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ARCHIVE 2006
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Why Are 75% of
US Households Still Offline?
A new consumer study conducted by Parks
Associates reveals the two most important reasons why about 75% of US households are not
online ¾ no computer at home and no perceived need for
Internet service. Of these non-online consumers, 32% own a PC, and 36% have some Internet
experience. Four percent have even had their own Internet service account, via a
subscription or a free trial, which indicates that the Internet service industry has lost
about three million customers who have received Internet service in the past.
The study, called
Surfing a New Wave: Consumers and Emerging Internet Access
Platforms, includes a random-sample survey of 1,523 American households
that currently DO NOT subscribe to online/Internet service. Below are some key findings
from the survey and analysis from Hongjun Li, Director of Research at Parks Associates.
Three
Million Non-Online Consumers Subscribed to Internet Service or Used a Free Trial in the
Past
Among the non-online respondents, 36% have used the Internet before at work, in a
library, at someone else's home, through a previous service subscription or a free trial,
etc. Among these "experienced" respondents, six percent subscribed to
Internet service in the past, and five percent have used a free trial. These consumers
account for about four percent of all the non-online respondents or about three percent of
all US households. This indicates that the online/Internet service industry has lost about
three million existing or potential customers.
The study has revealed some other important information of non-online households. Among
them, 28% have one PC, and four percent have multiple PCs. These PC households, numbering
about 24 million in total, represent a large, untapped market for Internet service.
While about two-thirds of the non-online subscribers have never used the Internet
before, only one-third of the respondents aged 29 or younger have no Internet experience.
These young consumers are the best targets for the marketing of Internet services. With
the passage of time, of course, the number of consumers who have no Internet experience
will become increasingly smaller. Thus, the overall market for Internet service is huge.
Figure 1
Inhibitors to Adoption of Internet Service
Among the topics addressed by the survey is why non-online households
have not subscribed to Internet service. The most important reasons given by the
respondents are no computer at home (43%) and lack of perceived need for Internet service
(31%). These two issues, however, will become less significant over time as computer
prices will go further down and more people will gain Internet experience.
Another inhibitor is the perceived high monthly fee of Internet service. While
the current average monthly fee is slightly over $20, the non-online subscribers, when
asked how much they think Internet service costs, reported an average monthly fee of $32.
Furthermore, respondents with no Internet experience reported an average price of $36.42,
and more than one-third (34%) simply don’t know.
This inhibitor of perceived high price will also become less significant over time, of
course, as more non-online subscribers become educated about the Internet and Internet
service. ISPs can help overcome the inhibitor by clear, repeated marketing
messages about pricing and the value of Internet service in relation to the monthly fee.
Currently, very few consumers seem to be are aware of $9.99-per-month offerings from some
local ISPs.
Figure 2
Most Important Internet Applications to Non-Online Subscribers
To get Internet service into more consumers’ homes, it is necessary
to understand what Internet applications are most important to them. The survey shows that
getting news and information ranks as the most important and e-mail is a close second.
These two are perhaps the major Internet applications non-online respondents are aware of
or have been exposed to. Online entertainment and transaction-based applications are
perceived to be of low importance. None of the applications, however, received an average
rating above 4.1 on a 7-point scale. A key to this market is the discovery or
promotion of an application that will be rated in the 6 or 7 category.
Figure 3
Appeal of TV-Based Internet Service to Non-Online Subscribers
Since more than two-thirds of the non-online subscribers do not have a
computer, TV-based Internet access may be a good solution for these non-PC households.
Currently, WebTV has the largest subscriber base of TV-based Internet access, and
WorldGate’s service, which does not require an additional box for Internet access via
the TV, has also started commercial deployment. In addition, cable operators and vendors
are developing digital set-top boxes that can support TV-based Internet access. But do
consumers like such TV-based Internet access solutions? Parks Associates’ survey
provides a moderately positive answer, as indicted in Figure 4.
The non-online respondents gave a higher rating of interest to TV than to other non-PC
Internet access devices. When asked how much they want to pay for TV-based Internet access
service, the non-online subscribers gave an average price of $25.93, which is slightly
higher than what WebTV charges per month. However, only 12% indicate a strong likelihood
to pay $200 for a piece of equipment in order to access the Internet on the TV. Thus,
TV-based Internet services that do not require the purchase of an additional box have a
much better potential than the current WebTV service.
Figure 4
Conclusion
Parks Associates' survey indicates that non-online households provide an
immediate and huge market for both PC-based and TV-based Internet services. The biggest
challenge to providers of these services is to communicate the value of Internet service
to non-subscribers in simple language and educate non-PC households about the availability
of TV-based Internet services.
About Parks Associates: Parks Associates is an
internationally recognized market research and consulting company specializing
in emerging consumer technology products and services. Founded in 1986, Parks
Associates creates research capital for companies ranging from Fortune 500 to
small start-ups through market reports, primary studies, consumer research,
custom research, workshops, executive conferences, and annual service
subscriptions.
The company's expertise includes new media, digital
entertainment and gaming, home networks, Internet and television services,
digital health, mobile applications and services, consumer electronics, and home
control systems and security.
Each year, Parks Associates co-hosts executive thought
leadership conferences CONNECTIONS™ and CONNECTIONS™ Europe in
partnership with the Consumer Electronics Association (CEA®). In addition, Parks
Associates produces the online publication Industry Insights in
conjunction with the CONNECTIONS™ Conference series.
http://www.parksassociates.com |
http://www.connectionsconference.com |
http://www.connectionseurope.com
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http://www.connectionsindustryinsights.com
For more information on Parks Associates' multiclient studies,
click here. |
