TV to dominate future home entertainment spending

Informa: The world's households each spend an average of $182.4 on home entertainment. This is set to rise to $225 by 2010, and means there will be an average increase of 4.7% for every year since 2000.

Iintriguing shifts taking place in expenditure on the four main types of in-home entertainment (music, TV, games and film). These changes are set to significantly alter the balance between each sector. As the average annual household spend on entertainment steadily increases, TV is set to take a progressively larger share of the overall pie.

Global average annual spend by home entertainment category ($)

	2000	2005	2010
Music	33.5	29.4	33.1
TV	61.8	90.1	119.0
Game	13.4	20.8	29.8
Film	33.9	42.0	43.2
Total	142.6	182.4	225.1

Source: Informa Telecoms & Media

In terms of total share of spending on the four, TV remains top. In 2000 it accounted for 44% of the combined revenues, ahead of film, music and games with 24%, 23% and 9% respectively. By 2010 TV will take 53% of the total, followed by film with 19%, music with 15% and games with 13%.

TV's growth is boosted by the rollout of digital and associated services. About 30 million digital TV homes were added to the total in 2005 alone, but overall penetration rates are, with some notable exceptions such as the U.S. and UK, way below 50%, leaving plenty of room for growth.

The category to suffer most from the rise in competing entertainment spending is recorded music. with a limited amount of money to spend on entertainment, particularly amongst younger demographics, the widespread availability of free music via P2P has given users the opportunity to have their cake and eat it. Rather than replace one home entertainment category with another, P2P users have been able to reduce spending on music while at the same time spend more on another category.

Although much more complex than previous format advances, the evolution of music delivery through the internet and by the mobile phone handset is expected to return global music sales to growth. The decline in overall hard format sales of soundcarriers is not forecast to reverse but will be more than compensated by the rise of internet and more importantly, mobile sales, driven largely by ringtones.

Digital Home Entertainment Publ 20060116