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Internet-enabled Home Entertainment - UK - March 2011

The key to mass-market adoption of wireless home entertainment devices is convincing consumers that internet TV is a central part of their lives. Offering exclusive content would be the most effective way of achieving this, as it is the feeling of missing out on programming they really want to see that is likely to have the most profound effect on those outside the early adopter groups.

  • Women appear to be more single-minded than men in terms of being driven purely by price when it comes to buying new technology, while 16-24-year-olds are less fixated on price compared to the overall population.
  • Although looks are clearly a secondary consideration in this market, the fact that nearly a fifth of consumers would make looks their second priority (ie ahead of at least two of the ‘core’ concerns – price, functionality and brand) indicates the extent to which fitting in with the décor can be make or break for many consumers when it comes to electronics.
  • Nearly half of all consumers agree that Wi-Fi capability is ‘nice to have’ but not something they would be prepared to pay extra for, while about a third ‘don’t see the point’ in having wireless connectivity in devices other than laptops and PCs, suggesting that many need to be convinced as to what wireless can do for them.
  • Some 29% of consumers agree that they would pay extra for a TV with Wi-Fi capability while 24% agree they would pay extra for radio or music player with Wi-Fi capability. Consumers that are under 35, and from higher socio economic groups are more likely to agree.

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: Estimated market penetration of Wi-Fi enabled home entertainment devices, February 2011
            • Economic downturn restricts potential growth
              • Slow replacement cycles
                • Content dictates demand
                  • Companies, brands and innovation
                    • The consumer
                      • Figure 2: Wireless technology ownership and purchasing intentions, February 2011
                    • Price is key, but looks are on the agenda
                      • Figure 3: Most important factors when buying a new wireless home entertainment device, February 2011
                    • Amazon out in front
                      • Yet to be convinced of the need
                        • What we think
                        • Issues in the Market

                            • What barriers are currently limiting take-up of wireless home entertainment products?
                              • Which products are most likely to take off in the short term?
                                • What is needed to turn wireless home entertainment devices into truly mass market products?
                                  • How does internet TV fit into the wider context of consumer technology markets?
                                  • Future Opportunities

                                    • Sense the mood
                                      • Confidence is key
                                      • Internal Market Environment

                                        • Key points
                                          • Wireless access catching broadband penetration
                                            • Figure 4: Use of wireless router vs. broadband take-up, 2007-10
                                          • Connected devices – what do they do?
                                            • Figure 5: Outline of connected home entertainment devices, value proposition and target audiences
                                          • Who’s involved?
                                            • Figure 6: Stakeholder map, beneficiaries of wireless home entertainment devices
                                          • Where does connected Blu-ray fit in?
                                            • Figure 7: UK volume sales of DVD players/systems, by type, 2006-09
                                          • Games consoles bring connectivity to a wider audience, but are gamers really engaged?
                                            • Figure 8: UK Christmas unit sales of the ps3 and Xbox 360, 2010
                                          • TV unit sales on the up, but are customers ready to get connected?
                                            • Figure 9: UK volume sales of TV sets 2004-10
                                          • Digital music on the up, will connected music systems benefit?
                                            • Figure 10: UK digital music revenues 2005-09
                                        • Broader Market Environment

                                          • Key points
                                            • Subdued demand for big ticket items
                                              • Figure 11: GDP, PDI, consumer expenditure and savings, at constant 2010 prices, 2005-15
                                            • Lack of broadband ubiquity limits potential for adoption
                                              • Figure 12: Broadband penetration by demographics, 2004-10
                                            • More affluent consumers good for connected TVs
                                              • Figure 13: Forecast adult population trends, by socio-economic group, 2005-15
                                          • Competitive Context

                                            • Key points
                                              • Pay TV in the connected living room
                                                • Figure 14: UK subscription TV revenue, 2004-09
                                              • YouView and Google TV – stakeholders and content
                                                • Figure 15: YouView and Google TV – stakeholders and content overview
                                                • Figure 16: Proportion of adults with home internet who watch online catch-up TV, q1 2009 and q1 2010
                                            • Who’s Innovating?

