Australia - Digital Entertainment and Media Market

  • June 2014
  • -
  • Paul Budde Communication Pty Ltd
  • -
  • 228 pages

High-speed broadband is pushing rich media ahead
OTT and the transformation of the media sector
The traditional media industry has been in turmoil since the rise of digital media platforms that impacted significantly upon many aspects of the media industry of old. These changes led to much unrest in the media sector. Major competing sectors include TV and radio broadcasting, newspaper publishers, film, music and video industries.
The digital media companies have become the clear leaders and to a certain extent there will be parallel developments - one driven by digital TV using the traditional broadcasting networks and one driven by broadband using new fixed and mobile telco infrastructure. In 2014 the advertising spending being directed towards digital media continues to grow, further escalating the problems for the traditional media.

It has become clear that over-the-top (OTT) is 'the new normal' for the media and telecoms industries - with the emerging all-IP networks media and telecoms services are basically moving to an OTT model. These services are seen as a threat by the traditional operators in these sectors and the companies offering them are perceived to be getting a free lunch over the broadband networks. The European telcos are calling for international regulation, and in the USA net neutrality is no longer a given.
While the story for the traditional players in the market is all about shrinkage significant growth is taking place in many of the new subsectors of the broader market, which includes video-based entertainment on the internet, mobile apps, social media and new forms of interactive entertainment.
Advertising and marketing in the digital age
Spending on advertising using digital media channels is continuing to grow in market share despite the growth of overall advertising spending being slowed down by economic conditions. In 2014 the advertising sector is focused on the future opportunities offered by multi-screen developments - in other words, a cross-marketing approach involving multiple devices including TV, touchscreen tablets, computers, laptops, mobile phones etc. In addition, advertisers and content developers/providers are eyeing off the potential opportunities offered by the OTT content distributed by smart TVs. Digital marketing as a whole remains a growth area, as marketers shift towards these types of advertising methods at the expense of traditional formats.

National broadband network - changing the media model
The national broadband network is the next disruptive stage. Again the media has largely been absent from this debate, but the NBN will create new changes with new options. The traditional media players can take a leadership role, looking at the trans-sector opportunities the NBN has on offer - or they can simply copy their outdated models onto the new infrastructure, perhaps by using the wholesale services of a telco.
Initial indications are that, rather than moving towards media innovation, they are looking at more of the same. The media companies do have strong brands and millions of customers, but how can they utilise this advantage?

New video media
Online video streaming is one of the fastest-growing digital formats and marketers are certainly recognising its potential. Online video streaming/web TV is being used by many different industries for advertising, marketing, demonstration, entertainment and communication purposes. The success of Google's YouTube has been well documented and YouTube continues to dominate in terms of viewers and streaming. Netflix, initially operating alone in the iVoD sector, has also entered the streaming video market and is gaining prominence and expanding internationally. Improvements in mobile technology and the introduction of smartphones have also assisted the development of mobile TV/video and we can now see it has a bright future ahead.

Adding further competition to the already highly contested online video-on-demand sector, in 2014 Walt Disney and Apple announced the launch of a cloud-based service called Disney Movies Anywhere. Around a couple of billion online videos are watched worldwide each month. Online VoD has gained the attention of internet heavyweights, Google and Facebook.
The US is an interesting market to watch for VoD developments, with Hulu, Netflix and Walmart Vudu just three of the players vying for position. There is a movement towards creating online video “channels” over the internet, aimed at target audiences, and YouTube has established a number of popular channels of its own.
Driven by the successful US-based Netflix IPTV service from America, Foxtel has launched its long-awaited Presto IPTV service. Until now the traditional IPTV products by ISPs have failed to attract large paying-user bases - in 2014 there are only around 800,000 subscribers in Australia.
By far the largest growth in IPTV video entertainment comes from user-generated content services such as YouTube, Facebook and a whole new range of services of short, and even super-short, videos. Catch-up TV would be the second largest category.

BuddeComm estimates that downloading and streaming of video now constitutes well over 50% of all regular online video usage and that this will only increase over time.
A relaunch of the Telstra T-box, the arrival of FetchTV, and new plans from Quickflix and Netflix will lead the further growth in this market.

Rich media
As broadband speed and capacity increases a whole new range of rich media will be entering the market over the next decade, based on increased broadband quality. Rich media contains images and video and involves user interaction.
We have seen console games change dramatically, with games, music and movies merging, integrating and moving online. Online gaming and gambling can take players from outside the boundaries of their home countries where these online activities may or may not be sanctioned by the authorities. The global market is an expanding one where virtual online gaming and gambling is a growth market.
In the meantime mobile phones have become the preferred devices for a large number of rich media apps. This is putting pressure on the mobile networks, which in turn require more fibre backbone networks in order to be able to handle the increased capacity.

