15 minute read 13 Aug 2020
EY African American family streaming and watching tv together

Six key trends shaping the digital home – and how to stay ahead of them

Authors
Rahul Gautam

EY Advisory Global Technology Sector Leader

Accelerating growth for some of the world's largest and most innovative tech companies. Passionate about deploying technology to solve major world problems.

Vincent Douin

Consulting Customer Principal, TMT sector, Ernst & Young LLP (EY)

Twenty years in telecom and cable. Enthusiastic advisor through the business and digital transformations of my clients.

Ben Chang

EY, National Business Transformation, Consulting, Manager

Seasoned consultant with a focus on go-to-market strategy and sales and marketing transformation in the TMT space.

15 minute read 13 Aug 2020
Related topics TMT Digital Consulting

From 5G to streaming to data privacy, our 2020 report reveals US consumers’ changing views around all aspects of in-home digital services.

In brief

  • Our second annual report on the digital home is based on a survey of 5,000 US households carried out in 2020.
  • Explore the consumer attitudes and behaviors that are influencing digital home purchasing decisions.

Even before the COVID-19 pandemic, the digital home was evolving at great speed. Now that process has intensified and what worked yesterday won’t necessarily work tomorrow.

Our second annual report on the digital home is based on our survey of 5,000 US households, which was conducted in early spring 2020. We also draw on additional research into how shelter-in-place recommendations and orders are shifting the digital dial.

From our findings, we identify six key topics and trends, and then share insights into how technology, media and entertainment, and telecommunications (TMT) providers can respond effectively.

EY - Caucasion man and son playing video games at home
(Chapter breaker)
1

Chapter 1

Home internet breathes new life into value propositions

As internet becomes the oxygen of the digital home, find out what this means for TMT companies.

The hyper-connected household favors internet-only plans

From browsing and streaming to online gaming, our surveyed consumers are spending an average of 33 hours per week on internet-based activities in the home. And 48% of participants reported spending more time using their home internet connections during the COVID-19 pandemic. This is making internet-only plans—meaning connectivity without additional TV or content options— increasingly attractive, with 40% of survey respondents subscribing to them, up from 32% in 2019. That figure is even higher among younger age groups, suggesting that this trend is here to stay.

EY - Households with interner only bundles

Reliability is replacing speed as the key differentiator

Four fifths (80%) of consumers are satisfied with their internet speeds, up from 66% last year. That’s the good news, but our increasing dependence on connectivity means that over half of respondents (54%) now say that reliability is more important than speed. With the COVID-19 pandemic increasing home working, reliability is likely to become essential. And it could also be an opportunity — during lockdown, almost one-quarter said they were prepared to pay extra for reliable internet.

Reliability

80%

of respondents are satisfied with their home internet speeds

Reliance on connectivity opens the door to new value propositions

Consumers are increasingly interested in products and features that make their home networks more effective. Data protection and privacy features appealed to 52%, outage protection appealed to 43%, and Wi-Fi signal management capabilities were attractive to 39% of respondents. In addition, 33% of 18- to 44-year-olds would pay a premium for a low-latency, gaming-focused internet service. Providers should innovate and redefine their value proposition to capture these opportunities.

EY - Which advanced internet features would be appealing to you

Repricing and repositioning connectivity to reflect its true value

Internet is the most important piece of the home bundle, but generally not the most expensive. Even before the COVID-19 pandemic added pressure to household budgets, repricing and repositioning internet connectivity to reflect its true value was a tough ask. More than 6 in 10 (61%) consumers say they try to spend as little as possible on communication services. The solution may lie in offering new products and features while still providing a fast and reliable connection.

Repricing

61%

of respondents try to spend as little as possible on communication services (up six points year over year)

Key action for TMT companies – re-invent the value proposition of home internet

Reliable and fast home internet remains the centerpiece of the digital home. Innovations in technology continue to generate new use cases for home internet — from home security, interactive streaming content and gaming, to telehealth, wellness and more. TMT providers should embrace this opportunity to re-invent their value propositions, not only for the broader customer base, but also for the fast-growing value-conscious segment.

