporting they personally play video games on at least one type of console, 54 percent said they play games online, down slightly since 2009 and 2008 (56% and 55% respectively).

The average number of hours spent per week on online gaming has increased from 7.3 hours per week in 2009 to 8 hours per week in the 2010 report. This means that, despite the decline in overall online game play, those who are playing, are spending more time playing than they did last year.

"While the percentage of the population that reports playing games has declined slightly, this study details other metrics which point to both stability and growth in both online and offline gaming," said Anita Frazier, industry analyst, The NPD Group."

The report found 71 percent of online gamers purchased or received a game over the 2009 holiday season. There were no major changes to the percent of online gamers making purchase from 2008 to 2010, and also no significant changes regarding average volumes purchased during that same time period. This indicates online gamers buying habits may not have been significantly impacted by the recession and it may be a positive for the future.

"The installed base of video game systems continues to grow, the platforms available to play games continue to expand, and the options for content acquisition have never been greater, especially online," said Frazier.
"And yet, effective monetization of many forms of online gaming continues to be a topic of much debate and discussion within the industry."

"Mobile gaming, for instance, has advanced to play a bigger role and the iPhone, in particular, is attracting a lot of attention given the dizzying array of game apps available for this device. Social networks have emerged as the hot venue for online gaming, due to the huge number of subscribers these are attracting. But still, it’s unclear which business models are working in this space."

The PC is still the most-used system for online gaming, with 85% of online gamers reporting using a PC for online gaming activities. Among non-PC systems, the Xbox 360 maintains its leadership for the third year in a row as the top video game system used for online gaming at 48%. In contrast to 2009, when Wii was leading over PS3 by 8 percentage points, PS3 and Wii are now neck and neck, with about 30 percent of online gamers reporting that they use each system for online gaming.

This is due to an increase in use for online gaming on the part of the PS3, which increased 10 percentage points since last year. The top three systems with the highest average hrs/wk spent gaming online (using the respective systems they own) are: Xbox 360 (7.3 hrs), PC (6.6 hrs) and PS3 (5.8 hrs).

March 2, 2010
Mobile Phone Buyers Prefer Touchscreen Interface

While text messaging continues to be the top motivating feature for mobile phone buyers, American consumers are increasingly purchasing handsets with touch screens or QWERTY keyboards, according to the latest report from The NPD Group.

The report found all 10 of the top-selling mobile phones purchased in the fourth quarter of 2009 came with a touch screen, a QWERTY keyboard, or both.

"Regargless of whether they opt for a data plan, consumers want richer user interface options," said Ross Rubin, executive director of industry analysis at NPD.

"The humble keypad is losing the race to optimize a handset’s surface."

Based on U.S. consumer purchases of mobile phones in Q4, the top 10 handsets were:

1.    RIM BlackBerry Curve (all 83XX models)
2.    LG enV3
3.    Apple iPhone 3GS (both models)
4.    Apple iPhone 3G
5.    Motorola Droid
6.    LG enV Touch
7.    RIM Blackberry Tour
8.    Samsung Intensity
9.    Samsung Solstice
10.    Samsung Impression

In Q4 2009 Apple, LG and RIM all declined in unit share, and Motorola’s Droid, even with its mid-quarter launch, was the fifth most purchased mobile phone in the U.S.

NPD also found that 46 percent of phones sold in Q4 had QWERTY keyboards (compared to 31 % in 2008) and 34 percent had touch screens (compared to 20% the prior year.)

February 10, 2010
Majority Of E-Reader Owners Have No Complaints

Owners of e-readers such as the Kindle report they are happy with their devices according to a new study by The NPD Group.

The majority (93%) of owners said they were "very satisfied" or "somewhat satisfied" with their device. Only 2 percent indicated any level of dissatisfaction.

Features are important to e-reader owners. More than half (60%) said wireless access was their favorite feature on their e-reader and nearly a quarter (23%) mentioned touch.

"Both the display technology and available content on e-Readers are optimized for those interested in books, said Ross Rubin, executive director of industry analysis at NPD.

"Pairing these optimizations with wireless technology for transparent access and touch screens for easy navigation has resonated with the avid readers that have been early e-Reader adopters."

Even with great features, e-reader owners are still looking for more in these relatively new devices. Some recommended improvements from owners include more book title availability (42%), longer battery life (39%), and color screens (34%). Content is important, with 46 percent of owners saying they were most satisfied with the selection of titles for their e-readers while 39 percent said they could find every title they were looking for.