The newspaper publishers are among those hardest hit by the massive changes that are taking place as a consequence of rapidly changing digital technologies.
New e-business models will need to be developed. The printed media could use their broad appeal to attract customers and then, once these customers are inside their applications and services, they could explore new rich media business models that would enable them to monetise these visits.

Mobile TV
There has been a great deal of hype surrounding mobile TV in Australia, but so far the concept developed by the mobile network operators has not taken off. Operators were given a wake-up call with the introduction of the iPhone, as this started to separate content from carriage. Developments have now seen mobile TV - both paid and free services from the MNOs available unmetered - so perhaps this will see greater uptake by the mobile watcher.

Into 2014 we are still seeing the popularity of mobile devices such as phones, and consumers are increasingly taking up tablets, which are better suited for mobile viewing. As a result data is being consumed at a higher rate. The availability of mobile TV from Foxtel (Mobile Foxtel) and the growing popularity of ABC's iView platform, as well as similar catch-up services from SBS and the main commercial TV channels, are steadily driving up mobile viewing levels.
However, increasing mobile video usage from mobile devices requires more and more data bandwidth. This is compounded by the mobile apps that are being developed for the mobile market and which allow mobile TV and video to be streamed, both on WiFi and over 3G or 4G. These apps, available for Apple and Android devices, are becoming data hogs on mobile networks.
This report provides an overview of the mobile TV market in Australia, including analyses on marketing strategies and background information on the technologies and players behind the service.

Smartphones and tablets
Apple must surely rue the day Android arrived on the scene, as over the past few years Android OS has continued to erode the lead it acquired when it first launched the iPhone. In 2014 the leading smartphone handset worldwide is Samsung Galaxy (based on Android), with over 35% market share, while the iPhone captures less than 15%.
The news is no more positive for Apple when looking at mobile operating systems, with Android OS accounting for around 80% global market share.
Looking at the touchscreen tablet sector, however, the Apple iPad retains its dominance in 2014. Again Samsung is hot on its heels and Apple will need to act quickly to remain in the lead. At this stage the rise of Samsung is mostly at the expense of lesser tablet players.

The next frontier will be new markets that can be built on the smartphone platform. Of course this market is already well and truly underway, with over 2 million apps now available from Google Play and the Apple app store. Another threat to the smartphone business is the limitations of the mobile broadband infrastructure. You can develop all of these new applications and services but if the infrastructure cannot handle the capacity there will be little use for them. Developed markets are now eating up new spectrum with a voracious appetite.
Data in this report is the latest available at the time of preparation and may not be for the current year