                                              • Key points
                                                • From TVs to tablets
                                                  • A design for lifestyle
                                                    • Google it
                                                    • Market Penetration

                                                      • Key points
                                                        • How many consumers own wireless home entertainment devices?
                                                          • Figure 17: Estimated market penetration of Wi-Fi enabled home entertainment devices, February 2011
                                                      • Strengths and Weaknesses in the Market

                                                          • Strengths
                                                            • Increased demand for online VoD
                                                              • Increased demand for digital music
                                                                • More consumers focused on in-home entertainment
                                                                  • Predicted rise in the AB socio-economic group
                                                                    • Weaknesses
                                                                      • Perceived lack of need among certain market segments
                                                                        • Fear, uncertainty and doubt even among tech savvy early adopters
                                                                          • Economic uncertainty
                                                                            • Slow replacement cycles for home entertainment devices
                                                                              • Difficulty in obtaining content for online TV platforms
                                                                              • Companies and Products

                                                                                  • Figure 18: Major companies active in the wireless home entertainment market, March 2011
                                                                                • Apple
                                                                                    • Figure 19: Financial performance of Apple Inc, 2009-10
                                                                                  • LG
                                                                                      • Figure 20: Financial performance of LG Electronics UK Limited, 2008-09
                                                                                    • Panasonic
                                                                                        • Figure 21: Financial performance of Panasonic UK, 2009-10
                                                                                      • Samsung
                                                                                          • Figure 22: Financial performance of Samsung Electronics (UK) Limited, 2008-09
                                                                                        • Sony
                                                                                            • Figure 23: Financial performance of Sony UK Ltd, 2008-09
                                                                                        • Ownership of Wireless Home Entertainment Devices

                                                                                          • Key points
                                                                                            • Ownership remains niche outside computing and consoles
                                                                                              • Figure 24: Types of wireless technology products owned, February 2011
                                                                                            • The connected consumer – who’s using wireless home entertainment devices?
                                                                                              • Figure 25: Connected consumer profile, February 2011
                                                                                            • One in five considering a wireless TV or tablet…
                                                                                              • Figure 26: Consumers who intend to buy or may buy in the next 12 months, by wireless device, February 2011
                                                                                            • … but most consumers aren’t yet engaged
                                                                                              • Figure 27: Consumers who have no intention of buying in the next 12 months or have never heard of the device, by wireless device, February 2011
                                                                                          • What Influences Purchase Decisions?

                                                                                            • Key points
                                                                                              • The balance between price and other factors
                                                                                                • Figure 28: Most important factors when buying a new wireless home entertainment device, February 2011
                                                                                              • Tech enthusiasts less concerned with costs
                                                                                                • Figure 29: Top-ranked factors in purchase of wireless products, by gender and age, February 2011
                                                                                            • Where are Potential Adopters Likely to Buy?

                                                                                              • Key points
                                                                                                • Online retailers have the edge
                                                                                                  • Figure 30: Consumer preferences for purchasing wireless home entertainment devices, online vs. physical retailers, February 2011
                                                                                                • Amazon – the first port of call?
                                                                                                  • Figure 31: Outlets most likely to be used by consumers when looking for wireless home entertainment devices, February 2011
                                                                                                • Tech literacy and price sensitivity drive buying behaviour
                                                                                                • Attitudes Towards Wireless Home Entertainment Devices

                                                                                                  • Key points
                                                                                                    • Demand for wireless home entertainment systems being kept under control
                                                                                                      • Figure 32: Attitudes towards wireless home entertainment devices, February 2011
                                                                                                  • Appendix – Ownership of Wireless Home Entertainment Devices

                                                                                                      • Figure 33: Ownership of desktop PC that can wirelessly connect to the internet, by demographics, February 2011
                                                                                                      • Figure 34: Ownership of laptop PC that can wirelessly connect to the internet, by demographics, February 2011
                                                                                                      • Figure 35: TV/set top box that can wirelessly connect to the internet owned, by demographics, February 2011
                                                                                                      • Figure 36: Games consoles that can wirelessly connect to the internet owned, by demographics, February 2011
                                                                                                      • Figure 37: Blue-Ray/DVD players that can wirelessly connect to the internet owned, by demographics, February 2011
                                                                                                      • Figure 38: Radio/music player that can wirelessly connect to the internet owned, by demographics, February 2011
                                                                                                      • Figure 39: Tablet devices that can wirelessly connect to the internet owned, by demographics, February 2011
                                                                                                  • Appendix – What Influences Purchase Decisions?

