overview & trends of digital content market · digital content market 23 oct 2012 ki hyun jung....
TRANSCRIPT
Overview & Trends of
Digital Content Market
23 Oct 2012
KI HYUN JUNG
Contents
1
Agenda
• Digital Content Market Overview
• Trends
• Implications
Contents
2
Agenda
• Digital Content Market Overview
• Trends
• Implications
Growth of Digital Content
3
Digital share of E&M Spending(%)
Sources : PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates (2012)
Digital content market is growing
E E
Comparison of Growth Rate
E E
Digital
Non- Digital
12.1%
2.8%
CAGR
2011-2015
Growth of Digital Content by Segment
4
% of Digitalization by Vertical
0% 20% 40% 60% 80%
Book
Game
Music
Video
5%
48%
33%
5%
18%
60%
55%
7% 2016 2011
Sources : PWC(2012), MPAA, JVA, DFFF, UKFC, IFC, ScreenDigest, DFC Intelligence, Video Game Industry, ScreenDigest, Markets and Markets, IFPI, RIAA, AAP, GPBA, BABP, The Publishers Association, AIE, FPBAI, JBPA, GAPP, APA, SNEP
Digitalization of content is different by verticals
Why
Growth of Digital Content by Segment Video
5
Global Video Market Size
Source: Bain IP, PWC(2012)* OTT: Over-The-Top
Digital video market continues to grow in its early stage,
mainly driven by entries of OTT services.
-
100,000
200,000
300,000
400,000
2011 2016
OTT Digital-VOD
Physical-VOD Pay-TV
6.8%
-4.2%
6.8%
21.0%
CAGR• Proliferation of connected
devices
• OTT services with
competitive pricing scheme
• Difficult to change
behavior of consumers
• Window policy of premium
content provider
+
-
Video
Video Subscribers 1Q09-4Q11
Growth of Digital Content by Segment Video
6
Cord-cutting rises with the emergence of new players
: Netflix subscriber exceeds Comcast
Video
Sources: CNN Money, Company Press Releases (2011)
Struggling Netflix
[Netflix Revenue Vs. Content Cost]
2,163
3,205 3,758
266 947
1,874
2010 2011 2012F
12%
30%
50%
Growth of Digital Content by Segment Video
7
(Unit : USD Mil)
Increasing content sourcing cost and competition within
players undermine competitiveness of OTTs.
Announcement of new policy
[ Netflix Stock Price ]
Video
• Announcement of new policy
and fee increase
- Separation of DVD rental
and online streaming
- Increase of streaming price
• Increased content sourcing cost
• Fierce competition w/ Hulu,
Amazon, Carriers and CATV
players
Source: BARCLAYS(2012)
Growth of Digital Content by Segment Video
8
New players add social elements to differentiate from
traditional service model
Premium Content
User-Generated Content
Live Video Streaming
Video Sharing Social Discovery(1)
(1) Social discovery helps users to discover and share interesting videos in YouTube or Vimeo using social network service.
Expansion of Digital Video Service
Pay per view / Subscription
Video
Content Service
Growth of Digital Content by Segment Music
9
Global Music Spending
Rapid transition to digital changes music industry dynamics
•Proliferation of smart devices
•Growth of digital recorded music market
•Decreased size of physical recorded music market(1)
•Concerts and music festivals as a new revenue source
•Popularity of digital media improving artist value paradoxically
-
10,000
20,000
30,000
40,000
50,000
60,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Digital Recorded Music Phycial Recorded Music Concerts & Music festivals
15%
32%
52%
23%
19%
58%
(Unit : USD Mil)
Source: PWC(2012), IFPI, RIAA
(1) Increase of digital recorded music market does not cover loss from decrease of physical recorded music market
Music
10
Digital Music Sales Market Share U.S. Unique Visitors To Music Services
Source : comScore Media Metrix
iTunes Pandora Rhapsody Spotify
Digital music industry is already in developing stage; New
comers have gained traction
Music
Source : The Music Void (2012)
76%
11%
4%9%
Apple
Amazon
Other services
MUSIC
11
Spotify/Pandora‟s Cumulative deficit
-56.62011
2010
2009
2008
-27.4
-15.5
-11
(Unit : USD Mil)
-0.3
-26.4
-42
-54.2
-125.5
Source : Pandora FY2012 Annual Report
Increased sourcing cost undermine business sustainability
Increase of license fee
Competition with OS/device players
Music
Ready-made
ContentsPay per download
Monthly subscription-based Streaming
User-generated
Contents
Music-based game
Auto-tunesCreation &
Mix-up
12
Observe similar transition like the video industry
Internet radio (Djing, Concierge)
Content Service
Music
Growth of Digital Content by Segment Game
13
Global video game spending (US$ millions)
Online and mobile games will overtake console games in 2013Game
Console/handheld gamesOnline/mobile games
Growth of Digital Content by Segment GameMobile game market is ramping up driven by enhanced SW
tech., matured ecosystem and improved performance of devices
