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Australia - Digital Media - Apps and Services

Overview

This annual report offers a wealth of information on the digital entertainment and media market in Australia. The report includes analyses, forecasts, statistics and trends. It provides a comprehensive insight into the progress of the various media internet and telco companies and examines the key issues in the market and the business opportunities arising from these developments.

Subjects covered include:

  • The rapidly expanding Digital Media Markets
  • Video-streaming industry insights and an overview of all the major players.
  • The Social Media market and its business challenges
  • The $2.5billion gaming market
  • The sustainability of the e-music market.
  • The e-newspaper and book publishing markets
  • The rapidly growing mobile media market
  • Mobile TV and cloud based TV.
  • Industry and market surveys and statistics

Executive Summary

Digital media now the largest entertainment market

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.

This report will follow the major digital media market segments, with analysis and overviews of the major trends and developments.

Video streaming

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.

BuddeComm 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.

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.

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.

Social Networks

Social media developments are fascinating and exciting. They show the great potential of the new communication and information tools that are becoming available thanks to the internet, Web 2.0, email, broadband infrastructure and mobile phones and tablets. But for these new social media tools to succeed they need to be fully and totally integrated into our daily communication.

Popular social media sites have come and gone over the last five or so years as users trend to new features that allow them to experiment and connect. Services include Facebook, Twitter, YouTube, Wikipedia, Foursquare and LinkedIn Instagram, Pinterest and many others. The battle however is still far from over, with companies trying to build viable business models around their ever increasing customer data bases.

In 2015 there are more than 13.8 million Facebook users, 2.7 million Twitter users and 3.3 million LinkedIn users; and some of them access these sites several times a day. This rise in users continues the trend from 2009, when Australians interacting with brands via social networks jumped by more than 60%. Increased use of mobile broadband through mobile devices is driving consumer uptake, with many businesses now also investing in social media and also expecting a return.

Gaming and Gambling

As broadband speed and capacity increases a completely new range of gaming applications will enter the market over the next decade. Not needing a console has increased access and created distinctions between console and casual gamers. Games are now integrated with other online services such as music and movies. The video and computer games industry in Australia had a bumper year in 2014, with sales hitting $2.46 billion (iGEA).

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 virtual online gambling is a growth market. There is a decline in the number of Australians who are gambling, but an explosion in sports betting, especially via online.

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.

Table of Contents

1. The Digital Media Markets

  • 1.1. Video Streaming
    • 1.1.1. Definitions
    • 1.1.2. Introduction
    • 1.1.3. Market Analysis
    • 1.1.4. Market surveys
    • 1.1.5. Major Players
  • 1.2. Social Networks
    • 1.2.1. Overview of key developments
    • 1.2.2. Social network trends in Australia
    • 1.2.3. Key social networks
    • 1.2.4. Business Market
    • 1.2.5. Conclusions and trends
  • 1.3. Gaming and Gambling
    • 1.3.1. Market trends and statistics
    • 1.3.2. Mobile gaming
    • 1.3.3. Online gambling
    • 1.3.4. Gaming surveys
  • 1.4. Music Industry
    • 1.4.1. The e-music industry
    • 1.4.2. Market overview
    • 1.4.3. Key players - some old and some new ones
  • 1.5. Newspaper Publishing
    • 1.5.1. The anomaly of the mass media
    • 1.5.2. The future of mass media news
    • 1.5.3. Key trends and developments
    • 1.5.4. Paywalls and other new models
    • 1.5.5. Media companies need to disaggregate and rebuild
    • 1.5.6. APN News and Media
    • 1.5.7. News Corp Australia
    • 1.5.8. John Fairfax
  • 1.6. Book Industry - E-books
    • 1.6.1. The market in 2015
    • 1.6.2. Embracing the new digital era
    • 1.6.3. Transforming the book industry
    • 1.6.4. Customer service is king
    • 1.6.5. Promoting national culture
    • 1.6.6. Industry protectionism will fail
    • 1.6.7. More power to the author
    • 1.6.8. E-publishers are very different beasts
    • 1.6.9. The transformation of the Australian book industry

2. Mobile Media

  • 2.1. Providers
    • 2.1.1. Mobile operators
    • 2.1.2. Service providers
  • 2.2. Surveys and Statistics
    • 2.2.1. Introduction
    • 2.2.2. Recent surveys
    • 2.2.3. Australian Mobile Phone Lifestyle Index
    • 2.2.4. Mobile data observations
  • 2.3. Mobile TV
    • 2.3.1. What is mobile TV?
    • 2.3.2. Market overview and analysis
    • 2.3.3. Cloud-based mobile TV
    • 2.3.4. Major players
    • 2.3.5. Regulation
    • 2.3.6. Technology platforms

