June 15, 2007
An Interview with Bruce Leichtman: Part III of IV

The following is the third installment of a four-part series featuring an interview with Bruce Leichtman, head of the Leichtman Research Group, based out of New Hampshire. Leichtman has become a respected quantitative survey-based researcher who focuses on both consumer analysis and industry data and perspectives.

In the first two installments, the interview looked at Leichtman's background, the focus of his company, and his work on high-definition. This third installment looks further at his focus on high-definition television and his work on online video as well. For previous posts mentioning Bruce's work online video, look here.

Sam: What do you think will happen in the next three years in relation to HD in the average American household?

Bruce: We are going to have 9 to 10 million new HD homes each year, but there is still a lot of consumer confusion around these technologies. 37 percent of the digital TV sets purchased last year were not high-definition, and the CEA expects that number to be even higher next year. If you go to Circuit City or Best Buy now, all you can get is a digital set. But a lot of people don't know that their digital sets are not high-definition.

Then, you have people who have HD sets not watching high-definition programming but thinking that they are. It is still an evolving market with a lot of constituencies involved, and the problem is that they are not all always on the same dance card.

Sam: In what ways do you think HD TV is causing changes in American culture and the day-to-day practices of those who buy these sets?

Bruce: We hear so much about all the smaller viewing options out there like cell phones and iPods and what have you, but television sets are getting larger and more dominant in the home. Whether you are talking about HD or digital or what have you, these bigger sets are a transformation of television watching in the home, and it is far different than five or 10 years ago. When people bought a 25" set in the past and thought it looked huge, they are now buying a 30" digital set that might look small. This more prominent viewing in the home has important social implications. The experience is quite different when gathering around a 45" set or a 48" set than a 19" set. For most of these homes, if you are spending $1,500 plus on a television set, that's probably not ending up in the bedroom or a kids' room. That is a primary television set. As these HD homes start buying second and third HD sets, those are probably going in those other locations.

Sam: I know you also have spent time examining the adoption of online video. A study of yours from earlier this year found that 4 percent of adults watch online video on a daily basis, while 93 percent of adults watch at least an hour of traditional television each day. Does this mean that the hype surrounding online video is somewhat undeserved?

Bruce: I think it's good for people no matter what they are looking at to take things in context. Is online video growing? Sure. Is it interesting? Sure. Let 's put it in context, though. By now, online video has grown past 4 percent of the population, which is the number where it was when I did that study, so it's growing, but we have to realize the nature of that growth in context with other types of video. A company is looking at what the tradeoff is and how people are trading off one platform for another. It is important to realize where online video stands in an average American's life.

That's not to disparage online video, but I think you have to compare what people are doing with their television sets to what they are doing with online video. It's an evolving market, but let's just keep it in perspective.

Sam: You found that 18-to-34-year-olds drive 41 percent of online video views. What methods did you use to compile this data?

Bruce: Everyone who is talking about online video is looking at the Long Tail. The reality of it, though, is that, while it may be an outlet for Long Tail content, it's also taking us back to the heavy hand. That means that online video is primarily drive by a few people who are viewing it a lot. Online video is quintessential heavy hand, driven by young males. Our study only started at 18, but online video is driven by young males going even younger than that.

As a research analyst with a background in marketing and a business degree in marketing, I view things from that marketing perspective. With online video, you have a product, and the question then becomes who do you want to market that service to and how do you want to market it? It's not just a matter of how many are using the service but also who they are. If I know better who is actually using online video, then I can profit from it better.

If I think everyone is using online video, then I have a problem. As we look at the adoption of new products and services, this is where the mistake is generally made from the provider. DVR is a great example. If you think everyone is getting a DVR, then you aren't marketing it correctly. The outlandish expectations in the late 1990s and the early part of this decade were a problem. If you think everyone is getting a service, you can't sell it correctly. You have to understand who these services appeal to most and why.