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Piracy fails to dampen online content services market

Jared Heng | Aug. 8, 2008
The Asia-Pacific's (excluding Japan) paid online content services market has grown despite pirate download threats, thanks to several driving forces.

SINGAPORE, 7 August 2008 -- Despite the continued threat of software piracy, APEJ (Asia-Pacific excluding Japan) revenues for paid online content services rose 25.6 per cent year-on-year to US$3.86 billion in 2007, according to research firm, Frost and Sullivan (Frost).

Frost attributes the growth to online gaming popularity, and expects the region's paid online content services market to be worth US$4.67 billion by end-2008, up 21 per cent year-on-year.

In 2007, the online gaming segment dominated the market, accounting for 81.3 per cent of total revenue. In contrast, piracy has taken its toll on the online music and online video segments, which accounted for 10.8 per cent and 7.9 per cent of market value respectively.

Mainstream infotainment channel

Today's internet has come a long way from being just a medium for disseminating information, and is now increasingly becoming the mainstream channel for distributing and accessing infotainment' content as well, says Frost and Sullivan's industry analyst, Kamlesh Kalwar.

Kalwar adds that the paid and ad-revenue supported free online content services markets will grow in tandem with the jump in users seeking leisure time internet entertainment.

The Chinese and South Korean markets together accounted for about 79 per cent of APEJ's premium online content revenues in 2007, according to Frost. China's online gaming market is largest in the region, thanks to increasing use of entertainment applications among Chinese netizens.

China is expected to contribute up to 45.7 per cent of the region's paid content revenues by end-2013, Frost says.

The research firm notes that increasing broadband affordability and adoption by households has driven growth of the region's premium content services market. Other driving factors include rising popularity of portable entertainment devices and more value-added services offered by ISPs.

Broadband on the rise

While different Asia-Pacific countries are at various stages of internet and online service adoption, broadband usage is on the rise across the region. According to Frost, some 57 per cent of Asia-Pacific households that accessed the internet, did so over broadband connections at the end of 2007.

As faster internet speeds enhance overall online experience, users are spending more time online playing games and visiting social networking sites, Kalwar says. Growing broadband penetration has created a conducive environment to encourage users to spend more time online engaging in entertainment activities, by enabling convenient sharing, personalisation and sourcing of relevant content.

He adds that consequently, demand for premium online content services like audio- and video-streaming and downloads, as well as online gaming, will jump.

Content piracy threat

However, Kalwar warns that widespread availability of free online content, both legitimate as well as illegal pirate downloads, will continue to affect paid online content demand.


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