Table Of Contents

1. Global Impact of the Digital Economy and the Media Industry
1.1 The digital economy what is at stake for you?
1.2 Advertising important to media industry
1.3 Collapse of the traditional media industry
1.4 Market insights
1.4.1 From calls to applications
1.4.2 Expect delays and roadblocks
1.4.3 Fragmentation, consolidation, mergers and acquisitions
1.4.4 Where are the new opportunities?
1.4.5 Think international
1.4.6 Media and Telcos adapting business to the new Digital Economy
1.4.7 Copyright and the Internet back in the Spotlight
1.5 Whatever happened to media convergence?
1.5.1 Convergence substitution
1.5.2 New business models for media content required
1.6 Media companies need to disaggregate and rebuild
1.6.1 Brand key in online media
1.7 The challenges for newspaper publishing
1.8 Brief case study: The book publishing industry
1.8.1 Digital e-readers/e-books
1.9 The anomaly of the mass media
1.9.1 Analysis of media trends
1.9.2 Digital and Mobile Media Apps, Social Networks, Entertainment and Gaming ) Separate report
2. OTT and Industry Transformation
2.1 Transforming the telecoms industry
2.1.1 Telcos still ignoring industry transformation
2.1.2 The rapidly shrinking traditional telecoms market
2.2 Telcos have already lost the current OTT battle
2.2.1 Infrastructure investment models are stuck
2.2.2 Telcos will need to lift their game on infrastructure
2.3 The demand and supply imbalance in telecoms
2.4 Vested interests
2.5 The digital business buzzword is also transformation'
2.6 What will be driving these new investments?
2.6.1 It is not about speed it's about big data'
2.7 Hot sectors for OTT services
2.8 How to move forward?
3. Global Digital Economy The Political and Economic Fallout
3.1 Smarter tools, fewer jobs how to address this conundrum?
3.1.1 Strong political leadership is needed
3.1.2 How smart tools can help
3.1.3 But still fewer jobs
3.2 Economic and social transformation
3.2.1 The impact on the economy
3.2.2 Technology fights against extreme poverty
3.3 Internet is transforming governments and politics
3.3.1 People-power needs to be taken seriously
3.3.2 People are often more sophisticated than their politicians
3.3.3 You can dumb down politics and media, but not people
3.4 Spy scandal further alienates people from their politicians
3.4.1 Telecoms as a spying tool
3.5 Transformation of the UN and other international bodies
4. Global Advertising and Marketing in the Digital Age
4.1 Market summary
4.2 Market insights
4.2.1 Consumers will lead the way
4.2.2 Changes in internet advertising
4.2.3 Mobile advertising
4.2.4 Mobile Location-Based Advertising (MLBA)
4.2.5 TV advertising
4.2.6 Digital ad exchanges
4.3 Internet media companies selected insights
4.3.1 Google - Advertising a main strategic drivers
4.3.2 Yahoo - profit up, sales down as it attempts to lure Google and Facebook users
4.3.3 Hulu - mostly positives for Hulu
4.3.4 Facebook - prepared to operate in different markets
4.3.5 Amazon's rising threat
4.4 Key online advertising categories
4.5 A multi-screen approach gains attention
4.6 Consumers react to privacy misuse by Internet companies
5. National Broadband Network - Changing the Media Model
5.1 Open wholesale network key to change
5.2 NBN Co's multicast service
5.2.1 Overview of the service
5.2.2 Wholesale Pricing
5.2.3 iiNet
5.2.4 4K TV
5.3 IPTV versus IPTV+RF - an analysis
5.4 Industry and market analysis
5.4.1 Industry wants wrong piece of the NBN action
5.4.2 Industry needs to start changing
5.4.3 New business models
5.4.4 Breaking out of the silo
5.4.5 Trans-sector thinking
5.4.6 Media companies well-positioned to operate trans-sectorally
5.4.7 Risk will be unavoidable not taking it will be deadly
5.5 Digital media regulation
5.5.1 Digital-only transmission
5.5.2 Media reforms 2011-2013
5.5.3 New copyright infringement laws will increase piracy
6. The Digital Media Markets
6.1 Online Video Streaming, iVoD and Mobile TV Insights
6.1.1 The power of online video media
6.1.2 Internet Video-On-Demand (iVoD)
6.1.3 Industry insights
6.1.4 Brief case studies
6.1.5 Mobile TV/video comms
6.1.6 Conclusion: The future of video in telecoms
6.2 IPTV
6.2.1 Market Analysis
6.2.2 Market surveys
6.2.3 Optus and the copyright issue
6.2.4 Regulations and standards
6.2.5 Major Players
6.3 Social Networks
6.3.1 Overview of key developments
6.3.2 Social network trends in Australia
6.3.3 Key social networks
6.3.4 Business Market
6.3.5 Conclusions and trends
6.4 Gaming and Gambling
6.4.1 Market trends and activities
6.4.2 Mobile gaming
6.4.3 Online gambling
6.4.4 Gaming surveys
6.5 Music Industry
