The media industry is an ever-changing beast. Just two decades ago, the idea of creating an animated feature film was unheard of. Nowadays you would be hard pressed to find anyone who hasn’t heard of the much anticipated film Finding Dory.
With such a radical range of developments, one can only wonder where the future of media technology lies. So while we cannot claim to predict the future, listed below are some of our own insights into the good, the bad and the ugly in the Asian Mediatech landscape.
But before we begin, let’s just clarify one thing:
The media industry in Asia is booming
According to the McKinsey 2015 Global Media Report, the global media industry continues to expand at a steady rate. The Asia Pacific (APAC) region in particular is growing at an especially rapid rate with a 5 year Compound Annual Growth Rate (CAGR) of 6.77% from 2010-2015.
Additionally, the region has the highest total spending on media globally by far, with a little over US$ 527,000 million spent in 2014. This is larger than the total combined spending by Europe, the Middle East and Africa (EMEA), which was measured at around US$ 488,500 million.
So whether you’re involved in the media industry, an investor or somewhere in between, this information should be especially exciting to you.
With the tone now set, let’s dive straight into the winners and losers in the industry.
Video game industry is booming
The video game industry has blossomed into a multibillion dollar industry worldwide. It is thriving in APAC – market share in APAC is 47% of the world market with double digit growth still expected. See our full report here.
Television and film showing moderate growth
In comparison to video gaming’s rampant growth, in-home video entertainment and cinema are growing at a relatively admirable CAGR of 4.6% and at 4.3% respectively.
These growth rates can be explained by how corporate profits are increasingly being driven by the ability to provide high quality original content while traditional means of revenue generation in the form of advertising are dropping off considerably.
With the rapidly growing number of media channels, traditional content distributors such as television and radio broadcasting companies no longer have the power to curate content. Let’s be honest here, other than between commercial breaks during your favourite shows, when’s the last time you spent more than 30 minutes channel surfing?
Thus the old business model that profited largely from advertising revenues is no longer relevant as consumers demand greater choice. In response, content distributors have begun dabbling in their own content creation in order to build brand recognition and loyalty.
Case in point, HBO’s hit series Game of Thrones helped to bring in an additional 14 million subscribers outside of the US in from 2007 to 2011. This was due to the strong fan base and buzz it created which, despite being the most pirated television show in the world, generated a substantial increase in subscribers.
Similarly, Netflix’s House of Cards and BBC’s Sherlock are both critically acclaimed original productions that are attracting subscribers.
Consumers can therefore look forward to seeing increasing numbers of content distributors creating their own original offerings in an attempt to maintain relevance.
Traditional publishing left in the dust
Take a moment and ask yourself, how often do I get my information from newspapers or magazines? By the very fact that you are reading this article, chances are that your answer falls somewhere between the range of “not often” to “never”.
You might be thinking: “why would I even need that kind of media? With the Internet and my smart phone, I have all the info I could ever want at my fingertips”.
Well, as it turns out, the statistics show that most of the world thinks so too.
Newspaper and consumer magazine publishing has borne the brunt of this cultural change, with negative CAGRs of -1.5% and -2.1% respectively. With their rapidly decreasing popularity, it is no wonder that many traditional publishing houses are expanding their range of business verticals to include areas such as digital publishing and ecommerce.
For instance, Singapore Press Holdings (SPH) maintains investments in both a restaurant reservation site Chope as well as a in SgCarMart, a vehicle classifieds website.
Other forms of traditional publishing have also been hit relatively hard, with consumer books and educational publishing showing middling CAGRs of 0.8% and 1.2%.
With the growing trends towards digitisation, the lines between traditional and modern media are becoming increasingly blurred. After all, is there really any reason to struggle with a bulky book of the works of Shakespeare when you can enjoy it on your phone?