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2007 Australia - Digital Content Markets

This report provides an overview of the various content markets, and analyses the business models used, the key players involved and the major trends and developments in each of these segments.

The content areas covered in the report include:

Video Communications and Video Entertainment including IPTV
User-generated Content
P2P, Instant Messaging (IM), Social Networks and Blogging
Electronic Programming Guides, Portals, Directories, Searching and Publishing
Games and Gambling
Dating and Adult Entertainment
Music and MP3
Mobile Content
VoIP, Services and Projects

In 2006 BuddeComm’s best seller was our new report on digital media developments.

This year we have produced four reports on this topic, an indication of the enormous developments that are taking place in this market. To a large extent the new information is related to the explosion in digital content.

Social networking and user-generated-content (UGC) have really taken off, and it is mind-boggling to watch what is happening around what can only be classified as the model-T of the new digital content. We are all learning and, unlike other content markets, we are all participating.

MySpace and Second Life are opening the eyes, not only of the users, but also of the various industries that are (or should be, or could be) involved in this market. Ultimately there is only so much time that customers can spend on these services, so there will be a limit to which services will be commercially successful. However, the Internet media companies have taken the lead and it will be interesting to see who will buy what in the end.

The major difference with the past is that digital media is about video. While there is room for animation as well, the real driver behind digital content will be video-based. But, again, it will be driven by content made by users. Commercial content will be less than 20% of the total.

We have already watched the IPTV model fail. The industry can’t just copy old models over into new technologies - more innovation will be needed.

In the initial models voice will play a key role, if only for its revenue generating capacity. At the moment this revenue still underpins many of the new digital media productions. Skype and many local VoIP providers are all participating in the ‘minute’s game’ (selling telephone minutes). However, new voice services will need to be integrated into the digital media. The Internet needs a voice.

The sky is the limit and we are sure that in next year’s report we will be marvelling about developments that haven’t even been thought of at this stage.

Key Highlights
The key application of digital media will be communication. Digital media will include an additional important element, video-based communication. Linked to cheap broadband and interactivity, this will result in over 75% of all new media being generated by the users themselves.

Companies involved in commercial media will need to drastically change their business models to allow for user participation and user-generated services and applications.

IPTV has failed because copying a traditional media model into a new technological environment doesn’t work.

Traditional media (TV, press, radio) can use their media as platforms to launch new (niche market) multimedia services, utilising digital media.

Social networks and user-generated content networks are demonstrating that the ‘consumer-led’ era has begun. MySpace and Second Life are some of the developments to watch.

Other communication-driven applications such as instant messaging (IM), peer-to-peer (P2P) networks and blogging are all associated with this trend.

Music has been the key driver behind digital media, both in mobile and fixed networks. This is also a fair indication of the future direction of the video entertainment and wireless broadband (mobility) market.

VoIP has already started to gain traction in the market. The product certainly will become very popular in broadband-based triple play business models. We estimate that over the next two years the market will grow to over one million paid VoIP subscribers.

After nearly ten years less than 5% of mobile users have ventured beyond SMS. The mobile operators’ content business models, in which content providers have to pay up to 50% of their revenue to the operators, are completely flawed. New models are needed before this market will start to move. Slowly but surely the walls are crumbling - with Hutchison doing most of the chipping away.

Australian content market revenue

Year Premium SMS Carrier Portal Total
$ millions
2005 200 100 300
2006 180 200 380
2007 260 300 560

This report provides an overview of the various content markets, and analyses the business models used, the key players involved and the major trends and developments in each of these segments. It gives further information on:

Video content as one the major drivers behind the digital media explosion. The emphasis will be on user-generated video content, such as we see on YouTube; however every site will soon need its own ‘YouTube’ section.

The user-led content revolution is what set the digital media apart from the traditional media. Combined with video this gives rise to a very disruptive development.

Accessing information is already big business, as we know from the Google phenomenon. But, as well as this, another market is emerging around the thousands of portals and other ‘search and find’ developments using social networks, friends and families.

After a disastrous entry into digital media the music industry is generating some interesting new business models and music products that have already become very popular.

Voice continues to be a key revenue earner in this market. It underpins many business models, in particular those of the telcos and ISPs. VoIP, as part of triple play models, is going to grow to one million users by 2008.

The potential of mobile content is phenomenal - if only the mobile operators would move out of the way. Currently accounting for less than 5% of mobile revenues, however, it will take until 2010-2012 before we start to see major changes in this market.

