Study: Online Entertainment Investment to Rise by 20%17 Jun, 2008 By: Erik Gruenwedel
Venture capitalists expect investment in distribution of original entertainment via mobile and social media services to increase by as much as 20% over the next two years, according to a new report.
Created by KPMG LLP, an audit and tax advisory firm, the study polled 300 venture capitalists and found that 52% believe investment in online digital entertainment will increase substantially.
About 25% of respondents said investment would surpass 20%, with respondents evenly split whether investment would target professional or user-generated content.
About 59% of respondents said they expect an increase in mergers and acquisition (M&A) activity between technology and entertainment industries, including 18% who expect M&A activity to soar more than 20%.
The report said 31% of investment dollars would be earmarked toward mobile devices, 26% for technology enablers and 20% for social networking services and related Web sites.
Within mobile entertainment devices, the report found that 31% of respondents believe social networks would dominate, followed by gaming (20%), video (14%), music downloads (20%) and user-generated applications (10%). Additionally, 90% of respondents believe mass adoption of mobile video consumption will take off in the next five years, and 60% expect it will happen within the next three years.
The report said social media services would significantly monetize their online viewership in less than 5 years.
“Activity in the market clearly indicates that the mobile space has become a significant area of opportunity for venture capitalists,” said KPMG partner Brian Hughes. “We've seen new funds created specifically for the mobile sector, and social media also continues to gain traction.”