Music is going to continue to lead the market for online distribution, according to Screen Digest. The research company forecasts that by 2011, 191 million single tracks and 21 million albums will be downloaded, with UK revenue at £285.6 million.
Dan Cryan, music analyst, said: “The rapid growth of online music constitutes an invaluable lifeline for the record industry as the decline in physical sales shows no sign of letting up. So the question remains whether the growth in digital will be able to fill the revenue gap left by the fall in physical sales.”
In addition, Screen Digest forecasts that the online TV market will generate annual revenues of £181 million by 2011.
Arash Amel, senior analyst, said: “Broadcasters and pay-TV operators will come under increasing pressure from many major ‘virtual networks’, such as YouTube and Joost, who will be competing for viewers’ time and attention. This will be exacerbated by hardware manufacturers, such as Apple, Microsoft and Sony, who will be far more adept at selling TV shows because of their existing device relationships with the consumer.
The result is that the UK online TV market will be increasingly fragmented, with the new entrants trapping considerable market share. The threats and opportunities for traditional broadcast networks and pay-TV platforms is clear. They must adapt their online strategies quickly and efficiently, whether it is focusing on maximizing the potential of video offered through their own websites and online outlets, or co-operating with the new platforms to syndicate as widely as possible in order to tap significant additional revenue.”
Recent research from comScore said that nearly 75% of US internet users watched an average of three hours of online video during July (see Three In Four US Internet Users Watch Online Video in July).
The forecasts for the value of the online movies market reveal the slowest market growth says Screen Digest. There are a number of reasons for the comparatively small size of movie downloads compared to music and TV.
Screen Digest believes that consumers will be reluctant to watch three hour long films on their PC, preferring to view them on their plasma screens and home entertainment systems. For movie downloads to make it into the British front room, film fans need to update their hardware to make transferring them possible – and this is a long way off.
Ben Keen, chief analyst said “While the internet offers an important new opportunity for movie distribution, studio fears of a ‘single dominant platform’ and revenue cannibalisation are in danger of limiting development of digital services, and damaging consumer attitudes towards downloads.”
A recent forecast from eMarketer predicted that, for the first time, online advertising will surpass radio advertising spending in the US (see US Online Advertising To Surpass Radio Adspend).
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