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Global Digital Goods OpportunitiesSam Kwong, PayPal APAC Product Management  December 12, 2011  PeaceSoft Conference
OUR AGENDA• Global Highlights• Look at the numbers• Segment deep dive    Global Digital Goods Opportunities   Confidential...
Highlights            • Books and magazines on reading devices will see significant growth            rates, tripling from...
Highlights            • EMEA digital market growths are mostly led by Germany, UK,            France, Italy and Netherland...
OUR AGENDA• Global Highlights• Look at the numbers• Segment deep dive    Global Digital Goods Opportunities   Confidential...
Digital Goods North America$90.0                                                 Market Opportunity by Vertical US$ billio...
Digital Goods EMEA                                             Market Opportunity by Vertical                             ...
Digital Goods APAC$60.0                                       Market Opportunity by Vertical                              ...
Digital Goods Latin America                                                 Market Opportunity by Vertical                ...
Global Mobile Market Opportunity                                               Market Opportunity by Vertical             ...
OUR AGENDA• Global Highlights• Look at the numbers• Segment deep dive    Global Digital Goods Opportunities   Confidential...
Gaming• PC game will continue to deteriorate due to competitions from othersectors•Console market will be sustained by gam...
Publishing•Online and eReader channels are seriously eroding newspaper andmagazine print revenue in North America•Online c...
Music/Video•Physical distribution is declining rapidly as the industry shifts to digitaldelivery•Anti piracy efforts are s...
OUR AGENDA• Global Highlights• Look at the numbers• Segment deep dive                       Sam Kwong                   sk...
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Global Digital Goods Opportunities

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Global Digital Goods Opportunities

  1. 1. Global Digital Goods OpportunitiesSam Kwong, PayPal APAC Product Management December 12, 2011 PeaceSoft Conference
  2. 2. OUR AGENDA• Global Highlights• Look at the numbers• Segment deep dive Global Digital Goods Opportunities Confidential and Proprietary 2
  3. 3. Highlights • Books and magazines on reading devices will see significant growth rates, tripling from $5.6B to $18.7B in 2015. Led mainly by North America consumers. • Other media, mainly video from TV streaming subscriptions and movie downloads will almost double to 2015, also due to North America consumers. • Digital Mobile(devices and smartphones) is expected to double from $22.5B to $48.4B. Majority of the growth is in reading devices followed by mobile gaming. • APAC has expected to be the second biggest digital market at $53.3B in 2015. North America is forecast to be $82.9B and EMEA is $41.8B in 2015. • Online gaming in APAC represents 1/3 of total digital revenues at $10B in 2011 and doubles to $19.2B in 2015. • Mobile is significant in APAC too with games and music being the biggest. South Korea leads the way at $2.7B for 2015 in mobile gaming, followed by Japan ($2.1B) and China ($1.3B).Source: PWC Global Media and Entertainment Outlook 2011. Global Digital Goods Opportunities Confidential and Proprietary 3
