Pure Play Web, Mobile Expected To Grow

by , Feb 24, 2009, 7:31 AM
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arrows up and downAlbeit at a slower rate than once thought, pure-play Web and mobile services are still expected to grow by 9.1% this year, according to a mid-term forecast report released Monday by private equity firm Veronis Suhler Stevenson.

This year's revised growth rate is down from the original of 15.5%, and 11.6% last year, according to VSS.

While at revised rates themselves, mobile content and video games will continue to be in demand and record double-digit growth this year--34.2% and 19.5%, respectively--VSS is predicting.

In addition, various alternative communications segments included in both consumer and institutional end-user sectors--such as branded entertainment, digital out-of-home, and professional business information services--are also expected to grow faster than other communications segments, as well as the broader economy.

Overall media spend, however, is expected to decline by 0.4% in 2009, after an increase of 2.3% in 2008. Previously, VSS had expected media spend to grow by 5.4% in 2008, and 4.9% this year.

This is the industry's lowest growth rate--and only its second decline--since VSS began collecting data on the industry 30 years ago.

The continued negative outlook for economic activity, coupled with secular shifts and cyclical trends impacting the media and communications industry, are being blamed for the revised numbers.

"The media, information and education industries have been negatively impacted by the economic downturn," said James Rutherfurd, EVP and managing director at VSS.

While reflecting a downward growth revision of several percentage points, the institutional end-user sector--in particular the professional and business information segment--will remain the fastest-growing of the four communications sectors in 2009 with a 2009 growth rate of 5.1%.

What's more, the institutional end-user sector is expected to emerge as the largest sector for the first time since VSS began tracking communications spending.

Still more encouraging, these industries--which comprise the communications industry--have performed better than many other sectors of the U.S. economy, and VSS predicts that over the medium and long term, the communications industry will regain momentum.

"The communications industry has outgrown GDP growth in all of the periods of economic expansion studied since the Second World War," Rutherfurd added.

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