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Media revenues will be mostly digital by 2015: survey

Streaming Netflix movies on an iPad in Los Angeles, Feb. 23, 2012. In the smartphone era, more people are being forced to think about how many megabytes of data they are using.(J. Emilio Flores/The New York Times)

J EMILIO FLORES/NYT

Consumer use of technology is transforming media and entertainment companies with almost 60 per cent of their revenues expected to come from digital sources by 2015, a new global survey says.

The rise of tablets, widespread use of smartphones, social media and faster Internet connections are pushing these companies to create new digital products and services, said the Ernst & Young study released on Wednesday.

"So the consumer is demanding what they want, where they want it and when they want it," said Martin Lundie, Ernst & Young's Canadian media and entertainment analyst.

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The study found that globally, media and entertainment companies expect 57 per cent of their revenues to come from digital sources by 2015, up from 47 per cent this year.

"If you stand still on tradition, you will be left behind," Lundie said in an interview from Toronto.

Consumers want to stream digital content and they want content to be "personalized" to what they like and on their preferred screen size, he added.

The survey interviewed more than 550 executives, including those from advertising, publishing, video game, film, music, broadcast and cable companies.

It also found that executives running media and entertainment companies know they have to fix problems pronto to meet consumer expectations.

"It's no longer good enough to identify a problem at 9 a.m. and have it fixed at the end of the business day," said the study, quoting Nick Earl, senior vice-president for games publisher Electronic Arts.

"In the mobile world, if you discover the problem at 9:00, you need to fix the problem by 9:05 and have it ready to go into the field at 9:10. That's just how it works now," Earl said.

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Product lifespans are also getting shorter and shorter and companies need to realize their products could only last for months, not years or decades before something else comes along, Lundie said.

"You need to be aware that your solution today and your revenue stream today could be gone tomorrow and you continually need to reinvent yourself."

"We're not going to have something like radio that lasted 100 years."

The survey was done by Oxford Economics in the first quarter of 2013 and involved interviews with executives from Australia, Brazil, Canada, Finland, Indonesia, Israel, Japan, New Zealand, Russia, South Africa, South Korea, Spain, Sweden and Taiwan.

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