Will Internet Access Produce More Revenue Than Content, to 2021?
With the caveat that individual markets can vary dramatically, at least some observers believe that internet access services (on a global basis) will produce more revenue growth by 2020 than will content.
That might initially strike you as somewhat odd, but it is not as odd as you might think. In the past, telecom revenues were a bigger revenue category than “content” services such as linear video or subscription music services, for example. That is especially true when considering both business and consumer revenues, as business customers contribute very little in terms of linear video revenue, for example.
Also, in part, that might be the case even if the telecom revenue base is more challenged than content, advertising or transaction revenues.
Internet access will grow at about a 6.3 percent compound annual growth rate to 2021, while ad revenue grows at 4.7 percent and paid content services at about 2.6 percent CAGR.
As with all such forecasts, keep in mind that segment growth prospects can be quite different. The “paid content” segment includes radio, magazine publishing, newspaper publishing, prerecorded music and book publishing, in addition to linear video subscriptions and over the top video subscriptions.
The same caveat holds for internet access revenues, which clearly are set to grow in developing regions, with flat or declining revenue in developed markets.
It is not yet completely clear whether mobile internet access revenue growth will happen in all, most or only some markets.
Even in some markets that are saturated, or approaching saturation, in terms of take rates, the possibility remains that average revenue per user could grow, as users upgrade to faster services.
Some observers believe internet access revenues will grow faster than content revenues, on a global basis, through 2021. That is easy enough to foresee in many developing markets, where both subscriptions and mobile internet subscriptions will grow significantly, or very significantly.
What is less clear are potential revenue trends in developed markets, where subscription growth is limited, and revenue growth mostly must come from higher ARPU. Some, including PwC analysts, forecast modest growth in the fixed segment, but relatively robust growth near nine percent on a compound basis for mobile internet access.
The caveat is that it also is not clear how much of that growth will come from new internet of things applications, and what percentage of growth could come from human users.