Israeli Consumers Prefer ONLINE Media -- Levi Shapiro

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Israelis Value Online Media 1.5x More Than Offline Media -- Highest in Global Survey

Digital media is a recent phenomenon in Israel. The first television broadcast, a military parade, did not occur until 1968. In the mobile era, the iPhone arrived in 2009 (two years after the US) followed by the iPad in 2011 and the iTunes store in 2012. Today, 60 percent of Israeli adults carry a smartphone, spurring 2-times the growth in mobile media consumption just in the last two years to 93 minutes per day (Shiluv Millward Brown). In a survey released this week by Google and BCG, among the 11 countries surveyed Israelis ascribed the most value to their online media. The value that Israeli consumers attach to online media suggests that business models will need to rapidly adapt to this new environment.

In a small market, limited to Hebrew language content and virtually no premium subscription services (such as Pandora, Hulu, Netflix, Spotify, Amazon Prime, etc), the transition to online has been swift. Three years ago, Israelis owned an average of two digital devices. This number will double in the next three years. Consumers crave more and better content they can access anywhere. For example, in January satellite TV operator YES introduced their yesGo product, allowing subscribers to watch live TV channels and video-on-demand for free. In less than half a year, more than one-third of subscribers are now using the service regularly. In fact, a majority (52%) of Israelis prefer consuming their media online rather than offline.

For media companies, the future is now. Business models will need to reflect consumer preference and ascribed value for online media. In some cases, the preferred business model will be advertising. Sixty-five percent of Israelis are willing to accept advertising in exchange for free content.

The higher value that consumers ascribe to online media also suggests there is room for subscription services (such as Netflix, Hulu and Amazon Prime) that provide a broader library of content. One thing is certain: The “People of the Book” have now become the “People of the Facebook.” The enthusiasm for online content creates new opportunities for media companies with innovative business models.

Levi Shapiro is a Partner at TMT Strategic Advisors, a research and strategy firm focusing on the technology, media and telecom sectors. He can be reached at levi@tmtstrat.com or via twitter: @levshapiro

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