6.5.1 The e-music industry in 2014
6.5.2 Market overview
6.5.3 Key players some old and some new ones
6.6 Newspaper Publishing
6.6.1 The anomaly of the mass media
6.6.2 The future of mass media news
6.6.3 Key trends and developments
6.6.4 Paywalls and other new models
6.6.5 Media companies need to disaggregate and rebuild
6.6.6 APN News and Media
6.6.7 News Corp Australia
6.6.8 John Fairfax
7. Mobile Media
7.1 Providers
7.1.1 Mobile operators
7.1.2 Service providers
7.2 PSMS Portals and Apps
7.2.1 Market analysis
7.2.2 Is SMS technology safe
7.2.3 Will social messaging end SMS revenue
7.2.4 Smart phone apps market
7.2.5 Consumer protection
7.2.6 Key players in the premium rate SMS (PSMS) market
7.2.7 PSMS revenues
7.3 Surveys and Statistics
7.3.1 Introduction
7.3.2 Recent surveys
7.3.3 Australian Mobile Phone Lifestyle Index
7.3.4 Mobile data observations
7.3.5 Mobile data and average revenue per user (ARPU)
7.4 Mobile TV
7.4.1 What is mobile TV?
7.4.2 Market overview and analysis
7.4.3 Cloud-based mobile TV
7.4.4 Major players
7.4.5 Regulation
7.4.6 Technology platforms
8. Smartphones, Wearable Technology, Handsets, Tablets
8.1 The future of the smartphone market
8.1.1 Hardware becomes a utility platform
8.1.2 Platform for innovation and industry transformation
8.1.3 Breaking into new markets
8.1.4 Affordable smart devices
8.1.5 Enviro-friendly handsets
8.1.6 Who will dominate the WiFi market?
8.1.7 Innovation to continue
8.1.8 Look towards emerging markets for smart phone growth
8.2 Global mobile handset statistics and forecasts
8.2.1 Historical handset market growth
8.2.2 Global handset sales and revenue
8.2.3 Global leading handset suppliers
8.2.4 A tough five years for Nokia
8.2.5 Brief case study: Motorola
8.3 Smartphone leading suppliers and operating systems
8.3.1 Global smart phone sales
8.4 Touchscreen tablets
8.5 Safety and security issues
Table 1 Global advertising spending- all mediums 2010 - 2015
Table 2 Top ten countries by digital advertising spend per Internet user - 2013
Table 3 Global online advertising spend 2012 - 2014
Table 4 Global advertising spending market share by major types 2013; 2015
Table 5 Most popular formats for receiving news in the USA 2013
Table 6 Growth of e-reader sales 2009 - 2013
Table 7 Global advertising spending- all mediums 2010 - 2015
Table 8 Top ten countries by digital advertising spend per Internet user - 2013
Table 9 Global online advertising spend 2012 - 2014
Table 10 Global advertising spending market share by major types 2013; 2015
Table 11 Google total advertising revenue 2006 - 2012
Table 12 Facebook total and mobile advertising revenue Q2 ; Q3 2013
Table 13 Global CAGR for key online service platforms 2012 - 2017
Table 14 Global revenue from online TV and video 2012; 2013; 2018
Table 15 Netflix total and international subscribers 2012; 2013
Table 16 Online video unique visitors top online video properties in the US Various months 2010 - 2013
Table 17 Global mobile TV subscribers 2009 - 2014
Table 18 Worldwide IPTV subscribers 2010; 2012; 2014
Table 19 Fetch TV subscribers 2012 - 2014
Table 20 Hulu revenue 2009- 2013
Table 21 Quickflix subscribers 2008 - 2014
Table 22 Telstra Media Group financial results 2012 - 2014
Table 23 Telstra T-Box subscribers 2011 - 2014
Table 24 Global subscribers to key social networks - 2014
Table 25 Estimated social networking members by major sites in Australia 2010 - 2014
Table 26 Use of social media sites in Australia 2011 - 2014
Table 27 Gaming machine turnover versus machines in operation 2001 - 2010
Table 28 Worldwide online gambling revenue 1997; 2001; 2004; 2006; 2008 - 2012; 2017
Table 29 Value of recorded music and digital music sales 2005 - 2013
Table 30 Internet distribution recorded music market sales 2006 - 2016
Table 31 BPM standard download pricing 2011 - 2013
Table 32 BigPond mobile music standard download pricing 2011 - 2013
Table 33 Fairfax Digital key financial performance indicators H1 2012 - H1 2013
Table 34 Telstra SMS traffic 2009 - 2014
Table 35 Jumbuck key financial performance indicators 2009 - 2013
Table 36 Jumbuck earnings per share (EPS) 2009 - 2013
Table 37 Jumbuck Revenue by market location 2012 - 2013
Table 38 Mnemon key financial performance indicators FY2012 - FY2013
Table 39 Mobile Embrace key financial performance indicators 2010 - 2013
Table 40 Mobi.moki key financial performance indicators H1 FY2014
Table 41 Mobi.moki key financial performance indicators 2010 - 2014
Table 42 Enero (Photon Group) key financial parameters 2010 - 2013
Table 43 Weekly app usage by selected demographic 2012 - 2013
Table 44 App usage by selected demographic 2010 - 2013
