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2008 Australia - Entertainment and Media Markets

Subjects covered include:

  • Key media and Internet media players;
  • Overview and analyses of the media industry;
  • Permission-based marketing, customer loyalty strategies;
  • Video communications, video entertainment, IPTV, EPGs, mobile TV;
  • Social networks, UGC, blogging, P2P, podcasting;
  • Music, games, gambling, dating, adult services;
  • Portals, directories, searching.

The Digital Media Market

Over the last two years the traditional media companies have well and truly established themselves in the emerging digital media market. While telcos tried to claim this territory, in the end they failed. Interesting new developments can be expected following the initiative taken by Lachlan Murdoch.

Seven has indicated it will launch a TiVo service and it has also bought two telco companies. Fairfax media has grown from strength to strength. It is obvious that key new developments will come from the industry. In this report we cover Lachlan Murdoch, News Limited, PBL, Seven, Yahoo!7, Ten, SCB, WIN, Fairfax and Austereo.

The most hotly debated topic in the digital media industry is how to make money. The telco industry is still full of complaints on this subject, but the media industry has made some quantum leaps. This has been driven, on the one hand, by role models such as Google, Yahoo, YouTube, eBay, Skype and others. But the traditional media companies have also made great progress, using their traditional media to launch events and then supplementing them with broadband-based services such as portals, blogs, vpods, chat-rooms, SMS, etc. New advertising models, permission-based marketing and premium sales activities are being used to attract people to these events and services.

The telcos were the first cabs off the rank, once they began to realise what they could do with the Internet. However, they quickly became entangled in the debate about the need for a good broadband infrastructure before new media services could be offered. As well as this, the telcos lack the requisite media background. Nevertheless, Telstra in particular remains adamant about its position in this new market and it has made significant investments in the market under its BigPond brand. Others covered in this report: Optus, Internode, Adam Internet, Unwired and TransAct. Non-telcos include: Roo Media, Video Ezy, Of the World TV and VOD Pty Ltd.

Digital Media Entertainment Services

New video applications are emerging as the Internet media companies seek to exploit the added speed and capacity of broadband infrastructure. With the increase in speed and capacity a whole range of new applications will be entering the market over the next decade. Console games have changed dramatically, with games, music and movies merging and integrating. Growing penetration of broadband and mobile 3G networks will also promote growth in online gaming. This report includes the digital media developments in online gaming, gambling, online dating and adult entertainment. In 2007, a record growth year for video game sales in Australia, the country’s video game industry produced $1.3 billion in sales.

Music has been the major driver behind the early developments in the digital media, both in mobile and fixed networks. While mobile is the preferred technology for listening to music, the associated business models are not conducive to helping people become accustomed to using these networks for music delivery. Most will use free or cheap Internet sites to gain access to music.

People naturally want to communicate, and the Internet has always provided a forum for User Generated Content - from the early bulletin boards to today’s video blogs that allow for new levels of interaction. Websites such as MySpace, MSN Spaces and Facebook are proving to be hugely popular around the world. Sites that initially began as social networks, such as Facebook, are also expanding into video-based services in order to compete with services offered by sites such as YouTube. Mobile social networking services are also being developed. With an estimated 230 million active memberships to such sites worldwide, there is no sign of this growth abating at present.

Key highlights

  • The involvement of Lachlan Murdoch in the Australian media landscape could well be a catalyst for further developments in the new media.
  • Printed media are performing better than TV stations in the digital world.
  • Broadcasters are still slow in adapting to the digital media.
  • Seven’s mixture of activities, including Yahoo, TiVo, engin and Unwired, will be an interesting case to watch in 2008.
  • The role of telcos and ISPs continues to reside in infrastructure and basic access.
  • Pay TV will remain a niche market and will not move much beyond 25% penetration.
  • User Generated Content (UGC) will penetrate the traditional market and an increasing amount of content production will be outsourced.
  • Over three-quarters of digital content will be created by the users (UGC).
  • Services offered in this sector are rapidly become a major market segment (databases, software, e-albums, specialised e-devices).
  • Social networks have seen massive growth and, with 230 million users worldwide, offer great opportunities for the commercialisation of digital media.
  • While the concept of social networks is here to stay, the format will start to change, with fragmentation expected.
  • Privacy, safety and piracy are seen as key issues by the new Australian government. Legislation will be introduced in 2008 to better manage this.
  • How to best commercialise the ‘Long Tail’ still remains an unsolved business issue;
  • Video entertainment will be the key to success, but this will not be based on (IP) TV models.
  • Music as an e-application has seen a comeback. Video will be the next battleground.
  • Environmental concerns re the e-living room will need to be addressed. Smart grids might assist in finding solutions.
  • Customers are happy to pay for devices but reluctant to pay for services, Nokia’s bundled approach will be an interesting one to watch in 2008.
  • Mobile Internet portals will attract mobile users on capped data plans, finally opening up commercial business models for mobile content.
  • There will 5 million broadband-enabled households towards the end of 2008.
  • The lack of affordable high-speed broadband (including its effect on quality) is holding back the market.
Total broadband subscribers - 2005 - 2009
Year Subscribers
2005 2.1
2006 3.4
2007 4.4
2008 (e) 5.2
2009 (e) 5.5
(Source: BuddeComm)

