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We can see that the European market for digital content is expected to increase from an estimated €15.8 billion in 2012 to just under €29 billion in 2017. As might be expected, the largest proportion of spend occurs in Western European markets throughout the forecast period, rising marginally from 89.5% in 2012 to 90.4% in 2017.
In both regions, revenue growth is being driven primarily by the consumption of content on a rapidly expanding installed base of smartphones and tablets; indeed, for streamed music and full-track downloads, we also envisage significant migration of content monetisation from the desktop to
the mobile device, with the result that PC revenues for music – in Western Europe at least – will diminish over the forecast period.
Throughout the forecast period, the largest contributor to digital content is expected to be Games. Here PC revenues are expected to be fuelled both by a continued transition from physical copies to downloads, allied to the increased monetisation of ‘casual’ games throughout the game lifecycle. Valve’s Steam platform (which distributes games and media online) and EA’s digital sales platform Origin have both attracted over 50 million users worldwide, including significant user bases across Europe. Meanwhile, adoption of casual gaming has soared – in large part catalysed by the emergence of gaming across social networks – and in-game purchases, for several years a cornerstone of gaming revenues in markets such as Japan and South Korea, has increasingly been exploited in Western Europe and North America. On smartphones and (particularly) tablets, the greater device performance levels and graphical capabilities has resulted both in the development of new revenues and – to an extent – of cannibalisation of a plateauing dedicated gaming handheld market.
Video comprises the second-largest revenue
stream, and is expected to experience particularly strong growth given the increased trend towards VOD from players such as Lovefilm and Netflix at the expense of DVD. We would also anticipate that, over the course of the forecast period, online VOD services will been deployed (and gain traction in) most European markets which had yet to introduce them. While the majority of smartphones are still perceived as possessing screens which are too small for the viewing of a full-length movie, that is not the case with phablets/tablets which are increasingly becoming used as a primary viewing device. (Nevertheless, as we observe below, smartphones – in addition to their increasing usage as a video ‘snacking’ tool, are also utilised within a home multiscreen experience to an ever greater extent).
While total digital music revenues are expected to see steady growth, bolstered by greater adoption of subscription-based streamed services – particularly on smartphones and tablets – the content sector which is expected to experience the strongest increase is eBooks. In most European markets, eBooks currently account for well under 3% of net sales – the UK is a notable exception, at 12% – but the percentages are rising sharply. Increasingly, adoption is occurring on tablets, rather than on dedicated eReaders. Indeed, given that the value of annual Western European book sales (physical and digital) is currently around €28.5 billion, and assuming the overall value of the market remains broadly flat, then we do not believe that our assumption that eBook sales in the region will reach just over €3.2 billion by 2017 (or 11% of the total) is in any way excessive. In Central/Eastern Europe, where tablet adoption remains relatively low, the market is much more modest, with sales not expected to exceed €50 million annually until after the end of the forecast period.
If you are interested in more details you can download DIMOCO´s White Paper here