July 22, 2010

The digital media future is (almost) here

In the late 1990's, almost everyone in the media industry went gaga over the promise of digital distribution of media products and services. As consumer behavior change slower than most visionaries want, it's taken almost 15 years to (almost) reach the promised future. Some very interesting data points reflecting the shift to digital distribution of media products:

* Amazon is selling more Kindle e-books than hardcover books. Obviously this doesn't take into account paperbacks, which in my opinion is probably the best reading experience, but it shows a massive shift. In the last four weeks Amazon has sold 1.8 e-books for every hardcover book. With the Kindle going down in price and the iPad and smartphones driving e-books sales, this is a market that should have a lot of room to grow.

* Digital make up 35.5 % of U.S. music sales, with iTunes being the by far largest retailer with 26.7 % of the total market. Wal-Mart had 12.5 % (mostly physical) and Amazon had 7.1 % (5.8 % being physical and 1.3 % being digital).

* Digital downloads were 48 % of U.S. PC games unit volume and 36 % of revenue. The major retailers for traditional PC games were Steam, Direct2Drive, Blizzard.com, EA.com and WorldofWarcraft.com. Major casual game retailers were Bigfishgames, Pogo, Gamehouse, iWin and Realarcade. That is obviously not taking Facebook games like Farmville into account.

With a combination of digital growing (driven by changed consumer behavior, products that take advantage of the medium and better online retailing) and physical having slower growth or even declines, expcting more than 50 % of media to be delivered digitally in 5-10 years seems like a quite reasonable assumption.


Andreas said...

I know it's not what you mean, but CDs are as much a digital form of music distribution as an MP3 file or a Spotify link, and computer games have, of course, always been digital. (Arguably books are digital too, as they describe information in a discrete and exact form.)

Words matter, because they enable us to reason coherently about things. When you stop caring about the meaning of the words you choose to express your thoughts, you lose some of that coherence.

Henrik Torstensson said...

CDs, computer games and books were mostly physically distributed (i.e. physical boxes were sent to stores) even if the products were digital when consumed/used.

Words are important and I've might been sloppy in using the word digital, but I think I made the distinction between the product and the distribution of the product. Online might have been a better word, though.

Andreas said...

Yes, physical distribution is not the opposite of digital distribution. Physical and digital are orthogonal[1]. "Online distribution" is a much better term.

[1] Although you couldn't distribute an analog signal online, since the carrier is digital. (Ultimately I believe it's an open question wether the universe is digital, ie quantized and discrete, in which case everything else would be too, or analog, ie continuous, but hey.)

Jonathan said...

digital now accounting for one third of aegis group revenues too. whisper it softly, but i think this thing is catching on!