List of Tables:

  • Table 1 - Online video content by service - 2013-2014
  • Table 2 - Preferred sources of entertainment
  • Table 3 - Video content viewing behaviours
  • Table 4 - Fetch TV subscribers 2012 - 2015
  • Table 5 - Hulu revenue - 2009- 2013
  • Table 6 - Average SVoD streaming speed by ISP - April 2015
  • Table 7 - Quickflix subscribers - 2008 - 2014
  • Table 8 - Telstra Media financial results - 2010 - 2015
  • Table 9 - Telstra cumulative T-Box device sales - 2011 - 2014
  • Table 10 - Global - subscribers to key social networks - 2015
  • Table 11 - Estimated social networking members by major sites in Australia - 2010 - 2014
  • Table 12 - Guestimates of Twitter users in Australia
  • Table 13 - Preferred devices for gaming
  • Table 14 - Gaming machine turnover versus machines in operation - 2002 - 2013
  • Table 15 - Worldwide online gambling revenue - 1997; 2001; 2004; 2006; 2008 - 2012; 2017
  • Table 16 - Value of recorded music and digital music sales - 2005 - 2014
  • Table 17 - Internet distribution recorded music market sales - 2006 - 2016
  • Table 18 - Fairfax Digital key financial performance indicators - 2013-2014
  • Table 19 - Growth of e-reader sales - 2009 - 2015
  • Table 20 - Telstra SMS traffic - 2009 - 2014
  • Table 21 - Mobile Embrace key financial performance indicators - 2010 - 2014
  • Table 22 - Mobi.moki key financial performance indicators - H1 FY2014
  • Table 23 - Mobi.moki key financial performance indicators - 2010 - 2014
  • Table 24 - Enero (Photon Group) - key financial parameters - 2010 - 2014
  • Table 25 - preferred device for engagement, by activity - 2014
  • Table 26 - Customer satisfaction with mobile provider services - 2010 - 2014
  • Table 27 - Mobile phone brand ownership - 2010 - 2014
  • Table 28 - Use of mobile phones by service - 2010 - 2014
  • Table 29 - Data included in monthly plans - 2010 - 2014
  • Table 30 - Use of mobile phones by service - 2010 - 2014
  • Table 31 - Use of information services - 2010 - 2014
  • Table 32 - Tablet use of services - 2012 - 2013
  • Table 33 - Mobile data downloaded versus mobile subscribers - 2012 - 2014
  • Table 34 - Telstra mobile ARPU - 2009 - 2014
  • Table 35 - Telstra mobile prepaid and postpaid revenue - 2008 - 2014
  • Table 36 - Optus mobile revenue - 2013 - 2015
  • Table 37 - Vodafone Australia revenue - 2009 - 2014
  • Table 38 - HTA key metrics - financial overview - 2009 - 2014

List of Charts:

  • Chart 1 - Overview of recorded music sales versus digital music sales - 2005 - 2015
  • Chart 2 - Overview of internet distributed recorded music market sales - 2008 - 2016
  • Chart 3 - Overview of Mobile Embrace key financial performance indicators - 2010 - 2014
  • Chart 4 - Overview of Mobi.moki key financial performance indicators - 2010 - 2014
  • Chart 5 - Overview of Vodafone Australia revenue - 2009 - 2014
  • Chart 6 - Overview of HTA financial metrics - 2009 - 2014

List of Exhibits:

  • Exhibit 1 - Seven Network's digital media strategies - 2006 - 2012
  • Exhibit 2 - Mobile video chat and conferencing - a key growth area
  • Exhibit 3 - Examples of popular online dating sites
  • Exhibit 4 - LinkedIn at a glance - 2014
  • Exhibit 5 - Examples of Web 2.0 developments
  • Exhibit 6 - Background information on the adult gaming category changes
  • Exhibit 7 - Interactive gaming versus online gaming and online gambling defined
  • Exhibit 8 - Wikileaks and will the e-publishers be the new free press
  • Exhibit 9 - Statistical snapshot of e-books
  • Exhibit 10 - All European books online for the price of 600km of roads
  • Exhibit 11 - MOKO.mobi at a glance - 2014
  • Exhibit 12 - Overview of Mobi-moki subsidiary companies - 2014
  • Exhibit 13 - Enero at a glance - 2014
  • Exhibit 14 - Background information on Information Dialling Services (IDS)
  • Exhibit 15 - Overview of the now defunct cloud- based mobile TV services
  • Exhibit 16 - Background information on the defunct Optus TV Now service
  • Exhibit 17 - Examples of Mobile TV technologies
  • Exhibit 18 - Broadcast Australia DVB-H trials - 2005 - 2009
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