The Fragility of Forecasting Tis easy to see, hard to foresee - Poor Richards Almanack Supplementary Material for Chapter 2 in When Media Are New Copyright.

The Fragility of Forecasting

Tis easy to see, hard to foresee- Poor Richard’s Almanack

Supplementary Material for Chapter 2 in When Media Are New

Copyright 2010, John Carey and Martin C.J. Elton

Famous Forecasts & Predictions

Western Union saw no market for the telephone.

Famous Forecasts & Predictions, Cont.

Western Union saw no market for the telephone.

The New York Times in 1939 predicted that TV would never compete with radio since TV required families to watch a screen.

Western Union predicted no market for the telephone.

The New York Times in 1939 predicted that TV would never compete with radio since TV required families to watch a screen.

RCA in 1966 forecast that there would be 220,000 computers in the world by the year 2000.

Famous Forecasts & Predictions, Cont.

A leading US consulting company in a 1980’s study for AT&T forecast 900,000 cell phones in use worldwide by the year 2000.

Famous Forecasts & Predictions, Cont.

A leading US consulting company in a 1980’s study for AT&T forecast 900,000 cell phones in use worldwide by the year 2000.

RCA in 1928 forecast that 50% of US households would be watching TV by 1933.

Famous Forecasts & Predictions, Cont.

A leading US consulting company company in a 1980’s study for AT&T forecast 900,000 cell phones in use worldwide by the year 2000.

RCA in 1928 forecast that 50% of US households would be watching TV by 1933.

AT&T forecast 10 million Picturephones in use by US households in 1980.

Famous Forecasts & Predictions, Cont.

Link Resources in 1982 forecast 2 million DBS subscribers by 1985.

Famous Forecasts & Predictions, Cont.

Link Resources in 1982 forecast 2 million DBS subscribers by 1985.

The WSJ in 1998 reported a consensus forecast by media analysts of 30 million satellite phone subscribers by 2006.

Famous Forecasts & Predictions, Cont.

“Fifty years hence, automobile traffic will

have entirely disappeared from the surface

thoroughfares of New York City, and people

will be shot through tubes like merchandise.”

- Harvey Corbett

American Institute of Architects

1925

Famous Forecasts & Predictions, Cont.

ForecastingGroup

Penetration(Millions of Households)

Advertising Age 6.6AT&T

8.0

International ResourceDevelopment

9.8

IFTF 11.0Strategic Inc.

4-12

Southham 20-25

Source: Thomson & Bowie, 1986

Market Projections for Penetration of Videotex in US Households by 1990

Projected Growth Of HDTV

Group Making Projections

Year Projected Penetration (%)

NTIA 1997 1

2002 25

2008 94

EIA 1997 10

2000 25

2003 33

America Electronic Association

2000 1

2003 6

NAB Newsletter, March 1989

Projected Cumulative Penetration of HDTV in U.S. Households

Forecast of VCR & Videodisc Player Sales

0

1,000

2,000

3,000

4,000

1980 1981 1982 1983 1984 1985

Thousands of Units

VCRs Videodisc Players

Source: Argus Research cited in Mahony et al 1980

Time Period*Region Under the Spotlights In the shadows

Early 1970’s for 30+ years

North America mainly; also the UK and elsewhere

Videoconferencing Audio conferencing

Mid 1970’s for 10+years

Western Europe mainly

Videotex (online information)

Teletext

Late 1970’s for 20+ years

United States Interactive television Pay cable channels, Pay-per-view TV and video rentals

End of 1980’s for 15+ years

North America Residential broadband networks (fiber-to-the- home)

DSL and cable modem technologies

Late 1990s for 5+ years

United States and elsewhere

Online subscriptions to electronic magazines and newspapers

Buying printed publications, e.g. books, online with regular postal delivery

Second half of 1990s for 5+ years

Europe mainly WAP (for mobile phones)

SMS

* Starting approximately when the spotlight was turned and covering the period during which the service in the

shadows continued to grow rapidly.

New Services: Under the Spotlights or in the Shadows?

Broadcast Subscription TV Videotex

Divx MDS

8-Track Cartridge Cable Game Channels (1980s)

Quadraphonic Sound Smart Screen Telephones

CD-I 3-D TV (in the 1980s - 1990s)

Videodisc Teletext (in the United States)

Videophone Iridium Satellite Phone System

Fax Newspapers Fiber-to-the-home (1990s)

Car Phonographs Interactive TV (1980s -1990s)

New Media Failures

Delphi Survey in 1994 About Media Penetration in 2005

Forecast Actual (U.S.)

Video CD Player (DVD) 15.1% 70%

CD-I 12.2 0

CD-Rom 20.5 65

Virtual Reality System 5.5 0

VOD 16.8 24

Digital Terrestrial Broadcast

17.3 <2

Fiber to the Home 12.2 <1

Source: Digital Media Forum, Digital Technology Timeline, 1994

Factors Affecting Adoption in the Bass Model

pm

Adoptions due to “External Influence”

Adoptions due to “Internal Influence”

Non-cumulative Adoptions

Source: Mahajav, Muller and Bass

p = “coefficient of innovation” (a constant for the product in question)

m = potential number of ultimate adopters (another constant for the product in question)

Time

Average Annual Growth Rate (Percent)FirstYear

First 2Years

First 5Years

First 10Years

First 20Years

USTelephone 200 200 80 50 28B&W Television 75 370 320 190 58Color Television 260 310 133 88 55Radio 567 356 157 77 37CB Radio 496 309 102 -- --Cable Television 114 115 90 51 35Pay Television 263 279 182 -- --VCRs 144 126 85 60 --CanadaTelephone 90 73 52 34 21B&W Television 67 213 184 98 45

Growth Rates for Selected New Products and Services in the US and Canada

Source: Hough (1980), pp. 55-56