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Digital entertainment market is in transition
- Report reveals how connectivity will shape market evolution
Reading, UK - Wednesday, 17 October 2007
For immediate release
Consumer Internet usage is having a huge impact on the way the
TV, gaming, music and PC industries function. The dynamics of these
markets, and the vendors that lead in them, vary considerably, but
digital connectivity is the common theme shaping the future
direction of them all. A new report released by leading industry
analyst firm Canalys considers how this is happening in EMEA
(Europe, the Middle East and Africa), and provides market sizing and
analysis of the key industry trends.
TV times – changing faster than you can switch channels
Established service providers, including cable and satellite
operators and terrestrial broadcasters, are busy migrating
subscribers to digital and rolling out advanced services, such as
video on demand (VoD) and high-definition (HD) programming, but
their once dominant position is being challenged. “IPTV is gaining
traction across Europe, while online services are also making their
presence felt,” said Canalys senior analyst Adrian Drozd.
“Meanwhile, the mobile industry is betting on the success of mobile
TV to boost ARPU in the face of falling voice revenues, offering new
distribution opportunities for content providers.”
With many consumers already spending considerable amounts on
pay-TV services at home, it is understandable that many baulk at the
prospect of investing significantly more for the largely limited
amount of time they would spend viewing content on the move.
Operators should also note that Canalys research indicates price
sensitivity varies considerably by country. “While 35% of UK
respondents think that €15 (£10) per month would be a reasonable
price to pay for a compelling mobile TV service, only 15% of French
and German consumers would agree,” Drozd added.
The music industry must change its tune
Piracy continues to ravage the music sector, hitting sales of
physical media hard. New business models, such as
advertising-supported services, need to be considered, but these are
not yet proven revenue generators. This year saw the first serious
steps to remove DRM on legally downloadable music, which could
provide a sales boost and will allow rival providers to compete on a
more even footing with Apple’s iTunes.
Drozd continued, “In device terms, the iPod will increasingly
come under pressure from converged mobile devices. Apple has
launched the iPhone in response to this, and it does face a number
of challenges, especially in Europe, but recent end-user research
indicates that the iPhone will find favour among European consumers,
especially within its own user base. Existing iPod owners are more
than twice as likely as non-owners to consider Apple for their next
mobile phone. Within this group, this rating puts Apple on a par
with leading handset vendors such as Samsung and Motorola.”
The console battle reaches the next level
Now that Microsoft, Sony and Nintendo have all launched their
latest consoles in EMEA, the race is on to drive uptake. Microsoft
took an early lead thanks to its 12-month head start, but the
innovative Nintendo Wii is rapidly making headway. Sony hopes its
historical dominance will translate into strong sales this time
around, but high prices and a limited exclusive games portfolio have
restricted it so far. Canalys expects sales of the current
generation to peak in 2009. “Price and feature revisions are
becoming common in this console generation,” Drozd commented. “In
their tactical moves, vendors must be careful to avoid alienating or
confusing consumers, especially as they attempt to broaden their
scope beyond gaming and the focus of the industry shifts to
developing more comprehensive online services and positioning
consoles as pivotal devices in the digital home.”
Lifestyles of the digital consumer
The PC is already at the centre of many consumers’ digital
lifestyles, and will increasingly become a conduit for entertainment
content – music and video downloads and web TV are all on the rise.
“The concept of the ‘living room PC’ has failed to meet market
expectations, but PC/TV connectivity will become increasingly
important,” said Drozd. “This will allow consumers to view
multimedia content on the most appropriate devices and will help
increase overall adoption. Content will continue to reside on a
broad range of devices in the home, depending on consumer
preference. Vendors must focus on connectivity to enable easy
content sharing rather than continue to fight for total control.
Online video download services are unlikely to hit the mainstream
until this becomes widespread.”
Developments across the digital entertainment market will be
driven by a combination of established companies reacting to
changing consumer demand and new players seeking to upset the status
quo. Vendors involved in the creation, aggregation, distribution or
storage of digital content will find this report essential reading.
In addition to analysis of market trends, the report looks at the
companies Canalys believes could lead in shaping European market
development over the next three years, including Amazon, Apple,
Cisco, Google, HP, Microsoft, Nintendo, Sky, Sony and Yahoo! A broad
range of market estimates and forecasts are also provided,
including: Western European digital TV households and forecasts by
platform; EMEA digital video recorder (DVR) shipment forecasts; EMEA
portable music player market shares; worldwide games console
shipment forecasts by region; EMEA consumer PC shipments and market
shares; and Western European broadband households by country.
The report “The evolving EMEA digital entertainment market” is
available now for €1,295 direct from this web site.
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Analyst photos
Photographs of the analyst(s) quoted in this
release are available in the biography
section and may be re-used by the press to accompany a relevant
article.
About Canalys
Canalys specialises in delivering high quality market data,
analysis and advice to the world’s leading technology vendors. It is
recognised as a key provider of continuous advisory services and
confidential custom projects for marketing managers and strategists
within blue-chip IT, telecoms, navigation and consumer electronics
companies. It has unrivalled expertise in European routes to market
for all kinds of high technology products and services in the
consumer, SMB and large enterprise segments, and provides worldwide
market data and trends analysis.
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