Over five million Australians will own a tablet computer by 2015 and more than a quarter of those will use the devices to watch television, films and read newspapers and books, according to the latest PwC Entertainment and Media Outlook report.
The interactive games segment has also been pegged as the next biggest growth area by the yearly report, which predicts revenue will grow to $2.5 billion in 2015 from $1.6 billion, helped along by the growth in gaming designed for tablets.
The media and entertainment industry as a whole is tipped to turnover $37.2 billion by 2015, up from this year’s $30.4 billion.
PwC executive director and report editor Megan Brownlow says the growth in the tablet market has to be seen in context with the release of other technologies, noting that tablets like the iPad are a whole new way of consuming media, rather than an evolution in existing technology.
“The best way to look at the future is to look at the past,” she says, saying that the take-up rate for tablets is much larger than for previous technologies, such as the introduction of MP3 players and DVD players.
“If something is a steep change, it’s a really obvious change. From the consumer experience, it’s a ‘lean back’ experience, in that you can just lean back, consume the internet without having to leave your desk.”
Brownlow says the tablet allows users to consume a vast array of content in whatever manner they choose, and that the growth of stores like the App Store have allowed developers to take part in entirely new markets.
“From the content owner’s point of view, it combats piracy. They are the absolute two big drivers for uptake, and they create a cycle – consumers have more content, and the more they take, the more developers will create it.”
The PwC report identifies a key number of growth areas, with interactive gaming taking out the highest growth spot at 9.5%, followed by the internet sectors at 7.4%, which covers both payment for internet access and advertising.
“The slower growth in the internet access space is due to the price reduction as ISPs look to an NBN future. But advertising is growing faster, as it sucks up revenue from traditional players such as television and print.”
The PwC report shows the magazine industry will decline by 1.4% to $1.5 billion over the next four years, while newspapers will grow by a meagre 0.1%. The internet is set to become the biggest advertising method by 2014.
Brownlow explains the massive growth in gaming comes not only as major publishers have created console devices to allow more general multimedia services, such as media streaming, but as the growth in mobile and social games continues to take off.
Already this year the growth in social gaming has been noted by the imminent IPO of Zynga, creator of the Facebook FarmVille game. Brownlow says the growth is part of the “explosion in mobile and online games”.
“What this has done is smooth the cyclical nature of the market. Consoles were very cyclical, so every time a major publisher released a blockbuster it would sell well, but now online and mobile gaming are really popular all the time.”
“Successful developers have also hit that same golden aspect – it’s about women. Social games are played more by women than they are by men.”
With gaming having been such a male-dominated sector for awhile, moving into social games has allowed publishers and developers to essentially double their market.
“In-app purchases are growing as well. With consumers wanting to grow their farms in game and progress faster, they need to have some sort of advantage. We now see that in-app purchases account for 52% of the revenues in the casual mobile gaming space.”
Recorded music is set to be the biggest causality, with PwC expecting the industry to decline by 3.9% over the next four years. Brownlow says music labels need to start identifying new models to make up for the lost cash, as music goes digital and becomes cheaper.
“Recorded music is the most classic example of moving from dollars to pennies. If we were looking at a unit sales picture, we would be able to demonstrate that the volume of purchases is growing by unit, but people are paying 99 cents instead of 15 dollars.”
“This means they have to develop new business, and it’s also a reason why live entertainment is doing so well.”
The report states that live entertainment is continuing to grow despite the sketchy economy, with Brownlow saying that even with high ticket prices, customers are continuing to pay.
“We have this strong Australian dollar which is bringing lots of concerts out here, and in our analysis of ticket prices we see there has been a steady climb. People are still willing to pay for that experience.”
“It’s also a good way of supplementing that business.”
Brownlow also says labels will need to identify new digital models, particularly around the area of streaming, evidenced by the growth of Spotify in Europe and now the United States.
“There’s an interesting trend we’ve identified, in that digital natives are quite happy to rent content, rather than just buying it. Digital migrants had to own content and have vast collections, but younger users are quite happy to just pay a subscription fee and rent a service.”