Jayant Bhargava, Alice Klat
January 5, 2017
The amount of digital content created, exchanged, and consumed is growing by the day across the world, and because the Internet has democratized access to creation and distribution tools, boundaries between professional and amateur content are blurring across all parts of the creative sector. The objective of this report is to provide a comprehensive view of the effect of the Internet on content providers and distributers, emerging artists, and consumers in five very different countries — Australia, India, Japan, South Korea, and Thailand. We selected these countries because they feature highly varying levels of Internet connectivity, infrastructure development, and media reach. Studying the commonalities and differences among them contributes to an understanding of how the Internet can bring value to the creative sector regardless of a country’s institutional and technological framework.
We analyzed the impact from the consumer perspective as well as from the creator and industry perspectives, providing a differentiated perspective on each player.
Our methodology combined desk research with one-on-one interviews with representatives of leading companies in each of the five countries. Our desk research was based on respected industry sources such as PwC’s Global Entertainment and Media Outlook, Ovum, and the World Bank, to name just a few. We assessed the impact of the Internet on both a quantitative and a qualitative perspective. Some of the key quantitative figures we analyzed were the market size and growth of the creative sector, the evolution of consumer time spent across media, and indicators of each country’s degree of digitization. Examples of qualitative factors we assessed include creative industry players’ business models and evolution, and strategies for integrating traditional and digital media, as well as market dynamics and competitive strengths.
1"Share of Time Spent per Day with Major Media by Australian Adults (above 18)," GroupM.
Digital models, driven by the proliferation of Internet, are fueling a renewed growth in creative sectors. Increasingly, the power is shifting to the consumers, who decide what they want to make, what they want to consume, and how and when they want to consume. This change has been the primary driver of innovation and investment in creative sectors. Succeeding in this digital environment requires a different approach and recipe than in the past. Players that have managed to adopt these new models have benefited from this growth.
Although this report focuses on the impact of the Internet on creative sectors, the Internet is a powerful tool that has impacted all of society. Transformative as the Internet is to individuals’ lives, it also creates new economic opportunities. The increase in Internet activity has stimulated economic expansion, job growth, and poverty reduction (especially in developing countries).
The Internet’s impact on the creative sector follows a similar evolution. From 2011 to 2015, across the five countries studied here, the penetration of mobile broadband increased at a CAGR of 5 percent and smartphones by a CAGR of 31 percent. During the same period, the digital creative sector grew at a rate of 7.5 percent. In aggregate, 84 percent of the $15 billion of revenues added to the creative sectors can be attributed to digital. Consequently, digital share of total creative sector in these countries increased from 11 percent to 18 percent in the same period.
Consumers have embraced the digital world. They are spending more time interacting with creative products. The quantity and relevance of creative products have increased steadily, and the barriers to becoming a creator have been lowered. Consumers are actively engaged in the creation of content, with many reaching global audiences. New creators and companies that have emerged are providing locally relevant content in new genres, adding to the variety of offerings. In developing nations such as India, the Internet is also driving social inclusion by enabling consumers in remote areas access for the first time to information, education, and entertainment content.
Although the demand for creative content is increasing, it is also fragmenting. Traditional media players must now compete with purely digital brands and platforms for the time and attention of the consumer. In this world, traditional offline media strategies will be very hard to defend. Agility and speed are as important as size, and often favor new players. Some established players have been held back by cannibalization of traditional revenue streams and fear that their current assets will be devalued. New propositions, frequently technology-led, need to be launched quickly, tested in the market, and adapted in the market. This approach can be challenging, especially for large corporations. But as long as the consumer benefits and spends more time with media, the creative sector will find a way to thrive. Many new digital media possibilities will augment, rather than replace, old media channels.
We are in the early stages of digitization of the creative sectors. The evolving digital ecosystem in creative sectors will be much more fluid than its predecessor, but it will also present abundant opportunities for all players. We expect the Internet to contribute another $15 billion to the creative sectors of the five countries studied here in the next five years. Traditional players that are able to embrace the new models, in the same way consumers have, stand to benefit immensely.