Multimedia Spending Craze

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Published on Saturday, 28 July 2012 07:21


Consumers will spend US$2.1 trillion worldwide on digital information and entertainment products and services in 2012. This amounts to a $114 billion global increase compared with 2011, and spending will continue to grow at a faster rate than in the past, at approximately $130 billion a year, to reach $2.7 trillion by the end of 2016, according to Gartner.



The $2.1 trillion consists of what the consumers will spend on mobile phones, computing and entertainment, media and other smart devices, the services that are required to make these devices connected to the appropriate network, and software and media content that are consumed via these devices. "The three largest segments of the consumer technology market are, and will continue to be, mobile services, mobile phones and entertainment services," says Amanda Sabia, principal research analyst at Gartner.



"There are two product classes, which in terms of absolute dollars are significantly smaller, but offer tremendous growth by 2016. These are mobile apps stores and e-text content. We expect consumers to more than triple their spending in these latter two categories by 2016." Mobile services are expected to generate 37 percent of total worldwide consumer technology spending in 2012 — that is $0.8 trillion — rising to almost $1 trillion by 2016. Mobile phones will account for 10 percent of total spending in 2012 — that is $222 billion — rising to almost $300 billion by 2016.



Similarly, entertainment services — cable, satellite, IPTV and online gaming, will account for 10 percent of total consumer spending on technology products and services in 2012, at $210 billion, rising to almost $290 billion in 2016. The analyst firm predicts consumer spending on mobile apps stores and content will rise from $18 billion in 2012 to $61 billion by 2016, and that spending on e-text content (e-books, online news, magazines and information services) will rise from $5 billion in 2012 to $16 billion by 2016.


“Our research consistently shows consumers are willing to pay for content they deem “worth it”,” Sabia says. “However, our research has also found that consumers are willing to tolerate an ad-supported business model in exchange for free functions and content such as personal cloud storage, social networking, information searching, email, IM, person-to-person (P2P) voice (Skype and mobile voice over IP [VoIP]), streaming/downloading video and musical content when accessing the Internet."

The interrelationships among the various segments are getting more critical. For example, new multi device rate plans being announced by U.S. mobile carriers are enabling consumers to get more from their devices. These persistent connections to more phones, tablets and mobile PCs will increase the value of entire ecosystem and will drive hardware sales. Partnerships among vendors in different segments are needed to build the bridges among the various platforms and deliver simpler solutions.

---Gartner