Contact: Matthew Longbottom
Deloitte
PR Manager
+44 20 7303 7030
The Technology, Media and Telecommunications (TMT) practice at Deloitte today announced its predictions for the media sector for 2007, forecasting that social networking sites will tap into a larger profitable market by charging for privacy.
Jolyon Barker, head of Deloitte’s TMT practice, comments: “Social networking’s appeal has so far been strongest among younger demographic groups. However in 2007, social networking companies will look to extend their appeal, as they seek further potential revenues. Older age groups could prove to be a lucrative opportunity for online social networks as these groups would be far more willing to pay for privacy. Paid for privacy online would encourage more people to share their uninhibited moments with their intimate circle avoiding prospective employers or existing peers.
“Premium subscriptions, in addition to the guarantee of privacy, could also offer a range of value-added services from voice messaging to group chat, from online storage to webpage design. As premium users are likely to be older and less technologically literate, technical support may also be in demand, ideally on a paying basis.
“Virtual fantasy worlds have become a serious business in their own right. There is a steady blurring of the line between fantasy and reality, which is leading real people to spend real money on entirely virtual goods and services. Real companies are also promoting or even offering virtual versions of their products for real money. In 2007, the value of this trade will, based on recent growth, become large enough to also attract the attention of tax authorities.
“2007 should also see substantial growth in the number of movies that are made available simultaneously on DVD in the shops and for download via video on demand (VOD) over the Internet to PCs. Where as streaming video appears to be working well, video downloads will encounter some challenges in 2007, particularly when downloaded to PCs. A high-definition video on a one Mbit/s DSL connection could take the best part of a day to download. A trip to the local Blockbusters would be a lot faster.”
Three key trends identified in the report are:
15 megabytes of fame; one gigabyte of privacy
In 2007, social networking companies should move rapidly to expand both the appeal and the revenue generating capacity of their services. To appeal to older age groups social networks may need to offer privacy – for which users may be prepared to pay to ensure that only their intimate circle, not prospective employers or existing peers, can see their uninhibited moments. Subscription revenues will become an increasingly important part of the revenue mix, potentially offering a range of value-added services – from voice messaging to group chat, from online storage to webpage design.
Virtuanomics
Real economies are emerging within digital online fantasy worlds. The largest virtual worlds, such as Second Life, collectively host millions of citizens, some spending many hours every day living their virtual lives. The real world value of transactions taking place in virtual worlds is rising steadily, and is likely to continue growing through 2007. The value of this trade may, based on recent growth, become large enough to also attract the attention of tax authorities.
Video-on-demand may leave you waiting
2007 should see substantial growth in the number of movies that are made available for download via video on demand (VOD) over the Internet to PCs. VOD’s allure is that it has the potential to exploit the 21st Century consumer’s passion for instant gratification. However video downloads will encounter some challenges in 2007. The key issue is most likely to relate to the meaning of ‘on-demand’. For example, on a typical two Mbit/s DSL network, it can take one minute to download each minute of a movie. Thus in 2007, it may be the case that wanting instant access to blockbusters, a swift walk to the local store may be the most immediate route to satisfaction.
Access the Media Predictions Report 2007.
Ends
Notes to Editors
The Deloitte Predictions series has been designed to provide a diverse selection of views and thoughts that challenge, inform and engage industry leaders and executives. It neither aims, nor claims to be a comprehensive forecast of every anticipated event.
The methodology used to generate the Predictions series is revisited every year. For the 2007 series Predictions have included inputs from conversations with member firm clients, contributions from DTT member firms’ 5,000 partners and managers, specializing in TMT, and discussions with industry analysts. This series of Predictions has incorporated two additional sources.
The first is a series of 36 interviews with leading executives from around the world on the key industry theme of convergence. This global primary research exercise, spanning the TMT sectors, produced a wealth of insight, much of which is reflected in many of this year’s Predictions. The interviews, collectively published by DTT as a book, Convergence Conversations, are available from www.deloitte.com/tmt.
The second source is a column, Drowning by Numbers, that the Financial Times invited Deloitte & Touche LLP in the United Kingdom to write on a fortnightly basis. Some of the ideas for Predictions have been tested in this column.
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. 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 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.
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.
