INTERNET ADVERTISING TO SURGE
Wednesday Aug 2 18:31 AEST
Consumer and advertising revenue growth on the internet will surge over the next four years challenging newspapers for the number one spot in the media market, a report has predicted.
Increasing use of broadband and mobile phones will fuel 19.2 per cent annual growth in revenue on the internet compared with a 2.8 per cent annual rise for newspapers between 2005 and 2010, PricewaterhouseCoopers said in its annual report on the media and entertainment sector.
The increase in spending will outpace free-to-air television, which will grow at 4.1 per cent, as the second highest revenue producer of any medium.
Newspapers will take $5.84 billion in from advertising and consumer spending with the internet close behind at $5.28 billion.
Both mediums will be well ahead of free-to-air television at $3.93 billion, PWC said.
Revenue from subscription television will grow by 12.7 per cent to $2.92 billion as it accepts more advertising frequency.
Even as the internet takes a bigger share of the advertising and consumer spending revenue newspapers won't become obsolete beyond 2010, according to PWC director Matthew Liebmann.
"It's alarmist to say newspapers are going to disappear overnight, we hear that from time to time, but they're going to continue past our forecast period," he said.
The same outlook applies to free-to-air television, which Mr Liebmann said is still the most effective way for media companies to simultaneously reach a mass audience.
Nevertheless, Mr Liebmann added that newspapers and television networks will have to offset slowing revenue growth by embracing technology convergence.
Newspapers, of course, are already doing this by putting news, information, classifieds and even dating services on the web, he said.
"The challenge for publishers will be raising additional online revenue without overly cannibalising the existing print business model."
Unlike newspapers, television networks have only experimented with putting TV programs on the internet, a practice Mr Liebmann said will pick-up in the coming months and years, mirroring advances in the United States.
Radio will generate $1.1 billion in revenue in 2010 - just below interactive games which will experience a growth explosion to be worth $1.25 billion, the report said.
Still, a delay in the introduction of digital broadcast radio until December 2009, and the high expense involved in adopting it, means radio will experience problems from alternative audio mediums, the report said.
On the regulatory front, Mr Liebmann said PWC did not expect the federal government's proposed changes to cross media ownership laws to spark much buying activity between traditional media companies.
"There really are no bargains out there at the moment," Mr Liebmann said.
He added that traditional media companies had recently been buying new media companies for their genuine revenue raising potential - not because they had few other options.
According to PWC the entire media and entertainment industry will grow seven per cent a year to $29.5 billion by 2010.