On May 28, Susan Whiting also published an editorial for The Huffington Post.

“The American fascination with television and other video content is not easing up, as consumers keep turning to TV, Internet and Mobile at record levels,” said Susan Whiting, Nielsen’s vice chair.  “Viewers appear to be choosing the best screen available for their video consumption, weightinga variety of factors, including convenience, quality and access.  It is clear that TV remains the main vehicle for viewing video, although online and mobile platforms are an increasingly important complement to live home-based television.”

Other notable facts from the report include:

• Except for the teenage years, viewing of traditional television increases with age; the use of video on the Internet peaks among young adults while viewing mobile video is highest in the teen years.
• Men continue to watch video on mobile phones more than women, and women continue to watch video on the Internet and TV more than men.
• The work day (M-F, 9am to 5pm) continues to be primetime for Internet video.

To read the entire press release, click here.

Susan Whiting, Vice Chair, The Nielsen Company

When China first announced its massive stimulus plan at the end of 2008, it was largely praised both internally and around the world. The four trillion Yuan ($586 billion) package was designed to expand growth 1% for each of the next two years, and help ensure gross domestic product (GDP) would remain above the 8% threshold Chinese leaders have repeatedly said is needed to maintain economic and social stability.

But as its principal trading partners, Europe and the United States, have slipped deeper into recession, China’s export-driven economy continues to slow as well. The nation’s exports in December fell 2.8% from a year earlier, while foreign direct investment—another key economic driver—faded in the final three months of last year.

Just as worrisome is the World Bank’s forecast of 7.5% growth in 2009—though still much better than the International Monetary Fund’s current 5% projection.

Stimulus plan concerns

Since its introduction in November, the plan has come under increased scrutiny. Some observers question the actual amount of the stimulus, noting it includes funds already budgeted in the government’s 2006–2010 plan. Others think it relies too heavily on monies that must be raised by the provinces and private businesses.

Most important, however, is the fact that the package includes only a few programs geared toward expanding consumer spending. Yet that is crucial to achieve the government’s expressed goal of transforming China’s growth engine from exports to a model based more on domestic demand.

Consumer spending challenges

Efforts to boost domestic consumption face considerable challenges, even in an economy as relatively strong as China’s. At December’s CAIJING Annual Conference in Beijing, hosted by the nation’s leading business and financial magazine—and in which I had the privilege to participate—several prominent economists, academics and government officials shared their perspectives on the issue.

According to Cai Fang, Director of the Institute of Population Studies at the Chinese Academy of Social Science, one factor suppressing consumer spending is what he describes as an “income effect,” which is the direct result of declines in both employment and income growth.

With the drop in exports, China’s manufacturing also has weakened, forcing thousands of factories to close. Nowhere has this been more evident than in provinces like Guangdong, where export growth plunged from 22.3% in 2007 to just 5.6% in 2008, and where it is expected to remain flat throughout this year.

Consequently, it has been reported that close to ten million Chinese migrant laborers are out of work. On top of this, as many as seven million university and college graduates also are seeking employment.

Moreover, even consumers willing to spend may find it difficult, since too few can afford to buy the goods their factories produce principally for export.

Indeed, earlier this year, China announced it had revised its 2007 GDP growth to 13%, thus surpassing Germany as the world’s third largest economy. Yet China’s 1.3 billion residents have a per capita GDP of only about $2,500, compared to the more than $40,000 enjoyed by Germany’s 82 million inhabitants.

Potential growth drivers

To maintain employment levels and sustain income growth, Cai believes China must focus its efforts on various sectors of potential growth. For example, there are opportunities to enhance labor productivity in coastal export businesses—particularly through training and education—while also establishing low-cost manufacturing in parts of Midwest and Western China.

Another possibility is to leverage flexible means such as self-employment, incorporation, and other channels beyond traditional state-owned enterprises.

Still, encouraging consumers to spend will require more than just augmenting employment, contends Shen Minggagao, Caijing magazine’s chief economist. China must significantly reform its social programs before more people will part with their money.

