Advertisers and manufacturers love to lump consumers into neat, convenient, and simple demographic groups like "18- to 34-year-old women." But that trusty old mass-market approach doesn't work in this era of maddeningly segmented markets and idiosyncratic consumers defined more by attitude than by age. Surveying the new environment is the specialty of Nick Donatiello, president and CEO of Odyssey, a San Francisco market-research firm that studies exactly what people want from technology, information, and entertainment in the home. Each year Odyssey conducts in-depth interviews with 9,000 consumers and holds 28 focus groups in 14 US cities. The research gets snapped up by a who's who of media, phone, cable, and computer companies. A Stanford University MBA with a degree in systems engineering from Princeton, Donatiello worked as a consultant at McKinsey & Company and as an aide to New Jersey Senator Bill Bradley before launching Odyssey in 1993.
Wired: You say that the early adopters of new technologies in the '80s are dead. What happened?
Donatiello: The people who bought a product just because it was based on new technology have been tempered over the last decade by buggy version 1.0s, shifting standards, and quick obsolescence. And now there's much more technology around, so they can get their fix without buying every new release. They're more concerned about whether it will work and its longevity. It's a different world now, and producers of everything from hardware to content will be burned if they base their market on early adopters.So, if a company can't depend on early adopters, how can it go about introducing new products that are innovative and risk-taking?
By targeting them carefully. Don't emphasize that something is a hot new technology, but that it does a specific task the consumer wants done. People still bear the scars of the Beta-VHS wars. They have not forgotten. They will not be burned again. They will wait.You've said the primary force that will drive new media is people's dissatisfaction with today's television programming.
America is already more heterogeneous than it was 40 years ago when television came of age. In the '50s, people desired conformity. Today, America is diverse, not just ethnically but in its interests, desires, and levels of education. New media can cater to that in a way television never could. In addition to this dissatisfaction with the content of TV, there is a dissatisfaction with the delivery system.With the medium itself?
No. With the people, with the companies. With the providers and the system. We dangerously underestimate the extent to which certain segments of the population dislike their cable companies, particularly the groups we call "surfers" and "new enthusiasts."Why do they have such animosity?
Surfers don't like the way these big cable companies have treated them. They don't like the fact that they don't have choices, that they have to buy groups of channels. And so much of what gets shoved down the wire isn't relevant to them.In the case of new enthusiasts, it's a service issue. New enthusiasts are demanding consumers: they know how much market power they wield. To them, hanging around for a whole day to get cable installed is completely unacceptable. The cable goes out and they get a busy signal from customer service - unacceptable. They aren't told immediately when it's going to be fixed - unacceptable. Both these groups are ripe for the picking. That could mean direct-broadcast satellite. It could mean a regional Bell operating company. It could mean a wireless cable company.
Where do online services fit in?
In the last six months of 1994, online services didn't keep pace with the growth in the PC and CD-ROM markets. Online services are having trouble proving their value to customers. In 1995, people expect entertainment to include moving pictures, but online services have limited ability to deliver full-motion video - or even something that is less than full-motion video but still compelling.Online media is really driven by text.
Right. It's either information-based or, to the extent it's entertainment, it's text-based. For most US households, that's an oxymoron.You have said that the demographics of broadcast TV viewers are going to look more and more like the demographics of smokers.
Meaning older, less educated, and less wealthy. People in those groups have fewer alternatives for economic reasons or because they lack technological know-how. So, they are left with broadcast television, the least common denominator. Has this already started to happen? Absolutely. Are the television and advertising industries in denial? Yes, with some important exceptions. Can they stay in denial? No. Television is the most important thing an advertiser has today. It will remain the most important thing for a long time, though it will be less important.Why is all this discussion of television important?
Because people who make computer hardware or set-top boxes or content - for CD-ROM interactive games, online services, or, eventually, interactive TV - need to recognise that fundamentally, they compete with television. Entertainment is the 6,000-pound gorilla in the American home, and in 1995, home entertainment is still predominantly television.What about the notion advanced by Al Gore and others that information, not entertainment, is going to be a big deal in this new world - things like long-distance learning, voting, browsing card-catalogues?
If by "big deal" you mean more important than entertainment, no way. That is not supported by the research. It's also counterintuitive. It doesn't fit with anything we know about the way people act today.Alan Deutschman (deutschman@aol.com), once the Silicon Valley correspondent for Fortune, is working on a screenplay and a novel.