2014 Australia - Digital Entertainment and Media Market

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Last updated: 25 Jun 2014 Update History

Report Status: Archived

Report Pages: 228

Analyst: Paul Budde

Publication Overview

This annual report offers a wealth of information on the digital entertainment and media market in Australia. The report includes analyses, forecasts, statistics and trends. It provides a comprehensive insight into the progress of the various media internet and telco companies and examines the key issues in the market and the business opportunities arising from these developments.

Subjects covered include:

  • Activities from the key market players;
  • Analyses of internet media companies, with case studies;
  • Mobile media – the PSMS portals and the apps market;
  • Overview and analyses of the various players in the market;
  • Overview and analysis of the burgeoning social media market;
  • Smartphones and tablets;
  • Surveys and statistics on mobile media;
  • The competitive internet media environment;
  • The digital gaming and gambling market.

Researchers:- Paul Budde, Kylie Wansink, Henry Lancaster
Current publication date:- June 2014 (6th Edition)

Executive Summary

High-speed broadband is pushing rich media ahead

OTT and the transformation of the media sector

The traditional media industry has been in turmoil since the rise of digital media platforms that impacted significantly upon many aspects of the media industry of old. These changes led to much unrest in the media sector. Major competing sectors include TV and radio broadcasting, newspaper publishers, film, music and video industries.

The digital media companies have become the clear leaders and to a certain extent there will be parallel developments – one driven by digital TV using the traditional broadcasting networks and one driven by broadband using new fixed and mobile telco infrastructure. In 2014 the advertising spending being directed towards digital media continues to grow, further escalating the problems for the traditional media.

It has become clear that over-the-top (OTT) is ‘the new normal’ for the media and telecoms industries – with the emerging all-IP networks media and telecoms services are basically moving to an OTT model. These services are seen as a threat by the traditional operators in these sectors and the companies offering them are perceived to be getting a free lunch over the broadband networks. The European telcos are calling for international regulation, and in the USA net neutrality is no longer a given.

While the story for the traditional players in the market is all about shrinkage significant growth is taking place in many of the new subsectors of the broader market, which includes video-based entertainment on the internet, mobile apps, social media and new forms of interactive entertainment.

Advertising and marketing in the digital age

Spending on advertising using digital media channels is continuing to grow in market share despite the growth of overall advertising spending being slowed down by economic conditions. In 2014 the advertising sector is focused on the future opportunities offered by multi-screen developments – in other words, a cross-marketing approach involving multiple devices including TV, touchscreen tablets, computers, laptops, mobile phones etc. In addition, advertisers and content developers/providers are eyeing off the potential opportunities offered by the OTT content distributed by smart TVs. Digital marketing as a whole remains a growth area, as marketers shift towards these types of advertising methods at the expense of traditional formats.

National broadband network – changing the media model

The national broadband network is the next disruptive stage. Again the media has largely been absent from this debate, but the NBN will create new changes with new options. The traditional media players can take a leadership role, looking at the trans-sector opportunities the NBN has on offer – or they can simply copy their outdated models onto the new infrastructure, perhaps by using the wholesale services of a telco.

Initial indications are that, rather than moving towards media innovation, they are looking at more of the same. The media companies do have strong brands and millions of customers, but how can they utilise this advantage?

New video media

Online video streaming is one of the fastest-growing digital formats and marketers are certainly recognising its potential. Online video streaming/web TV is being used by many different industries for advertising, marketing, demonstration, entertainment and communication purposes. The success of Google’s YouTube has been well documented and YouTube continues to dominate in terms of viewers and streaming. Netflix, initially operating alone in the iVoD sector, has also entered the streaming video market and is gaining prominence and expanding internationally. Improvements in mobile technology and the introduction of smartphones have also assisted the development of mobile TV/video and we can now see it has a bright future ahead.

Adding further competition to the already highly contested online video-on-demand sector, in 2014 Walt Disney and Apple announced the launch of a cloud-based service called Disney Movies Anywhere. Around a couple of billion online videos are watched worldwide each month. Online VoD has gained the attention of internet heavyweights, Google and Facebook.