  4. 4. Highlights • EMEA digital market growths are mostly led by Germany, UK, France, Italy and Netherlands. The growths and market size are smaller than the US but will also focus on significant growths in media (music and video), devices (books & magazines), followed by mobile. • The growth rates in Latin America for online media and games will not be much. • Digital mobile will see the greatest growth in Latin America which has 100% mobile penetration. Devices is not expected to grow much in this market. • Mexico and Brazil will lead the way mostly in mobile gaming. • In Emerging markets where income brackets are lower, Android smartphones will see exponential growths and this is where PayPal can offer a solution for microtransactions and digital media.Source: PWC Global Media and Entertainment Outlook 2011. Global Digital Goods Opportunities Confidential and Proprietary 4
  5. 5. OUR AGENDA• Global Highlights• Look at the numbers• Segment deep dive Global Digital Goods Opportunities Confidential and Proprietary 5
  6. 6. Digital Goods North America$90.0 Market Opportunity by Vertical US$ billions 2011-15 CAGR$80.0 $11.1 Mobile - Games, Music, 19.1%$70.0 Video, Software $9.0 $9.5 Devices - Books$60.0 & Magazines 26.5% $7.3 $30 $8.2 $20.8$50.0 $26 Media - $6.8 $5.8 10.2% Newspaper, $5.5 $4.6 $19.1 Music & Video $23$40.0 $3.5 $4.3 $20 $17.3 Software - SaaS 28.1%* $2.5 $18 $15.8 $63 and Downloads$30.0 $15 $14.1 $54 $26.3 $12.4 $46 $20.1 $42 $15.3 Games - Online 6.9%$20.0 $37 $12.3 $32 $9.8 $7.5 $3.0 $3.2 $2.3 $2.5 $2.7 $2.9$10.0 Games - 4.7% $10.3 $10.5 $10.7 $10.9 $11.4 $12.3 Console $- 2010 2011 2012 2013 2014 2015 TOTAL 15.9% $39.3B $45.9B $52.9B $60.4B $70.4B $82.9B Source: PWC Global Media and Entertainment Outlook 2011, Juniper Research 2011 and PayPal analysis. * Software forecasts are based on Renta Software analysis in 2010. Note: Numbers might not add up due to rounding. Global Digital Goods Opportunities Confidential and Proprietary 6
  7. 7. Digital Goods EMEA Market Opportunity by Vertical 2011-15US$$45.0 billions CAGR Mobile - Games,$40.0 $6.3 Music, Video, 15.4% Software$35.0 $5.8 Devices - Books & $5.2 Magazines 65.4%$30.0 $5.2 $3.7 $15 Media - $4.3 $2.3 $11 $9.3$25.0 Newspaper, 23.2% $1.3 $9 $7.7 Music & Video $3.5 $6.1 $0.7 $6$20.0 $2.7 $5.0 Software - SaaS $3.3 $5 $4 $0.4 $4.0 $3.1 $3.3 and Downloads 6.1% $3.4 $2.9 $30$15.0 $2.6 $5.7 $1.7 $5.2 $27 $4.7 $25 Games - Online $3.6 $4.1 $22$10.0 $3.3 $20 12.3% $18 $10.6 $11.1 $11.9 Games - Console $5.0 $9.5 $9.8 $10.2 5.1% $- 2010 2011 2012 2013 2014 2015 TOTAL 14.5% $20.9B $24.3B $27.9B $32.0B $36.7B $41.8B Source: PWC Global Media and Entertainment Outlook 2011, Juniper Research 2011 and PayPal analysis. Note: Numbers might not add up due to rounding. Global Digital Goods Opportunities Confidential and Proprietary 7
  8. 8. Digital Goods APAC$60.0 Market Opportunity by Vertical 2011-15US$ billions CAGR Mobile - Games,$50.0 Music, Video, 12.1% $11.4 Software $10.6 Devices - Books &$40.0 Magazines 32.2% $4.3 $9.6 $10 $3.4 $6.1 $8 Media - $8.4 $2.6 $5.1 Newspaper, Music 19.6%$30.0 $2.4 $7.2 $7 & Video $1.9 $4.1 $2.5 $6 $6.0 $3.6 $2.5 Software - SaaS $1.4 $4 $1.2 $3.0 $2.6 and Downloads -0.7%$20.0 $4 $2.7 $19.2 $38 $2.5 $1.8 $16.8 $34 $14.3 $12.0 $26 $30 Games - Online $10.1 17.4% $8.6 $23$10.0 $21 $9.1 $9.8 Games - Console $7.7 $7.7 $8.1 $8.6 6.2% $- 2010 2011 2012 2013 2014 2015 TOTAL 13.6% $28.0B $31.9B $36.7B $41.8B $47.5B $53.3B Source: PWC Global Media and Entertainment Outlook 2011, Juniper Research 2011 and PayPal analysis. Note: Numbers might not add up due to rounding. Global Digital Goods Opportunities Confidential and Proprietary 8
