the digital content industry in spain

2012 EDITION

The Digital Content Industryin Spain

Annual Report 2011

CONTENTS

Digital Content Industry

Video games sector

Music sector

Cinema and Videos Sector

Audiovisual Sector

Publishing Sector

Digital Advertising Sector

Driving Digital Content

Trends and forecast

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2

3

4

5

6

7

8

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Digital Content Industry

1.

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Turnover in the digital contentindustry was €8,553 million

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Despite this figure, which breaks with the growing trend of the last fewyears, the rapid growth in the digital content industry stands out.

Source: ONTSI (Spanish Observatory for Telecommunications and the Information Society) Digital Content in Spain, 2011

Turnover in the digital content industry: evolution 2005-2011 (M €)

CAGR 2005-2011 (%): 15%

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0110111110

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3,703 3,832

4,971

6,033

8,863

8,924 8,553

3.5%

29.7%21.4%

32.7%

11.5%-4.2%

2005 2006 2007 2008 2009 2010 2011

The audiovisual sector is the industry driver, accounting for 43.6% of turnover

Digital Content in Spain, 2011

€M

5

43.6%

8,553

Radio and television programming and broadcasting activities (audiovisual)

Cinema, video and television programme activities

28.2%

Online advertising

Book and newspaper publishing and other publishing activities

Video games

Sound recording and digital editing activities

Other information services

WWW

i

10.5%

5.8%

1.3%

2.2%

8.3%

Breakdown of sales* in the digital content industry by sector in 2011 (*% of the total sales in the digital content industry)

Source: ONTSI

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In the cinema and video, music and audiovisual sectors the digitalisation rate is above the average of 52.8%

Digital Content in Spain, 2011

6

Publishing sector

10.4%

89.6%

% digital

% non digital

Music sector

% digital

% non digital

44.2%

55.8%

Cinema and video sector

% digital

% non digital

26.8%73.2%

Audiovisual sector

% digital

% non digital

9.5%9.4%

90.5%

Digitalisation rate by sector 2011

Source: ONTSI

(% of the total sales for each sector)

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Video games sector

2.

576

719744

633

575

499

2006 2007 2008 2009 2010 2011

Digital Content in Spain, 2011Source: ADESE

Income from sales of video games (software) in Spain: evolution 2006-2011

(and % of income from sales of video games)

Sales of video games fell by13.2% compared to 2010

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24.8%

3.4%

-14.8%

-9.2%

-13.2%

2011

CAGR 06-11 (%): -2.8% Growth 2006-2011: -13.4%

Music sector

3.

20102011

190€M

192€M

10

-1.3%

Digital music brought in a salesturnover of €190 million

Digital Content in Spain, 2011Source: ONTSI

Downloadable music represented 35.6% of all digital business (20.5percentage points more than in 2010).

Cinema and Videos Sector

4.

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Digital business sales turnover in the cinema and video sector reached €2,412 million

Digital Content in Spain, 2011Source: ONTSI

This sector is still second in terms of highest contributions to the total sales,contributing 28.2%.

Cinema, video and television

post-production 49.8%

Cinema screenings

10.5%

Cinema and video

production 14.4%

Production of TV programmes

10.5%

Cinema and video

distribution 14.6%

Distribution of TV programmes

0.1%

Audiovisual sector

5.

4,124.3 4,015.23,733.2

-3%-7%

-100000%

0%

100000%

200000%

300000%

400000%

500000%

20102009 2011

Digital Content in Spain, 2011

In 2011 the audiovisual sector* was marked by the increase in the number of channels and audience fragmentation spreading over more channels

Source: CMT (Telecommunications Market Commission)

Income from television activities in the audiovisual sector: 2009-2011 (M €)

Sales in television activities reached €3,733 million

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This decrease in sales was caused by the fall in advertising, which had a direct effect on freeview television

*For the purposes of calculating the digital sales figure for this sector, this study only takes into account thefigure corresponding to television programming and broadcasting, whether paid or freeview, which has beencarried out digitally since 2010

2011

Publishing sector

6.

20102011

708€M

778€M

-10.2%

Digital business sales* in the publishing sector reached €708 million

Digital Content in Spain, 2011Source: ONTSI

*Digital publishing in the publishing sector includes: books, phone or address directories and guides,newspapers, magazines and other publishing activities (such as the online versions of catalogues,photographs, illustrations, cards, postcards and posters, prints of artwork, advertising material, otherprinted material and the publishing of statistics and other information).

According to data from the Observatorio de la Lectura y el Libro (Spanish Reading and Books Observatory) the percentage of digital readers has increased from 48.6% at the beginning of 2010 to 52.7% at the end of 2011

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Digital Advertising Sector

7.

WWW

Digital Content in Spain, 2011Source: Infoadex

Investment in Internet advertising rose to €899 million, a growth of 12.6%

Investment in Internet advertising is the third highest, behind television anddaily newspapers

18CAGR 06-11 (%): 23.7% Growth 2006-2011: 190.0%

55.4%

310.4

482.4

610.0654.1

798.8

899.2

26.5%

7.2%22.1%

12.6%

0

100

200

300

400

500

600

700

800

900

1000

20102009200820072006 2011WWW

WwwWWW WWW

WWWWWW

Driving Digital Content

8.

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Digital Content in Spain, 2011

The Digital Agenda for Europe comeswithin the Europe 2020 Strategy, drawnup by the European Commission andpublished in March 2010.

The Digital Agenda for Spain initiative

Source: prepared by ONTSI (Spanish Observatory for Telecommunications and the Information Society)

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The development of the DigitalAgenda for Spain initiative was ledby:•The Ministry of Industry, Energy andTourism•The Ministry of Finance and PublicAdministrations•The participation and collaborationof all partners involved.

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Digital Content in Spain, 2011

Driving digital content in Spain

Objective 2.3 Promoting the production and distribution of digital content over the Internet. Measures:

Designing a Comprehensive Plan for the Digital Content Industry in Spain in 2013.

Simplifying copyright rules for using content digitally.

Simplifying conditions for reusing information from the Public Sector.

Facilitating the development of companies focusing on the creation, production or distribution of digital content.

Developing an Exports and Internationalisation Strategy for the Spanish digital content industry.

Promoting the creation and evolution of codes of conduct for digital content, together with the rest of the partners involved.

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Trends and forecasts

9.

Edificio BroncePlaza Manuel Gómez Moreno s/n28020 Madrid. Spain

Trends The future of the digital content industry in Spainwill be marked by the following general trends:

• Rapid development of high-speed networks overthe next few years and rollout of fourth generationmobile networks.

• Growing competition in access devices, formobile telephones as well as for tablets, smart TVsand set top boxes.

• Need to create standards for these newdistribution platforms, which will facilitate thedevelopment of applications and bring down costsfor content providers.

• Content is what matters. The market will revolvearound who has the distribution rights and theoptimisation model for content distribution. 23

Edificio BroncePlaza Manuel Gómez Moreno s/n28020 Madrid. Spain

Tel.: 91 212 76 20 / 25Fax: 91 212 76 35www.red.es

Thank you very much