E-reader owners are not completely tied to their devices to do their reading. About three-in-ten say they use at least one other device for reading e-books, such as a PC or a smartphone.

"As we have seen with music, photos and video, books and other printed matter are slated to appear on a wide array of devices that offer tradeoffs in such factors as screen size and battery life," said Rubin.

"As the recent introduction of Apple’s iPad demonstrates, applications now on smartphones benefit from larger screens, and industry leaders are recognizing the importance of supporting multiple platforms by supporting multiple clients and open standards."

Related Articles:

> Android May Power New Barnes & Noble E-Reader

> Consumer Interest In E-Readers Mixed

> Sony Can’t Guarantee E-Reader Holiday Shipments

February 3, 2010
OS Software Revenue Up 35%

U.S. retail operating systems boxed software revenue increased 35 percent in 2009, but it was not enough to lift non-games software into positive territory, according to new research from The NPD Group.

Total retail non-games software revenue fell 7 percent in 2009 to $2.4 billion. That is an improvement over the 10 percent decrease in 2008. Unit volume for 2009 dropped 6 percent and average selling price dipped 2 percent.

Operating systems was the only category to post both a revenue and unit increase over 2008. With new operating system releases from both Microsoft and Apple in the back half of the year sales traffic, volume, and interest in boxed software were at very high levels. Both OS releases posted record sales and growth figures for their initial launch periods and continued to perform strongly even after their initial entry into the market.

"2009 was a mixed bag for the packaged consumer software market," said Stephen Baker, vice president of industry analysis at NPD. "There is always a burst of interest when new versions of operating system are released.

"But weak results in the more stable sales categories, like tax and system utilities, drove overall revenue down. Shifting channel activities and a move to more online purchasing took a bite out of both of those segments in 2009. The outlook for 2010 is for similar sales results as the lack of any OS launches will likely be offset by the release of Office 2010."

Business software was the only other category, besides operating systems, to post a unit gain. The category grew 6 percent, due in part to ASPs dropping 15 percent. MS Office Home and Student delivered strong sales volumes during both the back-to-school and holiday periods as a result of aggressive price promotion.

The average selling price fell from $118 in the prior year to $106 in 2009. Apple’s iWork 2009 also saw strong unit volume growth as average prices declined more than 15 percent on the single-user version. With these falling prices, however, category revenue took a hit posting a 10 percent decline.

Related Articles:

>US Video Game Revenue Down 31%

>Digital Music Sales Closing In On CDs

>42% Of Americans Play Games Online

January 23, 2010
U.S. Video Game Sales Reach $19 Billion In

U.S. sales of video games, which includes portable and console hardware, software and accessories, generated revenues of close to $19.6 billion, an 8 percent decrease over the $21.4 billion generated in 2008, according to The NPD Group.

Retail sales in the PC game software industry also saw declines, with revenues down 23 percent, reaching $538 million in 2009. The total console, portable and PC game software industry hit $10.5 billion, an 11 percent decrease compared to the $11.7 billion generated in 2008.

"December sales broke all industry records and underscores the incredible value consumers find in computer and video games even in a down economy," said Michael D. Gallagher, president and CEO of the Entertainment Software Association, the trade group which represents U.S. computer and video game publishers.

"This is a very strong way to transition into 2010. I anticipate these solid sales numbers to continue upward through 2010 with a pipeline full of highly-anticipated titles."

Portable hardware was a bright spot with a 6 percent increase in revenue in 2009, while the remaining video game categories all saw declines, with the largest decrease coming from console hardware (-13%). Consoles software and portable software both saw declines of 10 percent, while video game accessories saw a 1 percent dip.

"When we started the last decade, video game industry sales, including PC games, totaled $7.98B in 2000," said Anita Frazier, industry analyst, The NPD Group.

"In ten years, the industry has changed dramatically in many ways, but most importantly it was grown over those years by more than 250 percent at retail alone. Considering there are many new sources of revenue including subscriptions and digital distribution, industry growth is even more impressive."

Related Articles:

>US Video Game Revenue Down 31%

>Digital Music Sales Closing In On CDs

>42% Of Americans Play Games Online

January 15, 2010
Windows 7 Drives Holiday Software Sales

U.S. software retail sales fell slightly by just over 1 percent for the 2009 holiday season, according to The NPD Group.