Table 45 Weekly app usage by selected demographic 2012 - 2013
Table 46 Estimated app market revenue 2009 - 2015
Table 47 Users who pay for mobile applications by app type 2010 - 2013
Table 48 Type of apps used 2011 - 2013
Table 49 Typical charge for paid apps 2010 - 2013
Table 50 Mobile premium service complaints by major provider 2010 - 2012
Table 51 Estimated revenues PSMS market 2004 - 2014
Table 52 Customer satisfaction with mobile provider services 2010 - 2013
Table 53 Mobile phone brand ownership 2010 - 2013
Table 54 Use of mobile phones by service 2011 - 2013
Table 55 Use of information services 2010 - 2013
Table 56 Tablet use of services 2012 - 2013
Table 57 Mobile data downloaded versus mobile subscribers 2012 - 2013
Table 58 Telstra mobile ARPU 2009 2013
Table 59 Telstra mobile prepaid and postpaid revenue 2008 2013
Table 60 Optus mobile revenue 2013 2014
Table 61 Vodafone Australia revenue 2009 - 2013
Table 62 HTA key metrics financial overview 2009 - 2013
Table 63 Global - overall mobile handset shipments 2004 - 2015
Table 64 Global - mobile handset revenue 2010 - 2014
Table 65 Regional - mobile handset sales market share 2011; 2013
Table 66 Global - handset supplier market shares 2007; 2009; 2011; 2012
Table 67 Nokia's handset supplier global market share decline 2007; 2009; 2011; 2013
Table 68 Global - smart phone supplier market share 2012; Q3 2013
Table 69 Global - smart phone operating system market share 2010; 2011; 2012; Q3 2013
Table 70 Global - smart phone share of handset market 2009 - 2014
Table 71 Global - smart phone mobile device sales by quarter Q2 2009 Q2 2013
Table 72 Global - touchscreen tablet vendor market share Q4 2012; Q2 2013
Table 73 Global - touchscreen tablet operating system market share 2011 - 2013
Table 74 Global - touchscreen tablet sales 2010 2014
Chart 1 Global mobile TV subscribers' annual change 2009 - 2014
Chart 2 Overview of recorded music sales versus digital music sales 2005 - 2013
Chart 3 Overview of internet distributed recorded music market sales 2008 - 2016
Chart 4 Overview of Mobile Embrace key financial performance indicators 2010 - 2013
Chart 5 Overview of Mobi.moki key financial performance indicators 2010 - 2013
Chart 6 Overview of PSMS revenue mix of downloads
Chart 7 Overview of use of technology by seniors 2011 - 2012
Chart 8 Overview of Vodafone Australia revenue 2009 - 2013
Chart 9 Overview of HTA financial metrics 2009 - 2013
Exhibit 1 Statistical snapshot of e-books
Exhibit 2 Price fixing allegations
Exhibit 3 Telstra leading the global telco move towards the OTT model
Exhibit 4 WCIT-12 disappoints, more work to be done
Exhibit 5 Key applications of a digital economy
Exhibit 6 - Government sector reform
Exhibit 7 - Trans-sector vs. Cross-sector
Exhibit 8 Digital advertising cost considerations
Exhibit 9 Middle East offers online advertising potential
Exhibit 10 Online ad deal between Google and Yahoo aborted
Exhibit 11 Top mobile advertising spenders Q2 2012
Exhibit 12 Anarchy Online by Funcom
Exhibit 13 Examples of online VoD sites
Exhibit 14 Equivalence between access modes and traditional audiovisual use
Exhibit 15 Blockbuster closes their stores across America
Exhibit 16 Definition: Content Delivery Networks (CDN)
Exhibit 17 Open Mobile Video Coalition (OMVC)
Exhibit 18 Case studies similar to the Optus copyright issue case
Exhibit 19 Seven Network's digital media strategies 2006 - 2012
Exhibit 20 Mobile video communication: FaceTime and Google Talk
Exhibit 21 Examples of popular online dating sites
Exhibit 22 LinkedIn at a glance March 2013
Exhibit 23 Examples of Web 2.0 developments
Exhibit 24 Background information on the adult gaming category changes
Exhibit 25 Interactive gaming versus online gaming and online gambling defined
Exhibit 26 Sportingbet Plc at a glance 2013
Exhibit 27 Wikileaks and will the e-publishers be the new free press
Exhibit 28 Some background information on Planet 3
Exhibit 29 MOKO.mobi at a glance 2014
Exhibit 30 Overview of Mobi-moki subsidiary companies 2014
Exhibit 31 Enero at a glance 2013
Exhibit 32 Background information on Information Dialling Services (IDS)
Exhibit 33 5th Finger historical company background information
Exhibit 34 An overview of Gemalto
Exhibit 35 Key national and major smaller players in the PSMS market
Exhibit 36 Overview of the now defunct cloud- based mobile TV services
Exhibit 37 Background information on the defunct Optus TV Now service
Exhibit 38 Examples of Mobile TV technologies
Exhibit 39 Broadcast Australia DVB-H trials 2005 - 2009
Exhibit 40 Open Handset Alliance

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