The explosion of digital media has been nothing less
than spectacular. It is revolutionising the way people stay in contact with
each other and the way they consume and enjoy their digital entertainment. The traditional landscape is trembling under
these changes.
Similar to the digital economy developments, the
digital media are also transforming many aspects of the economy and the
society, in general increasing efficiencies, democratising access and putting
the people in charge rather than the suppliers of the services.
The changes are proving very difficult for the
traditional industry to cope with and as a result digital media leadership is
coming from new companies who don’t have the burden of legacy systems and
legacy services.
Driven by the successful US-based Netflix video
streaming service from America, several Australian companies have launched new
video streaming services, or have updated their existing services.
The traditional IPTV model is making something of a
comeback, with new video streaming services launched over higher-speed
broadband networks and the introduction of competitively priced triple-play
models. But digital rights constraints are making it impossible for the
services to take a larger share of the entertainment content market, and the
current developments are therefore being driven by free catch-up TV series
rather than movies and sport. Movie content available (under the basic IPTV
subscription) is mostly B- or C-rated; A-rated material and new releases are
only available at extra charge.
Publisher remains pessimistic about the current
commercial video streaming business models of most of the players. We predict
that consolidation will have to take place.
Until now services offered by ISPs have failed to
attract large paying-user bases – in early 2015 there were only around 128
million subscribers globally, and some 800,000 in Australia.
By far the largest growth in 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.
All of the above will significantly influence video
streaming developments and future models will therefore have to be
substantially different from those of today. The best way to envisage this is
to look at the smart devices which provide ‘app-like’ interfaces to new content
services that supply instant streaming.
Publisher 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.
There is a correlation between the availability of
high-speed broadband and video streaming usage and it is envisaged that further
increases in high-speed broadband penetration will drive new video streaming
developments. The rapid growth of smartphones and tablets is also giving this
market a boost, as well as new business models such as pay-per-view. New video
streaming services are already being streamed over these devices, as well as
over gaming devices.
Music Industry
Music was one of the early key drivers behind the
developments in digital media but, with faster speeds, both mobile
broadband-based and fixed broadband video streaming has overtaken music
downloading. Nevertheless music streaming, podcasting and downloading MP3s is a
growing activity, particularly among the younger demographic. Inflexible
digital rights arrangements are still leading to illegal downloading.
With the 20% or so of Australians who actually pay
for downloaded music, many others are using the online music apps like YouTube
and other cloud-based sites to obtain their music. Cloud-based music has been
the major growth area in recent years. It is expected that the other 80% of
users who are using digital media online will try it and then some will
continue to use these services – with some service providers giving cheap or
free complimentary access for a couple of months and access to over 20 million
tracks, some interspersed occasionally with ads. The online industry has also
created several new services, especially around interaction with artist,
festivals and concerts.
Newspaper and
Book Publishing
The newspaper publishers are among those hardest hit
by the massive changes that are taking place as a consequence of rapidly
changing digital technologies.
Many of the printed media have resorted to ‘dumbing
down’ their newspapers in order to survive. This has led to excesses – illegal
practices in order to obtain news, and politicisation of the media to create an
environment of fear, uncertainty and doubt in relation to some of the critical
issues that are now being faced around the world.
New e-business models will need to be developed
whereby 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 business models that would enable them to monetise these
visits.
By way of contrast the book industry has a golden
future. More books are read than ever before and new (international) book
markets open up every year. Writers have existed – and have been in demand –
for 5,000 years and they are not going to die out any time soon. Nor will there
be any decrease in demand for more book content.
However, new technologies are delivering the same
product in a different format and/or different ways, for a fraction of the
cost. Traditional cost structures are dictated by analogue business models.
Digital technologies don’t have those high costs and they therefore can deliver
the product significantly cheaper. As the traditional industry has been slow to
adapt to this situation, we have seen others entering the market. These are
enormously destructive developments for the traditional industry, and linear
solutions are not the answer.
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