The future of broadband will rely on providers who innovate and enrich their value proposition through new products and features to become enablers of “digital life” for the modern consumer.
– Jay Robbins,
Global Client Service Partner, TMT Sector, Ernst & Young (US) LLP
EY - Hispanic mother and son streaming movie together
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2

Chapter 2

The streaming era is redefining content consumption

As the streaming era takes shape, find out how consumers seek simple, seamless solutions.

Streaming continues to turn up the heat on pay TV providers

Three quarters (74%) of survey respondents now complement their TV watching with streaming services, and half say they have streamed more during the COVID-19 pandemic. Worryingly for more traditional players, 59% of surveyed households now believe that they get more value from streaming services than from pay TV. Not surprisingly, nearly a third (32%) would be willing to cancel their pay TV subscriptions in favor of an online streaming service provider.

Streaming

59%

of respondents say their households get more value from streaming services than pay TV (up six points year over year)

Consumers like streaming – but still love to save money

It’s not all smooth sailing for streaming providers, however — 71% of surveyed consumers want to pay less than $25 for all of their streaming, which typically represents between two and four services. But price is clearly not everything. Content quality and customer experience are also key differentiators. Some consumers try to save money on streaming services via password sharing: 12% of respondents aged 25 to 34 report doing so — three times more than 35- to 44-year-olds. 

EY - Main criteria for choosing a new streaming service

The desire for seamless streaming is creating opportunities

As content shifts across platforms, consumers want to access, manage and discover content seamlessly, whether linear or on-demand. Separate streaming services don’t deliver this, making aggregation an attractive proposition, with 69% of those surveyed already using digital media players such as Roku and Amazon’s Fire TV. But spend management is currently less well addressed. More than half of respondents (51%) say that they would like to pay for all of their video content through a single bill. And 41% would like to access it all through a single app.

EY - Chart 7

The next frontier of content consumption beckons

Television has long been the provider of “lean-back” or passive entertainment, but that’s changing as households enjoy more premium gaming content and interactive experiences. With improvements in internet technology, and the exponential growth of the gaming industry, the next frontier of content consumption may be interactive entertainment and e-sports.

Consumption

24%

of households watch videos of online gaming/e-sports competitions

Key action for TMT companies – embrace the future of video and entertainment

It’s abundantly clear that online streaming services are disrupting the video market, and consumers today believe they derive better value for their money from streaming services than from pay TV services. With video consumption spiking while consumers stay home, the shift has become even more pronounced. TMT providers have an opportunity to embrace this change and find innovative ways to support consumption — whether through aggregation platforms, search functionality or other means.

The cable TV and video ecosystem is radically shifting toward streaming. COVID-19 has definitely accelerated this move with all types of content being consumed through OTT devices and platforms. The last traditional TV bastion is sports content with a question mark about the future business model of this industry.
– John Harrison,
EY Americas Media & Entertainment Leader
EY - African American man working from home
(Chapter breaker)
3

Chapter 3

Getting ready for 5G and the convergence of home internet and wireless

Explore the forces reshaping the traditional bundle.

There is strong interest in 5G and it carries disruptive potential

Wireless phone service providers appear to have done a good job of communicating the merits of 5G. As a result, over two in five (44%) respondents fully understand its benefits, and nearly half of surveyed 18- to 44-year-olds are willing to switch providers and pay a premium to get it. The trend is being intensified by the COVID-19 pandemic, with almost a quarter of surveyed consumers (24%) now considering a 5G connection as a result of the pandemic.

EY - Willingness to switch carriers

There’s also strong interest in a potential game changer — 37% of respondents say they would be interested in purchasing home internet through 5G fixed wireless access as an alternative to fixed broadband.

Adding wireless connectivity to home internet packages is becoming popular

Most European providers already offer home internet and wireless phone service together. That development is just starting to take off in the US, where providers are finding success in offering both home internet (fixed broadband or 5G fixed wireless) and wireless phone service, with high levels of customer satisfaction. Nearly a third (32%) of consumers surveyed say they currently have home internet and wireless phone service from the same provider, and 60% say they would be very likely to continue with an integrated package.

