Television still king while social media revenue to remain modest predicts Deloitte

The long heralded talk of the death of television is still a long way off, while social media advertising revenues are expected to remain ‘modest’ in comparison to revenue generated by other media platforms in 2011, despite being set to surpass over 1 billion members, Deloitte has predicted today.

Technology, media and telecommunications company Deloitte has announced its global predictions for the media sector in 2011, predicting that digital television will hold strong, and that over half of UK households in the UK owning a digital video recorder by the end of the year.

It says that 40 million new viewers will tune into digital television for the first time and more than 140 billion more hours of content will be watched around the world. Meanwhile, Pay-TV revenue will grow by 20 per cent, and that global advertising revenue will increase by $10billion to $191 billion - the fifth year in a row growth has been recorded.

Another prediction is that social media advertising will deliver two trillion advertisements but that advertising revenue on the platform will remain at $5 billion - $4 per member, which represents less than one per cent of the global industry total.

However, due to a low cost base, the report states that social media advertising will still achieve ‘impressive gross margins despite the low revenue-to-user ratio, especially compared to traditional media companies.

It also says that ‘a ceiling’ on the future growth should global internet adoption expand, making it difficult for social networks to sustain current subscriber growth numbers.

Another prediction centres around the growth of the global computer and video games industry which is says 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 next year, it is expected that total revenue from these sources could be as high as $10 billion - 16 percent of total games revenues - and that eventually these sources could represent 50 percent of all revenues for the industry.

Predictions around digital music sales are also made, expected to outsell CD sales for the first time in one major market, possibly the US, with a sharp decline in the sale of CD’s predicted, rather than an increase in digital music subscriptions and downloads. This decline could be severe for the music industry, with three quarters of revenue made by record labels in the UK in 2009 coming from CD sales.

Jolyon Barker, global lead for Deloitte's Technology, Media and Telecommunications Industry, predicted that over half of TV householders will own a digital video recorded by the end of the year, and that TV advertising would be unaffected as a result.

“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.”

Barker continued: “This year’s predictions report also highlights that record label investment in Artist & Repertoire (A&R) investment is set to decline this year. 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 per cent of the highest grossing live acts in the US over the past decade will be 60 or older."

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