Video-Capable MP3 Players On Rise: CEA


Factory-level sales of portable digital media devices — MP3 players and portable media players (PMPs) — will rise 23 percent this year to 28 million at the factory level, and the percentage incorporating video playback will double because of the growing availability of video-equipped models, a Consumer Electronics Association (CEA) study asserts.

Household penetration of portable digital media devices posted greater penetration gains than any other CE product in 2005, rising a full 10 percentage points to a penetration rate of 25 percent in January 2006, compared with the year-ago month's 15 percent, the study also found. (See figure 1.)

Among online adults, the penetration rate jumps to a third, or 54.1 million people. A total of 28 percent of online adults own an MP3 player, and 12 percent own a PMP, the survey noted.

The trends underscore a "growing expectation among consumers to have access to their digital content wherever they are — be it music, pictures or video," said Steve Koenig, CEA's industry analysis senior manager.

He pointed to a finding that more than half (54 percent) of online adults plan to buy a portable entertainment device over the next year, whether an MP3 player, PMP, cellphone, portable DVD player, portable CD player, notebook PC, portable gaming device or PDA.

When broken out by product segment, the findings indicate that 10 percent of online adults plan to buy an MP3 player, 8 percent plan to buy a PMP, 21 percent plan to buy a cellphone, 20 percent plan to buy a notebook PC, and 14 percent plan to buy a portable DVD player.

However, more than half, or 51 percent, of the cellphones currently used by online adults aren't capable of playing entertainment content, nor are 8 percent of the notebook PCs owned by online adults, the report noted.

For the most part, the vast majority of owners — 94 percent — use a portable digital media device to listen to music, but that is due largely to a small selection of video-capable devices and lack of downloadable video content, CEA said. (See figure 2) The percentage of owners viewing video on their devices will grow as the selection of video-capable devices grows from the current “fraction of the total audio and video digital media player market,” the association said.

Only 15 percent of total digital media players shipped in 2005, or 3.4 million, were video-capable, but the percentage will double in 2006 to 30 percent, or 8.3 million units, according to CEA's forecast.

CEA also expects the amount of authorized downloadable video to grow. “Video content has only recently become available in a meaningful quantity over the past year,” the report said.

Even with a smattering of video content available, 27 percent of online adults who own video-capable portables already use them to watch music videos, 37 percent use them to watch movies, and 21 percent use them to watch TV programs, CEA said.

In the future, the findings “suggest” that “video content should enjoy a larger role in the content arena” because “substantial numbers of owners show an increased interest in watching activities,” the report said.

CEA based that conclusion on the responses of online adults who were asked what they'd like to use their portable digital device for in the next two years. “Listening to music was the only activity where owners of portable digital media devices expressed a declining interest over the next two years, while substantial numbers of owners show an increased interest in watching activities,” the report said.

Comparing the surveyed users' current usage habits to their future interests, the survey found that 30 percent more of today's users would like to watch TV programs on their device in two years. Twenty-two percent more said they would like to watch movies on them,18 percent more said they'd like to watch music videos, and 18 percent more said they'd like to watch home videos on them. (See figure 3)

On the other hand, 19 percent fewer owners said they'd like to listen to music on them, although 22 percent more said they'd like to listen to audio books on them.

Despite expressed consumer interest, CEA describes the outlook on digital video as “one of guarded optimism” because “the cues and signals of consumer demand remain mixed on the topic of digital video.” One mixed signal is the relatively low percentage, 21 percent, who would like to see more online stores selling digital movie files. Only 22 percent said they would like to buy digital movies from brick-and-mortar stores. In addition, only 29 percent said they wanted a broader selection of digital movies to buy.

Although the report didn't expressly say it, one reason for these low percentages could be that consumers would prefer to use their portable devices to watch video content that they already own, as is currently the case with music. The study found that only 44 percent of online portable device owners download content from online merchants. Most of it comes from personal audio and video collections, the study found.

Based on reports from download sites and previous studies, “we can infer ... that consumer uptake of online purchases and downloads of entertainment content is likely on the rise.”

In the coming year, CEA's latest survey found, 71 percent of online portable digital media device owners plan to purchase entertainment content that can be played back on their device, and they will each spend close to $68 on content in the coming year. CEA didn't announce an expected percentage change because the question wasn't asked in the previous year's survey.

Most download spending, however, will be concentrated among a small number of big spenders. Among 38.4 million portable-digital-device-owning online adults who plan to buy downloadable audio or video content in the coming year, 27 percent will account for 49 percent of spending, the survey found. These big spenders, numbering 10.4 million, plan to spend more than $125 in the coming year. Another 42 percent, or 16.1 million people, will spend from $26 to $125, and the remaining 31 percent of spenders will spend $25 or less.

The CEA survey of online adults was conducted in April and included information on where consumers buy their devices, where they get their content, where they use them, and how much they spend on accessories.

The report is available at


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