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Smarter generations State of the Media Democracy Surveyďťż How the UK public are interacting with media

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www.deloitte.co.uk/mediademocracy #mediademocracy


Smarter generations State of the Media Democracy Survey

Foreword Devices Media Local Advertising, retail and the high street Security About the research Notes Relevant Deloitte thought leadership Contacts XXX

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Tablets are now as likely to be found in the hands of the over 55s as among the under 24s.

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Smarter generations State of the Media Democracy Survey

The global media industry had a remarkable 2011. The volume of media-centric devices, from televisions to MP4 players, continued to grow strongly. In this respect, tablets deserve a special mention. In its first full year on sale 67 million tablets were shipped globally; a further 100 million should be sold in 2012.1

Foreword Devices

Despite continued economic uncertainty, several social network sites had their initial public offerings, with double-digit first day pops for LinkedIn, RenRen and Groupon. New music and video streaming services continued to gain in popularity, while some older formats enjoyed a renaissance.2

Media Local Advertising, retail and the high street Security About the research Notes Relevant Deloitte thought leadership Contacts XXX

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In the United Kingdom, Culture Secretary Jeremy Hunt announced that new media would be the platform for delivery of local television, with services launched in 20 municipalities in 2012.3 In retail, e-commerce gained further ground on the high street; e-commerce is now ten per cent of all commerce in the United Kingdom.4 However not all news was positive. In 2011 the media industry faced growing concerns over the security of the data they hold on consumers; social networks were accused by some commentators of provoking or exacerbating social unrest in the United Kingdom, Greece and North Africa.5,6,7,8 In December 2011, we surveyed over 2,000 people in the United Kingdom to learn more about how the public are interacting with media. In this year’s report, we cover five key themes: how consumers access media and entertainment content, use their multi-media devices, react to advertising, interact with local media, and perceive the issue of data security. Media Democracy is a global survey with over 16,000 consumers responding across eight countries (for more information see About the Research, pg 27). These five themes have an even greater resonance in the year that London hosts the Olympic Games. Seventy per cent of the people we surveyed are planning to watch at least some of the Games, with a quarter expecting to watch more than ten hours.9 Since Beijing 2008, the number of social network users worldwide has risen more than fivefold. Social media should therefore play a role in visitors’ enjoyment of and involvement with the event. Our research shows that as many people expect to use their smartphone to update social media sites – 32 per cent – as expect to take photos.10 The United Kingdom has historically been an early adopter of technology relative to its European neighbours, and our research has shown that it has maintained this edge. UK consumers enjoy new devices more than their European counterparts and demonstrate a growing appetite for new media services to use on them. 3


Smarter generations State of the Media Democracy Survey

It is important to note that this adoption is complementary, not cannibalistic of traditional media and traditional devices (such as TV sets), which still represent the majority of media consumption and delivery.

Foreword

The pervasiveness of new devices on which to consume media is extending. Tablets are now as likely to be found in the hands of over 55s as among the under 24s. Adoption of smartphones among women is now closing on the ratio among men. These new technology platforms are finally making digital media as inclusive and accessible as the enduringly popular traditional formats that pre-dated them.

Devices Media

In sum, our media democracy is as healthy and thriving as ever. We hope you enjoy our perspectives on it.11

Local Advertising, retail and the high street Security

Mark Lee-Amies Matthew Guest Sponsoring Partner, UK Media Democracy Author, UK Media Democracy Partner, Audit Senior Manager, Consulting Deloitte LLP Deloitte MCS Limited

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Smartphones (finally) become mass market technology

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Smarter generations State of the Media Democracy Survey

Devices Overall, the global technology sector enjoyed a stellar 2011. Tablet computers – a new category in 2010 – led the charge with 67 million units shipped in 2011, creating a $30 billion market and demonstrating the ever increasing fascination consumers and markets have with electronic devices.12

Foreword Devices

Figure 1. Average number of personal media access devices per respondent Japan

11.7

US

10.9

UK

This year has picked up where 2011 left off; the 2012 Consumer Electronics Show saw the launch of more than 20,000 products.13 With technology everywhere we turn, we asked UK consumers what technology they’re using, what their favourites are and what devices they’d most like in the future.

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Device ownership rises, even in difficult economic times The average UK citizen owned 9.7 devices capable of accessing media via any transmission technology by December 2011. This compares to 8.7 in December 2010.14 A weak economic outlook, rising inflation and low consumer confidence might be expected to reduce consumer spending on discretionary items such as new television sets or tablet computers.15 But this hasn’t happened – demand for technology has remained strong. The UK is the clear leader in device ownership within the European markets we surveyed. At year-end 2011, the average UK consumer owned 20 per cent more devices than the French and 14 per cent more than the Germans (see Figure 1). However the United Kingdom lags behind Japan and the United States, with 11.7 and 10.9 devices respectively.

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Spain Australia Germany France 6

7

8

9

10

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Average number of devices per citizen Source: Deloitte, YouGov – December 2011. Sample size: 16,768 (UK & International)

Device ownership grew almost across the board.16 The fastest growing segments were the newest product categories, with both eReaders and tablet computers showing growth (from a low base) of over 500 per cent in 2011. Based on these findings, Deloitte estimates that five million UK citizens own eReaders. Nearly three million now own a tablet computer, up from 1.3 million in December 2010.17 Take up of tablets has been strong in all age groups, from 14 to 55+, with 20 per cent penetration in the 35 to 44 age groups, perhaps driven by the large volume of family-friendly content now available. 6


Smarter generations State of the Media Democracy Survey

This runs contrary to historical precedent, which suggests that early adopters will be male and under 35. Even so, there are clear differences in device take-up between the sexes (see Figure 2). Although our findings show that the rise in smartphone penetration has been due in large part to women acquiring the devices, men are still more likely than women to own one. The same is true of Blu-ray players, games consoles and Internetconnected television sets. Women are more likely to own eReaders and laptop computers, but own less devices on average than men – 9.4 devices per person versus 10 per person for men.

