Deloitte Identifies Top Trends in the Media Industry for 2005

Deloitte Identifies Top Trends in the Media Industry for 2005

- Legal Music Downloads, Embedded Advertising, Customizing Mobile Phones among Key Trends -

NEW YORK, Jan. 18 /PRNewswire/ -- Deloitte's Technology, Media and Telecommunications (TMT) industry group today announced its predictions for the media industry in 2005, forecasting that the year ahead will be driven by the public's desire for more content, more media and more choices -- leading to a market that is both larger and more diverse.

Tony Kern, Deputy Managing Partner of Deloitte's TMT industry group, commented, "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."

"Convergence will give consumers more options, leading to rapid growth in legal music downloads and jointly developed movies and games. Consumers worldwide will spend billions of dollars personalizing their mobile phones with ring tones, screensavers, and wallpaper. Meanwhile, the number of sources for content will explode. Digital TV will bring terrestrial broadcasters back into the game, giving consumers one more source for TV programming. An ever- increasing number of print publications and niche journals will be available in electronic form over the internet. And more and more people will express their opinions to the world through blogs and wikis."

Three key trends identified in the report are:

1. Music downloading becomes respectable
2005 will see rapid growth in music downloads over the internet.
Illegal downloading will still dominate, but legal sites will
significantly increase their share, 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), the inclusion of CD
burners as standard features in laptop and desktop computers, and the
exceptional quality of legal downloads. The music industry will
finally begin to recognize and embrace the financial benefits of this
new distribution channel for singles and albums, as well as new forms
of content, such as ring tones, remixes, live recordings, concert
videos, merchandising and concert tickets. By year-end, the growth of
illegal downloading will start to slow, with occasional but high-
profile litigation scaring off many casual pirates. Nonetheless,
illegal downloads will continue to cost the music industry billions of
dollars in lost revenue.

2. Advertising gets embedded
To better reach consumers, advertisers will begin embedding
advertising -- text hyperlinks, software toolbar buttons or even
computer graphics will appear in video games, software (particularly
freeware), web browsers and even active desktops on mobile phones.
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 they
will need to be far more subtle and sophisticated and less intrusive
than the banner ads and pop-ups that currently plague the internet, in
order for consumers to accept them. Embedding advertising has the
potential to reinvigorate the advertising business -- agencies will
need to stay abreast of technological progress, and will need to know
when the audience is available, what its members are likely to be
doing, and most important, how to capture their interest within that
context.

3. Simplicity sells content on mobile phones
2005 will see mobile phones in the hands of two billion consumers
worldwide, and the commercial opportunity for content producers and
resellers will become increasingly tantalizing. 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 social context
of mobile usage and, importantly, the limitations of the mobile
device. Most particularly, attempts to offer television programming on
mobile will attract little or no interest, because it will be
considered neither practical nor relevant on the mobile phone, and its
cost will remain disproportionate to established TV offerings. What
will sell is simplicity -- small, relevant packages of content that
serve to customize the mobile device -- ring-tones, screensavers,
wallpapers and other 'disposable' items will contribute to a
multi-billion dollar growth industry.



As used in this press release, the term "Deloitte" includes Deloitte & Touche USA LLP and its subsidiaries Deloitte & Touche LLP, Deloitte Consulting LLP and Deloitte Tax LLP.

Notes to editors

Predictions Methodology


These predictions have been compiled by Deloitte Research (a part of Deloitte Services LP) on behalf of Deloitte's Technology, Media and Telecommunications (TMT) Group. The major inputs used in writing the predictions were: input from the 5,000 strong TMT team around the world; discussions with leading industry and financial analysts; interaction and conversations with clients from the telecommunications and related sectors. These predictions do not claim to be fully comprehensive, but rather provide a commentary on major industry trends and developments.

About Deloitte's Technology, Media & Telecommunications (TMT) Group

The TMT Group is composed of service professionals who have a wealth of experience serving technology, media and telecommunications companies throughout the world in areas including cable, communications providers, computers and peripherals, entertainment, media and publishing, networking, semiconductors, software, wireless, and related industries. These specialists understand the challenges that these companies face throughout all stages of their business growth cycle and are committed to helping them succeed. Deloitte is a leader in providing strategic, financial and operational assistance to its technology, media and telecommunications clients

About Deloitte

Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms, and their respective subsidiaries and affiliates. Deloitte Touche Tohmatsu is an organization of member firms around the world devoted to excellence in providing professional services and advice, focused on client service through a global strategy executed locally in nearly 150 countries. With access to the deep intellectual capital of 120,000 people worldwide, Deloitte delivers services in four professional areas - audit, tax, consulting, and financial advisory services - and serves more than one-half of the world's largest companies, as well as large national enterprises, public institutions, locally important clients, and successful, fast-growing global growth companies. Services are not provided by the Deloitte Touche Tohmatsu Verein, and, for regulatory and other reasons, certain member firms do not provide services in all four professional areas.

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Source: Deloitte

CONTACT: Laura E. Wilker of Deloitte Services LP, +1-212-436-4697, or
lwilker@deloitte.com; or Evonne Lum of Ogilvy Public Relations,
+1-212-884-4026, or evonne.lum@ogilvypr.com, for Deloitte Services LP

Web site: http://www.deloitte.com/us
http://www.deloitte.com/research/tmt

Note to Editors: To schedule a briefing or for more information on Deloitte's Predictions Report for the Media Industry, please contact Laura E. Wilker of Deloitte Services LP at (212) 436-4697 or Evonne Lum of Ogilvy Public Relations at (212) 884-4026. Full reports for the Media, Telecom and Technology Industries are available at http://www.deloitte.com/research/tmt.

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