Contact: Jo Ouvry
Deloitte
Public Relations
+44 (0) 20 7303 0587
The Technology, Media and Telecommunications (TMT) practice at Deloitte today announces its predictions for the media industry in 2006, forecasting that the year ahead will be driven by the effect of growing digitisation, convergence and shifting business models.
Ed Shedd, head of media at Deloitte comments: “Online music will provide the greatest potential for growth for the music industry, with improvements in distribution and the emergence of specialist online music stores.
“The television and video world will witness the development of 3 distinct trends, with televisions getting bigger, IPTV becoming a reality and high definition TV (HDTV) finally establishing itself as a standard format. Growth in television will be literal, with the average television size rising, driven by fierce competition in the flat panel television market as well as the increasing availability of HDTV content. For content providers, IPTV will be just another distribution channel and a relatively small one at that.
“Digitisation of the production process will progress across all media sectors. Digitised media production will enable a variety of new revenue streams, with content archives more accessible, automatic digital rights management and the repurposing of content made easier.
Video games will have a strong year, with the industry likely to attempt to broaden its appeal beyond young males. Companies will also explore ways to generate revenue streams after the initial purchase, with next generation consoles’ built-in broadband access used to sell a diverse range of digital content. The network connection may also be used to pipe in localised and even personalised advertising.
The business model for radio is on the cusp of significant change, as consumers move towards greater control over what they listen to, how they listen to it and when. The number of blogs will continue to rise, reaching over 60 million worldwide. However there is likely to be a decline in average quality, in turn catalysing the emergence of blog aggregators. 2006 may well see the publication of a novel that first arose in blog form.
The array of converged products and services on offer will continue to widen, with IPTV, podcasting, video-on-demand over the Internet and other services becoming increasingly available to consumers. As convergence produces an increasingly diverse mix of devices capable of media consumption, connected by a variety of networks, media companies should ensure they are well positioned to exploit the shifting dynamics of the market.
Three key trends identified in this report are:
1. The digital music revolution has only just started
2006 will see digital distribution becoming both the catalyst and foundation for a growing share of revenues. Online music may have the greatest potential for medium-term growth as the mobile ring tone market matures. By the end of the year, music distributed in purely digital form will account for 20% of total music revenues, with 8% expected to come from legal downloads, and 12% from ring tones.
2. Digital media production
2006 will see even more digitisation of the production process in all media sectors, with cost savings and revenue growth the main drivers. However media companies must give careful consideration to specific details such as timing, digital security and process change. Revenue growth should be the most convincing reason to move to digitisation, yet some media companies will not be investing enough time and effort to understand how the two can be linked.
3. Radio 2.0
Although radio will continue to be funded by advertising and public funding, stations are likely to start generating an increasingly diverse mix of revenue streams to satisfy demand for content that is becoming more varied and geographically dispersed. Consumers are likely to enjoy greater control over what they listen to, how and when they listen to it. Customers will be able to buy replays of a missed broadcast, or download a classic archive broadcast, and this suggests that radio stations will enjoy a growing range of opportunities to charge for content and advertising. At the same time, traditional radio should remain a genuinely mass medium, as the number of radio sets worldwide reaches 1.8 billion.
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Notes to editors
Predictions methodology
These predictions have been compiled by Deloitte Research on behalf of Deloitte Touche Tohmatsu’s (DTT) Technology, Media and Telecommunications (TMT) Group. The major inputs used in writing the predictions were: input from the 5000-strong TMT team around the world, discussions with leading industry and financial analysts, interaction and conversations with clients from the telecommunications and related sectors. These predictions do not claim to be fully comprehensive, but rather provide a commentary on major industry trends and developments.
About DTT’s TMT Group
The TMT Group is composed of service professionals who have a wealth of experience serving technology, media and telecommunications companies throughout the world in areas including cable, communications providers, computers and peripherals, entertainment, media and publishing, networking, semiconductors, software, wireless, and related industries. These specialists understand the challenges that these companies face throughout all stages of their business growth cycle and are committed to helping them succeed. DTT is a leader in providing strategic, financial and operational assistance to its TMT clients.
About Deloitte
In this press release references to Deloitte are references to Deloitte & Touche LLP which is among the country’s leading professional services firms, providing audit, tax, consulting and corporate finance services through more than 9,000 people in 21 locations. Known as an employer of choice for innovative human resources programmes, it is dedicated to helping its clients and its people excel. Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein whose member firms are separate and independent legal entities. Neither DTT nor any of its member firms has any liability for each other’s acts or omissions. Services are provided by member firms or their subsidiaries and not by DTT. Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority. The information contained in this press release is correct at the time of going to press.
