RHK Forecast Confirms the Maturity of Online Entertainment

SOUTH SAN FRANCISCO, CA -- February 25, 2005 -- Telecom analyst firm predicts the global online entertainment market will grow at a 24% CAGR between 2004 and 2009, reaching $36 billion; rising broadband penetration is helping online entertainment cut into the traditional entertainment market, estimated at half a trillion dollars globally.

Global online entertainment services such as video (IPTV, VoD), music downloads, games, gambling, and adult, currently offered over both narrowband and broadband telecommunications infrastructures, are expected to generate revenues of $15.8 billion in 2005 and then grow at a CAGR of 24 percent to reach $36 billion in 2009.

While online gambling, online adult content, and online games are already established multibillion-dollar markets, video and music will be the two fastest growing segments over the forecast period. Video will reach the $1.3 billion mark by 2006 and is growing at a CAGR of 100 percent, followed by music in 2007, growing at 66 percent.

“Broadband connectivity has been a key driver and will gain even more significance in enabling new forms of content services through the introduction of new high-quality digital features that will enhance the user’s experience,” said Stephane Teral, principal author of the report.

According to Dr. Josette Bonte, Managing Director of RHK’s Broadband Content and Video Services Practice: “The next five years will see IPTV come into its own as a new distribution medium with its own new business rules and challenges. We forecast that IP VoD in all its incarnations will total revenues that equal over a third of DVD sales by 2009.”

As part of RHK’s Broadband Content & Services program, this global entertainment forecast is the result of the aggregation of five distinct online entertainment forecasts -legitimate music downloads, video, games, gambling, and adult entertainment- and incorporates three possible forecast scenarios for these market segments: most likely, optimistic, and pessimistic. Each segment has its own specific drivers and inhibitors.

For more information regarding this report, Online Entertainment Takes Off, please contact RHK Client Services at clientservices@RHK.com.

About RHK -

For over 12 years, RHK has been the industry’s leader in providing advice, analysis, and research to telecommunications companies. RHK offers continuous research and strategic consulting in the following areas:

-- Technology trends and dynamics

-- Corporate strategy

-- Product and market strategies

-- Network architecture

-- Telecom economics

-- Market intelligence and forecasts

-- Global and regional analysis

RHK’s first-class international team offers a rigorous understanding of telecom networks, unbiased analysis, a strategic perspective, and real-world operating experience to meet its clients’ business challenges. Visit www.rhk.com, or email info@rhk.com, for more information.

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