Sales for the 5-week holiday period totaled $278 million dollars, up from the 13 percent decline during the 2008 holiday season.

The operating systems category showed the strongest improvement during the holiday season, boosted by the sales of Microsoft’s Windows 7. Overall operating systems revenue increased from $10 million in 2008 to $29 million in 2009. Education software performed well, with revenue increasing by 15 percent, driven y the strong performance of Rosetta Stone and Topics Entertainment. Business software, which posted flat year-over-year holiday sales, was the highest revenue grossing retail software category, with sales of over $77 million.

"Despite a slight decline in overall sales, boxed software showed pockets of strength as publishers, especially Microsoft, invested money in holiday promotional activity," said Stephen Baker, vice president of industry analysis at NPD.

"Aggressive pricing on Office 2007 and continued strong sales of boxed versions of Windows 7 added a big kick to retail software sales during the holiday. But weak results in the key utilities category, along with ongoing weakness in PC games sales proved too much for the market to overcome."

Related Articles:

> Bing Gets a Bunch of New Search Features

> Yahoo and Microsoft May Be Close to Signing

> Some Bing Users Seeing Latest Posts on Publisher Searches

January 14, 2010
Consumer Technology Holiday Sales Hit $10.8 Billion

U.S. consumer technology retail sales fell less than one percent for the 2009 holiday season, according to a new report from The NPD Group.

The report found sales for the five-week holiday period reached $10.8 billion, a big improvement from the 6 percent decline during the 2008 holiday season.

The holiday season had its share of fluctuations. Overall revenue declined three out of the five weeks. While the second week of the season posted the largest revenue growth it only represented for 15 percent of overall holiday sales. The final week of the season also saw revenue growth and represented 22 percent of all sales, so the success of the final week was more relevant to the overall success of the season.

"The dynamics of the holiday season changed this year; the holiday season started before Black Friday as retailers ran Black Friday-like sales throughout November," said Stephen Baker, vice president of industry analysis at NPD.

"That move may have lessened the Black Friday hype for consumers, but the increase during the final week of the season is a sign that consumers either went back out or waited it out to get the best deal."

PCs and flash-based camcorders were popular this holiday leading the way in unit growth among large categories, but total sales numbers were dependent on the success of PCs and flat-panel TVs. Combined they accounted for 41 percent of the revenue over the five week holiday period, up from 39 percent in 2008 and 34 percent in 2007.

Despite the high revenue, flat-panel TVs registered a decline in dollars of 13 percent, in line with their performance during most of 2009. That decline pulled down the industry overall. MP3 players, for the third year in a row, were the largest unit volume category despite increased ASPs and declining unit volumes.

"Just cutting prices this year was not enough to guarantee successful sales results," said Baker. Flat-panel TVs had a disappointing holiday because there wasn’t enough price-cutting on the right items, while notebook PCs and camcorders offered new form factors and price points that drove enormous increases in units and revenue despite falling prices."

January 9, 2010
Online Music Most Popular Digital Content Among Kids

The majority (79%) of kids age 2-14 have purchased some form of physical or digital content in the past year, with 31 percent acquiring both physical and digital content, according to a new report from The NPD Group.

Video rental services and online music services were the most popular among kids ages 2-14 in the past year, with 19 percent using an in-store video rental service, 12 percent using an online video rental service, and 14 percent using an online music service. Paid subscriptions to online video game rental services and paid subscriptions to online gaming websites ranked among the lowest.

Forty-one percent of kids who own some form of digital content said music was the first type of content they downloaded, with 38 percent saying it was game downloads. The average age when kids make their first digital purchase is 7 years old. Girls are more likely to download single songs and also slightly more likely than boys to first buy ringtones.

Anita Frazier

"Forty-three percent of digital downloaders were six years old or younger when they acquired their first digital content," said Anita Frazier, industry analyst, The NPD Group.

"Since parents are the first touch point for children this age, it is important for companies to develop marketing strategies that reach parents as well as kids."

The report found digital content to be an additional source kids turn to when they want to supplement their physical collections, which is supported by the fact that less than 1 percent of kids only purchased digital content. In terms of money spent on this content by kids, $0.85 of every content dollar spent went to physical items, while $0.15 went to digital.

Related Articles:

> YouTube and Universal Making a Music Video Site?

> YouTube is Going Through Changes

> MTV Offering…Music Videos?

January 5, 2010