  9. 9. Digital Goods Latin America Market Opportunity by Vertical 2011-15 US$ billions$2.5 CAGR Mobile - Games, Music, Video, 12.3% Software$2.0 $0.9 Devices - Books & Magazines N/A $0.8$1.5 $0.7 $0.1 Media - $0.6 Newspaper, 20.9% $0.5 $0.0 $0.3 Music & Video $0.5 $0.0 $0.2 $0.0 $0.2$1.0 $- $0.2 $0.1 Software - SaaS $- $0.1 $0.1 $0.1 and Downloads 2.2% $0.1 $0.1 $0.2 $0.1 $0.2 $0.2 $0.1 $0.1 $0.1 $1.4 $0.1 $1.2 Games - Online $1.1 $1.1$0.5 $1.0 12.0% $0.9 $0.7 $0.7 $0.8 $0.6 $0.7 $0.7 Games - Console 4.2% $- 2010 2011 2012 2013 2014 2015 $1.4B $1.6B $1.7B $1.9B $2.1B $2.3B TOTAL 10.6% Source: PWC Global Media and Entertainment Outlook 2011, Juniper Research 2011 and PayPal analysis. Note: Numbers might not add up due to rounding. Global Digital Goods Opportunities Confidential and Proprietary 9
  10. 10. Global Mobile Market Opportunity Market Opportunity by Vertical 2011-15US$$50.0 billions CAGR$45.0 Devices - Books & Magazines 34.9%$40.0 $18.7$35.0 Mobile - Video $14.4 27.9%$30.0 $10.8 $3.4$25.0 $2.7 Mobile - Music** $7.9 $5.5 15.4% $2.0 $5.2$20.0 $5.6 $1.6 $5.0 $1.3 $4.0 $8.2$15.0 $4.0 $7.0 Mobile - Software $3.1 $6.0 19.5% $1.1 $1.9 $5.0$10.0 $4.0 $2.9 $11.7 $12.7 Mobile - Games $5.0 $8.5 $9.6 $10.7 10.6% $7.5 $- 2010 2011 2012 2013 2014 $41.0B* 2015 $48.4B* TOTAL 21.1% $17.6B* $22.5B* $28.0B* $34.4B* * Global Mobile includes both Mobile and Devices (e.g. electronic reading devices) ** Mobile Music is extrapolated based on Juniper Research numbers and PWC Online music growth. Source: PWC Global Media and Entertainment Outlook 2011, Juniper Research 2011 and PayPal analysis. Note: Numbers might not add up due to rounding. Global Digital Goods Opportunities Confidential and Proprietary 10
  11. 11. OUR AGENDA• Global Highlights• Look at the numbers• Segment deep dive Global Digital Goods Opportunities Confidential and Proprietary 11
  12. 12. Gaming• PC game will continue to deteriorate due to competitions from othersectors•Console market will be sustained by gamers into new titles•Online gaming market driven by increase in broadband penetration andcontinuing growth of micro transactions•Mobile gaming is exploding due to the rapid adoption of smartphones.Asia (Japan and Korea) leads in spending on mobile games•For the Facebook penetrated markets, Zynga has generally won thewar on social games•IP owners are starting to crack down on gold farming and 3rd partyresellers Global Digital Goods Opportunities Confidential and Proprietary 12
  13. 13. Publishing•Online and eReader channels are seriously eroding newspaper andmagazine print revenue in North America•Online channels are gradually putting up pay walls to offset the loses inprint revenue•Other markets are forecasted to follow a similar path as North America,but on a delayed timeline•eBooks market currently has a small base, but is the segmentforecasted to grow the fastest•Expanding eBook markets -> increase accessibility for consumer eBooks•Educational eBook is an emerging segment that warrants significantopportunities Global Digital Goods Opportunities Confidential and Proprietary 13
  14. 14. Music/Video•Physical distribution is declining rapidly as the industry shifts to digitaldelivery•Anti piracy efforts are starting to see results•Pay per track/download model is thriving•Subscription model is emerging, but minimal payout to artists in thismodel is starting to see backlash Global Digital Goods Opportunities Confidential and Proprietary 14
  15. 15. OUR AGENDA• Global Highlights• Look at the numbers• Segment deep dive Sam Kwong skwong@paypal.com Global Digital Goods Opportunities Confidential and Proprietary 15

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