Last month Ofcom, the UK Communications Regulator, published its annual International Communications Market Report. This weighty tome, coming in at 397 pages (plus annexes) offers a wealth of industry and consumer insights from the UK and 17 comparator countries.
“One of the key aims of the International Communications Market Report,” Ofcom’s Director of Market Intelligence, Jane Rumble told TheMediaBriefing, “is to provide a wide ranging, comparable evidence base of availability, take up and use of communications services to help inform policy and industry discussions and decisions.”
Nations featured in the study include France, Germany, the US, Sweden, Japan, Singapore and South Korea, as well as emerging economies such as Brazil, Russia, India, China and Nigeria. Here are some key findings from the report.
Advertising and Revenue
Globally revenues from the communications sector’s – namely the telecoms, television, postal and radio industries – stood at £1,190bn in 2014. Within this, the telecoms sector – at £846bn – enjoys the lion’s share of these monies. However, television was the sector which recorded the fastest rate of growth, Ofcom found, with 5% growth year-on-year and 4.3% CAGR between 2010-14.
Across the audio-visual industries there are considerable variances in revenue across national markets. Both South Korea and Italy, for example, enjoy larger TV revenues (£6bn per annum) than Russia (£4bn). Whilst Germany’s radio industry, with annual revenues of £3bn a year, is the second largest market – based on revenue – of the 18 nations studied. Nonetheless, it’ still some way behind the market leader. The US radio sector, worth £13bn p.a., accounts for almost half (£28bn) of global radio revenues.
TV’s revenue growth is being driven by advertising (5.3% YOY growth) and subscriptions (5.4%). It’s this latter revenue source – subscriptions – which has seen the fastest growth in the past five years. At the end of 2010, subscriptions were worth £101bn p.a. to the TV industry. Fast forward five years and this number had swelled to £125bn.
In the UK, revenues from short and long-form online TV and video have seen rapid recent growth, as this income stream grew by £278m to £908m in 2014.
However, the US market for this segment leads the way.
It expanded from £1.3bn revenue p.a. in 2009 to being a £6.8bn p.a. sector just six years later. This market is nearly three times the size of the combined online TV and video revenues for the UK, France, Germany and Japan. Whether these TV markets will continue to grow at the same pace is a moot point, but as online viewing continues apace, we can certainly expect to see further dollars flowing in this direction.
On mobile, another growth platform, mobile advertising – based on expenditure per head – is highest in the UK. At almost £25 per head, the UK is followed in this space by the US (£23.69) and Australia (£17.66). In Australia, year-on-year growth in mobile internet advertising spend was 116%. In contrast, the Netherlands saw growth of just 16%.
Expenditure in this arena remains, perhaps surprisingly, low in France, Italy and Spain, as well as the Netherlands. Meanwhile, mobile advertisers in Sweden spend almost twice as much per head as their Japanese equivalents.
Away from mobile, the internet’s share of all advertising spend is highest in the UK and China. In both countries, 43% of all advertising spend was online in 2014. Nonetheless, year on-year growth was higher in China (9%) than in the UK (3%).
Looking across the globe, many countries have seen online’s share of advertising double since 2009; with the fastest transformations being seen in Brazil (4%-21%), Singapore (4%-14%) and Italy (10%-26%). Interestingly, India is the only market which seems to have seen a decrease in the share of advertising enjoyed by the web. The internet was worth 7% of India’s advertising market in 2009, dropping slightly to 6% in 2014.
For Ofcom’s Jane Rumble, some of the biggest surprises in this year’s report were found in the evolving media habits of audiences.
“Developments in the range of audio visual services available…. together with growth in ownership and use of connected devices, is leading to many people’s viewing habits across the world changing,” she says.
One obvious change is the decline of traditional live TV viewing across many markets. Although some countries – such as Poland, Brazil and the Netherlands – have bucked this trend, in a number of other nations year-on-year live viewing is down. Despite this, it should be noted, audiences are still watching a huge amount of TV. On average, people are consuming traditional TV content – either live or via a timeshifted device – for 223 minutes (3 hours and 43 minutes) every day.
The increasing popularity of non-broadcaster subscription video-on-demand (“SVoD”) services (such as Netflix and Amazon Prime Video) may put further pressure on this traditional TV viewing model. In the States, more than half of audiences had used such services in the past year, with 38% having done so in the past week.
In the UK, this figure is a little lower – 47% in the past year and 26% in the previous week – no doubt due to the long-standing availability of on demand services from the UK’s mainstream TV players. As Rumble notes, the online offerings of these broadcasters remain popular, in part, due to “their early arrival in the market.”
“For example,” Rumble reminds us, “Channel 4’s 40D was launched back in 2006, the BBC iPlayer in 2007 and Sky player in 2008.”This longevity, she feels, has contributed to the fact that “more than anywhere else that we researched, people in the UK are watching TV and films at a time that suits, on a range of devices.”
In terms of other online content, Ofcom’s research also sheds light on browsing habits of internet users around the world.
Among laptop and desktop users, it’s discernible just how similar their online experience often is; with Google, Facebook, Microsoft, Wikimedia, Yahoo and Amazon services being found in the list of Top 10 websites across a broad range of (otherwise) diverse media markets.
Interestingly, these online parallels are less applicable when considering the mobile web. Analysis of the most viewed websites from mobile devices shows a much broader range of sites being visited; including a greater number of country-specific websites, as well as more mobile orientated services such as Shazam.
“On mobile phones,” Ofcom states, “Google sites were significantly less popular than on laptop and desktop computers.” Similarly, they observe: “Media groups and multimedia publishing groups were notably popular on mobile phones.”
This variance may be a product of demographics; with mobile audiences often being younger and viewers of a wider range of online services. It could also be attributed to the rise of news consumption on the move – with younger audiences among those more likely to consume digital news content in this way.
These variances between mobile vs. desktop and laptop behaviours, clearly merit further exploration and will be of substantial interest to many publishers.
For Jane Rumble, these developments are part of the emerging “smartphone revolution.” “The phone is no longer used just for talking,” she comments, “it is a multifunctional device helping people do everything from the weekly shop to catching up with friends with a face-to-face video call.”
“The rate of growth of 4G coverage and take up,” she concedes, “[is] faster than I was expecting,” and this development may have quicker than anticipated impacts on the digital strategies of many media companies.
Looking at the UK, as a result of this take-up, Ofcom’s research has identified “the shift in preference to go online via a smartphone over a laptop.” “This is the first year that we’ve observed this change to more people preferring a smartphone,” Rumble admits.
If other countries follow suit, then this may mean media companies will need to further accelerate and prioritise their mobile offering. Mobile isn’t just eating the world, it’s reshaping it with increasing speed too.
Damian Radcliffe (@damianradcliffe) is the Carolyn S. Chambers Professor in Journalism at the University of Oregon and a former guest editor of TheMediaBriefing.
Before moving to the USA he led new creative and research initiatives at the BBC, Ofcom (the UK Communications Regulator), Volunteering Matters – a UK NGO – The Local Radio Company and Qatar’s Ministry of Information and Communications Technology (ictQATAR).
Damian is also an Honorary Research Fellow at Cardiff University’s School of Journalism, Media and Culture Studies, and a Fellow of the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA).