Telecomm analyst group RHK revealed this week that online entertainment worldwide is expected to increase threefold in five years, driven primarily by Internet television
Revenues from video, which includes IPTV and video on demand; music downloads, games, gambling and adult entertainment are expected to increase to $36 billion in 2009 from $12.3 billion last year. This year, online entertainment is expected to reach $15.8 billion.
IPTV, an acronym for Internet protocol TV, is expected to be the biggest driver behind the 24 percent annual growth in online entertainment, RHK analyst Josette Bonte said. “It’s very embryonic right now, but it’s growing at a compound annual growth rate above 100 percent,” Bonte said.
The second biggest driver will be online games that involve multiple players, Bonte said. Music, on the other hand, is not expected to contribute a lot of new revenue, primarily because prices for music subscriptions are expected to drop.
“(The telephone companies) have no choice but to go into video services,” Bonte said. “Their core services are being eaten up by cable operators.”
IPTV, which is more widely used in Europe and Japan, distributes television programming, and other services over a broadband connection that feeds into a special set-top box. Telephone and cable companies are looking to attract customers by offering telephone, video and hi-speed data services in a package that would be less than buying the services individually. The companies could also offer wireless services as a fourth offering.
On a related theme, a bullish piece was carried by Inform ITV proposing that the runaway success of Internet poker has sparked growing interest in interactive TV gaming generally.
The story uses respected UK gambling icons like Ladbrokes, William Hill and Sportingbet to illustrate the point. Ladbrokes recently revealed that profits from its online gaming division were up 50 percent to over GBP 21 million, apparently boosted by explosive growth in online poker, which is soon expected to overtake revenue from traditional sports betting.
Meanwhile online betting and casino site Sportingbet announced record profits for the last six months, up 85 percent to GBP 26 million on a turnover of GBP 825 million, driven by an GBP 8 million profit on turnover of GBP 12.5 million in the Paradise Poker division it acquired last year. With over 800,000 registered poker players and as many games played each day, growth has exceeded expectations.
Annual results for British bookmaker William Hill, which recently launched its own TV channel, featuring interactive casino games such as roulette are also anticipated with interest.
The piece quotes The Sunday Times, which reported “…the holy grail for interactive betting groups is gambling via television”. The one page story in the business section concludes “It cannot be long before the technology develops sufficiently to allow interactive poker on television”.
The technology is not necessarily the limitation, at least in the UK, where the Sky platform is already littered with gaming and gambling opportunities.