Foreword Devices Media Local

Figure 2. Proportion of women and men who own selected categories of device Percentage 90 80 70 60 50 40 30

Notes

Average

Male

Tablet

Smartphone

Games console

Blu-ray player

Standalone DVD player

Laptop/netbook computer

Desktop computer

Connected TV

Radio

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10

MP3 player

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20

eReader

Advertising, retail and the high street

Smartphones (finally) become mass market technology 2011 was also the year in which the smartphone finally became mass market: almost half of respondents now have a device that they consider to be a smartphone. This is higher than other recent estimates of UK smartphone penetration, which at around 42 per cent represents the industry’s definition of a device with an open operating system rather than the average consumer’s perception of a smartphone as a touch screen or full-sized keyboard device that can access the Internet.18

Female

Source: Deloitte, YouGov – December 2011. Sample size: 2,276 (UK)

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Smarter generations State of the Media Democracy Survey

Unlike the tablet computer, which seems universally appealing, younger age groups are much more likely to own smartphones than their elders (see Figure 3). Two-thirds of 14 to 17 year olds and 18 to 24 year olds surveyed have one, as do 62 per cent of 25 to 34 year olds and 58 per cent of 35 to 44 year olds. Levels of ownership then fall sharply, particularly among the 55+ age group: this age group has yet to join the smartphone revolution.

Foreword Devices Media

Figure 3. Smartphone and tablet ownership by age group

Local

Percentage

Advertising, retail and the high street

Even though it lacks the cachet of a tablet, smartphone or even a huge flat screen TV, the laptop is today’s ultimate converged utility and entertainment device. Laptops in 2012 have relatively large, high definition screens but remain portable. They have processing and graphics capabilities considerably in excess of those available on other portable devices, supplemented with massive on-device storage that can be filled with entertainment.

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0 14-17 Smartphone

18-24

25-34

35-44

Tablet

45-54

55+

With the growth in availability of streamed and downloadable TV and radio, there is now no form of media that cannot be enjoyed or created on a laptop wherever it is carried to, be that a living room, a coffee shop or a holiday abroad. Its popularity by no means heralds the end of the TV era; it just reflects the fact that consumers now get their entertainment from many sources and in many locations. The TV remains remarkably and enduringly popular.

Source: Deloitte, YouGov – December 2011. Sample size: 2,276 (UK)

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Despite growth in new platforms, traditional devices are still most popular Relative ubiquity does not necessarily equate to relative popularity. When we asked consumers what their favourite device was, the smartphone came in a lowly fourth. The average UK consumer’s favourite piece of technology was the laptop, knocking the TV from the top spot for the first time. Twenty-eight per cent of those surveyed pickedthe laptop, versus 22 per cent for television and 19 per cent for the desktop computer.19

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Smarter generations State of the Media Democracy Survey

Only in London did it fall outside the top three most popular devices, illustrative of a broader characteristic of the London media consumer. People who live in London appear to own fewer devices than the national average – nine per person – and tend to be more likely to own smartphones, tablets and eBook readers, and less likely to have TVs, personal video recorders (PVRs), DVD players and games consoles (see Figure 4). This probably reflects a characteristic of life in the Capital: Londoners spend more time at work and commuting to work on public transport and therefore focus their time and money on their portable – and particularly their handheld – electronics.

Foreword Devices Media Local Advertising, retail and the high street Security About the research Notes Relevant Deloitte thought leadership

Figure 4. Average number of devices owned per respondent, by UK region 10.0

9.8

9.6

9.4

9.2

9.0

Londoners spend more time at work and commuting to work on public transport and therefore focus their time and money on their portable – and particularly their handheld – electronics.

8.8 London

East

Midlands Northern Scotland Island

Wales

North

South

Source: Deloitte, YouGov – December 2011. Sample size: 2,276 (UK)

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Smarter generations State of the Media Democracy Survey

Foreword Devices Media Local Advertising, retail and the high street Security

Consumers want services that enable anytime, anywhere access to media It is interesting that with the UK’s population consuming their media on a wider variety of platforms than ever before, the innovation that they desire most is the ability to move music, television shows, podcasts and movies to any devices and platforms that they own without any problems. Forty-two per cent of those surveyed asked for this service, including up to 65 per cent of younger age groups and 53 per cent of Londoners who, as discussed earlier, are more likely to favour mobile media consumption.20

To summarise the above, the UK consumer is more connected than ever before and more willing to customise their device portfolio to match their needs. The economic downturn has not prevented consumers from investing in new media consumption experiences, such as those found on tablet, eBook and smartphone devices. And if technology, media and telecoms companies continue to invest in new services that unify those screens into one experience, we believe that the outlook for the device market in the United Kingdom will remain strong in 2012.

A quarter of the survey group wanted to be able to buy and download magazines onto any device they own, and nearly 30 per cent wanted to store or backup all of their media to the cloud.21 This data suggests a bright future for cloud services which aim to bring this session and content shifting capability to the mass market.

Nearly 30 per cent wanted to store or backup all of their media to the cloud.

