2007 Australia - Digital Content Markets

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Last updated: 14 Feb 2008 Update History

Report Status: Archived

Report Pages: 265

Analyst: Stephen McNamara

Publication Overview

This report provides an overview of the various content markets, and analyses the business models used, the key players involved and the major trends and developments in each of these segments.

The content areas covered in the report include:

  • Video Communications and Video Entertainment including IPTV
  • User-generated Content
  • P2P, Instant Messaging (IM), Social Networks and Blogging
  • Electronic Programming Guides, Portals, Directories, Searching and Publishing
  • Games and Gambling
  • Dating and Adult Entertainment
  • Music and MP3
  • E-commerce
  • Mobile Content
  • VoIP, Services and Projects

Executive Summary

In 2006 BuddeComm’s best seller was our new report on digital media developments.

This year we have produced four reports on this topic, an indication of the enormous developments that are taking place in this market. To a large extent the new information is related to the explosion in digital content.

Social networking and user-generated-content (UGC) have really taken off, and it is mind-boggling to watch what is happening around what can only be classified as the model-T of the new digital content. We are all learning and, unlike other content markets, we are all participating.

MySpace and Second Life are opening the eyes, not only of the users, but also of the various industries that are (or should be, or could be) involved in this market. Ultimately there is only so much time that customers can spend on these services, so there will be a limit to which services will be commercially successful. However, the Internet media companies have taken the lead and it will be interesting to see who will buy what in the end.

The major difference with the past is that digital media is about video. While there is room for animation as well, the real driver behind digital content will be video-based. But, again, it will be driven by content made by users. Commercial content will be less than 20% of the total.

We have already watched the IPTV model fail. The industry can’t just copy old models over into new technologies – more innovation will be needed.

In the initial models voice will play a key role, if only for its revenue generating capacity. At the moment this revenue still underpins many of the new digital media productions. Skype and many local VoIP providers are all participating in the ‘minute’s game’ (selling telephone minutes). However, new voice services will need to be integrated into the digital media. The Internet needs a voice.

The sky is the limit and we are sure that in next year’s report we will be marvelling about developments that haven’t even been thought of at this stage.

Key Highlights

  • The key application of digital media will be communication. Digital media will include an additional important element, video-based communication. Linked to cheap broadband and interactivity, this will result in over 75% of all new media being generated by the users themselves.
  • Companies involved in commercial media will need to drastically change their business models to allow for user participation and user-generated services and applications.
  • IPTV has failed because copying a traditional media model into a new technological environment doesn’t work.
  • Traditional media (TV, press, radio) can use their media as platforms to launch new (niche market) multimedia services, utilising digital media.
  • Social networks and user-generated content networks are demonstrating that the ‘consumer-led’ era has begun. MySpace and Second Life are some of the developments to watch.
  • Other communication-driven applications such as instant messaging (IM), peer-to-peer (P2P) networks and blogging are all associated with this trend.
  • Music has been the key driver behind digital media, both in mobile and fixed networks. This is also a fair indication of the future direction of the video entertainment and wireless broadband (mobility) market.
  • VoIP has already started to gain traction in the market. The product certainly will become very popular in broadband-based triple play business models. We estimate that over the next two years the market will grow to over one million paid VoIP subscribers.
  • After nearly ten years less than 5% of mobile users have ventured beyond SMS. The mobile operators’ content business models, in which content providers have to pay up to 50% of their revenue to the operators, are completely flawed. New models are needed before this market will start to move. Slowly but surely the walls are crumbling – with Hutchison doing most of the chipping away.

Australian content market revenue

Year Premium SMS Carrier Portal Total
$ millions
2005 200 100 300
2006 180 200 380
2007 260 300 560
(Source: BuddeComm www.budde.com.au)

This report provides an overview of the various content markets, and analyses the business models used, the key players involved and the major trends and developments in each of these segments. It gives further information on:

  • Video content as one the major drivers behind the digital media explosion. The emphasis will be on user-generated video content, such as we see on YouTube; however every site will soon need its own ‘YouTube’ section.
  • The user-led content revolution is what set the digital media apart from the traditional media. Combined with video this gives rise to a very disruptive development.
  • Accessing information is already big business, as we know from the Google phenomenon. But, as well as this, another market is emerging around the thousands of portals and other ‘search and find’ developments using social networks, friends and families.
  • After a disastrous entry into digital media the music industry is generating some interesting new business models and music products that have already become very popular.
  • Voice continues to be a key revenue earner in this market. It underpins many business models, in particular those of the telcos and ISPs. VoIP, as part of triple play models, is going to grow to one million users by 2008.
  • The potential of mobile content is phenomenal – if only the mobile operators would move out of the way. Currently accounting for less than 5% of mobile revenues, however, it will take until 2010-2012 before we start to see major changes in this market.

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