Internet Quarterly - UK - September 2008

TABLE OF CONTENTS

• Issues in the Market
• Focus on youth internet habits
• Research methodology
• Definitions
• Abbreviations
• Market in Brief
• Broadband driven by young men in London and the South
• Smartphone usage grows amongst innovators
• Convergence all the rage amongst devices
• Search becoming less enlightening
• Downloading a threat to both music and gaming
• Browsing and buying levels holding up well
• Amount spent online healthy -- except for travel
• Youths spending a lot of time online
• iPlayer and YouTube look to dominate in early days of online video
• Internet Penetration
• Key points
• Penetration rates to increase thanks to mobile broadband
  • Figure 1: British internet penetration at home/work/place of study or elsewhere, by gender, age, socio-economic group, region and working status, 2003-08
• Broadband growth driven by young men in London and South
  • Figure 2: Broadband internet at home usage, by gender, age, socio-economic group, region, working status and technology usage, 2007-08
• Price competition attracts the less well off
• Sky leaps ahead as Orange and Tiscali lose out
  • Figure 3: New broadband customer connections, Q2 2008
• Advertising spend of leading ISPs
  • Figure 4: Advertising spend, by top ten internet service providers, January-September 2008
• Broadband provision market showing signs of maturing
• Operators starting to put the emphasis on profitability of customers...
• ...as consumers focus on speed and service issues
• ISPs deliberately throttling speeds
• Device Usage Analysis
• Key points
  • Figure 5: Device usage summary, July 2008
• DEs and 20-24s lead decline in standard mobile usage
  • Figure 6: Digital device usage over time, by gender, age and socio-economic group, April and July 2008
• Young switching to smartphones
• Mainstream adoption is a 'When' not an 'If'
• PDAs evolving into smartphones for survival
• Digital media
  • Figure 7: Digital device usage over time, 2007-08
• Digital radio leaps forward
• Internet radio on the rise
• Digital radio becoming a strategic service
• HDTV party short of guests
  • Figure 8: Digital TV usage profile, by gender, age, socio-economic group and household size, July 2008
• HD set ownership driven by household size
• More HD services, but will it boost HDTV demand?
• Blu-ray fails to shine as costs weigh heavily with consumers
• Interactive services climb as Channel 5 switches its red button off
• Personal media player usage driven by the young
  • Figure 9: Personal media player usage over time, by age, April and July 2008
• Young power portable gaming -- older drive static gaming
  • Figure 10: Gaming device usage profile, by gender, age and socio-economic group, April and July 2008
• Portable gaming platforms to become even smarter
• Internet Usage Experiences
• Key points
  • Figure 11: Summary of types of activity undertaken on the internet in the last three months, July 2008
• Consumers searching more and finding less
  • Figure 12: Types of activity undertaken on the internet in the last three months, 2003-08
• More search only equates to more frustration for consumers
• Newspapers needing to attract online users
• Music and DVD facing moment of truth as the crunch bites
  • Figure 13: Types of activity undertaken on the internet in the last three months, 2003-08
  • Figure 14: Types of activity undertaken on the internet in the last three months, by gender, socio-economic group, age, working status, household income and presence of children, July 2008
• The less well off attracted to music savings online
• Social networking sites letting the kids down
  • Figure 15: Communications activities undertaken on the internet in the last three months, 2003-08
  • Figure 16: Profile of social networking sites visited on the internet in the last three months, by gender, age, socio-economic group and presence of children, July 2008
• Facebook discovers the risks in the race for revenues...
• ...whilst MySpace takes the safer route to revenue generation
• Games industry also suffering at hands of online pirates
  • Figure 17: Types of activity undertaken on the internet in the last three months, 2003-08
  • Figure 18: Types of activity undertaken on the internet in the last three months, by gender, age, socio-economic group, household income and presence of children, July 2008
• Men and the young download games -- but not always legally
• Transactions
  • Figure 19: Types of activity undertaken on the internet in the last three months, 2003-08
  • Figure 20: Profile of those paying household bills on the internet in the last three months, by gender, socio-economic group, age, region, working status, household income and presence of children, April and July 2008
• Mobile becoming an increasingly important platform for price comparison
• The crunch dampens digital
• Browsing and Buying Behaviours
• Key points
  • Figure 21: Summary of change to websites actually purchased from in the last three months, April and July 2008
• Online purchasing activity looking healthy
  • Figure 22: Any type of website browsed for information purposes in the last three months, 2002-08
• Clothing continues its stellar run -- young now taking online seriously
  • Figure 23: Clothing and food websites browsed for information purposes and purchased from in the last three months, 2007-08
• Interest in online food hits new high as prices soar
• Entertainment tickets benefit from summer season
  • Figure 24: Entertainment and CD/DVD websites browsed for information purposes and purchased from in the last three months, 2007-08
  • Figure 25: Websites actually purchased from in the last three months, by gender, socio-economic group and age, April and July 2008
• Writing on the wall for CD/DVDs
• Downloading fuelled by surge of services
• News sites attracting offline readers online
  • Figure 26: Websites browsed for information purposes in the last three months, 2002-08
  • Figure 27: Websites browsed for information purposes in the last three months, by gender, socio-economic group and age, April and July 2008
• News sites attracting the right sort of readers
• Sports news attracting men with time on their hands
• Finance news being lapped up by us all
• Amount Spent Online
• Key points
• Proportion of online buyers
  • Figure 28: Incidence of purchasing over the internet in the last three months, 2002-08
• Incidence of online buyers holds up well in seasonal context
  • Figure 29: Seasonal percentage point change in incidence of purchasing over the internet in the last three months, 2005-08
• What credit crunch?
