In terms of the total size, the worldwide media industry will reach $2.2 trillion by 2012. The size of the industry in BRIC countries will grow to about $250 billion, while it’ll be $760 billion in the U.S., $630 billion in Western Europe, and $165 billion in
Digital media will be the fastest growing segment within the media industry. Consumer spending on both online and by mobile phones worldwide is expected to grow to $234 billion by 2012, at an monumental rate of 21.8% annually. In
, digital media spending will grow at an impressive 16.1% annual rate, reaching $75 billion by 2012. the U.S. India and will provide the best opportunities for Internet and mobile entertainment growth because people in these countries would use phones as a primary source of entertainment. Media companies will benefit from the proliferation of smartphones (iPhone, BlackBerry, etc.), which are essentially mini-computers. Already, a big portion of today’s traffic at most leading digital media firms (Facebook, Google, Yahoo, etc.) comes from emerging markets. As business models evolved in the China relatively more mature U.S. and Western Europe markets reach emerging markets, and new local models emerge, dollars in emerging markets will follow the eyeballs.
I believe traditional media firms stand a good chance of winning the digital media led future world too, but there will be pain during the transition phase, and they will need to do three things right:
First, as discussed before, traditional media firms need to accept the reality that their total revenue will decline during the transition phase, because online and mobile advertising would not fully compensate for declines in traditional advertising (broadcast, print, etc). Numbers over the past couple of years already reflect this trend.
Second, they will need to continually invest in the future and experiment with new technologies and business models during the transition phase. This is not easy for most traditional media firms which are public enterprises, and hence face Wall Street's pressure quarter after quarter to keep their costs in check to protect margins as their revenue flattens/declines.
And third, their attitude towards technology, arguably the most important component of the digital future of the media industry, will need to change drastically. Building more bridges between
Hollywoodand Silicon Valleyon an equal footing and with an appreciation for the value each brings to the table will be paramount. Both come from very different cultures, but despite their traditional differences, they need each other more than anytime before in the history of the media industry. Some early partnerships that I’ve seen bode well for the future, but the pace of change is still slow in my opinion.