Digital Content in Asia
By J. Michael Oh
February 17, 2012
I recently spent about two weeks visiting technology, media and consumer companies in Shanghai, Beijing and Seoul. Most companies I met with were still cautious over the year’s outlook, which was evidenced by unusually low inventory levels going into the Chinese New Year holiday shopping season.
Smartphone sales, however, continue to be one bright spot for markets in Asia. While second-generation mobile handsets still dominate the region’s markets, 3G phones and smartphone sales have been taking off in some economies—most notably in Asia’s more developed countries, with Singapore showing the highest smartphone penetration rate in the world (at over 50%), followed by Hong Kong.
More advanced mobile phones are also on the rise in China as affordable smartphone models become available. Some companies are expected to release new models that should retail for approximately US$100 this year, compared to an average retail price of US$300 to US$400 for smartphones in many developed countries.
A potential benefit of the rising penetration of smartphones and tablets is the development of more original digital content in Asia, a region in which piracy and weak copyright protection has long posed intellectual property issues. If South Korea serves as a guide to where the rest of emerging Asia may be headed, dramatic improvements could come over the next decade. In Korea, the overall music industry began declining in early 2000 due the proliferation of the Internet and illegal music downloads. But as digital sales continued to grow and as copyright protection improved (Korea was among the first countries to pass a three-strike Internet piracy law), the overall music industry started to grow again in 2008. This growing and profitable music industry provided a lucrative market for musicians and producers in Korea, which helped spark the international spread of Korean pop music, known as “K-pop.”
Smartphones and tablets facilitate the sale and downloading of music from legitimate sites with improved software embedded into the hardware. Consumers, therefore, tend to have a better user experience with the digital content, including music, movies and games, when purchased via legitimate sources. A major Chinese Internet search provider and video sharing site recently signed a deal with a major U.S. film and entertainment studio to stream content from the studio onto its platform. With the deal newly underway, overall sales are expected to be small but this marks a meaningful collaborative step in the right direction.
In terms of battling piracy with stronger copyright protection, Asia still has a long way to go. But there has been an established trend of copyright protection improving along with rising incomes in other parts of the world, and we expect Asia to follow the same trend in the coming years.
(C) Matthews Asia