1.1 Latest developments
1.1.1 Broadband and TV - not converging, but complementary
1.1.2 Video-on-Demand (VoD) - missed the boat
1.1.3 Every site needs its own YouTube
1.2 Developing markets
1.2.1 User Generated Content (UGC)
1.2.2 Social networking
1.3 Market overview
1.3.1 Introduction
1.3.2 Digital Content Industry Action Agenda
2.1 Video entertainment
2.1.1 Market analysis
2.1.2 Video entertainment overview
2.1.3 Key developments in Australia
2.1.4 Personal video services
2.1.5 Digital film distribution
2.2 Broadband TV
2.2.1 From IPTV to multimedia events
2.2.2 IPTV: Australia ain’t America
2.2.3 Are you ready for the video explosion?
2.2.4 Broadband TV - first financial results
2.2.5 Regulations
2.2.6 Movies downloading
2.2.7 IPTV developments
2.2.8 Tips for successful video over IP
2.3 Broadband video - key players
2.3.1 Introduction to broadband TV
2.3.2 Telstra’s complex convergence strategy
2.3.3 Other players
2.3.4 OfTheWorldTV
2.3.5 Southern Cross Broadcasting
3.1 Personal video
3.2 Social network sites
3.2.1 Redefining the media world
3.2.2 MySpace - Australia
3.2.3 Advertising is king on social network sites
3.2.4 My Second Life
3.3 The future of VoIP lies in videoconferencing
3.4 Instant messaging services
3.4.1 Thanks to video facing a revival
3.4.2 Interoperability between applications
3.4.3 Additional functionality
3.4.4 Messenger services on mobile phones
3.5 Peer-to-peer networks
3.5.1 File sharing networks
3.5.2 Influence on Internet resources
3.5.3 Commercialisation of P2P services
3.6 Blogging
3.6.1 Creating havoc in news media
3.6.2 Mediacracy
3.6.3 Affecting traditional news media
3.6.4 Other blog terms
3.7 Analysis
3.7.1 Introduction
3.7.2 Consumer-led era
3.7.3 Types of consumers
3.7.4 Business opportunities
3.7.5 Social networks
3.7.6 User Generated Content (UGC)
3.7.7 Internet media consumption
3.7.8 Wireless digital media
4.1 Introduction
4.2 Brief overview of DVRs
4.3 Brief overview of Home Media Centres
4.4 The EPG market
4.4.1 The market in 2007
4.4.2 EPGs essential for success of DVRs
4.4.3 Mixing pot of industries
4.4.4 New business models for EPG
4.4.5 Competition
4.5 Key players
4.5.1 TiVo
4.5.2 Foxtel launches Online Guide
4.5.3 IceTV (discontinued)
4.5.4 Hobbyists
4.6 EPG analyses
4.6.1 Delaying tactics from FTA broadcasters
4.6.2 Broadcasters conspired to block EPGs
4.7 Forecasts
5.1 Overview
5.2 Advertising model
5.3 Search and advice models
5.4 Vertical portals from content providers
5.5 Our own experiences
6.1 Directory service overview
6.2 Needed: competition in directory services
7.1 Google clear winner
7.2 Interesting new deals around Telstra’s digital media activities
7.3 Google Schmoogle - the battle continues
7.4 Australia’s largest online library
7.5 Mapping and tracking
8.1 Personal web publishing sites
8.2 Creating havoc in news media
8.3 Mediacracy
8.4 Affecting traditional news media
8.5 News online
8.6 One-stop news shop from Unwired
8.7 Other blog terms
9.1 Introduction
9.2 Market crossing the $1 billion market
9.3 The market moving towards 2010
9.4 Statistics
9.5 Major players
10.1 Overview
10.2 ABS Report - 2006
10.3 Contribution of gambling to retail estimates
10.4 Casinos
10.5 Historic data
11.1 Online dating
12.1 Adult entertainment
13.1 The market in 2007
13.2 Statistical overviews
13.2.1 Australian digital music downloads to grow to $200m a year
13.2.2 Ericsson Consumer Lab survey
13.3 Key players
13.3.1 destra media
13.3.2 ninemsn assault on the online music market
13.3.3 Telstra
13.4 MP3 and podcasting
13.4.1 Digital Media Players - MP3/iPods
13.4.2 Statistical overview
13.4.3 Podcasting advertising
13.4.5 The Podcast network
13.5 Historical data
14.1 The key drivers of growth
14.2 The role of service providers
14.2.1 Service providers as e-commerce facilitators
14.2.2 E-cash service providers
14.2.3 The role of ISPs
14.2.4 New telcos - no winner, many losers
14.3 Market statistics and surveys
14.3.1 Sensis - 2006 e-Business Report for SMEs
14.3.2 E-business and Internet trends amongst SMBs
14.3.3 The Sensis e-Business index- 2006
14.4 Advertising strategies (separate report)
15.1 Industry overview, forecasts
15.1.1 The mobile content market moving into 2007
15.1.2 A market still kept hostage - analysis
15.1.3 New marketing and distribution models
15.1.4 Mobile TV
15.1.5 Revenue forecast
15.1.6 Operators - developments
15.1.7 Service providers
15.1.8 Premium Rate SMS
15.2 Services overview and stats
15.2.1 Ringtones and wallpaper
15.2.2 Mobile gaming
15.2.3 Mobile email
15.2.4 Gambling
15.2.5 Voting
15.2.6 MP3/iPods
15.2.7 Music
15.2.8 ninemsn
15.2.9 Seven back into mobile
15.2.10 AdultShop
15.3 Regulatory framework
15.3.1 SMS numbering
15.3.2 Adult content
15.3.3 SMS spam
16. VOIP
16.1 Stats, overview, analyses
16.1.1 Statistical overviews
16.1.2 The future of VoIP lies in videoconferencing
16.1.3 IT and telecoms no happy convergence
16.1.4 Market analysis
16.1.5 Regulatory issues
16.2 Services and projects A-N
16.2.1 AAPT
16.2.2 AT&T
16.2.3 Bigair - business-grade VoIP
16.2.4 Broadband Phone
16.2.5 BroadIP (since September 2006 MyNetPhone)
16.2.6 Clarinet
16.2.7 Country Energy - VoIP over BPL
16.2.8 engin - broadband telephony
16.2.9 Freshtel
16.2.10 gotalk
16.2.11 iiNetphone
16.2.12 ISPhone
16.2.13 iVox carrier-grade VoIP wholesaler
16.2.14 MyNetPhone
16.2.15 Neighborhood Cable
16.2.17 Optus
16.2.18 PBA - VoiP over wireless
16.2.19 Pipe Networks - VoIP peering
16.2.20 PowerTel introduces wholesale VoIP business network
16.2.21 Primus Telecom
16.2.22 smartMeeting
16.2.23 SP Telemedia
16.2.24 TalkNet
16.2.25 Telecorp’s VoIP over broadband
16.2.26 Telstra initiatives
16.2.27 Unwired and Freshtel - wireless VoIP
16.2.28 Australian VoIP Association (AVoIPA)
Exhibit 1 - Examples of social networking websites - 2006
Exhibit 2 - Video Ezy
Exhibit 3 - IPTV applications
Exhibit 4 - Proposed retail pricing strategy
Exhibit 5 - Video Ezy
Exhibit 6 - Second Life Financial - February 2007
Exhibit 7 - Second Life in Stats - 2007
Exhibit 8 - Definitions
Exhibit 9 - UGC key success factors
Exhibit 10 - Unique mobile users’ aspects to social networks and UGC
Exhibit 11 - Top ten game consols ranked by total units sold - 2005
Exhibit 12 - Selected licensed Australian online gambling operators
Exhibit 13 - Podcast advertising benefits
Exhibit 14 - Mobile facts and figures
Exhibit 15 - What users want
Exhibit 16 - BlueSkyFrog clients and partners
Exhibit 17 - BlueSkyFrog services
Exhibit 18 - Key m-gambling market segments
Exhibit 19 - BuddeComm VoIP quality survey
Exhibit 20 - VoIP issues
Exhibit 21 - BroadIP price plans
Exhibit 22 - Westpac one of the largest VoIP rollouts