                                                                                                      • Figure 40: Importance of price in determining choice of wireless home entertainment devices, by demographics, February 2011
                                                                                                      • Figure 41: Importance of trust in brand name in determining choice of wireless home entertainment devices, by demographics, February 2011
                                                                                                      • Figure 42: Importance of functionality in determining choice of wireless home entertainment devices, by demographics, February 2011
                                                                                                      • Figure 43: Importance of appearance/design/size in determining choice of wireless home entertainment devices, by demographics, February 2011
                                                                                                      • Figure 44: Types of wireless technology products owned, by importance of trust in brand name in determining choice of wireless home entertainment devices, February 2011
                                                                                                      • Figure 45: Types of wireless technology products owned, by importance of price in determining choice of wireless home entertainment devices, February 2011
                                                                                                      • Figure 46: Types of wireless technology products owned, by importance of appearance/design/size in determining choice of wireless home entertainment devices, February 2011
                                                                                                      • Figure 47: Types of wireless technology products owned, by importance of functionality in determining choice of wireless home entertainment devices, February 2011
                                                                                                  • Appendix – Where are Potential Adopters Likely to Buy?

                                                                                                      • Figure 48: Types of outlets most likely to use for buying wireless home entertainment devices, February 2011
                                                                                                      • Figure 49: Most popular outlets for buying wireless home entertainment devices, by demographics, February 2011
                                                                                                      • Figure 50: Most popular outlets for wireless home entertainment devices, by importance of trust in brand name in determining choice of wireless home entertainment devices, February 2011
                                                                                                      • Figure 51: Most popular outlets for wireless home entertainment devices, by importance of price in determining choice of wireless home entertainment devices, February 2011
                                                                                                      • Figure 52: Most popular outlets for wireless home entertainment devices, by importance of appearance/design/size in determining choice of wireless home entertainment devices, February 2011
                                                                                                      • Figure 53: Most popular outlets for wireless home entertainment devices, by importance of functionality in determining choice of wireless home entertainment devices, February 2011
                                                                                                      • Figure 54: Most popular outlets for wireless home entertainment devices, by ownership of desktop PC that can wirelessly connect to the internet, February 2011
                                                                                                      • Figure 55: Most popular outlets for wireless home entertainment devices, by ownership of laptop PC that can wirelessly connect to the internet, February 2011
                                                                                                      • Figure 56: Most popular outlets for wireless home entertainment devices, by ownership of TV/set top box that can wirelessly connect to the internet, February 2011
                                                                                                      • Figure 57: Most popular outlets for wireless home entertainment devices, by ownership of games consoles that can wirelessly connect to the internet, February 2011
                                                                                                      • Figure 58: Most popular outlets for wireless home entertainment devices, ownership of blue-ray/DVD players that can wirelessly connect to the internet, February 2011
                                                                                                      • Figure 59: Most popular outlets for wireless home entertainment devices, by ownership of radio/music player that can wirelessly connect to the internet, February 2011
                                                                                                      • Figure 60: Most popular outlets for wireless home entertainment devices, by ownership of tablet devices that can wirelessly connect to the internet, February 2011
                                                                                                  • Appendix – Attitudes Towards Wireless Home Entertainment Devices

