BuddeBlog

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

• Digital cable is expected to grow significantly over the next few years as analogue cable switches to digital services.

• 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.

• 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. In 2008 DVR growth is taking place in Europe and Asia; manufacturers are also escalating DVR exports to North America and the Middle East.

• The Asia region is at the forefront of service innovation for online entertainment development.

• 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.

• 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 detailed information, table of contents and pricing of our new report: 2008 Global Digital Media - Entertainment Market.

Kylie Wansink, Senior Researcher Global markets BuddeComm

See also:

• Global - Digital Media - Ecommerce Analysis & Trends
• Global - Digital Media - Advertising Overview, Statistics & Forecasts
• Global - Digital Media - Consumer and Business Markets
• Global - Digital Media - Ecommerce Analysis & Trends
• Global - Digital Media - Industry Business Models
• Global - Digital Media - Internet Media Companies
• Global - Digital Media - Marketing Strategies
• Global - Digital Media - Permission Based Marketing
• Global - Digital Media - The Media Industry
• Global - Digital Media - Triple Play Overview & Analyses

The Chinese telecommunications market is the largest in the world. With the mobile sector still expanding at over 18% going into 2008, the long-awaited licensing of 3G services is getting closer and will surely give the market yet another boost. There continues to be a major need for industry restructuring and government action is expected in conjunction with the issuing of 3G licences. Telecommunications development figures prominently in the nation’s priority scheme as China readies itself for the 2008 Beijing Olympics.

The Chinese telecom market is serviced by six main operators: China Telecom, China Netcom, China Mobile, China Tietong (formerly China Railcom), China Satcom and China Unicom. State agencies have been discussing possible mergers among the operators as part of the industry restructuring. In the past five years, as one of the country’s ‘pillar industry’, China’s telecom service industry has grown at a faster rate than the country’s GDP. According to official statistics from the Ministry Information of Industry, revenue from basic telecom service contributes approximately 2.1% of the country’s GDP, while value-added telecom services contribute a further 3.2% to total GDP.

By the end of 2007, mobile penetration in China stood at 41.4%, following a record level of subscriber additions during the year. The robust growth was due to an expanding rural market and the increasing number of people who have acquired more than one mobile phone. Both China Mobile and China Unicom have invested considerably in network improvements, especially in rural China, where approximately 750 million of China’s population resides and teledensity is just 12%. For many of China’s tech-savvy citizens, the mobile phone is becoming the preferred means of using the Internet. The number of people who access the Internet through their mobile phone surged to 50 million in 2007 from 17 million at the end of 2006, about a quarter of China’s Internet users.

Since the implementation of one-way charging implemented nationwide in the middle of 2007, the substitution of fixed-line services by mobile networks has accelerated. While China Mobile and China Unicom added over 86 million users, or roughly 7 million a month, the fixed-line customer base shrank by 2.3 million to around 365 million, a penetration of 27.8%. By February 2008, the number of mobile phone users reached 565 million, exceeding the fixed-line subscription base of 362 million. Looking ahead, total mobile subscriber numbers are forecast to pass 600 million in 2008, but crucially market penetration will remain below 50%, meaning the Chinese market still has a lot of untapped potential.

China became the second largest broadband market in the world after the US in 2004, after it had passed Japan earlier in that year and South Korea in 2003. Falling equipment prices, low service tariffs and strong consumer demand for services such as online gaming and file sharing have been some of the reasons behind the impressive growth of broadband. There is little doubt that China will soon pass the US to become the world’s top broadband market. According to the annual survey conducted by China Internet Network Information Centre, going into 2008, Internet users stood at 210 million, over 75% using broadband for Internet access.

Key highlights:

• The number of China’s telecommunication users reached more than 900 million in 2007, including around 365 million fixed lines and 545 million mobile users. This makes it the first country in the world to do so.

• Against a background of rising consumer prices in 2007, telecommunication charges fell 13.6% year-on-year.

• By end-2007, close to 75% of China’s 210 million Internet users were from urban areas. Urban subscribers reached 157 million representing an urban penetration rate of 27.3%. This was well above rural subscribers of 52.6 million giving a rural penetration rate of 7.5%. Over the next five years, it is estimated that the number of Internet users in China will grow at a compounded annual rate of 18.5%, while the US will grow at only 2.2%. By 2012, that would give China 590 million Internet users. Going into 2008, China had about a 16% Internet penetration rate compared with the world standard 19.1% and the US’s 69.7%.

• The rise in broadband lines to over 66 million was accompanied by a significant fall in the cost of Internet connections. The average connection cost fell to less than 75 yuan per month at the end of 2007, however a World Bank report released in May 2007 highlights that this is more than 10% of the Chinese average monthly income. In developed countries people spend an average of less than 1% of their income to access the same information online.