Table 1 - Online advertising spend USA - 2006 - 2008
Table 2 - EPG forecasts Australia - 2005; 2007; 2010; 2015
Table 3 - Forecast telecommunications services revenue by product - 2005; 2010; 2015
Table 4 - Ten most visited Australian search engines - week ending 14 October 2006
Table 5 - Australian games software sales and growth - 2000 - 2009
Table 6 - Gambling as a portion of hotels/licensed clubs & total retail (seasonally adjusted) - 2004 - 2006
Table 7 - Gambling in retail trade (seasonally adjusted) - 2004 - 2006
Table 8 - Contribution of gambling to total turnover, by state (seasonally adjusted) - 2004 - 2006
Table 9 - Electronic gaming machines per state - 2002
Table 10 - Listening to music - 2006
Table 11 - Getting/buy music habits - 2006
Table 12 - Net wholesale sales of sound recordings & music videos - January - June 2005
Table 13 - Net wholesale sales of sound recordings & music videos - percentage change since 2004
Table 14 - Digital music market - revenue and forecasts - 2004 - 2009
Table 15 - Online users and other media usage
Table 16 - Computer ownership by industry sector - May 2006
Table 17 - Computer ownership by business size and location - May 2006
Table 18 - Telecommunication equipment ownership - May 2006
Table 19 - SME computer equipment ownership trends - 1999 - 2006
Table 20 - SME computer hardware & software expenditure - 2005 calendar year
Table 21 - SME trends in mean expenditure, computer hardware & software - 1998 - 2005
Table 22 - SME expected computer hardware & software expenditure - 2006 calendar year
Table 23 - New software applications purchased/planned by SMEs - 2005/06
Table 24 - Buying over the Internet by business size - 2006
Table 25 - Buying over the Internet by industry sector - 2006
Table 26 - Proportion of orders placed over the Internet - 2006
Table 27 - What businesses buy over the Internet - 2006
Table 28 - Business trends in Internet connections - 1995 - 2006
Table 29 - Reasons for connecting to the Internet by business size - May 2006
Table 30 - How SMEs access the Internet - May 2006
Table 31 - SME broadband access questionnaire - May 2006
Table 32 - Summary of current and expected uses of the Internet by SMEs - May 2006
Table 33 - Australian content market revenue - 2005 - 2007
Table 34 - Mobile content ARPU per customer - 2006
Table 35 - Skype users Australia - 2004 - 2008
Table 36 - Paid VoIP users Australia - 2004 - 2008
Table 37 - Main business distribution Australian VoIP market - July 2006
Table 38 - Unwired/Freshtel pricing

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