What do broadband customers want?

What happens when consumers switch from narrowband to broadband? Do they surf the same sites? Chat more? Look for the same entertainment and community experiences they had enjoyed through their narrowband connections? For businesses targeting these consumers, information about what happens as they make the transition to broadband is frequently too scarce for strategic decision making.

To bridge the information gap, McKinsey, working with Jupiter Media Metrix and Vividence, examined the usage patterns of a group of consumers on narrowband and then, six months later, after those same consumers had switched, on broadband. McKinsey also used focus groups and surveys to draw a profile of broadband consumers and what they want.

The research shows that the broadband consumer population in the United States has moved beyond the predominantly young, male early-adopter stage to reach a broad cross-section of age, family composition, sex and income. Broadband is finally entering the mainstream. Companies that closely examine these early usage patterns can draw crucial inferences about what the mass market will want from its broadband experience and refine their online offerings accordingly.

We first looked at how fast broadband is being adopted and at forecasts for future rates of adoption. The penetration of broadband has already reached 20 to 30 percent in those parts of the United States where it is available. By 2003, users with broadband connections will account for a majority of the time spent online there. Consumers adopt broadband connections to get a faster, more intense experience. Once they have set up their broadband connection, they spend 27 percent more time online overall, average 37 percent more sessions a month, and view 17 percent more pages a month.

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Although broadband users spend more time online than they did when they had narrowband connections, proportionately less of it is spent on the Web. In our sample, converts to broadband, who had spent 71 percent of their online time viewing Web pages before the conversion, spent only 60 percent of their time doing so afterward. How do they pass the rest of their online hours? Using non-Web applications like e-mail, chat and messaging, as well as downloading music.

Although Web use may decline as a percentage of total online time after the conversion to broadband, it nonetheless increases on an absolute basis. Entertainment sites benefited from the biggest proportional increase in time spent: to 25 percent, from 17 percent. The usage of gaming sites in particular shot up. Sites that featured bingo and other games of chance were far more popular, on average, than skill-oriented action games.

Today?s broadband consumers can be usefully divided into six segments. The most interesting of them are the entertainment junkies and the hobbyists. Consumers in these segments don?t spend the greatest amount of time online, but they regularly use their broadband connections to find information related to their offline lives, such as movie times and concert dates--information that consumers in other segments still reflexively search for offline.

Thus, entertainment junkies and hobbyists offer great opportunities to companies that can integrate their online offerings with their offline activities. Hobbyists, who are older, on average, than the entertainment junkies, may prove to be the most promising consumers of all for a company doing business online, given their high level of engagement, their willingness to spend money, and the narrow target they offer to advertisers.

Seizing these opportunities doesn?t mean that companies will need to change radically overnight. Speedy, convenient access will certainly transform the online value proposition, but it is clear from looking at the features each user segment finds most attractive that businesses won?t necessarily have to develop expensive alternative broadband-only sites or to invest in streaming media. Companies do have to observe, systematically, how many of their users are connecting through broadband and what segments those users fall into. Then such companies will be able to focus on the development of their sites, whether the right answer for them is to serve users who want a quick reference service, on the one hand, or people looking for an invitation to stay, on the other. Either way, there is now enough information to act.

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