Unlike its American counterpart, the average Chinese family saves about 30% of its income, mainly because of China’s frail social safety net. Without support systems like social security or health and unemployment insurance, people must rely on their own resources to pay for a hospital stay or a child’s education.

The way to stimulate consumer demand, notes Shen, is to speed such reforms. In addition, he sees an immediate need to increase Chinese income levels, especially those of low-income groups in both urban and rural areas.

Huang Qifan, Vice Mayor of China’s largest municipality, Chongqing, agrees with the concept of low-income family stipends, along with discounts on purchases of home electrical appliances by rural families. He also thinks changing the personal income tax system could generate aggregate demand among consumers.

A tax deduction or refund on individual mortgage spending, for instance, would help restore property market confidence and increase consumption—as would a special tax refund for those whose incomes depend on exports.

Possible pitfalls

But Zhou Xiaochuan, Governor of the People’s Bank of China, warns that if China only reduces taxes without reducing administrative spending, there will other issues to deal with, including a fiscal deficit.

Instead, he recommends a bundled resolution that provides a progressive percentage tax cut supported by a proportionate reduction in government administrative expenditures.

So far, the government has taken a number of steps in response to these and other recommendations. In January, it announced it would spend an additional 850 billion Yuan ($124 billion) over the next three years to improve health care coverage. It also has lowered the down payment requirement for home purchases from 30% to 20% of a home’s value.

A difficult dichotomy

Yet the nation’s success may rely as much on altering cultural dynamics as replacing economic models. China is encouraging its citizens to spend more at a time when consumers in the United States are being admonished to do just the opposite, putting even greater pressure on exports and manufacturing.

In fact, Chinese and American consumers have ostensibly become mirror images of one another. While Chinese families save nearly a third of their incomes, Americans’ personal savings rate has crept near zero for the past several years. It is not surprising then that household consumption represents more than two-thirds of the U. S. economy, compared to slightly more than 35% in China.

Changing that correlation won’t be easy. In 2008, American households accounted for only about 4.5% of the global population, but bought more than $10 trillion worth of the world’s products and services. On the other hand, the four-in-ten people who live in either China or India bought only $3 trillion.

Optimistic results

Nonetheless, there are signs that Chinese consumers are open to the possibility of spending more of their money.

According to Nielsen’s most recent Global Consumer Confidence Survey, nearly three-quarters (72%) of Chinese consumers are optimistic that their country is not in a recession. Accordingly, China’s Consumer Confidence Index (CCI) of 96 has remained relatively stable since 2006, and hovers above the CCI of 84 that is the global average.

More than half (56%) of consumers surveyed are generally optimistic about their personal finances in 2009, though less so (41%) about job prospects. Among those willing to spend their spare cash, most favor leisure-related categories, such as holidays, out-of-home entertainment and new technology—areas in which the government hopes to encourage greater consumption.

For its part, the government too is willing to spend more where necessary. Much like its citizens, it has “money in the bank,” with a budget surplus that exceeded one trillion Yuan in the first half of last year. Recently, it announced it will expand the country’s money supply by 17% next year to spur domestic spending. It hopes to grow 2008 bank lending levels by as much as $14 billion.

Even so, China’s economy has been unable to avoid the “economic tsunami” that has engulfed much of the rest of the world, and its eventual outcome rests on a host of variables both at home and abroad. So far though, it appears to be in position to effectively weather the global economic storm.

In 2005, Congress mandated that television stations switch from analog to digital signals in 2009. The purpose of this switch was to increase the efficient use of the spectrum, to expand consumer choice for video programming, and to increase the amount of spectrum available for public safety and other wireless services.  In addition, Congress was able to raise nearly $20 billion by auctioning the analog spectrum that has been used for broadcast television.