1. The Digital Media Industry
1.1 Major industry segments
1.1.1 Media statement new government
1.1.2 TV broadcasters
1.1.3 Radio broadcasters
1.1.4 Newspaper publishers
1.1.5 The video and DVD rental companies
1.1.6 Film and video producers
1.2 Media companies
1.2.1 The Murdoch - Packer deal
1.2.2 News Corp and subsidiaries
1.2.3 MySpace
1.2.4 PBL - Nine - ninemsn
1.2.5 Seven Network (Yahoo!7)
1.2.6 AOL
1.2.7 Ten Network
1.2.8 Fairfax Media
1.2.9 Austereo online
1.2.10 Foxtel
1.2.11 Southern Cross Broadcasting (SBC)
1.2.12 WIN SelecTV
2. Digital Entertainment Market
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 IPTV
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 - some early stats from 2006
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 Telcos & ISPS in the digital media
2.3.1 BigPond Media
2.3.2 Telstra’s complex convergence strategy
2.3.3 Internode - BlueBox
2.3.4 Adam Internet
2.3.5 Unwired screens IP movies
2.3.6 TransACT
2.3.7 Participation TV from Optus
2.3.8 Non telco providers
2.4 Social networks & UGC
2.4.1 A popularity contest
2.4.2 Every site needs its own YouTube
2.4.3 Consumer-led era
2.4.4 Types of consumers
2.4.5 Business opportunities
2.4.6 Other developments
2.4.7 Statistics and forecasts
2.5 Market overview
2.5.1 The music revolution
2.5.2 Business models were changed too late
2.5.3 Free legal downloads
2.6 Statistical overviews
2.6.1 Album sales drop as music download sales increase
2.6.2 Survey on online music searching
2.6.3 Australian digital music downloads to grow to $200m a year
2.6.4 Ericsson Consumer Lab survey
2.6.5 Key players
2.6.6 Digital media players - MP3/iPods
2.6.7 Podcasting and Vodcasting
2.6.8 Historical data
2.7 Video communications
2.7.1 The power of video
2.7.2 Personal video
2.7.3 Universities turn to video conferencing
2.7.4 The future of VoIP lies in videoconferencing
2.8 Social network sites
2.8.1 MySpace - Australia
2.8.2 Loop Mobile (Moko)
2.8.3 Analysis
2.9 Synthetic environments
2.9.1 New developments
2.9.2 Paul Budde’s Second Life
2.10 Instant Messaging (IM) services
2.10.1 Thanks to video facing a revival
2.10.2 Interoperability between applications
2.10.3 Additional functionality
2.10.4 Messenger services on mobile phones
2.11 Peer-to-Peer (P2P) networks
2.11.1 File sharing networks
2.11.2 Influence on Internet resources
2.11.3 Commercialisation of P2P services
2.12 Blogging
2.12.1 Creating havoc in news media
2.12.2 Mediacracy
2.12.3 Affecting traditional news media
2.12.4 Other blog terms
2.13 Internet portals
2.13.1 Overview
2.13.2 Advertising model
2.13.3 Search and advice models
2.13.4 Vertical portals from content providers
2.13.5 Our own experiences
2.13.6 Telstra launches online shopping portal
2.14 Online directories
2.14.1 Directory service overview
2.14.2 Analysis - Needed: competition in directory services
2.14.3 Customers moving to the web
2.15 Online search engines - overview and statistics
2.15.1 Google’s domination
2.15.2 BRW Magazine investigation
2.15.3 News and weather market site statistics
2.15.4 Survey on online search advertising market revenues - IAB
2.15.5 Australia’s largest online library
2.16 Online search engines - analysis
2.16.1 Analysis - Interesting deals around Telstra’s digital media activities
2.16.2 Telcos and media versus Googles
2.16.3 Google Schmoogle - the battle continues
2.17 Mapping and tracking
2.17.1 E-map for vehicles and pedestrians
2.18 Web publishing
2.18.1 Personal web publishing sites
2.18.2 One-stop news shop from Unwired
2.19 Gambling
2.19.1 Overview
2.19.2 Tabcorp Internet revenues top $1 billion
2.19.3 Contribution of gambling to retail estimates - 2007
2.19.4 Casinos
2.19.5 Mobile gambling
2.19.6 Historic data
2.19.7 Online gaming industry
2.19.8 Mobile gaming
2.20 Online dating
2.21 Adult services
3. Mobile Media
3.1 Industry overview
3.1.1 The mobile content market in 2008
3.1.2 The market for mobile digital media
3.1.3 A market still kept hostage - analysis
3.1.4 New marketing and distribution models
3.1.5 Mobile TV
3.1.6 Premium Rate SMS (PSMS)
3.2 Analysis
3.2.1 ‘Off-deck’ content
3.3 Statistics
3.3.1 Ringtones and wallpaper
3.3.2 Mobile email
3.3.3 Voting
3.3.4 Advertising
3.3.5 Nokia set to break into the music market?
3.4 Mobile TV
3.4.1 The market in 2007
3.4.2 Major players
3.4.3 Spectrum for mobile broadcasting
3.4.4 Mobile Broadcast Multicast Service (MBMS)
3.4.5 Key market 13-19 year olds
3.4.6 DVB-H
3.4.7 Telstra pulls out of movemedia trial
3.4.8 Analysis of video-based mobile developments
3.4.9 Mobile TV and WiMAX could be a good match
4. Glossary of Abbreviations