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Foreword Devices Media Local Advertising, retail and the high street Security About the research Notes Relevant Deloitte thought leadership Contacts XXX

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Despite rising tablet ownership, magazine readers still prefer

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Smarter generations State of the Media Democracy Survey

Media The fate of the media market continues to diverge. TV consumption continued to rise in 2011, as did revenues of the major UK commercial broadcasters.22 Conversely, many newspaper and magazine titles suffered falls in circulation, with some experiencing double-digit declines.23 There were, however, encouraging signs from sales of tablet versions of print titles, supported by the high degree of tablet take-up in the United Kingdom.24

Foreword Devices Media

The UK consumer has fewer content subscriptions than his or her international equivalents. Figure 5. Average number of media services subscribed to per respondent

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In light of the above, we asked UK consumers how they perceived traditional and new media, which services they value most and what services they’d like to see in the future.

3.0

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Subscriptions grow but the United Kingdom lags behind international comparators In 2011, the average UK consumer subscribed to 1.6 media services, up from 1.4 in 2010, reflecting the growing range of new media products and services launched to the UK public in recent years.25 Even so, the UK consumer has fewer content subscriptions than his or her international equivalents. Only Australians have fewer, while the average US consumer has almost twice as many media subscriptions (see Figure 5). This reflects the plethora of free options available to UK consumers via services such as Freeview and Freesat in the TV market, nationwide and local radio services, free newspapers in many local areas and free to use online video and newspaper websites accessible to the 74 per cent of the population that have a broadband Internet connection.26,27,28

2.0

1.5

1.0 US

Japan

Germany

Spain

France

UK

Australia

Source: Deloitte, YouGov – December 2011. Sample size: 16,768 (UK & International)

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Smarter generations State of the Media Democracy Survey

Foreword Devices Media Local Advertising, retail and the high street Security About the research

Deciding whether this is due to the early stage of tablet adoption, or a more fundamental reason related to the mode of use of these devices, will be critical to the magazine industry as they move towards a more digital future.

In music, the number of consumers subscribing to streamed media services grew by more than 30 per cent in the year to December 2011. The market experienced triple digit growth in the 18 to 35 age groups and we estimate that it was worth £25 million in 2011. Although it is now on par with online PC games, it falls well short of the connected console market – 14 per cent of respondents subscribed to services such as Xbox Live and Playstation Network, up from ten per cent in December 2010.

Online console videogaming service

Figure 6. Proportion of UK respondents subscribing to selected media services in 2011 Satellite TV Print magazine subscriptions Cable TV

DVD/Blu-ray Discs by mail Newspaper subscriptions IPTV Online subscription music services Online PC game subscription

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Services that expand the size of a consumer’s media portfolio grow in popularity UK consumers appear willing to pay for services that extend their access to media and supplement enduringly popular traditional sources such as TV, newspapers and magazines (see Figure 6). Services that provide subscribers with a selection of DVDs, Blu-ray discs and streamed content were the biggest gainers in 2011, with subscriptions growing 133 per cent from December 2010 to December 2011. About a sixth of respondents paid for such a service. We estimate that the UK market for by-mail and over-IP subscription film services was worth around £200 million in 2011.

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Despite rising tablet ownership, magazine readers still prefer print It was also a good year for magazines, with 35 per cent of respondents saying that they subscribed to at least one magazine, up from 29 per cent in 2010. Despite increased tablet penetration, online magazine subscribers were flat at two per cent of respondents. Only a third of tablet users had read a magazine on their device.

Online newspaper subscription Online magazine subscription 0

5

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35

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Percentage 2011

2010

Source: Deloitte, YouGov – December 2011. Sample size: 2,276 (UK)

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Smarter generations State of the Media Democracy Survey

Consumers who use a web browser to read magazine content formed a larger group – 15 per cent of respondents did this in 2011, double the proportion in 2010. Even so, an overwhelming 88 per cent of people who read magazine content in 2011 preferred to do so in printed hardcopy, the same proportion as in 2010 (see Figure 7).29

Foreword Devices Media Local Advertising, retail and the high street

Looking regionally, newspapers were most popular in Scotland, London and the South of England. Magazines were most popular in the Midlands, while in London online newspaper subscriptions were as popular as their print equivalent, perhaps because of the high penetration of tablet computers in this area and the concentration of people with access to corporate subscriptions. Figure 7. UK respondents’ favourite formats for reading magazine content

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Broadcast TV remains UK consumers’ favourite type of media Of the media services that UK consumers purchased in 2011, there was a clear and universal favourite. TV services, whether delivered by free to air, satellite or cable technologies were in 98 per cent of respondents’ top three, making TV subscriptions doubly more valuable to consumers than newspaper subscriptions, in second place.30 TV maintained that percentage across the age brackets – including in the 18 to 24 demographic where it is often considered to be losing share to online equivalents. Confirming the sustainability of this model, even in difficult economic conditions, 76 per cent of respondents told us that they had no plans to cancel their subscriptions.

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Despite increased tablet penetration, online magazine subscribers were flat at two per cent of respondents. Only a third of tablet users had read a magazine on their device.

Printed hard copy 2011

Computer

Tablet

Smartphone

eReader

2010

Source: Deloitte, YouGov – December 2011. Sample size: 2,276 (UK) XXX

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Smarter generations State of the Media Democracy Survey

Although broadcast is still the dominant means by which video content gets into the living room, live consumption is becoming less significant – the proportion of live TV consumption fell in all demographics by an average of 12.5 per cent, with growth in consumption using PVRs increasing strongly. Since PVRs are typically used for ’near-live’ viewing, it would be reasonable to regard their use as a simple extension of the schedule, allowing several favourite shows to be viewed in an evening.31,32 Fiftyseven per cent of users said that this was why they recorded shows on their PVR, replacing “in order to fast forward through commercials” as the number one reason for recording live TV.