  • Figure 30: Tendency of internet shoppers to purchase in various product categories in the last three months, 2002-08
• Seasonal context looks even better -- except for travel
  • Figure 31: Seasonal percentage point change in amount spent on purchasing over the internet in the last three months, 2005-08
• Expenditure brackets
  • Figure 32: Amount spent on purchasing over the internet in the last three months, by category, April and July 2008
• Youth Surfing Habits
• Key points
• More time spent online than ever
  • Figure 33: Time spent online during a typical week -- 11-18-year-olds, by age, August 2008
• Differences in where, and how youth access the web
  • Figure 34: Where accessing the internet -- 11-19-year-olds, by age, 2008
  • Figure 35: How accessing the internet -- 11-19-year-olds, by age, 2008
• Attitudes of the young online
• Some finding real solace online -- but only a minority at present
  • Figure 36: Attitudes towards the internet -- 11-18-year-olds, August 2008
• Higher Education brings kids into the real world
  • Figure 37: Attitudes towards the internet -- 11-18-year-olds, by age, socio-economic group and working status, August 2008
• Those feeling more understood online becoming more addicted
  • Figure 38: Attitudes towards the internet against time spent online -- 11-18-year-olds, August 2008
• Is the web creating an isolated underclass?
  • Figure 39: Statements agreed with -- 11-18-year-olds, August 2008
• How the young use the internet
• Music and video dominate online youth activities
  • Figure 40: How youth use the internet -- 11-18-year-olds, August 2008
• Youth more forthcoming about illegal downloading
• Vodafone in danger of missing a slice of the download action
  • Figure 41: How youth use the internet -- 11-18-year-olds, by socio-economic group, network and region, August 2008
• Those visiting online worlds especially active online
  • Figure 42: Selected activities undertaken online -- 11-18-year-olds, August 2008
• Those buying just as likely to download illegally -- and vice versa
• Using PC as a TV
• Statements agreed with by youth
  • Figure 43: Statements agreed with -- 11-18-year-olds, August 2008
• Bullying online
• Leaders of the future
• Naivety of 11-15-year-olds exposed
  • Figure 44: Statements agreed with -- 11-18-year-olds, by gender, age and socio-economic group, August 2008
• Boys cheating online
• Social networking tribute sites
  • Figure 45: Length of time spent online -- 11-18-year-olds, versus selected internet activities, August 2008
• Gossips slow to learn their lesson
  • Figure 46: Youth experiences online -- 11-18-year-olds, August 2008
• Online daters display growing pains
  • Figure 47: Attitudes towards the internet against statements agreed with -- 11-18-year-olds, August 2008
• Appendix -- Internet Penetration
  • Figure 64: Broadband internet at home usage, by gender, age, socio-economic group, region, working status and technology usage, 2007-08
  • Figure 65: British internet penetration at home/work/place of study or elsewhere, by gender, age, socio-economic group, region and working status, 2003-08
• Appendix -- Device Usage Analysis
  • Figure 66: Digital device usage over time, 2007-08
  • Figure 67: Digital device usage, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel's Special Groups, working status, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups and terminal education age, July 2008
  • Figure 68: Digital device usage, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel's Special Groups, working status, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups and terminal education age, July 2008
  • Figure 69: Digital device usage, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel's Special Groups, working status, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups and terminal education age, July 2008
  • Figure 70: Digital device usage, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel's Special Groups, working status, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups and terminal education age, July 2008
• Appendix -- Internet Usage Experience
  • Figure 71: Types of activity undertaken on the internet in the last three months, 2003-08
• Appendix -- Online Activities in Last 3 Months
  • Figure 72: Types of activity undertaken on the internet in the last three months, by gender, socio-economic group, age, region, working status, household income and presence of children, July 2008
  • Figure 73: Types of activity undertaken on the internet in the last three months, by gender, socio-economic group, age, region, working status, household income and presence of children, July 2008
  • Figure 74: Types of activity undertaken on the internet in the last three months, by gender, socio-economic group, age, region, working status, household income and presence of children, July 2008
  • Figure 75: Types of activity undertaken on the internet in the last three months, by gender, socio-economic group, age, region, working status, household income and presence of children, July 2008
