The Software and Entertainment Industry Association (SIEA) released its 2017 State of the Industry report, and its latest findings indicate that digital downloads continue to grow at a rate of 2.2% per year.
However, while the industry continues to see growth in total revenue, it has declined slightly in the past year due to the introduction of new services, which were unable to compete with the traditional online marketplaces.
“The industry continues its downward trajectory, with revenue falling from $2.4 billion in the fourth quarter of 2017 to $1.7 billion in 2017,” the SIEA report said.
“The industry experienced a $2 billion decline in the quarter ending June 2018 compared to the same period in 2017, which is a drop of $1 billion.”
We continue to see the software sector’s growth and decline slowing in the near term, with revenues declining 1.5% per quarter in 2018 compared with a 1.6% decline in 2017.
However we expect this decline to continue as new products and services continue to launch and as our digital subscription businesses are able to recover their market share.
“While this may not seem like a great time to be spending on the Internet, according to the report, this slowdown is a necessary part of the process for the industry to continue growing.”
We have seen declines in the number of subscribers, particularly those who are on a mobile device, which makes the loss of revenue from digital subscriptions even more concerning.”SIEH expects revenue to fall to $2,500 per subscriber in 2021, and $1,500 in 2022, as it transitions to an online subscription model. “
In the fourth-quarter of 2018, we see a continued decline in digital subscriptions.
We have seen declines in the number of subscribers, particularly those who are on a mobile device, which makes the loss of revenue from digital subscriptions even more concerning.”SIEH expects revenue to fall to $2,500 per subscriber in 2021, and $1,500 in 2022, as it transitions to an online subscription model.
“We have seen revenue fall significantly in the third quarter of 2018 due to continued disruption in the digital content business, which resulted in lower digital subscriptions,” Bannisters said.
“In 2018, our revenue projections for 2021 and 2022 were lower than those in 2021 and 2019, as our revenues were below our expectations for 2021, a year earlier,” BANNISTER said.
SIEB is projecting a revenue of $3.1 billion in 2021 compared to $3 billion in 2019, and expects revenue in 2022 to be in line with those in 2019.
Bannister noted that there were other changes in the industry in 2017 that affected revenue and growth.
For instance, the launch of Apple TV, Amazon Fire TV, and Google Chromecast.
“These devices and platforms were able to compete on a level playing field with traditional TV and film content, but as consumers are transitioning to the new technologies, these platforms and services are unable to gain a significant competitive advantage.”
The SIEF also noted that a major issue that impacted the digital subscription market in 2017 was that there was a lack of competition.
The SIE report notes that while the new entrants were able on the online market to offer lower prices, they were unable in the offline space.
“This led to lower revenue growth for the entire industry in 2018,” Binns said.
However “these challenges could be overcome through the continued development of digital content and the development of new content offerings to compete.”