Over 5 million Australians will own a tablet by 2015; media to show high growth rate.
According to a latest report by PwC Entertainment and Media Outlook report, more than 5 million Australians will own a tablet by 2015, and more than 1/4th of those will be using their devices for multimedia purposes, such as television, videos, newspapers and books.
The report believes interactive games to be the second largest growth area, which will bring its revenues up from $1.6 billion to $2.5 billion in 2015. The growth of games designed particularly for tablets will also help boost the revenue.
It is estimated that the overall media and entertainment industry will grow from $30.4 billion to $37.2 billion by 2015.
Megan Brownlow, PwC executive director and report editor, believes that expansion of the tablet market must be evaluated while keeping the technologies in perspective. She notes that tablets are a new way to consume media, rather than an addition to previous technologies.
“The best way to look at the future is to look at the past,” she said, noting that the adoption of tablets has been much faster than previous technologies, such as MP3 players and DVD players.
“If something is a steep change, it’s a really obvious change. From the consumer experience, it’s a ‘lean back’ experience, in that you can just lean back, consume the internet without having to leave your desk.”
Brownlow believes that a tablet lets users consume large numbers of content in any manner they want to, and the growth of markets such as the Android Market allow developers to take benefit of the new sector.
“From the content owner’s point of view, it combats piracy. They are the absolute two big drivers for uptake, and they create a cycle – consumers have more content, and the more they take, the more developers will create it.”
The report lists key growth areas for tablet usage, placing interactive gaming at the top at 9.5%, followed by internet usage at 7.4 – which covers advertisement as well as payment for usage.
“The slower growth in the internet access space is due to the price reduction as ISPs look to an NBN future. But advertising is growing faster, as it sucks up revenue from traditional players such as television and print.”
Magazines will decrease by 1.4% to $1.5 billion by 2015, while newspapers are expected to grow only by 0.1%. The internet will become the primary method of advertisement by 2014.
The PwC executive director believes that growth in gaming has not only been due to the advent of consoles that allow multimedia features, but also due to the growth of mobile and social games.
Social gaming has become a prominent sector as developer Zynga aims for an IPO very soon. Brownlow credits the growth of social gaming due to the “explosion in mobile and online games”.
“What this has done is smooth the cyclical nature of the market. Consoles were very cyclical, so every time a major publisher released a blockbuster it would sell well, but now online and mobile gaming are really popular all the time.”
“Successful developers have also hit that same golden aspect – it’s about women. Social games are played more by women than they are by men.”
It has to be noted that gaming was considered to be a male-dominated sector. The growth of social games has allowed the industry to be doubled by aiming at women.
“In-app purchases are growing as well. With consumers wanting to grow their farms in game (Farmville) and progress faster, they need to have some sort of advantage. We now see that in-app purchases account for 52% of the revenues in the casual mobile gaming space.”
PwC notes that recorded music will take the largest hit due to these trends, as the industry will decline by 3.9% by 2015. Brownlow said that record labels need to find new ways of generating revenues as music comes in digital format and becomes cheaper.
“Recorded music is the most classic example of moving from dollars to pennies. If we were looking at a unit sales picture, we would be able to demonstrate that the volume of purchases is growing by unit, but people are paying 99 cents instead of 15 dollars.”
“This means they have to develop new business, and it’s also a reason why live entertainment is doing so well.”
The report states that live entertainment is growing despite the gloomy economic climate, and customers are willing to pay high ticket prices.
“We have this strong Australian dollar which is bringing lots of concerts out here, and in our analysis of ticket prices we see there has been a steady climb. People are still willing to pay for that experience.”
“It’s also a good way of supplementing that business.”
Brownlow points out that record labels need a new way to generate revenue from digital music, noting that streaming services such as Spotify are gaining popularity.
“There’s an interesting trend we’ve identified, in that digital natives are quite happy to rent content, rather than just buying it. Digital migrants had to own content and have vast collections, but younger users are quite happy to just pay a subscription fee and rent a service.”
While the digital music industry might be facing a looming storm, overall the entertainment industry seems to be growing. Tablets have grasped the sector effectively and will be able to expand not only in Australia but throughout the world by 2015.
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