  • Figure 76: Types of activity undertaken on the internet in the last three months, by gender, socio-economic group, age, region, working status, household income and presence of children, July 2008
• Appendix -- Browsing and Buying Behaviours
  • Figure 77: Websites browsed for information purposes in the last three months, 2002-08
  • Figure 78: Websites actually purchased from in the last three months, 2005-08
• Appendix -- Sites Browsed for Information
  • Figure 79: Websites browsed for information purposes in the last three months, by gender, socio-economic group, region, working status, household income and presence of children, July 2008
  • Figure 80: Websites browsed for information purposes in the last three months, by gender, socio-economic group, region, working status, household income and presence of children, July 2008
  • Figure 81: Websites browsed for information purposes in the last three months, by gender, socio-economic group, region, working status, household income and presence of children, July 2008
  • Figure 82: Websites browsed for information purposes in the last three months, by gender, socio-economic group, region, working status, household income and presence of children, July 2008
• Appendix -- Sites Purchased From
  • Figure 83: Websites actually purchased from in the last three months, by gender, socio-economic group, region, working status, household income and presence of children, July 2008
  • Figure 84: Websites actually purchased from in the last three months, by gender, socio-economic group, region, working status, household income and presence of children, July 2008
  • Figure 85: Websites actually purchased from in the last three months, by gender, socio-economic group, region, working status, household income and presence of children, July 2008
  • Figure 86: Websites actually purchased from in the last three months, by gender, socio-economic group, region, working status, household income and presence of children, July 2008
  • Figure 87: Websites actually purchased from in the last three months, by gender, socio-economic group, region, working status, household income and presence of children, July 2008
• Appendix -- Amount Spent Online
  • Figure 88: Amount spent on books purchased over the internet in the last three months, 2002-08
  • Figure 89: Amount spent on CDs/tapes/DVDs/videos purchased over the internet in the last three months, 2002-08
  • Figure 90: Amount spent on clothing and footwear purchased over the internet in the last three months, 2002-08
  • Figure 91: Amount spent on computer hardware and software purchased over the internet in the last three months, 2002-08
  • Figure 92: Amount spent on entertainment tickets purchased over the internet in the last three months, 2002-08
  • Figure 93: Amount spent on flights/holidays purchased over the internet in the last three months, 2002-08
  • Figure 94: Amount spent on grocery shopping purchased over the internet in the last three months, 2002-08
  • Figure 95: Amount spent on products from an auction site purchased over the internet in the last three months, 2002-08
  • Figure 96: Amount spent on financial services-related products purchased over the internet in the last three months, 2002-08
• Appendix -- Youth Surfing Habits
  • Figure 97: Time spent online during a typical week -- 11-18-year-olds, August 2008
  • Figure 98: Attitudes towards the internet -- 11-18-year-olds, August 2008
  • Figure 99: How youth use the internet -- 11-18-year-olds, August 2008
  • Figure 100: Statements agreed with -- 11-18-year-olds, August 2008
  • Figure 101: Time spent online during a typical week -- 11-18-year-olds, by gender, age, socio-economic group, ethnicity, newspaper readership, payment method, network, region and working status, August 2008
  • Figure 102: Attitudes towards the internet -- 11-18-year-olds, by gender, age, socio-economic group, ethnicity, newspaper readership, payment method, network, region and working status, August 2008
  • Figure 103: Attitudes towards the internet -- 11-18-year-olds, by gender, age, socio-economic group, ethnicity, newspaper readership, payment method, network, region and working status, August 2008
  • Figure 104: How youth use the internet -- 11-18-year-olds, by gender, age, socio-economic group, ethnicity, newspaper readership, payment method, network, region and working status, August 2008
  • Figure 105: How youth use the internet -- 11-18-year-olds, by gender, age, socio-economic group, ethnicity, newspaper readership, payment method, network, region and working status, August 2008
  • Figure 106: Statements agreed with -- 11-18-year-olds, by gender, age, socio-economic group, ethnicity, newspaper readership, payment method, network, region and working status, August 2008
  • Figure 107: Statements agreed with -- 11-18-year-olds, by gender, age, socio-economic group, ethnicity, newspaper readership, payment method, network, region and working statusographics, August 2008