Foreword Devices Media Local Advertising, retail and the high street Security About the research Notes

TV content becomes more gripping and more social Only 15 per cent of respondents had connected their TV to the Internet, even though the penetration of ’Internet ready’ TVs and games consoles suggests that more than 50 per cent of UK consumers are able to, if they were aware of that capability or saw value in doing so.33 It seems that for most consumers, the combination of live TV and PVR provides sufficient variety and longevity of content, particularly when supplemented by web-browser and application based online catch-up services.

It seems that TV remains a key driver of social interaction in 2012. Sixty-four per cent of those surveyed discussed what they’d seen on TV with colleagues, friends or family at least once a week, making it by far the most frequently discussed type of media.34 Figure 8. Activities UK respondents do while watching TV, ranked by proportion of respondents Percentage 60 50 40 30 20 10

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2011

Surf the web

Talk with someone else in the same room

Email

Nothing else – just watch TV

Send IM or text messages

Read a newspaper

Use a social networking site

Read a magazine

Shop online

Read books

Work

Talk on the phone

Talk with others on a land line phone

Micro-blog

Listen to music

Use mobile or tablet apps

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Play videogames

And the content they view seems to be more gripping than ever. When we asked respondents what they were doing at the same time as watching TV in 2011, 29 per cent said they were just watching the TV, nothing else, up from 23 per cent in 2010.

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Surprisingly, the fastest growing category of activity enjoyed alongside TV was simply “talking with someone else in the same room”, up 12 per cent since 2010, overtaking web surfing as the most common activity done in concert with TV viewing (see Figure 8).

2010

Source: Deloitte, YouGov – December 2011. Sample size: 2,276 (UK)

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Smarter generations State of the Media Democracy Survey View video

Foreword Devices Media Local Advertising, retail and the high street Security About the research Notes

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Consumers enjoy news on the web, but mainly as a part of national websites.

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Smarter generations State of the Media Democracy Survey

In 2011, the provision of local media services garnered much press attention. The stimulus for this was Culture Secretary Jeremy Hunt’s announcement to launch local TV services, similar to those offered in the US.35 The Minister set aside £40 million for the next three years to launch these services in 20 conurbations, including London, Edinburgh and Cardiff.36 In light of these plans for more local media, we asked UK residents about their current consumption.

Foreword Devices Media Local Advertising, retail and the high street Security About the research Notes Relevant Deloitte thought leadership Contacts XXX

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Local news is a daily fix for most TV viewers, but remains a small proportion of total viewing Traditional media is, per our survey, key to communicating local news. Almost two-thirds of respondents watch a local TV news broadcast at least daily. Local broadcasts are particularly important for the over 55s: 80 per cent of this age group watches daily. And while London is the least likely region to watch local TV news, three-quarters of Londoners watch local news programmes at least once a week.

’Free’ is the key characteristic of local newspapers Looking at newspapers, Londoners are by far the most likely group to read a free local newspaper – not surprising given the range of options on offer at every Tube stop on weekday mornings and evenings. A quarter of Londoners read a free paper at least daily and 50 per cent read on a weekly basis, ahead of the national average. Nationally, about 40 per cent of respondents read a local paper or magazine at least weekly (see Figure 9). Figure 9. Proportion of respondents reading a free or paid-for local newspaper at least weekly Percentage 60 50 40 30

Whether this enjoyment of news content will extend to nonnews programming targeted at local audiences remains to be seen. Although our survey shows that it is frequently viewed, local news often forms a short addenda to the main national broadcasts and therefore is consumed in slots of five minutes or less. Over 55s typically watch more than two hours of television per day and a third of them watch more than four hours, so in proportion, their consumption of localised TV is small.37 It is also the case that most ’local’ news is in fact regional. Only in London do the population benefit from city-specific content and this is the area with the lowest proportional number of viewers.

20 10 0 North

Midlands

Free local newspaper

East

London

South

Wales

Scotland

Northern Ireland

Paid for local newspaper

Source: Deloitte, YouGov – December 2011. Sample size: 2,276 (UK)

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Smarter generations State of the Media Democracy Survey

Nationally, the over 55s are the most likely age group to buy a local newspaper; 62 per cent of respondents buy one at least once a week.

Foreword Devices

Free local newspaper readership does appear to constrain paid-for local newspaper consumption. The Welsh are the least likely to receive and read a free paper, but the most likely to buy a local newspaper.

Media Local Advertising, retail and the high street Security About the research Notes Relevant Deloitte thought leadership

Consumers enjoy local on the web, but mainly as a part of national websites Around two-thirds of respondents read local news, weather or current events on the Internet at least weekly in 2011, down ten per cent from 2010. Consumers are 60 per cent more likely to view this content on the local pages of national websites than on websites dedicated to their local area. Half our respondents do not look at local news websites at all. Nationally, consumers in Wales are most likely to seek out local news on the Internet; those in London are the least.38 The Welsh are also most likely to listen to local radio services, with more than 60 per cent of respondents listening to a local radio service at least weekly. Interest in local radio grows with age; 40 per cent of 14 to 17 year olds never listen to these services, compared with only 18 per cent of over 55s, 66 per cent of which listen at least once a week.

Increased penetration of GPS-enabled smartphones, tablets and cameras also makes it possible for news to become even more local, potentially down to the street or post code level. Seventeen per cent of consumers expressed an interest in applications that send localised news to them based on their geographic location. While this may not appear a resounding endorsement for the technology, as services are launched, consumers may become more aware of the potential benefits. In the round, the local media market in the United Kingdom remains strong. However, in broadcast and in the emerging online environment, local content appears to be a companion to primary content, rather than a product in itself. This suggests that creating locally relevant long-form programming that can compete with national broadcasts in quality as well as in relevance may be a difficult challenge for fledgling local broadcasters.

