The digital content economy: a demand-side view
This report defines the micro-economic landscape that affects the monetization strategies and business models emerging in the digital content sector. We identify and describe the most powerful economic factors from a demand-side view, concluding that scarcity of consumer attention, network effects, consumer experience, new devices, and localization are the more important factors shaping demand in the digital content economy.
Executive summary
In a nutshell
Ovum view
Business model choices affect demand
Local impacts are increasingly important
Key messages
Scarcity has moved from the supply side to the demand side
Race to claim audiences migrating to on-demand
When attention is scarce, search and discovery becomes key
Greater focus on less technically able consumers
Telcos need to rekindle network effects
New devices drive demand for content
Privacy champions could erode the power of data-dependent Internet giants
Report focus: the demand-side story
Demand-side forces affecting the digital content economy
Network effects
The importance of network effects
Overcoming switching costs
High expectations support network effects
New pricing strategies
Dynamic pricing and price elasticity
Personalized pricing or price discrimination?
The digital consumer experience
Scarcity of consumer attention
Search and discovery drives audience migration
Audience migration accelerated by new entrants
The “free” expectation
Piracy drains monetizable demand
Mainstream technology adoption crashes
Maintaining privacy and trust, not just best practice
Market-makers create demand
Apple iTunes still dominates digital music
The local environment
Local content an increasing priority
…but it can be a challenging proposition
Translating into local language/dialects is only the start
The indirect benefits of local content will be stronger
Big opportunities in BRIC and emerging markets
Young people have influence beyond their borders
Piracy an acute problem in emerging markets
Mobile becomes the prime channel for digital content in emerging markets
Mass market has strong aspirations but limited means
A long list of requirements needed to get the proposition right
Appendix
Research methodology statement
Further reading
In a nutshell
Ovum view
Business model choices affect demand
Local impacts are increasingly important
Key messages
Scarcity has moved from the supply side to the demand side
Race to claim audiences migrating to on-demand
When attention is scarce, search and discovery becomes key
Greater focus on less technically able consumers
Telcos need to rekindle network effects
New devices drive demand for content
Privacy champions could erode the power of data-dependent Internet giants
Report focus: the demand-side story
Demand-side forces affecting the digital content economy
Network effects
The importance of network effects
Overcoming switching costs
High expectations support network effects
New pricing strategies
Dynamic pricing and price elasticity
Personalized pricing or price discrimination?
The digital consumer experience
Scarcity of consumer attention
Search and discovery drives audience migration
Audience migration accelerated by new entrants
The “free” expectation
Piracy drains monetizable demand
Mainstream technology adoption crashes
Maintaining privacy and trust, not just best practice
Market-makers create demand
Apple iTunes still dominates digital music
The local environment
Local content an increasing priority
…but it can be a challenging proposition
Translating into local language/dialects is only the start
The indirect benefits of local content will be stronger
Big opportunities in BRIC and emerging markets
Young people have influence beyond their borders
Piracy an acute problem in emerging markets
Mobile becomes the prime channel for digital content in emerging markets
Mass market has strong aspirations but limited means
A long list of requirements needed to get the proposition right
Appendix
Research methodology statement
Further reading
LIST OF TABLES
Table 1: The needs of early adopters versus the early majority
Table 1: The needs of early adopters versus the early majority
LIST OF FIGURES
Figure 1: Factors affecting the digital content economy
Figure 2: Population percentage distribution by age (2006)
Figure 3: High-level segmentation of consumers in emerging markets
Figure 1: Factors affecting the digital content economy
Figure 2: Population percentage distribution by age (2006)
Figure 3: High-level segmentation of consumers in emerging markets