Internet and wireless

32%

of respondents stated that they currently have home internet and wireless phone service from the same provider

Home internet providers are successfully combining fixed and wireless connectivity — for now

The convergence bundle is being driven largely by consumers' satisfaction with their existing home internet service — 43% of respondents stated that the main reason they purchased a converged home internet and wireless phone service bundle was because of their existing home internet service. Only 26% said it because of was their existing wireless phone service. But we expect wireless phone service operators to fight back hard, not only to defend their base but also to capture additional share.

EY - Chart 11

Discount is a key driver, but it’s not the only one

Our survey shows that the most popular reason, chosen by 49% of respondents, for signing up for a converged home internet and wireless phone service bundle is the discount it generates. This is backed up by another key finding, that 61% of respondents try to spend as little as possible on communication services. The COVID-19 pandemic is accelerating this trend, with 33% stating that they are trying to pay less for the communications and content services during the pandemic. But the good news for bundle providers is that there are other important reasons for signing up to a converged bundle, including the ability to manage one account (chosen by 39% of respondents), manage one bill (34%) and contact one provider (27%).

EY - Chart 12

Key action for TMT companies — get ready for 5G and the changing relationship between fixed and wireless connectivity

The introduction of 5G technology in the US is accelerating the convergence of home internet and wireless phone service. Increasingly, consumers are looking for an integrated bundle that includes both services. TMT companies, especially internet providers, are well positioned to capture this opportunity, but they must be ready to go beyond just price discount if they hope to be successful — an integrated and seamless experience will also be a key factor to consider.

Most cable providers have recently entered the wireless space, and incumbent wireless players are also eyeing the home broadband market, especially with the arrival of 5G. We can expect the convergence of home broadband and wireless to accelerate and the competition to intensify in the coming years.
– Miles Lee,
Business Consulting Executive Director, TMT Sector, Ernst & Young (US) LLP
EY - Couple looking at smart refrigerator
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4

Chapter 4

The smart home is on the move — are you keeping pace?

Explore the drivers and blockers shaping this dynamic market.

Interest in smart home devices increases

Ownership rates for smart home devices rose from 11% of respondents in 2019 to 17.5% in 2020 — a 59% year-on-year increase. Based on this survey data, we expect the trend to continue, with average smart home device ownership rising by a further 80% between 2020 and 2025. Products with the most compelling use cases will dominate, with security products, voice assistants and smart thermostats expected to grow fastest over the next five years.

EY - Device with strong uses

Smart security devices lead the way as COVID-19 accelerates uptake

Based on our survey data year over year, the ownership of smart locks, smart video doorbells and smart security systems is projected to double by 2025. The impact of COVID-19 is not only accelerating the uptake of these established products; it’s also creating new applications and use cases. Providers should therefore consider enhancing their offerings in areas such as contactless home delivery systems and health monitoring services.

EY - Chart 14

Smart speakers and voice-activated assistants hit a flat note

With smart speaker ownership projected to rise just four percentage points by 2025, and voice-controlled assistants only a little better at five percentage points, it seems sales have plateaued. One factor behind these relatively low forecasts may be the lack of integration between devices from different brands and a perceived lack of use cases. As consumers stay at home during the COVID-19 pandemic, the opportunity is there to re-stimulate demand.

EY - Chart 15

Smart-home-specific privacy and security fears are easing

Although still top of mind for consumers, smart home privacy and security risks are easing. Over two thirds of those surveyed (69%) are concerned about the ability of hackers to access their internet-controlled devices, down six percentage points from 2019. Similarly, 68% of respondents are concerned about the personal information captured and shared by their smart home devices, down nine percentage points year on year. Over half (54%) consider security features during their decision-making process, down from 63% in 2019.

