On the technology side, the digital convergence between the TV, PC and mobile phone into a single industry, enabling customers to access information and entertainment whenever they want, is being backed by the rapid acceleration of computing speed and deployment of internet broadband networks. No longer a mirage, interactivity is the key word in the digital revolution, ultimately allowing advertisers to tailor their campaigns by household, and get feedback on-the-fly.
From a business perspective, two forms of consolidation ' vertical and horizontal ' are powerful forces in the media and entertainment industry. Some media segments such as music and film have already consolidated horizontally in such a way that the top five companies control 80 per cent of their markets. Vertical integration to control both media content and distribution is keeping fast pace as well: the rationale is that larger media and entertainment companies will benefit from greater bargaining power, better programming, better products, cross-selling and synergies.
Digital technologies, broadband Internet and mobile are becoming established and increasingly lucrative distribution channels that are shaping the way consumers acquire entertainment and media content. Global spending via online and wireless channels reached $19bn in 2005 and will increase to $67bn by 2010, PwC estimates.
Main Industry Drivers
Continued expansion in household broadband will be a major growth driver, and wireless subscriber growth and deployment of next generation handsets and high-speed wireless networks will stimulate mobile markets.In 2005, the broadband reached 187 million households worldwide, up from only 30 million in 2001. By 2010, there will be an additional 246 million households with broadband access, bringing the total to 433 million globally. The number of people with a mobile phone subscription is also growing rapidly, with a total of 1.8bn globally in 2005. That figure will rise to 2.8bn by 2010, adding one billion potential customers to mobile content during the next five years, according to PwC.
Key Segments
Internet Advertising and Access
Increased broadband access will be the main driver of future growth. Internet advertising is growing rapidly, stimulated by an expanding broadband subscriber base and ad formats targeted to broadband, including keyword search and full-motion video. Triple-play service bundles that combine broadband Internet access with telephone service and television distribution are making broadband increasingly attractive. Globally, Internet advertising will grow to $51.6bn at an 18.1 percent CAGR and Internet access will increase to $214bn at an 11.9 percent CAGR.Television Networks (Broadcast and Cable)
Digital platforms will support new channels and fuel multichannel advertising, which will be the main driver during the next five years. New digital broadcasting and HDTV will increase the appeal of free-to-air channels. Distribution to mobile phones will further grow viewing and advertising.Television Distribution
Video-on-demand will continue to expand, contributing to overall market growth. The introduction of IPTV will play a vital role in subscriber growth, and the migration of subscribers to premium digital services will increase revenue per subscriber. The market will reach $230.3bn in 2010 from $154.4bn in 2005, at an 8.3 percent CAGR, PricewaterhouseCoopers estimates.Video Games
The next generation of consoles and recently introduced handheld games will foster the console/handheld market in the US, EMEA, Asia Pacific, and Canada, while PC games will continue to dwindle or see little growth in the US and EMEA.The introduction of new mobile phones capable of downloading games will boost the wireless game market in the US, EMEA, Asia Pacific and Canada. The video game market will grow globally at an 11.4 percent CAGR to $46bn in 2010 from $27bn in 2005.
Internet: The Multilingual Channel
Global internet use is growing beyond expectation. According to Computer Economics, the number of worldwide internet users rose from 513 million in 2001 to 1.2bn in 2007. Of these users, more than 70% are from non-English speaking countries.Language use on the internet is also changing. While, for many years, the balance was in favour of English over other languages, there is now a steady increase in the use of languages other than English.
Taking the key non-English languages, Portuguese has shown a much larger increase from 7.7 million users in 2000 to 58 million in 2008. Spanish on the internet has grown from 19.5 million to 122 million users during the same period. But the most significant increase has been in the use of Chinese, with a massive rise from 18 million in 2000 to some 233 million in 2008.