Creating locally relevant long-form programming that can compete with national broadcasts in quality as well as in relevance may be a difficult challenge for fledgling local broadcasters.

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Smarter generations State of the Media Democracy Survey View video

Foreword Devices Media Local Advertising, retail and the high street Security About the research Notes Relevant Deloitte thought leadership

and newspapers remain more impactful advertising media than online alternatives. XXX

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Smarter generations State of the Media Democracy Survey

Advertising, retail and the high street In 2011, UK consumers had more devices and were using them to consume more media than ever before. As computing devices are freed from the living room and taken to the high street their potential as enhancers of – and substitutes for – the retail experience can finally be realised.

Foreword Devices Media Local Advertising, retail and the high street

To understand the degree to which this has already happened and the direction in which this market will travel, we asked respondents a number of questions about how they discover new products, how they research them, obtain discounts and finally pay for them. In doing so, we have discovered that a number of the most hyped media and technology trends of 2011 – social networks, social coupons and n ­ ear field communications – have little resonance with UK consumers and, for now at least, remain far from the mass market.

Security About the research Notes Relevant Deloitte thought leadership

TV remains the largest contributor to UK display advertising spend by platform, contributing four times that of online and over twice that of national newspapers.

TV and newspapers remain more impactful advertising media than online alternatives TV remains consumers’ primary content platform of choice – 70 per cent of respondents said they watched their favourite TV programme live from their home TV while only 19 per cent watched from an Internet site, five per cent from a tablet and four per cent from a smartphone.39 UK citizens now spend over four hours a day, or a quarter of their waking life, watching TV.40 This prevalence of TV was reflected in our findings, which showed 93 per cent of people watch TV almost every day. Because of this, TV remains the largest contributor to UK display advertising spend by platform, contributing four times that of online and over twice that of national newspapers.41 And nor should the influence of newspapers in informing purchasing decisions be underestimated. Sixty-two per cent of respondents said that they paid more attention to newspaper adverts than their online equivalents.42 Rather than becoming ever more dominant, Internet display advertising in fact lost ground in 2011. When asked the same question in 2010, only 49 per cent of respondents said that they paid more attention to print than online.43

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Smarter generations State of the Media Democracy Survey

The importance of traditional media as a route into the Internet economy is illustrated by the fact that 64 per cent of respondents told us they visited websites as a result of seeing them advertised on TV (see Figure 10).44 This behaviour was as common in 14 to 17 year olds as it was in 45 to 54 year olds.

Foreword Devices Media

Figure 10. Ways in which UK respondents discover websites, ranked by proportion of respondents Percentage

Local

90

Advertising, retail and the high street

80

The popularity of online reviews may be affecting a change in UK consumers’ willingness to give advice online: 31 per cent of consumers had recommended a product to someone online through a blog entry, social networking site or service, a message board posting, or an online product review. Although this seems like a relatively small percentage, it represents a 30 per cent increase since 2010, a shift in behaviour that is particularly marked in the 55+ age group, where 70 per cent more respondents told us that they had reviewed a product online in 2011 than in 2010.

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Recommendations dominate purchasing decisions Although the majority of consumers pay more attention to traditional media, 55 per cent of UK women and 64 per cent of men did still learn of a new product for the first time while online in 2011. Sixty-two per cent went on to buy a product on the recommendation of other online users, gathered online. This was slightly less than those who were put off buying a product based on negative reviews (68 per cent). Neither proportion represents a shift in behaviour in relation to 2010, although 73 per cent of those surveyed did say that recommendations online were more influential in their buying decisions than any other Internet content.

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Source: Deloitte, YouGov – December 2011. Sample size: 2,276 (UK)

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Mobile applications

0

Despite considerable hype, only nine per cent of UK consumers considered that recommendations on social networking sites had more impact than advertising on traditional websites (up from five per cent in 2010).45 This is less than the proportion of consumers that regarded adverts in computer games as the most influential form of online advertising, putting into perspective the value of ’likes’ and their equivalents. 21


Smarter generations State of the Media Democracy Survey

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Groceries

A meal at a restaurant

0 Clothing

Social coupons remain a niche Once they had decided what to buy, consumers were not shy about using coupons to obtain discounts on products on services (see Figure 11). Nearly a quarter of those surveyed had used a coupon they had acquired on a website to get a discount on a meal out, 14 per cent had used one to get money off their clothing purchases and another 14 per cent received discounts on groceries. In the future, 24 per cent of consumers said they would like to use their smartphone as a device to redeem mobile coupons.49

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About the research

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Books

Security

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Music

Advertising, retail and the high street

With nearly 50 per cent of consumers now owning a smartphone, this behaviour may become more commonplace in the years ahead and is desirable for a considerable number of consumers: 32 per cent of consumers said that they would like to have the ability to access product information in store by scanning a bar code with their mobile phone.48 This functionality is already available from online retailers such as Amazon, but may soon be a must-have for all retailers.

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Electronics

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DVDs or Blurays

Media

Percentage

Videogames

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Figure 11. Proportion of respondents who used a coupon to obtain a discount on products and services in 2011

Gym visits or subscriptions

The smartphone shows its potential as a retail aid and disruptor Consumers are also using their smartphones to inform their decisions in store. Seventeen per cent of respondents admitted to using their phone while in a retail store to ‘comparison-shop’ and 18 per cent had read product reviews.46,47 These were weekly behaviours for 30 per cent of those surveyed.

