Tuesday, July 17, 2018

Will Autonomous Vehicles Increase Video Consumption?

Executives at AT&T seem certain that new video screens are going to emerge as passengers start spending more time in autonomous vehicles. The argument is that if people are riding, but not required to drive, then video viewing time might well increase beyond present levels.

The biggest potential changes might come from people with long commutes, though even users of autonomous or even ridesharing vehicles for shorter trips around town would logically become potential new audiences.

Consumer behavior still is a barrier for subscription-based or pay-per-view approaches. Consider an airliner a ridesharing vehicle. How many passengers do you notice buying a video entertainment service during the flight? Not many.

Ad-supported content obviously will have a bigger potential audience, and especially for ridesharing services, rather than auto owners. The immediate problem is that the economics of substituting ridesharing for auto ownership, in most parts of the United States, do not exist.

Using Uber or Lyft (or a taxi) for episodic travel often makes more sense than renting a car. What is not yet clear is whether it will soon make sense to use ridesharing instead of owning a car, in some instances.

It probably is easy enough to argue that car ownership still makes more sense, financially, than full time ridesharing for most families and individuals, in most areas of the United States.

Some attempt to include “cost of your time” in calculating the benefits of ridesharing, compared to car ownership, but most of us cannot name another individual who really would consider that value in trying to assess ridesharing versus auto ownership.

Assume the cost of most Uber or Lyft rides is about $2 a mile. Assume you really need to move about 12,000 miles a year. The ridesharing might then cost about $24,000 a year. The Internal Revenue Service uses a figure of $0.545 per mile for use of autos for business purposes.

So owning a vehicle and using it 12,000 miles a year represents about $6,540 a year (including depreciation of the vehicle, insurance and operating expenses, but not parking).

At such rates, ridesharing represents out of pocket costs about four times higher than owning a vehicle.

So while many of us would consider ridesharing as a full alternative to auto ownership, the economics do not yet work, for people who live in suburban areas, or even in many urban areas other than New York or San Francisco.

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