Mobile Console
SWTechnology
Ecosystem
Device/Infrastructure
•Native App to handle complex video rendering
•HTML5
• In-App purchase
•Lower development cost
• Increased speed of network
•High performance device
•Expensive console device and game package
• Increased life-cycle of console device
Game
14
by Segment Game
15
Hard to see clear path of the industry due to market fragmentation
Fragmented Game Market
Different features by each
game segment
Build-up ecosystem
by each game segment
No dominant player &
platform
Console Online Mobile
Main
Genre
Action/RPG
/SportsMMORPG/FPS(1) Casual
User Hardcore GamerHardcore/
Middlecore GamerCasual Gamer
Business
Model
Console device/
Game package
Monthly fee/
In-app purchase
Download fee/
In-app purchase
Players
Sony
Nintendo
MS
Blizzard
NC
Nexon
Gameloft
Com2us
Gamevil
Game
(1) MMORPG : Massive Multiplayer Online Role Playing Game, FPS : First-person shooting
by Segment Game
16
New approaches in Game platform are being introduced
New Approaches in Game Platform
Multi-
Platform
OUYA Gaming Console : Ultra-low cost Consoledevice + In-app purchase
Onlive, Gaikai, Ubitus: Minimization of dependency on hardware
Console
on
Android
Cloud
Game
EA Origin : Game store& SocialService
Social
Game
Game
E-Book
17
North America e-book market growth
Exponential growth is expected in e-Book market
Sources : PricewaterhouseCoopers LLP (2012)
Device
• Variety
: kindlefire, iPad, Nexus7...
• Low Price
• High Performance
: weight, less glariness...
KEYDrivers
Book
Key Driver - Connected Device
18
US Market Share of Android Tablets
Amazon expedites its dominance by integration of device
distribution and content
29.4%41.8%
54.4%
70.6%58.2%
45.6%
Dec-11 Jan-12 Feb-12
All Other Android Tablet
Amazon Kindle Fire
Sources : comScore(2012)
[ Platform Players ]
• View content business as a way to boost sales of devices
•Target K-12 market with authoring tool and interactive content
• Try to overcome the gap against Amazon by introducing high performance tablet (Nexus7)
•Promote single brand(Google play) to provide comprehensive digital goods
[ Publishers ]
• Some publishers to take down books for Amazon
•Launch own Apps
Book
Responses from competitors
E-Book
19
E-book market evolves from its early model to new era
Various Pricing Model New Features New Content
• Rental
• Subscription
• Sales by chapter
• Social
• Gamification
• Interactivity
• Magazine
• STMs & Professionals
(in addition to trade)
• Self-publishing
Book
Contents
20
Agenda
• Digital Content Market Overview
• Trends
• Implications
Ubiquitous High-Speed Wireless Access
Unprecedented Global Technology Innovation
Plug & Play Start-up Environment
„Social‟ for Content Distribution
Beautiful / Relevant / Personalized / Curated Content by Consumers
(Source : Internet Trends, Mary Meeker, KPCB, 2012)
21
Mobile will bring stunning changes, and some argue it’s still
spring training step
Will focus on content curation/distribution & social here
22
OS players will continue to drive market. Content creators in
various areas will gain traction by active involvement in distribution
PRESENT FUTURE
•Anybody to become service platform by horizontal and vertical play
•Expanded openness of platform
(App → Music, Video...)
• Users to create, re-create, distribute content directly
• Smart device introduction
• Increased consumption of digital content • Heavy competition among service platform• Expansion of authoring tool on smart
devices
•Commoditized network and content coverage
•Era of open platform and proliferation of App
•Big players(mainly OS players) to become service platform
Key driver
Little difference in “Acquisition”
and “Consumption”
Consumption
Content
Unmet needs exist mainly for
mobile Area from “Discovery”
and “Share” stand point
Cloud Storage
Cloud Play
N-Screen
AcquisitionDiscovery
Sharing
Easy to pay
Social Share
Personalization
Search
Pricing Scheme
Spectrum of Content Usage
23
Discovery and sharing needs in content consumption cycle appear
to increase
Key Trend
• Improve efficiency by building self-fulfilling eco-system
• Invest for scalability, not for profitability
Global big players solidify their ecosystem through vertical
integration and horizontal expansion
ContentPlatform
OS/ ServiceNetwork Device
Media Hub /
Smart Hub
Nexus7
Tight Integration
24
[ ABC News ]
Simultaneous usage, not sequential usage, is more focused
today, and a number of new services are developed
25
Contents
26
Agenda
• Digital Content Market Overview
• Trends
• Implications
27
Summary
Implications
•Mobile first
•Eco-system is pre-requisite
•Content curation and social for better discovery and sharing