From the 1993 Ten-Year Forecast, Institute for the Future (c. December 1992)

Consumers are notoriously fickle about accepting electronic novelties. In fact, success is the exception when it comes to the diffusion of new devices and services. For every hit like the VCR, there are many examples of spectacular duds, such as RCA’s DiscoVision, quadraphonic stereo, or videotex services like Viewtron or Prestel. And even success can be fleeting, as evidenced by CB radio, which flashed through the consumer zeitgeist like a shooting star, rocketing to the top of wish lists and just as quickly plummeting from sight.

This crazy quilt of abundant failure and unusual success seems to defy prediction, but beneath it lies a set of behavioral constants that can help identify the products and services likely to succeed in the decade ahead. The most fundamental is that, unlike business purchasers, consumer adoption is driven not by needs, but urges and desires. Underlying every major consumer product/service success is some “deep desire” that has been awakened and ultimately satisfied. Moreover, the number of such desires in the consumer electronic arena is comparatively small—it can be categorized into the hierarchy of four desires set forth in Table 1. Note that entertainment is far and away the top priority in the hierarchy—but it is also the hardest desire to satisfy. As a consequence, the biggest consumer successes tend to be those products or services that combine entertainment with one or more of the three remaining desires. This hierarchy of needs provides a framework for identifying products and services with a good chance for success in interactive new media.

Table 1: The Hierarchy of Consumer Desires

Entertainment
Our appetite for entertainment is almost limitless, and our time and dollar budgets are remarkably elastic. However, novelty is a key factor, making this a large target that is nonetheless hard to hit.

Communications
A clear second to entertainment, this translates into a desire to “be in touch” interpersonally. However, there are many moments in the day when communications is an annoyance. In the end, much of what passes for communications actually has a high entertainment component. The most powerful hybrid of communications and entertainment is “particitainment”—entertaining communications that connects us with some larger purpose or enterprise.

Transactions
This is a distant third, because only certain kinds of transactions hold appeal, while others (like paying taxes) are conducted only under the threat of legal suasion. However, add an entertainment dimension and certain kinds of transactions can become an absorbing priority—this is the appeal of shopping malls.

Information
A very distant fourth, because in fact consumers never want information for its own sake. Information becomes appealing only when it is harnessed in the service of one or more of the other three desires in the hierarchy, especially entertainment.

Source: IFTF

Entertainment: The Search for Novelty

Consumer appetites for entertainment are almost insatiable (“entertainment” encompasses activities inherent in the entertainment industries generally, but with a central focus on media such as movies and TV). The addition of new media simply increases consumer appetites for ever greater quantity and “quality” (vividness and immediacy) of entertainment. The result is that the initial diffusion of new entertaining experiences replaces older activities less often than we would expect. Movies did not make radio obsolete, TVs did not shut down movie houses, VCRs replaced neither movies nor the networks, and none of the newer media made books obsolete. Somehow, consumers find time to fit the new activities atop the old, often by shifting the older media’s function in their lives. For instance, movies once were a regular habit. Then television arrived and became a daily habit, transforming movies into special occasion experiences. New media thus tend first to displace older media. Then in the long run, new media eventually might replace old media entirely, but this is the exception rather than the rule. And even after the replacement occurs, the sum total of consumer appetites for entertainment end up higher than ever.

A key success factor within the entertainment dimension is novelty. The early days of both movies and TV were sustained through periods of excruciatingly dull programming by consumer fascination with a then novel medium. Except for a few rare hits that were pure entertainment, the most dramatic and sustainable success stories combined the entertainment dimension of the hierarchy with one or more of the other desires. As discussed later in this article, TV combines entertainment and communications, while home shopping programming creates its peculiar appeal by adding a third dimension—transactions. In fact, “pure” entertainment hits are remarkably rare.