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Source: Deloitte, YouGov – December 2011. Sample size: 2,276 (UK)

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Smarter generations State of the Media Democracy Survey

Following Google’s $5.75 billion offer for Groupon in November 2010, 2011 was always going to be a year in which attention focused on the latest social networking trend – that of social couponing. Despite the hype, our survey group showed a negligible response to these services.50 Seven per cent of respondents told us that they had used such sites for discounts on meals, but in no other category did positive responses exceed two per cent of the base. In all categories besides meals, coupons cut out of national newspapers were more popular than social couponing.

Foreword Devices Media Local Advertising, retail and the high street Security About the research Notes

Consumers do not see a benefit in mobile wallets and payments (yet) In terms of purchasing, mobile payment using near field communications was another big story in 2011, with the announcement that the UK mobile operators were to work together to create such a platform.51 Our survey suggests that these parties have some work to do to convince the mass market of the benefits of this technology – only 17 per cent of consumers would like to be able to use their mobile device as a substitute for their credit card to purchase products.52

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Men were much more likely to be positive about this capability, with 21 per cent wanting it, versus 13 per cent of women. In fact half of all respondents said that they had no need to purchase products from their mobile device at all, with only 17 per cent of individuals having ever made a purchase through their smartphones. For now, at least, all our evidence points to portable computing devices being a companion to the discovery and research of products, but – in the eyes of consumers at least – they are not ready to become the core of the high street retail experience.

Half of all respondents said that they had no need to purchase products from their mobile device at all, with only 17 per cent of individuals having ever made a purchase through their smartphones.

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Smarter generations State of the Media Democracy Survey View video

Foreword Devices Media Local Advertising, retail and the high street Security About the research Notes Relevant Deloitte thought leadership

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Institutions are perceived as the biggest to consumers data.

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Smarter generations State of the Media Democracy Survey

Security After several high profile losses of consumer and business data in 2011, 2012 started with a number of governments proposing anti-piracy and customer data protection legislation. Organisations in the media industry have also begun to take more interest in using consumer data to understand the nature and even identity of their customers in order to improve customer retention or targeting of advertisements.53,54

Foreword Devices Media Local Advertising, retail and the high street

Regardless of how these legislative and commercial initiatives proceed in 2012, it seems certain that collection of customer data will increase this year. We asked respondents three key questions on this topic: whether they are willing to share their data in exchange for better services; whether they believe that they are at risk from its loss; and where they believe it is most likely to be lost from.

Institutions are perceived as the biggest risk to consumers’ data Of course, consumers are aware that a large amount of their data is in circulation, either because they have explicitly given it to companies and governments or because they have posted it on social networking sites. Eighty-five per cent of those surveyed expressed concern about their personal data being taken, although only 57 per cent rated themselves either “extremely” or “very” concerned about this. Older people were more likely to be worried about data loss than younger demographics – over 55s were twice as likely to express significant concerns than under 35s (see Figure 12).58 Figure 12. Level of concern expressed about theft of personal data, by age group Percentage

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Consumers don’t see the upside of targeted adverts Use of consumer data to improve the targeting of adverts has been a controversial issue since it first became feasible in the early part of the last decade. Among our survey respondents there was muted enthusiasm for the idea that sharing more personal data online would lead to better targeting of advertising – only 16 per cent of respondents were even somewhat positive about this idea.55 Nor did consumers want browsing history used for the same purpose. Only 15 per cent of respondents were positive about this.56 What is particularly interesting is that many UK customers have their data used in this way in any case; the fact that they don’t like the idea is perhaps illustrative of the need for raised awareness, something that the online industry has been active in trying to provide.57

45 40 35 30 25 20 15 10 5 0

14-17

18-24

Extremely concerned

25-34 Very concerned

35-44

45-54

Somewhat concerned

Source: Deloitte, YouGov – December 2011. Sample size: 2,276 (UK)

55+ Not very concerned

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Smarter generations State of the Media Democracy Survey

Perhaps it is years of shredders being bought as Christmas presents that has led to consumers feeling that the least likely source of data theft would be from their rubbish bin – less than 50 per cent of respondents were even somewhat concerned by this. Nor do social networks feature in many consumers’ nightmares – 68 per cent of people were somewhat concerned about loss of data from these sites, but contrary to the belief of some legislators, only 38 per cent were significantly concerned and these people were predominantly drawn from the under 35s.59

Foreword Devices Media Local Advertising, retail and the high street Security About the research

Despite the fact that phishing is now commonly known about, 75 per cent of consumers felt that it was at least a somewhat likely source of data loss, although curiously it was 25 to 45 year olds that were most concerned, and over 55s the least concerned about this. We take concern over the risk of phishing as a positive sign. Concern is, in fact, the precursor to taking care to protect oneself from a threat and we believe it is therefore a positive sign about consumers’ awareness of the risk of data loss and how to protect themselves.

Notes

But it is not these active threats that worry consumers most in regard to loss of their private data; instead it is the unknown, passive threat of data loss from banks, building societies and credit card companies. Seventy-nine per cent of respondents were somewhat concerned by this and 41 per cent were significantly concerned.60 Loss of data given to national or local governments was the next most concerning thing for consumers – 75 per cent considered this somewhat likely and 39 per cent were significantly concerned. The message here seems to be that consumers are more aware of the risks to their personal data than they are given credit for. Perhaps because they are familiar with ways of protecting themselves from the upfront threats of site scraping from social networks, nefarious characters ransacking their bins or impersonating their bank on an email, they consider the invisible data that is held about them by major organisations to be the least secure.

