Media decline could run deeper than downturn

Irrespective of the current economic downturn, the underlying trend is for households to spend less on media and entertainment, according to a white paper from consultancy Cap Gemini.

It suggests that spending on telecoms, media and entertainment (TME) services in major markets has been running behind GDP growth for several years and that the recession will simply exacerbate a deeper structural issue.

“The pace of increase in TME expenditure has been slowing down, and has fallen below economic growth levels in recent years. Moreover, the recession is likely to exacerbate the slowdown,” Cap Gemini noted. “We have already started observing instances where consumers have shifted from high-value TME services to relatively lower priced services in response to the unfavorable economic environment.”

Within the TME sector, Cap Gemini cites gaming and DVRs as growth sectors. It adds that operators will need to diversify and, increasingly, to bundle services to drive growth. Gaming will drive growth in the content sector.