Technology

Digital to see double-digit revenue growth in the US: Survey

MUMBAI : More than 90 per cent of the communications and media business leaders in the US expect digital revenues to grow this year and more than a third anticipate increases greater than 10 per cent, according to the results of the annual Communications and Media Industry Business Climate Survey by KPMG, the audit, tax, and advisory firm.


In the survey, 94 per cent expect an increase in digital revenues, up from 2010 when 83 per cent expected gains. Also, more of them look to larger increases, as 37 per cent expect their companies to grow digital revenues by over 10 per cent, compared to 31 per cent in the 2010 survey who expected double-digit growth.


In addition, the respondents in the 2011 survey said increasing broadband access speeds, new distribution methods, social media platforms and online advertising are the most important drivers of their company‘s overall revenue growth over the next three years.


KPMG‘s National Sector Leader for Communications and Media Paul Wissmann said, "It‘s clear from our survey that communications and media executives are more optimistic and their companies are placing bets that now is the time to position and invest for growth, despite an uneven economic recovery. They‘re focussed on investing in technology and products through both organic growth and mergers and acquisitions to beat the competition and grab emerging opportunities."


In addition to the previously mentioned 37 per cent who see digital revenues increasing by greater than 10 per cent in 2011, 21 per cent of those surveyed, compared to 15 per cent in 2010, see a seven per cent to 10 per cent increase, and 20 per cent expect a 4 per cent to six per cent gain.


The 2011 respondents also said that maximising digital media revenue growth, managing subscriber growth and managing customer churn are the most important challenges facing their companies.


Nearly three-fourths of communications and media executives said that they expect the overall revenue at their companies to be higher one year from now which contrasts with 58 per cent who anticipate current year growth.
 
The respondents in the KPMG survey believe that in the next 12 months, communications and media industry convergence resulting in new business opportunities (e.g. mobile commerce) will have the greatest positive impact on their business.


In considering the communication and media industry‘s growth rate over the next year, 47 per cent of those surveyed predict a one to five per cent increase in the next 12 months and 32 per cent expect growth in the six per cent to 20 per cent range.


KPMG‘s National Account Leader for Communications and Media Carl Geppert said, "Communications and media companies are sensing industry momentum that is the result of leaner organizations coming out of the recession, combined with the opportunity offered by the development of and users rapid adoption of innovation such as tablets, high-speed wireless access and social networking platforms".


KPMG‘s survey results show 44 per cent ranked new distribution methods, which can include devices and access technologies, as either the first, second or third most important driver, 43 per cent placed social media platforms among the top drivers, and 37 percent ranked online advertising, including search ads, among the top three. Also, three-fourths of communications and media respondents expect Cloud computing to have a slight to moderate transformational impact on their business in the next few years.


Nearly seven out of 10 communications and media executives believe their companies will be involved in a merger or acquisition during the next two years, with 58 per cent likely involved as a buyer and 10 per cent as a seller. Those surveyed also said that access to new technology and products (53 per cent), product synergies (38 per cent), and access to new geographic markets (35 per cent) will be the most important drivers of alliances, mergers and acquisitions over the next 12 months.


This is consistent with the executives‘ expectation that their companies will increase spending the most over the next year in new products, IT, and acquisitions.


"Given the pressure on communications and media companies to evolve to grab market share or be left behind in the shift to digitally-based services, it makes sense that M&A remains a key tactic for many. Recent large acquisitions in the communications and media industry, and numerous smaller acquisitions of digitally strategic companies, increase the pressure on all companies wanting a part of the digital value chain," said Wissmann .


In the 2011 survey, 47 per cent of the communications and media leaders anticipate their companies‘ headcount increasing over the next year compared to the 2010 survey when 57 per cent expected headcount to increase during the coming 12 months. Also, in this year‘s survey, looking back, only 34 per cent said they actually increased headcount in the last year. 41 per cent said their company reduced headcount in the past year, while 23 per cent expect their company to cut headcount over the next year.


In addition, while 22 per cent of the communications and media executives said their headcount already has reached or exceeded pre-recession levels, another 35 per cent said their companies‘ headcount would return to pre-recession levels over the next 30 months, and 34 per cent said that headcount will never return to those levels.

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