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.