The switch to all-digital television broadcasting, which was originally scheduled to occur on February 17, but which could be postponed four months, is arguably the most significant change in television since the introduction of color.  It means that every household will have to get ready for these new transmissions. Since the mandate, broadcast stations have invested billions of dollars to upgrade their facilities and towers to comply.  Networks and cable and satellite operators have built infrastructure to support the enhanced capabilities of the digital world.  And tens of millions of Americans have bought new televisions, signed up for cable or satellite transmission or acquired digital converter boxes.

Nielsen’s role in digital transition has been two-fold:

1) to provide the television industry, policy-makers and local communities with information about how ready television households are for this transition, and

2) to make sure we are ready to measure television broadcasting when it moves to digital transmission.

Education

Nielsen is in a unique position to understand how prepared the country is for digital transition.  We have ongoing relationships with more than 35,000 households (or “Nielsen families”) that form representative samples from which we derive the TV ratings.  Each home in the sample has a Nielsen meter attached to every TV set that collects viewing data 24/7.  That means that we are able to identify every television set in these households and whether or not it is ready for DTV.

Nielsen has developed reports and analyses that help clients understand what is happening, beginning with the basic dimension of how many households are completely unready and at risk to lose access to television.

At this point we estimate that about 6.5 million households are not prepared for the digital transition.  We find that the level of un-readiness falls disproportionately on young, African-American and Hispanic families. For example:

• Overall, 5.7 percent of American families are unprepared.

• 9.9 percent of African American families are unprepared

• 9.7 percent of Hispanic families are unprepared

• 8.8 percent of young families (age 18-34) are unprepared.

Nielsen has been sharing key parts of these reports with government and local leaders so that they can make decisions based on the state of the U.S. readiness.  These activities have included:

• Briefing members of Congress, both one-on-one and in committees.

• Sharing data with ourAfrican American, Asian-Pacific American and Hispanic/Latinoadvisory councils,so that they can use it to educate their clients and communities.

• Conducting extensive media outreach – first monthly and soon bi-monthly – on all issues related preparedness.

Back Office Preparation

To ensure that we are ready for the challenge, Nielsen has been actively preparing for the digital transition for years. Three years ago we began installing new digital meters in households.  This Active/Passive or A/P meter was designed and patented specifically to measure the new digital world.  We have surveyed clients about their plans and shared best practices to help prepare them for changes Nielsen has made, including new encoding methods that enable our meters to identify what is being watched.

Now as the transition date approaches, we are ready.  We’ve recently provided very detailed information to clients explaining how we will handle every aspect of the shift, including:

• We have upgraded our technology in the 800 sites that monitor television programming around the U.S.

• Our Statistical Research department has prepared procedures to ensure that our samples remain representative after the transition and that we have a process in place to remove households that do not switch to digital TV within a certain period of time.

• We have postponed all vacations for our field staff during the period before and after the transition so that they can install meters to new TV equipment that our sample homes buy as the transition approaches.

• Bilingual staff is also being reassigned as needed, since we know that Hispanics are less prepared than non-Hispanics. Nielsen will deploy staff to areas where there is the most potential for visits.

The transition to digital television has been a huge undertaking by the entire television industry and Nielsen has played a critical role in making sure the shift is as smooth as possible.  We will be ready for the transition regardless of what date Congress sets for the switch.

“Nielsen has been preparing for the transition to digital television for more than two years,” said Nielsen Vice Chair Susan Whiting. “Because we recognize that accurate and reliable information on consumer behavior is essential to this transition, we’ve been sharing our data with clients, government leaders and the public so they could track progress to digital readiness.”

Click here to see the full press release.

For more information on how to prepare for the DTV transition, visit http://www.dtv.gov/

Percentage of Households that Are Completely Unready For the Digital Transition

Watch Susan Whiting’s Message About The Digital Transition

Local Market Rankings

Among the 56 local markets that Nielsen measures with electronic meters, the one that is least ready is Albuquerque-Santa Fe, with 12.4% of the households completely unready.  The most prepared market is Hartford & New Haven, with only 1.8% of homes unready.

Least Prepared Local Metered Markets Based on Percentage of Households Currently Unprepared for Digital Conversion