Consumers are more aware of the risks to their personal data than they are given credit for.

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Smarter generations State of the Media Democracy Survey

About the research This is the sixth annual edition of research commissioned by Deloitte’s Media & Entertainment practice.

Foreword

Focusing on four generations, the survey provides a ’reality check’ on how consumers between the ages of 14 and 75 are interacting with media, entertainment and information, and what their preferences might be in the future.

Devices Media

Fielded by an independent research firm during December 2011, the survey employed an online methodology among 16,768 consumers in eight countries:

Local Advertising, retail and the high street Security About the research

We regard changes of five per cent or more as statistically relevant and where possible have referred to time series data from previous surveys. Several companies have helped us shape the survey and discussed the initial results with us. We also referred to the results of other Deloitte research programmes in the media, telecoms, technology and retail markets, which can be found at www.deloitte.co.uk/tmt or by contacting mguest@deloitte.co.uk

• Australia: 2,010 • France: 2,038 • Germany: 2,068 • India: 2,006 • Japan: 2,118 • Spain: 2,037 • United Kingdom: 2,276 • United States: 2,215

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Smarter generations State of the Media Democracy Survey

Foreword Devices Media Local Advertising, retail and the high street Security About the research Notes Relevant Deloitte thought leadership Contacts XXX

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Notes 1 http://mobility.cbronline.com/news/android-increases-its-global-tablets-shipment-share-to-39-n-q4-2011-2701012 2 http://www.guardian.co.uk/music/2012/jan/05/adele-us-album-sales-rise 3 http://www.bbc.co.uk/news/uk-politics-12220187 4 http://www.retailgazette.co.uk/articles/03313-amazon-has-22-of-entertainment-market-in-the-uk 5 http://www.bbc.co.uk/news/technology-13169518 6 http://www.guardian.co.uk/uk/2011/dec/07/twitter-facebook-rioters-saw-it-on-tv 7 http://mg.co.za/article/2011-06-06-greek-protest-draws-tens-of-thousands 8 http://www.aljazeera.com/indepth/features/2011/11/2011113123416203161.html 9 Responses to the question “How much of the London Olympic Games do you plan to watch, at the event, on television or online in 2012?” Sample: all UK respondents (2,276). 10 Responses to the question “If you are going to an Olympic event and own a smartphone will you... update Facebook using your smartphone?” Sample: all UK respondents (2,276). 11 The term ‘media democracy’ is intended to convey the nature of a market in which everybody contributes, not just traditional media companies. Empowered by new technologies, customers now are now able to ’vote’ through their actions for new sorts of content, new access devices, distribution platforms, advertising models, and pricing schemes and see results in a historically short time period. 12  http://mobility.cbronline.com/news/android-increases-its-global-tablets-shipment-share-to-39-n-q4-2011-2701012 13 http://news.bbc.co.uk/1/hi/programmes/click_online/9677630.stm 14 Responses to the question “Which of the following media or home entertainment equipment does your household own?” Sample: all UK respondents (2,276). 15 UK inflation reached a three-year high of 5.2 per cent in September 2011. Source: Office for National Statistics. 16 The only device categories to show a decline were CRT TVs and Video Cassette Recorders, neither of which were widely available to purchase in 2011. 17 http://www.macworld.co.uk/apple-business/news/?newsid=3302827 18 http://econsultancy.com/us/blog/8805-smartphone-penetration-hits-42-across-eu5 19 Responses to the question “Of the products you indicated you own, which 3 do you value the most?” Sample: all UK respondents (2,276). 20 This group consists of all respondents under the age of 35. 21 Positive responses to the question “Listed below are several new areas of technology/media that may or may not be developed in the future”. Sample: all UK respondents (2,276). 22 http://corporate.sky.com/ and http://investors.virginmedia.com/phoenix.zhtml?c=135485&p=irol-irhome and http://www.itvplc.com/investors/ 23 http://www.guardian.co.uk/media/abcs 24 http://paidcontent.co.uk/article/419-futures-newsstand-tranformation-75000-new-subscribers 25 Responses to the question “Which of the following services does your household purchase?” Sample: all UK respondents (2,276). 26 Deloitte & YouGov – December 2011. Responses to the question “Which of the following services does your household purchase?” Sample: all UK respondents (2,276). 27 There is a total of 30.7million Freeview enabled TVs in the UK. Source: Ofcom, The Communications Market 2011. 28 Total UK broadband take-up has now reached 74 per cent. Source: Ofcom, The Communications Market 2011. 29 Responses to the question “What methods have you used to read your favourite magazines in the past 6 months?” Sample: all UK respondents (2,276). 30 Responses to the question “Of the services you indicated your household purchases, which 3 do you value the most?” Sample: all UK respondents (2,008). 31 Responses to the question “Of the methods you use to view your favourite television shows, which is your favourite?” Sample: all UK respondents (2,116). 32 Deloitte & GfK, June 2011. Sample: 4,000. 33 Responses to the question “Have you connected your TV to the Internet to view Internet content on your TV?” Sample: all UK respondents (2,276). 34 Responses “daily” or “weekly” to the question “How frequently do you discuss each of the following with your friends, family, and workplace colleagues?” Sample: all UK respondents (2,276). 35 http://www.bbc.co.uk/news/uk-politics-12220187 36 http://www.guardian.co.uk/media/2011/dec/13/towns-cities-local-tv-announced 37 Deloitte & GfK, June 2011. Sample: 4,000. 38 Responses “hourly”, “daily” or “weekly” to the questions “How often do you read, receive or access one of the following local news services – Local news website” and “How often do you read, receive or access one of the following local news services – Local news pages of a national website (e.g. BBC.co.uk)”. Sample: all UK respondents (2,276).

