Consumers can look forward to a far wider choice of digital music and video content over the coming year, in addition to a proliferation of devices on which to play the media, experts have predicted today.
According to Deloitte's Technology, Media and Telecoms (TMT) industry group, 2005 will be characterised by the public's growing desire for more content, more media and more choice, leading to a larger and more diverse market.
Tony Kern, deputy managing partner at Deloitte TMT, said: "2005 will see the steady disappearance of the 'mass' market, replaced by an ever growing number of 'micro' markets that cater to the needs of specific groups or individuals.
"New devices and media will flourish, along with new forms of advertising, including embedded advertisements in video games, software and even mobile phones."
Kern added that convergence will give consumers more options, leading to rapid growth in legal music downloads and jointly developed movies and games.
The report predicts that digital consumers will spend billions of dollars personalising mobile phones with ring-tones, screensavers and wallpaper. Meanwhile, the number of sources for content are expected to explode.
"Digital TV will bring terrestrial broadcasters back into the game, giving consumers one more source for TV programming," said Kern.
"An ever increasing number of print publications and niche journals will be available in electronic format over the internet, and more and more people will express their opinions to the world through blogs and wikis."
Deloitte TMT also predicted that 2005 will see rapid growth in music downloads over the internet. Although it expects illegal downloading to still dominate, legal sites will "significantly increase their share".
This will be fuelled by the growing quality of online music stores, a sharp increase in the installed base of digital music players, both portable and for the home, and the high quality of legal downloads.
The study expects the global music industry to finally recognise and embrace the financial benefits of the internet distribution channel for singles and albums, as well as other forms of content such as ring-tones, remixes, live recordings and concert videos.
This trend will slow down illegal downloading, with occasional but high-profile litigation scaring off many casual pirates.
But the analyst group warned that illegal downloads will continue to cost the music industry billions of dollars in lost revenue.
Another key trend for 2005 will be the rapid expansion of advertising in the form of text hyperlinks or software toolbar buttons embedded in video games, software (particularly freeware), web browsers and even active desktops on mobile phones.
It is expected that these ads will be very precisely targeted as advertisers learn more about each group of consumers.
They will be dynamic, updated via an internet connection based on time of day and user activity, and will need to be far more subtle and sophisticated and less intrusive than the banner ads and pop-ups that currently plague the internet.
Deloitte TMT also noted that there will be two billion mobile phones worldwide by 2005, and that the commercial opportunity for content producers and resellers will become increasingly tantalising.
Faster networks, better processors and brighter screens will make content over mobile phones more appealing, but many experiments will fail due to a lack of understanding of the way mobile phones are used, the study warned.
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