Communications: Give Us a Call

On the surface, communications (defined broadly to encompass all person-to-person communications, but with a core focus on telecommunications services such as telephony) is high on the consumer hierarchy of desires—witness the steady growth of telephone use in the last half of the century. However, pure communications—the simple transfer of a message for its own sake—is a far less popular consumer desire than entertainment. Consider the annoyance of being interrupted during dinner or a favorite TV program by a sales call, or by a colleague from the office with a business question. But add an entertainment dimension, and the calculus of appeal changes dramatically. The same individual who can’t wait to break free from the sales call will happily talk for hours about nothing of great consequence with a close friend.

In fact, the consumer acceptance of phones is less communications-driven than it seems. Phones serve an essential communications function that consumers value, but most calls satisfy low-level entertainment desires—just ask any teenager. The failure of CB radios demonstrated this fact even more starkly. Many consumers justified the purchase of CB radios for the most basic of communications function—safety—but they were motivated equally by the prospect of an entertaining communications experience in a new venue—their automobiles. CB sales soared, but then promptly plummeted as consumers collectively discovered that CBs were much less convenient than phones, and far less entertaining. They couldn’t dial friends at all, and their conversations were limited to a grab bag of strangers within the range of their transceivers. What have been more successful than CBs are those media that link communications with entertainment in a convenient package.

Television became a huge industry by offering an entertaining experience based on one-way communications into the home. The most compelling of these entertainment/communications hybrids offer “particitainment,” an experience that links the viewer in some fashion with a larger effort or enterprise. Home Shopping Network extended this into a two-way experience by allowing viewers to dial in by phone to place orders, while yet newer media permit viewers to respond to events occurring on screen in real time. Calling in to a TV talk show, or responding to a telephone viewer poll, is a particitaining experience. Particitainment is engaging because it offers an experience shared with others. The sharing can be with a single individual (a phone call), or with thousands of participants (a baseball game). In general, particitainment becomes more compelling as the number of participants increases.

The television age has increased our appetite for particitainment by bringing remote events into our living rooms and allowing us to experience those events with remarkable first-person intimacy and immediacy. Television has made the remote local and personal. We do not merely see Olympic events on TV, but we see them through the camera more closely than fans in the stands do. News of crises and tragedies from opposite ends of the globe is delivered by CNN and other news broadcasters in equally vivid, real-time intimacy.

But Plain Old TV (POTV) offers no outlet for the participatory urges it arouses. Users can watch, but not influence, and only vicariously participate. Participatory urges can best be satisfied by some connection that the viewer is allowed to make with the event, or the larger audience participating in the event. This connection does not require fancy technology—particitainment urges have been tapped with 900-number polling on programs such as Nightline, and the effect can be electric. Early in 1992, a CBS experiment offering viewers an 800-number response to President Bush’s State of the Union address received over 300,000 calls—and an estimated 24.6 million unconsummated call attempts, according to one report. This is a hunger for particitainment on a massive scale.

This hunger has also led to a boom in location-based entertainment such as theme parks, and it has triggered a newer wave of location-based electronic venues, such as virtual reality Star Trek simulators and high-tech battle zones, where participants don sensors and shoot at each other with electronic pistols. Meanwhile, yet more exotic forms of particitainment wait in the wings. A small but growing group of youthful computer adopters are electronically interacting by computer terminals in remote “multiuser dimensions” (MUDs), electronic spaces modified by the interaction among the participants who enter them. We are entering an age of electronically intermediated particitainment, where consumers will increasingly expect their information appliances to connect them with larger “virtual communities” of other participants on a moment’s notice.

Transactions: Shopping Without Dropping

Transactions play a distant third to entertainment in the hierarchy of consumer desires. There are some transactions—such as paying bills, or filing tax returns—that make the most undesired of phone calls fascinating by comparison. Consumer desires in this category tend to be convenience driven—they will adopt anything that makes transactions easier or less time consuming to conduct, thus freeing more time for activities higher on the scale of desires.

But transactions can also be boosted up the hierarchy of desires by adding a dimension from higher up the hierarchy. Shopping malls transform the transaction process by combining entertainment and communication dimensions-buying thus becomes an entertaining social and sensory experience. In the media sphere, 3Home Shopping Network2 and similar services advertise convenience, but really ride participatory entertainment desires into U.S. households (see Figure 1).

