Content Industry Back to Pre-2008 Levels, Thanks to OTT Innovation
A report issued today at the Forum d'Avignon finds that music, movies, and video games still face uncertainty in the marketplace, but that all are on the upswing

The content industry is poised to regain its pre-2008 economic value, driven largely by emerging markets, predicts a new report.

The study, executed by Bain & Company, also identifies the emergence of a media 'middle ground' which it describes as a sustainable, diverse market for properties that fill the gap between mass franchises and niche content and which will open new growth opportunities.

The global survey of 6,000 consumers titled "Seven years: Age of reason? 2005-2012: Creating Value(s) in the Digital Age" was commissioned by, and released today at, the meeting of the Forum d’Avignon, a European cultural think tank comprising figures from private and public sector as well as members of the creative communities.

It concludes that despite uncertainty, there are "compelling reasons for hope" in the future of content.

"Consumers across the world continue to express an ever-growing appetite for content, stimulating new media experiences, including many that bridge creators and consumers in both developed economies and emerging markets," it stated.

It identified the music industry as finally on its way back to value creation. “Several signs point to the stabilization of the music industry; for example, in the U.S. digital revenues are poised to overtake physical sales. In this improving but fragile context, high-profile recorded music and publishing mergers, such as Sony/BMG and EMI/Universal, should contribute to strengthening the economic resilience of the industry.”

In video, half of French and German households now own an over-the-top video device, such as a console, set-top box or tablet, the report found, while half of tablet owners have stopped using television to watch certain types of content, such as news or fiction.

"[These devices] are the new territory to conquer for the video industrym" says the report. "The rapidly growing importance of social networks in video choices and consumption represents another trend that was hardly anticipated a few years ago. As a result, non-linear video now generates significant audiences as it meets the consumer’s need for abundance and customization.... The i-generation is becoming the mass market."

Half of surveyed consumers in the U.S. and Europe and two-thirds of those in BRIC (Brazil, Russia, India and China) countries are interested in social video.

"As they stimulate audience appetite for new formats, connected video devices and platforms could unleash the creative energy of content producers," the report says. "Initiatives such as Condition One’s immersive video, which allows iPad and iPhone users to adjust their field of vision in real time within a recorded movie, is one of many innovation examples.

"Yet consumer willingness to pay remains limited, requiring the advertising market to absorb the costs of these new experiences."

The digital transition of book publishing has only just begun, yet purchasing intent – according to the authors, suggest that the democratization of digital reading should continue, benefiting from rapidly declining device prices, especially in BRIC countries.

Meanwhile, the video game industry, which has thrived on a platform of online consoles and massively multiplayer online games, is currently being shaken up by mobile, web-centric, and freemium models.

“Our survey suggests that connected consoles will penetrate up to 30% of households by 2014. More importantly, the emergence of smartphones, tablets and social networks as gaming platforms has dramatically broadened and altered the industry’s user base. Gamers who play on portable gaming devices spend over one-third of their gaming time on casual games, mostly on social networks. Yet their willingness to pay on such platforms remains structurally lower—inducing a long-term shift toward lower-value and freemium models. In parallel, the next generation of consoles should revitalize the core gaming segment—at the cost of ever-higher development budgets."

The report also charts the rise of a creative middle ground which has emerged thanks to the lowering of historical barriers to creation and distribution.

'There is an ongoing rebalance between large blockbusters and niche content, resulting in the emergence of a profitable middle ground in the content industry," the report says. "This shift can only be reinforced by new distribution platforms and social communities, which have demonstrated their ability to deliver virally targeted content to mass audiences."

The fifth edition of the Forum is being held in Avignon, France, today through 17 November.