The US is an interesting market to watch for VoD developments, with Hulu, Netflix and Walmart Vudu just three of the players vying for position. There is a movement towards creating online video “channels” over the internet, aimed at target audiences, and YouTube has established a number of popular channels of its own.

Driven by the successful US-based Netflix IPTV service from America, Foxtel has launched its long-awaited Presto IPTV service. Until now the traditional IPTV products by ISPs have failed to attract large paying-user bases – in 2014 there are only around 800,000 subscribers in Australia.

By far the largest growth in IPTV video entertainment comes from user-generated content services such as YouTube, Facebook and a whole new range of services of short, and even super-short, videos. Catch-up TV would be the second largest category.

BuddeComm estimates that downloading and streaming of video now constitutes well over 50% of all regular online video usage and that this will only increase over time.

A relaunch of the Telstra T-box, the arrival of FetchTV, and new plans from Quickflix and Netflix will lead the further growth in this market.

Rich media

As broadband speed and capacity increases a whole new range of rich media will be entering the market over the next decade, based on increased broadband quality. Rich media contains images and video and involves user interaction.

We have seen console games change dramatically, with games, music and movies merging, integrating and moving online. Online gaming and gambling can take players from outside the boundaries of their home countries where these online activities may or may not be sanctioned by the authorities. The global market is an expanding one where virtual online gaming and gambling is a growth market.

In the meantime mobile phones have become the preferred devices for a large number of rich media apps. This is putting pressure on the mobile networks, which in turn require more fibre backbone networks in order to be able to handle the increased capacity.

The newspaper publishers are among those hardest hit by the massive changes that are taking place as a consequence of rapidly changing digital technologies.

New e-business models will need to be developed. The printed media could use their broad appeal to attract customers and then, once these customers are inside their applications and services, they could explore new rich media business models that would enable them to monetise these visits.

Mobile TV

There has been a great deal of hype surrounding mobile TV in Australia, but so far the concept developed by the mobile network operators has not taken off. Operators were given a wake-up call with the introduction of the iPhone, as this started to separate content from carriage. Developments have now seen mobile TV – both paid and free services from the MNOs available unmetered – so perhaps this will see greater uptake by the mobile watcher.

Into 2014 we are still seeing the popularity of mobile devices such as phones, and consumers are increasingly taking up tablets, which are better suited for mobile viewing. As a result data is being consumed at a higher rate. The availability of mobile TV from Foxtel (Mobile Foxtel) and the growing popularity of ABC’s iView platform, as well as similar catch-up services from SBS and the main commercial TV channels, are steadily driving up mobile viewing levels.

However, increasing mobile video usage from mobile devices requires more and more data bandwidth. This is compounded by the mobile apps that are being developed for the mobile market and which allow mobile TV and video to be streamed, both on WiFi and over 3G or 4G. These apps, available for Apple and Android devices, are becoming data hogs on mobile networks.

This report provides an overview of the mobile TV market in Australia, including analyses on marketing strategies and background information on the technologies and players behind the service.

Smartphones and tablets

Apple must surely rue the day Android arrived on the scene, as over the past few years Android OS has continued to erode the lead it acquired when it first launched the iPhone. In 2014 the leading smartphone handset worldwide is Samsung Galaxy (based on Android), with over 35% market share, while the iPhone captures less than 15%.

The news is no more positive for Apple when looking at mobile operating systems, with Android OS accounting for around 80% global market share.

Looking at the touchscreen tablet sector, however, the Apple iPad retains its dominance in 2014. Again Samsung is hot on its heels and Apple will need to act quickly to remain in the lead. At this stage the rise of Samsung is mostly at the expense of lesser tablet players.

The next frontier will be new markets that can be built on the smartphone platform. Of course this market is already well and truly underway, with over 2 million apps now available from Google Play and the Apple app store. Another threat to the smartphone business is the limitations of the mobile broadband infrastructure. You can develop all of these new applications and services but if the infrastructure cannot handle the capacity there will be little use for them. Developed markets are now eating up new spectrum with a voracious appetite.

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

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