2008 Global Digital Media - Entertainment Market

The most hotly debated topic in the digital media industry is how to make money and it is the entertainment sector that many involved in the industry are directing their focus. The Internet, digital television, home media centres and mobile devices are all being used to deliver entertainment services. Set-top boxes are seen as the key to digital television service take-up around the world; HDTV, DVRs, home media centres and Internet services are also set to drive entertainment growth. Internet media companies (ie, Google, etc) are exploiting the added speed and capacity offered by broadband infrastructure, which will result in a whole range of new applications continuing to enter the market over the next decade. For more information, see chapter 1.1, page 1.

The UK continues to be a leader in digital television penetration; however, this is expected to change over the next five years as take-up accelerates in other parts of the world, particularly Asia. In 2008 Asia Pacific is expected to supersede North America and Europe in terms of set-top box sales. For more information, see chapter 2.1, page 5.

With the development of broadband, interactive TV is back in favour again. Many TV programs now have an interactive element to them, particularly in the Asian and European markets. The Multimedia Home Platform is beginning to assist in the progress of T-commerce around the world, particularly in South Korea. iTV and interactive content is also being incorporated into mobility, with further progress expected throughout 2008 and 2009. For more information, see chapter 2.3, page 20.

Video applications over broadband have emerged over the last couple years. In only a few instances however do we see an opportunity for IPTV – the reality is that the telcos will find it pretty tough competing with cable and pay TV operators. However, as PCCW has shown, it can be done. The market is progressing; in 2008 there are initial global standards and architecture specifications in place and interesting developments are taking place in Europe (particularly France and Italy), China, Hong Kong and the Netherlands. For more information, see chapter 3.1, page 41.

Video consumption via the Internet is producing promising statistics and advertisers have begun to seriously take note. In the USA around one in every three videos watched online is done via a Google property (primarily YouTube) – evidence that this industry leader continues to dominate. In 2008 it will be interesting to watch the impact of Hulu upon the online video market in the US. Launched by NBC Universal and News Corp’s Fox, Hulu offers access to advertising-supported television shows, movies and other video – differentiating itself from sites such as YouTube which are based on content generated by the users. For more information, see chapter 4.3, page 68.

The Internet has also increasingly become a forum for User Generated Content, from the early bulletin boards to today’s video blogs that allow for new levels of interaction. In recent times social networking has become a major focus – dominated by industry leaders MySpace and Facebook. Other competitors are also scrambling to capture market share. In 2008, AOL purchased popular European social networking site Bebo. Social network services are now evolving in order to maintain users’ attention. Mobile social networking services are also in development. For more information, see chapter 4.4, page 76.

Virtual worlds are another example of the developments occurring as part of the digital media evolution. The most high profile of these is ‘Second Life’; the popularity of this virtual world has exploded over the past couple of years from around 1.5 million users in 2006 to nearly 13 million registered users in 2008. However, the departure of some high-profile companies in 2007 has the industry wondering if Second Life’s growth will continue unabated. Attention is turning towards its competitors such as There.com. With recent entrants such as China’s HiPiHi and the emergence of worlds designed specifically for teenagers and children, this sector has become a focus for marketing opportunities. For more information, see chapter 4.5, page 88.

There is currently a lot of interest in both the online gambling and gaming sectors, with both being readily adopted into mobile devices. The increased penetration of high-speed broadband is assisting in this growing popularity and recently developed online game consoles are driving video game growth. The innovation of placing advertisements within games is creating potential new revenue streams with one industry leader, Microsoft, making strides in this area. In terms of online gambling, the regulatory environment continues to create uncertainty but the industry is still growing and looking towards other markets beside the US. For more information, see chapter 4.2, page 61.

Several different industries are vying for networked home media sector. They all want to become the gateway to the customer. While most of the initial home automation efforts have concentrated on the PC, there is now a noticeable shift away from PCs as home media centres. Focus has shifted to game consoles but eventually we see the future will be based on TV and DVR players. For more information, see chapter 5.1, page 95.

This report provides an insight and analyses into the trends and developments taking place in digital media with a focus on entertainment services. The report comprises a global overview of the progress of digital media entertainment developments, including digital TV, HDTV, iTV, IPTV and Internet based services. Mobile developments have been incorporated where applicable. Developments and statistics at a regional level are also provided for North America, Latin America, Europe, Middle East, Africa and Asia Pacific.

Key highlights:

• By 2009 yearly sales of Set-top boxes are expected to reach almost 150 million worldwide. For more information, see chapter 2.1.2.1, page 6.
• Digital cable is expected to grow significantly over the next few years as analogue cable switches to digital services. For more information, see chapter 2.4, page 31.
• Legitimate sales of digital music have increased by 40% worldwide in the past 12 months or so.
• The US, Japan, UK, Canada, China, South Korea and Germany are considered the leaders in terms of HDTV. However, the penetration of HDTV sits at less than 10% of TV homes worldwide. For more information, see chapter 2.2, page 11.

Installed base of homes with networked entertainment centres worldwide – 2009 - 2011

(Source: BuddeComm estimates, 2008)

• With the development of new handsets and next-generation consoles, spending on gaming is expected to increase with a CAGR of around 10-15% over the next few years. For more information, see chapter 4.2.3, page 64.
• In 2008 DVR growth is taking place in Europe and Asia; manufacturers are also escalating DVR exports to North America and the Middle East. For more information, see chapter 5.1.2, page 96.
• The Asia region is at the forefront of service innovation for online entertainment development. For more information, see chapter 6.5, page 138.
• South African mobile operator MTN has obtained exclusive mobile content rights for the 2010 Soccer World Cup for Africa and the Middle East for $65 million. For more information, see chapter6.4.1, page 136.
• The demographic makeup of the Middle East means that there is huge potential for the development of a dynamic entertainment industry. In the GCC countries, around 65% of the population is under 30. For more information, see chapter 6.4.2, page 137.

Data in this report is the latest available at the time of preparation and may not be for the current year.