Figure 1: Video Retailing Revenues, 1982-2000

Source: 1990 Home Shopping Investor, estimates of Paul Kagan Associates, Inc.

The transaction level could prove to be the surprise area of new media product and service hits. New interactive systems could provide powerful substitutes for telephone links to shows like “Home Shopping Network.” Existing infrastructures, such as credit cards and mail order catalogues, are already substantially electronic, allowing for modest extensions to deliver dramatically new kinds of consumer experiences.

Information: Entertainment You Can Use

Information is a distant fourth on the consumer hierarchy of desires, for there is very little consumer appeal in pure information. In fact, there may be no consumer appeal at all. Most of the activities that pass for “information acquisition” are really satisfying one or more of the first three elements in the desires hierarchy. Consumers claim to read newspapers to acquire information, but the experience is something quite different. Most “information” media succeed because they serve multiple and ultimately ambiguous functions. Do we read breaking news because it supports our information needs—or is it another form of entertainment? Stock prices on the one hand explicitly support transactional activities, but comics are pure diversion.

Only two factors are sufficient to turn consumers into active purchasers of large amounts of pure information—obsession and guilt. We call the obsessions “hobbies”—activities that are powerful information access motivators, licenses for obsession that compel enthusiasts to search out the most obscure facts and data. But even counting hobby interests, information acquisition is a priority to only a minority of users, a fact evidenced by the miserable performance of online information systems despite a decade of personal computer diffusion.

In fact, guilt may be the only real motivator behind consumer’s acquisition of pure information, for it ties closely to the anticipation-driven nature of consumer desires. Consumers acquire many information products and services in hopes of bettering themselves. Encyclopedias were information-oriented guilt purchases by families, statements about the value placed on the education of their children. The same guilt was also an important motivator in the early purchase of home computers as information tools. The use of guilt and obsession have been convincing triggers for seeking information.

In fact, the primary consumer use of information in electronic media is as “infotainment”—the combination of low amounts of information in highly entertaining packages. Infotainment is the desire behind most casual magazine and newspaper reading. Public TV’s particular blend of information and entertainment amounts to high-brow infotainment, while TV talk shows deliver grittier, street-smart infotainment. Over the last decade, the infotainment dimension of radio and TV has been steadily rising, as indicated by the appearance of infotainment shorts on radio and new TV programming such as “National Geographic” and “Inside Edition.” Infotainment is entertainment you can use, and a likely new media wild card.

Implications

Consideration of this hierarchy of consumer desires suggest a number of implications for interactive new media for the decade ahead, including:

• Winning products will satisfy multiple desires. The consumer electronics, communications, and computer industries are on the verge of delivering a host of new products and services to the consumer marketplace over the next decade. The most promising of these will target the top two desires on this hierarchy — entertainment and communications. The products and services most likely to avoid the fate of fads like CB radio will combine multiple levels of desire into a compelling new experience.

• Different players will be expert at satisfying particular desires. Consumer interactive new media is being targeted by multiple industries today. For example, telephone and cable companies jockey to deliver “video-on-demand” to consumer households. In fact, consideration of the hierarchy of desires suggests each industry has a core competence in a different level in the hierarchy. The TV and cable industries thoroughly understand in-home entertainment; the telephone companies understand communications; and mail order houses, banks, and credit card companies understand transactions. Note that these core competencies are reinforced by the peculiarities of each industry’s product and service infrastructure—the phone network is ideal for communications and transactions, while cable’s bandwidth is perfect for moving large amounts of entertainment software like video. All things being equal, it is most likely that early winning products and services will come from players who “stick to their knitting”—who deliver the experiences they understand best.

• The biggest wins may come from cross-industry alliances. The biggest surprises in terms of new product and service “hits” are likely to come from cross-industry alliances that leverage the best understanding of each. For instance, novel combinations of cable and computer interactivity could deliver compelling new generations of video particitainment. Or TV broadcast combined with telephone switching could offer compelling alternatives to conventional print-based news. For instance, some day a viewer might be able to interact with a computerized “personal agent” to screen for news stories of personal interest.