Setup complexities create simplification opportunities

Smart home solutions are getting more complex, and 41% of households surveyed now say they lack confidence in their ability to install smart home devices, up 5% year on year. As a result, providers must work harder to keep it simple. That means better integration with third-party devices as well as easier installation and activation processes. With 42% agreeing that it makes sense to have all smart home devices controlled by a central ecosystem, the opportunity is clear for providers who can deliver seamless user experiences.

Setup complexities

41%

of respondents are not confident in their ability to self-install smart home devices

Key action for TMT companies — drive innovation in the smart home

With families and workers staying at home more than ever, delivery services, home visitors and personal health are all taking on new significance. TMT and smart home products and service providers therefore have a real opportunity to embrace these trends and create new products, services and use cases. At the same time, providers will need to carefully manage the economics and successfully navigate ecosystem and business model complexities.

The smart home market is growing and shifting to offer more sophisticated home automation and security services. A post-pandemic environment may further heighten demand for more innovative services in areas of in-home visitor health screening and enhanced package delivery solutions.
– Rahul Gautam,
EY Consulting Global Technology Sector Leader
EY - African American woman online shopping from home
(Chapter breaker)
5

Chapter 5

Making a secure and private connection in the digital home

Find out how privacy concerns are creating new opportunities for TMT companies.

Protecting personal data is a consumer priority

Concerns over data privacy and security continue to grow, with 45% of respondents agreeing that it is impossible to keep their personal data secure when using the internet or internet-enabled devices, up four percentage points from 2019. Even when using websites they know and trust, 75% of consumers surveyed remain cautious about disclosing personal details and financial information.

Data privacy tools and features are highly valued

Over half (52%) of respondents find security features and data protection/private browsing features appealing. However, it may be a mistake to link this interest too closely with changes in rules related to personal data, with 40% saying that they are unaware of recent data privacy regulations and their impacts.

Data privacy

52%

of respondents found security and data protection/private browsing features to be appealing

The privacy opportunity opens up for home internet providers

One quarter (25%) of consumers surveyed said that data security and privacy features are one of the most important factors when choosing their internet provider, up six percentage points year on year. Over half (58%) say they are interested in getting a service from their home internet provider that would control the data they share, and 49% are interested in one that protects their personal data.

Data privacy

25%

of respondents said that the offering of data security and privacy products is one of the most important factors they consider when choosing a home internet provider. This is up year over year

Home internet providers cannot take consumer trust for granted

In our survey, home internet providers are ranked second only to utility companies as the most trusted in relation to personal data. That’s good news, particularly as it’s the second year running that they have achieved this feat. However, among 18- to 24-year-olds, home internet providers rank only fifth. This suggests that action is needed to engage younger generations and maintain high trust levels.

EY - Personal data secure

Key action for TMT companies — change the privacy conversation

With data privacy at the forefront of the digital conversation in recent years, consumers are now hyperaware of how their personal data is viewed and used. As a result, they are seeking more security and privacy-related products and features. As providers of internet and connectivity, which facilitate technologies such as home security and videoconferencing, TMT companies have a clear role to play in enabling a privacy transformation.

Data privacy and security are top of mind of all consumers. Beyond the regulation and compliance priorities, TMT companies have the opportunity to develop a set of new products and services to better protect consumers’ data and even let the consumers manage their data.
– Vincent Douin,
Business Consulting Principal, TMT Sector, Ernst & Young (US) LLP
EY - Hispanic man working in call center
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6

Chapter 6

Keeping it simple — improving consumer interaction and experience

Find out why digital households are demanding simpler offerings and smarter support.

Confused consumers are willing to pay extra for simplicity

Over a third (35%) of consumers surveyed agree that digital home services are very difficult to understand, especially when it comes to value and price — one reason, perhaps, why 37% now use comparison websites when choosing an internet provider. The good news for TMT companies that invest in improving customer experience is that 34% of respondents are willing to pay a premium for good customer service.

