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Top UK media trends for 2011

Monday 24th January 2011
The Technology, Media and Telecommunications practice at Deloitte has announced its global predictions for the media sector in 2011 - predicting that more than half the households in the UK will own a digital video recorder by the end of 2011.

Jolyon Barker, global lead for Deloitte's Technology, Media and Telecommunications Industry, said: "We predict that digital video recorder (DVR) penetration in the UK will exceed 50% of TV households by year end 2011 - but TV advertising will be almost entirely unaffected.

"While DVRs provide the technological capacity to skip ads, the majority of DVR owners are likely to continue watching their television live. TV ad rates may go up or may go down for various reasons this year but DVR penetration probably won't be one of them.

This year’s predictions report also highlights that record label investment in Artist & Repertoire (A&R) investment is set to decline.

As a consequence, record companies will increasingly draw on a wider base of support from other entities in the music industry. Deloitte predicts that this will mean a change in the way the industry nurtures new talent with a shift towards the live music industry. Venue owners, concert promoters and ticket sales agencies are in a good position to pick up some of the slack.

"The need to foster new talent has rarely been more pressing as 40% of the highest grossing live acts in the US over the past decade will be 60 or older."

Ed Shedd, lead media partner of Deloitte said: "This year’s predictions show television’s continued strength, which continues to lead all media in total revenues, including advertising sales, subscriptions, pay-per-view, and licence fees. In addition some 40 million new viewers will tune in for the first time and more than 140 billion more hours of content will be watched around the world.

"The television set is continually evolving and tens of millions will be sold in 2011 with a search function that allows viewers to 'pull' content via simple search applications on the menu screen. However the inherently passive nature of watching television means the only pulling that most viewers may want to do is pulling up a chair."

Meanwhile, in 2011, the global computer and video games industry growth will come from diverse revenue streams, including monthly subscriptions, peripherals, fees for services, as well as in-game purchases and advertising in the free-to-play and "Freemium" markets. By the end of 2012, total revenue from these relatively new sources could be as high as USD 10billion, or 16% of total games revenues. Over time, these sources could represent 50% of all revenues for the industry.

Social networks will deliver a breathtaking two trillion advertisements. Yet advertising revenue will remain at a modest USD 5billion, a mere USD 4 per member, which represents less than 1% of the global industry total. Nevertheless, thanks to a low cost base, social networks might still achieve impressive gross margins despite their relatively low revenues-per-user, particularly when compared to the traditional media companies they are competing against.

Elsewhere, this year will prove to be the inflection point in the music industry when digital sales outstrip CD sales for the first time in at least one major market, probably the US, with the UK to follow close behind.

However the shift will represent a sharp decline in CD sales rather than a significant spike in digital music subscriptions or downloads. The scale of the decline is put into perspective when considering that three-quarters of the revenue made by record labels in the UK in 2009 was in CD form.

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Mike Jones

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