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NARM: Video, videogames to grow through 2012

PHYSICAL: Music will become marginalized, says Futuresource

By Susanne Ault -- Video Business, 6/9/2009

JUNE 9 | PHYSICAL: In some sobering news to National Assn. of Recording Merchandisers conference attendees, music will become marginalized as a product when compared to competing video and videogame products, according to Futuresource Consulting at a Tuesday conference session.

One problem for music is that although online and mobile revenue should rise, the category’s digital business will fail to make up for declines in physical CD sales. On the other hand, there should be long-term interest for physical video and videogames to keep these businesses stable to growing through 2012.

“Global consumer spending on video will be flat and remain that way through 2012,” said Alison Casey, head of entertainment content at Futuresource. “The music segment will continue to decline because mobile and online won’t be enough to stem drops in physical. Game will continue to grow on a single-digit percentage basis through 2012. That is the real jewel in the entertainment crown, and we are seeing shelf space go away from music and given over to games.”

Games will be lifted for some time by Nintendo’s Wii and its success in reaching new family game players.

Blu-ray Disc was cited for keeping video steady through 2012. Casey believes there are big opportunities for Blu-ray in Europe, as its TV broadcasters are delivering tiny amounts of high-def content when compared to the region’s relatively large HDTV hardware base.

“Blu-ray can play an important role in Western Europe,” said Casey. “In 2008, 30% of homes had HDTVs. But less than 2% of European homes can get high-def broadcast content. There is no content for them to watch. That is a real opportunity for Blu-ray.”

Also during her presentation, Casey noted that paid digitally-delivered film is not taking off in the same way as paid digitally-delivered music. For example, there will be 170 billion video digital views in 2009 in Western Europe. Although that seems significant, 47% of that is on YouTube. Only 3.5%, or 6 billion views, is of premium TV and movie content.

And of that 6 billion, 2.5 billion views are devoted to free online TV watching. About 2 billion of that is free Web-based cable viewing, and 1 billion is illicit file sharing.

For paid, legit content, the totals break down to 165 million for cable/satellite video-on-demand/pay-per-view, and 35 million for Web-based paid streaming/sell-through.

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