Consumers

34%

of respondents will pay more for their internet bundle in return for good customer service. This number increases to 45% for the 18- to 34-year old segment

Self-service adoption rates remain low, but COVID-19 is changing behaviors

So far, providers’ attempts at improving customer service through self-serve tools and features are having limited success. Over the last 12 months, only 10% of respondents used self-serve tools instead of contacting their providers, and 33% are dissatisfied with the complexity and limited capabilities of self-serve features. But COVID-19 has shifted the dial, with 42% of 18- to 34-year-olds saying that they would be happy to use automated services or virtual assistants to enable quick access during the pandemic.

Among those who use digital tools, the value is clear

Despite the low adoption rates, those who do use self-serve options see their value. For example, 59% of respondents say they prefer using instant messaging because of its speed of response, and 50% prefer using self-serve tools to resolve issues because of their 24-hour availability. This suggests that a combination of better tools and better communication about them could tip the balance toward online help.

Call centers remain the cornerstone — for now

Consumers continue to pick up the phone, with 86% of respondents saying they used a call center to resolve their issues (up from 73% in 2019). COVID-19 has accelerated this dependency. Just one month after the pandemic hit the US, 24% of all respondents said they had called their internet providers. But this reliance on call centers does not mean that they are popular. Thirty percent of respondents said they were dissatisfied because it took too long to get in touch with someone who could help during the COVID-19 pandemic.

Key action for TMT companies — accelerate digital capabilities

With consumers across the country spending more time at home and call centers running at full capacity, digital service solutions are becoming increasingly important. Now that households are more willing to give them a try, it’s essential that providers make sure that their existing digital tools are not only well integrated into their call center capabilities but also are flexible, simple and easy to use.

The COVID-19 pandemic has put a spotlight on customer service and digital interactions — TMT companies must accelerate digital service capabilities to keep up with consumer demands for flexible, simple and easy-to-use solutions.
– David Monize,
Global Client Service Partner, TMT Sector, Ernst & Young (US) LLP

We will be following up with targeted research on specific areas of the digital home, which offer the greatest opportunities for TMT companies. Check back for more insights or contact our team to discuss key trends and how to address them.

List of contributors

Jason Buckman
Senior Consultant, Ernst & Young (US) LLP
Business Transformation, TMT Sector

Jay Robbins
Principal, Ernst & Young (US) LLP
Business Transformation, TMT Sector

Brian Early
Managing Director, Ernst & Young (US) LLP
Business Transformation, TMT Sector

David Monize
Managing Director, Ernst & Young (US) LLP
Business Transformation, TMT Sector

Adrian Baschnonga
Lead Analyst, Ernst & Young (UK) LLP
EY Global Telecommunications

Emily Reidy
Senior Consultant, Ernst & Young (US) LLP
Business Transformation, TMT Sector

Paul Demascus
Senior Consultant, Ernst & Young (US) LLP
Business Transformation, TMT Sector

Madhurika Rao
Senior Consultant, Ernst & Young (US) LLP
Business Transformation, TMT Sector

Liz Stompel
Consultant, Ernst & Young (US) LLP
Business Transformation, TMT Sector

Lauren Katz
Consultant, Ernst & Young (US) LLP
Business Transformation, TMT Sector

Lauren Koenigsberg 
Consultant, Ernst & Young (US) LLP
Business Transformation, TMT Sector

Seth Singer
Senior Consultant, Ernst & Young (US) LLP
Business Transformation, TMT Sector

Summary

Our 2020 digital home report, which is based on a survey of 5,000 US households, identifies six key trends that are shifting the digital dial.

About this article

Authors
Rahul Gautam

EY Advisory Global Technology Sector Leader

Accelerating growth for some of the world's largest and most innovative tech companies. Passionate about deploying technology to solve major world problems.

Vincent Douin

Consulting Customer Principal, TMT sector, Ernst & Young LLP (EY)

Twenty years in telecom and cable. Enthusiastic advisor through the business and digital transformations of my clients.

Ben Chang

EY, National Business Transformation, Consulting, Manager

Seasoned consultant with a focus on go-to-market strategy and sales and marketing transformation in the TMT space.

Related topics TMT Digital Consulting