List of Tables

Table 1 - Leading social networking sites in the US - 2006 - 2007
Table 2 - Leading blogging sites in the US - 2006 - 2007
Table 3 - US ad spending on social networking sites - 2006 - 2007; 2010
Table 4 - Worldwide ad spending on social networking sites - 2006 - 2007; 2010
Table 5 - Listening to music - 2006
Table 6 - Getting/buy music habits - 2006
Table 7 - Average time spent listening by radio users per week by device - November 2007
Table 8 - Net wholesale sales of sound recordings & music videos - January - June 2005
Table 9 - Net wholesale sales of sound recordings & music videos - % change since 2004
Table 10 - Digital music market - revenue and forecasts - 2004 - 2009
Table 11 - Four most visited Australian search engines - four weeks ending 26 January 2008
Table 12 - Search engine advertising revenue - 2007
Table 13 - Most visited news and weather market sites - January 2008
Table 14 - Gambling as a portion of hotels/licensed clubs & total retail (seasonally adjusted) - 2004 - 2007
Table 15 - Gambling in the retail trade (seasonally adjusted) - 2004 - 2007
Table 16 - Contribution of gambling to total turnover, by state (seasonally adjusted) - 2004 - 2007
Table 17 - Electronic gaming machines per state - 2002

List of Exhibits

Exhibit 1 - Murdoch - Packer deal structure and pblMedia structure
Exhibit 2 - Intermix Media and MySpace
Exhibit 3 - pblMedia structure
Exhibit 4 - TiVo USA
Exhibit 5 - IPTV Applications
Exhibit 6 - Video Ezy - 2008
Exhibit 7 - Proposed ReelTime retail pricing strategy
Exhibit 8 - Podcast advertising benefits
Exhibit 9 - Second Life Financials - 2007 - 2008
Exhibit 10 - Second Life user statistics - 2008
Exhibit 11 - Key m-gambling market segments
Exhibit 12 - Selected licensed Australian online gambling operators
Exhibit 13 - Mobile facts and figures
Exhibit 14 - What users want
Exhibit 15 - Key applications from data pack users
Exhibit 16 - Mobile TV minutes
Exhibit 17 - Broadcast Australia DVB-H trials - 2005 - 2007

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