                                                                                                      • Figure 61: Agreement with the statement “I have a good understanding of the various wireless home entertainment products on the market”, by demographics, February 2011
                                                                                                      • Figure 62: Agreement with the statement “I would probably pay extra for a TV that has Wi-Fi capability”, by demographics, February 2011
                                                                                                      • Figure 63: Agreement with the statement “I would probably pay extra for a radio/music player that has Wi-Fi capability”, by demographics, February 2011
                                                                                                      • Figure 64: Agreement with the statement “I don’t see the point in having Wi-Fi connectivity in devices other than PCs or laptops”, by demographics, February 2011
                                                                                                      • Figure 65: Agreement with the statement “It is important to me that my home entertainment devices fit in with my home décor”, by demographics, February 2011
                                                                                                      • Figure 66: Agreement with the statement “Wi-Fi capability is nice to have but not something I’d pay extra for”, by demographics, February 2011
                                                                                                      • Figure 67: Agreement with the statement “I opt for more basic home entertainment equipment these days because of the current economic climate”, by demographics, February 2011
                                                                                                      • Figure 68: Agreement with the statement “Because of the current economic climate I will probably put off upgrading any of my home entertainment devices”, by demographics, February 2011
                                                                                                      • Figure 69: Agreement with the statement “A lack of confidence in my ability to set up and use wireless devices puts me off buying them”, by demographics, February 2011
                                                                                                      • Figure 70: Attitudes towards wireless home entertainment devices, by ownership of desktop PC that can wirelessly connect to the internet, February 2011
                                                                                                      • Figure 71: Attitudes towards wireless home entertainment devices, by ownership of laptop PC that can wirelessly connect to the internet, February 2011
                                                                                                      • Figure 72: Attitudes towards wireless home entertainment devices, by ownership of TV/set top box that can wirelessly connect to the internet, February 2011
                                                                                                      • Figure 73: Attitudes towards wireless home entertainment devices, by ownership of games consoles that can wirelessly connect to the internet, February 2011
                                                                                                      • Figure 74: Attitudes towards wireless home entertainment devices, by ownership of blue-ray/DVD players that can wirelessly connect to the internet, February 2011
                                                                                                      • Figure 75: Attitudes towards wireless home entertainment devices, by ownership of radio/music player that can wirelessly connect to the internet, February 2011
                                                                                                      • Figure 76: Attitudes towards wireless home entertainment devices, by ownership of tablet devices that can wirelessly connect to the internet, February 2011
                                                                                                      • Figure 77: Attitudes towards wireless home entertainment devices, by importance of trust in brand name in determining choice of wireless home entertainment devices, February 2011
                                                                                                      • Figure 78: Attitudes towards wireless home entertainment devices, by importance of price in determining choice of wireless home entertainment devices, February 2011
                                                                                                      • Figure 79: Attitudes towards wireless home entertainment devices, by importance of appearance/design/size in determining choice of wireless home entertainment devices, February 2011
                                                                                                      • Figure 80: Attitudes towards wireless home entertainment devices, by most popular outlets for wireless home entertainment devices, February 2011

                                                                                                  Companies Covered

                                                                                                  • British Broadcasting Corporation (BBC)
                                                                                                  • British Sky Broadcasting Group plc (BSkyB)
                                                                                                  • BT Group plc
                                                                                                  • Co-operative Group
                                                                                                  • Facebook, Inc.
                                                                                                  • Google UK
                                                                                                  • Kantar Media
                                                                                                  • LG Electronics (UK)
                                                                                                  • Logitech Inc.
                                                                                                  • LOVEFiLM International Ltd
                                                                                                  • Netflix, Inc.
                                                                                                  • Ofcom
                                                                                                  • Samsung Electronics (UK) Ltd
                                                                                                  • Skype Technologies S.A.
                                                                                                  • Sony (UK) Ltd
                                                                                                  • Spotify AB
                                                                                                  • Tesco Plc
                                                                                                  • Universal Music Group
                                                                                                  • Virgin Media Ltd
                                                                                                  • Warner Music Group
                                                                                                  • YouTube, Inc.
                                                                                                  • YouView TV Ltd

                                                                                                  Internet-enabled Home Entertainment - UK - March 2011

                                                                                                  £1,995.00 (Excl.Tax)