Television to continue to be world’s dominant media, according to Deloitte’s Media Predictions 2011 reportDOWNLOAD
27 January 2011: Television will expand on its position as the world’s most dominant media despite challenges from new technologies, according to professional services firm Deloitte’s Media Predictions 2011 report.
Deloitte’s Technology, Media & Telecommunications (TMT) leader in Australia, Damien Tampling, said television will face rising challenges from social networks and digital video recorders that could affect advertising and consumer behaviour.
“In particular, social networks are expected to surpass one billion unique members globally this year. Despite such challenges, we expect television’s global audience and revenues will continue to grow in 2011 and beyond.
“Of course, other media sectors will not be standing idle. The global market for computer and video games will grow and evolve, with increasing emphasis on new business models such as monthly subscriptions and ‘freemium’ content.
“Meanwhile, the music industry will continue to be shaped by the digital download revolution, which is pushing physical music distribution into niches such as ‘pop up’ music outlets for special events, and increasing the importance of live performances as a source of revenues and promotion.”
Television’s “super media” status strengthens
In 2011, television will continue to lead all media in total revenues, which include advertising sales, subscriptions, pay-per-view, and license fees. Television’s share of audience attention will expand with the global television audience likely to increase by 40 million to 3.7 billion viewers. Even then, half of the world’s population will remain untapped, leaving significant room for continued growth. Viewing per person is forecast to rise modestly to three hours and 12 minutes per day, compared to 33 minutes per day spent on the Internet per U.S. citizen.
DVRs proliferate! The 30-second spot doesn’t die!
By the end of 2011, more than 50 percent of television owners in the U.S. and U.K. will likely own a digital video recorder (DVR), giving these viewers the technological ability to skip ads. However, the impact of DVR sales on television advertising is expected to be minimal since most DVR owners will likely continue watching the vast majority of their television live, dominated by “appointment to watch” programs, such as sports, talent shows, soap operas, reality shows, or news. This type of programming usually crowds out time available to watch pre-recorded content. Even when viewers fast-forward programs, the ads are not wasted; studies show that ads viewed at 12x speed are still retained by viewers.
Social network advertising: modest, not mega
Social networks are likely to surpass the milestone of one billion unique members in 2011 and may deliver over two trillion advertisements. Yet the advertising revenues directly attributable to social networks will likely remain modest at roughly US$4 per member, totalling less than US$5 billion, which is less than one percent of the worldwide advertising spend total. When social networks attain the billion unique user milestone, nearly half of the potential global user base will have been signed up, which could put a ceiling on future growth. If global Internet adoption continues to expand at a steady — not stellar — pace, it might be increasingly difficult for social networks to sustain their impressive growth trajectories.
Games go online and on sale: the audience grows, but at what price?
In 2011, the global computer and video games industry growth will come from diverse revenue streams, including monthly subscriptions, peripherals, fees for services, as well as in-game purchases and advertising in the free-to-play and “Freemium” markets. By the end of 2012, total revenue from these relatively new sources could be as high as US$10 billion, or 16 percent of total games revenues. Over time, these sources could represent 50 percent of all revenues for the industry. As these new revenue streams emerge, the industry growth should be more stable and profitable. Also, the global gamer audience will likely continue to expand rapidly, primarily due to an increase in casual gamers on consoles, web and social networks, and smartphones and tablets.
Keeping the life in live: A&R diversifies
In 2011, the live music sector will expand its role to include nurturing new talent, which was previously the domain of the recorded music industry’s Artist and Repertoire (A&R) divisions. The live sector’s goal will be to identify, develop, and commercialize the next generation of stadium-filling artists. Over the past decade, the live music industry has prospered while recorded music sales declined, along with its A&R investments. The live sector will pick up some of the slack by identifying and commercializing new acts to maintain its momentum.
Pop goes pop-up: music retail goes seasonal and temporary
In 2011, revenues for digitally distributed music will exceed physical music sales in at least one major market, most likely the U.S. This long-anticipated event will probably be driven by a sharp decline in CD sales, rather than a significant increase in digital music subscriptions or downloads. The decline in the CD market is likely to cause a marked reduction in year-round shelf space dedicated to physical music. Instead, CD retail will shift to becoming a seasonal or event-driven purchase. By the fourth quarter of 2011, there could be 1,000 temporary “pop-up” music outlets created to meet occasional surges in demand, creating a small, but growing, niche segment.
Push beats pull in the battle for the television viewer
Despite the sale of millions of television sets that offer built-in search capability for television programming, the vast majority of viewing in 2011 will be delivered on a traditional “push” basis, in other words, based on the schedules determined by channel planners. Viewers “pulling” television content, beyond selecting a television channel, is likely to remain an exceptional behaviour. For most people, television continues to be a passive experience. While viewers value the option to choose, they often do not exercise the option even when it’s available. Technological progress is unlikely to shift these ingrained habits any time soon.
For a copy of Deloitte’s Technology, Media & Telecommunications Predictions 2011 report, go to www.deloitte.com.au
Deloitte's Predictions 2011 is also available in an iPad App format. You can download the TMT iPad App in the Apple Store for iPad (no cost).
The 2011 series of Predictions has drawn on internal and external inputs from conversations with member firm clients, contributions from Deloitte member firms’ 7,000 partners and managers specialising in TMT, and discussions with industry analysts as well as interviews with leading executives from around the world.