• China Internet consumption in 2007 was 398.8 billion yuan and is expected to grow 45.8% in 2008. Online shopping reached US$8.2 billion, up more than 90% from 2006. Of China’s 210 million Internet users, 55 million shopped online in 2007. Online sales, which accounted for less than 1% of China’s total retail sales, are forecast to make up 5-8% of total retail sales by 2012. Sales of online games in China topped US$1.45 billion in 2007, up 61.5%. It is estimated that China’s online gaming population will hit 84.56 million by 2012 from 40 million in 2007.

• The transaction volume of China’s online business-to-business jumped 65.9% year on year to 2.1 trillion yuan (US$292 billion) in 2007. Revenues drawn from online B2B operations are expected to jump to 13.8 billion yuan (US$1.8 billion) in 2011 from 76 billion yuan (US$10.6 billion) in 2002.

• China’s online advertising market revenue reached US$1.3 billion in 2007, while US Internet advertising spending reached around US$21.4 billion in the same period. The Internet makes up only about 5% of advertising spending in China compared with 10% in the US.

• By end-2007, China Netcom and China Telecom between them, had over 1.2 million IPTV subscribers. Shanghai had 300,000 IPTV subscribers by March 2008, the highest in the country.

• By early 2008, 68 cities had completed digital cable TV conversion, with the penetration rate of digital cable TV reaching 24.33%..

• Early in 2007 China ramped up the number of cities trialling its home grown 3G standard, TD-SCDMA, to 10. After initial reports in May 2007 that China was expected to invest at least RMB4 billion (US$519 million) buying TD-SCDMA handsets, in early 2008 China Mobile started selling heavily subsidised TD-SCDMA phones in eight cities. Officially it is a trial, because 3G licences have not yet been issued. According to the International Olympic Committee, the inability to offer a widely-supported 3G network was the only infrastructure target that Beijing failed to meet.

• The calling-party-pays billing policy for mobile phones, under discussion from before 2001, was finally implemented during 2007.

For detailed information, table of contents and pricing on our new report: 2008 Asia - Telecoms, Mobile and Broadband in China see:

Lisa Hulme-Jones, Senior Researcher China BuddeComm

See also:-

• China - Broadband Market - Overview & Statistics
• China - Convergence - Digital Satellite TV, Digital Terrestrial TV & iTV
• China - Convergence - Triple Play & Digital Cable TV
• China - Infrastructure - FttH and NGNs
• China - Infrastructure - IP Networks
• China - IPTV & Video Broadband Market in 2007
• China - Key Statistics, Telecom Market Overview & Analysis
• China - Major Telcos - Overview & Statistics
• China - Mobile Communications - 3G Development
• China - Mobile Communications - Voice and Data Services
• China - Mobile Market - Overview & Statistics
• China - Mobile TV
• China - New Internet Economy
• China - Regulatory Environment

The a NUS Consulting Group’s International Electricity Report and Cost Survey provides an annual update on what is happening in this industry as well as comparative movements in worldwide prices.This year’s benchmark report reveals interesting developments in the world’s electricity industry as all countries surveyed, with the exception of Canada, showed an increase in pricing. As much of the world community has embraced the concept of deregulating electricity supplies, the increases can be directly attributable to rising oil prices as well as the speculation of electricity in various commodity’s markets.

In Europe, Sweden experienced the largest single year increase coming in at 40%. The United Kingdom had the second largest year-on-year increase having the largest five year increase measured at an outstanding 135.9%. Italy retains its top spot as the most expensive surveyed country. France records the lowest electricity cost of all surveyed European nations as most of its pricing remains in regulated markets. Most European countries have reported their energy markets as being at their most volatile in several decades with this trend continuing in the future.

Australia reported a 6.8% rise in its electricity pricing and points to its prolonged drought as having a direct impact on generation facilities. Increased demand for power is also playing a major role in the increases for Australian consumers. South Africa reported a modest increase of 4.8%, but warns larger increases are inevitable as the country finds itself having to invest huge sums in new generation and existing infrastructure.

In North America, Canada remains one of the lowest cost surveyed countries recording the only decrease in pricing over the past year. The United States has once again seen its average price of electricity grow as its struggles with rising generation costs and the concept of market deregulation. This year’s increase in the US, however, kept pace with inflation coming slightly below that figure in April 2008.

With fleeting opportunities for savings and the cold reality of ever higher prices, consumers must take an active role when it comes to their electricity purchases.

For more information of NUS see: http://www.nusconsulting.com/

See also:

• Global - Smart Grids - Energy & Environmental Issues - 2008
• Global - Utilities Broadband - HomePlug and Demand Side Management
• Global - Utilities Broadband - Multi-utility Market
• Global - Utilities Broadband - Projects & Pilots
• Global - Utilities Broadband - Smart Grids
• Global - Utilities Broadband - Trends & Analyses