The State of the Digital Home: eMarketer

Convergence will bring new opportunities to the consumer electronics (CE) marketplace, probably.

JULY 13, 2007 – Although convergence is on the horizon, it hasn’t arrived yet and no one is certain what will happen when it does. One thing is certain, however: The Internet is now indispensable both for consumers and the CE industry.

“The world is going digital at a dizzying rate,” says Lisa Phillips, eMarketer Senior Analyst and the author of the new report, Consumer Electronics Online: Converged or Confused? “New products, falling prices and increased capabilities have made the global CE market almost impervious to economic ups and downs.”

In-Stat projects strong CE sales for several years to come.

Total global shipments are projected to grow from 2.1 billion units in 2006 to three billion in 2010, with Europe, the Asia-Pacific region and the “rest of world” region leading the growth.

“The digital home is the next frontier, the next huge opportunity for the CE industry,” says Ms. Phillips. “But today if you say ‘digital home,’ most US adults will answer ‘too expensive’ or ‘too hard to set up.’ At the same time, many of them wish they could integrate and control the various electronic devices already in their homes.”

According to Strategy Analytics, last year consumers worldwide spent $166 billion on digital home entertainment devices, an increase of 33% over 2005.

Growth is expected to increase 14% this year, to $190 billion. That’s not bad. But before more consumers will buy new digital technology, more of them have to be able to receive digital signals.

The “Global Digital TV” report, from Informa Telecoms & Media, projects that 489 million homes, or 40% of households worldwide, will receive digital signals in 2011.

By then, the Asia-Pacific region � driven by digital TV growth in China � will surpass North America in the number of households owning a digital TV set.

“Nevertheless, Americans love technology, particularly if it delivers entertainment such as TV programs, movies, video games or music,” says Ms. Phillips. “Digital technologies are most prevalent in portable form � cellphones, MP3 players and the like � but digital television, scheduled to become the standard broadcast technology in February 2009, is showing strong sales growth.”

Currently, the music sector leads in digital downloads, but online TV and movie content will experience rapid growth beginning this year. US consumers will spend $3.6 billion on digital entertainment content in 2007, and nearly $8 billion in 2010 � a 115% increase.

“eMarketer projects the majority of all digital content will be distributed via the Internet in years to come,” says Ms. Phillips.

To better survey the current state of the digital home, and for a better understanding of what it may look like tomorrow, read the new eMarketer report, Consumer Electronics Online: Converged or Confused?, today.

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