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Smarter generations State of the Media Democracy Survey

Foreword Devices Media Local Advertising, retail and the high street Security About the research

Notes 39 Responses to the question “What methods have you used to watch your favourite television shows in the past 6 months?” Sample: all UK respondents (2,276). 40 “Communications Market Report: UK”, Ofcom, 4 August 2011. 41 Advertising Association/WARC. 42 Positive responses to the question “I tend to pay greater attention to print advertising in magazines/newspapers than advertising on the Internet.” Sample: all UK respondents (2,276). 43 Positive responses to the question “I tend to pay greater attention to print advertising in magazines/newspapers than advertising on the Internet”, Sample: all UK respondents (2,276). 44 Responses of “frequently” or “occasionally” to the question “How often would you say you visit websites as a result of seeing an advertisement on TV?” Sample: all UK respondents (2,276). 45 Positive responses to the question “Advertising on social networking sites influences my buying decisions more than any type of online advertising”. Sample: all UK respondents (2,276). 46 Positive responses to the question “Thinking about the features included on your mobile/cellular phone or ‘smartphone’, please select how frequently you use each feature listed below. – Using my phone while in a retail store to comparison shop”. Sample: all UK respondents (2,276). 47 Positive responses to the question “Thinking about the features included on your mobile/cellular phone or ‘smartphone’, please select how frequently you use each feature listed below. – Using my phone to read product reviews while shopping in a retail store”. Sample: all UK respondents (2,276). 48 Positive responses to the question “When in a store, the ability to access product information (i.e. competitive pricing, ingredients, location of manufacture, user comments, etc.) for a product I’m interested in buying by simply scanning a bar code with my mobile/cellular phone/hand-held device”. Sample: all UK respondents (2,276). 49 Responses to the question: “Have you used a coupon when purchasing any of the following goods and services this year?” Sample: all UK respondents (2,276). 50 http://articles.businessinsider.com/2011-11-01/tech/30344922_1_groupon-google-ipo 51 http://www.theregister.co.uk/2011/06/16/uk_nfc_jv/ 52 Positive responses to the question “I would like to be able to use my smartphone/mobile device as a substitute for my credit card to purchase products”. Sample: all UK respondents (2,276). 53 http://www.guardian.co.uk/technology/2012/jan/20/pipa-vote-shelved-harry-reid?intcmp=239 54 http://news.cnet.com/8301-13506_3-57365542-17/eu-overhauling-data-privacy-policies-to-protect-consumers/ 55 Responses to the question: “Listed below are several new areas of technology/media that may or may not be developed in the future”. Sample: all UK respondents (2,276). 56 Responses to the question: “Listed below are several new areas of technology/media that may or may not be developed in the future”. Sample: all UK respondents (2,276). 57 http://www.brandrepublic.com/news/1102452/ 58 Positive responses to the question “How concerned are you about your personal data being taken?” Sample: all UK respondents (2,276). 59 Respondents answering “extremely concerned” or “very concerned” to the question “How likely do you think it is that your personal data could be taken from one of the following sources – From my profile on a social media website (e.g. Facebook, Myspace)” Sample: all UK respondents (2,276). 60 Respondents answering “extremely concerned” or “very concerned” to the question “How likely do you think it is that your personal data could be taken from one of the following sources – From data held by my bank, building society or credit card company”. Sample: all UK respondents (2,276).

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Smarter generations State of the Media Democracy Survey

Foreword Devices Media

Relevant Deloitte thought leadership State of the Media Democracy survey: US edition Published February 2012 (Deloitte Global Services Limited) www.deloitte.com/us/mediademocracy

Innovating for a digital future: The leadership challenge Published May 2011 (Deloitte LLP) www.deloitte.com/digital

TMT Predictions 2012 Published January 2012 (Deloitte Global Services Limited) www.deloitte.co.uk/tmtpredictions

Addicted to connectivity: Perspectives on the global mobile consumer, 2011 Published February 2011 (Deloitte Global Services Limited)

TV+ perspectives on television in words and numbers Published August 2011 (Deloitte LLP) www.deloitte.co.uk/television

Local Advertising, retail and the high street

www.deloitte.co.uk/mediademocracy www.deloitte.co.uk/tmt

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Smarter generations State of the Media Democracy Survey

Contacts Mark Lee-Amies Sponsoring Partner, UK Media Democracy Partner, Audit +44 20 7007 3162 mlee-amies@deloitte.co.uk Deloitte LLP

Foreword Devices Media Local Advertising, retail and the high street

Matthew Guest Author, UK Media Democracy Senior Manager, Consulting, Technology Media & Telecommunications +44 20 7007 8073 mguest@deloitte.co.uk Deloitte MCS Limited

Ed Shedd Managing Partner, Global Media & Entertainment Practice +44 20 7007 3684 eshedd@deloitte.co.uk Deloitte MCS Limited www.deloitte.co.uk/mediademocracy #mediademocracy

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Smarter generations State of the Media Democracy Survey

Foreword Devices Media Local Advertising, retail and the high street Security About the research

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms. Deloitte LLP is the United Kingdom member firm of DTTL.

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This publication has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication. Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific circumstances. Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication. © 2012 Deloitte LLP. All rights reserved. Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 2 New Street Square, London EC4A 3BZ, United Kingdom. Tel: +44 (0) 20 7936 3000 Fax: +44 (0) 20 7583 1198.

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