OPA: Consumer Spending Up On Entertainment Online

by Gavin O'Malley, Nov 15, 2004, 12:00 AM

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Consumers in the United States spent some $853 million for paid online content during the first half of 2004, reported the Online Publishers Association yesterday. Entertainment-related categories experienced the greatest gains, and led an overall 14 percent year-over-year swell. The Online Publishers Association's "Paid Content U.S. Market Spending Report," covering the first and second quarters of the year, was conducted by comScore Networks. Eleven percent of U.S. Internet users paid for content in the second quarter of this year--and 11.2 percent did so in the first quarter, according to the OPA.

Entertainment/lifestyles paid content spending--led by music, which grew a remarkable 78.3 percent to $182.8 million--bettered business/investment spending in the first quarter of 2004, according to the report. Sports, including "fantasy" sports games--where fans can orchestrate their own season play-- grew by a notable 68.7 percent, while games increased by 27.4 percent.

Not surprisingly, subscription sales contributed to 90 percent of paid content revenue, as the number of single-purchase consumers continues to decline. Monthly subscription revenue continues to grow at a faster clip than annual subscription revenue.

"Thanks to new technology and innovation, we're in the midst of a new stage of online content spending, led by entertainment, which enforces our belief that consumers are finally realizing how much fun they can have online," explained Michael Zimbalist, president of the Online Publishers Association. "These findings are consistent with other research we've done on the subject: the 18- to-34-year-old studies and our Internet Activity Index," said Zimbalist.

"Consider that only a year ago, paid music was just getting started," said Zimbalist, "and now, thanks to the popularity of great election-related video like Jon Stuart on Crossfire, consumers are absorbed, informed, and spending more time online." Zimbalist posited: "I expect people in the industry to expand their portfolios to include more content that fills consumers' appetites for media entertainment."

The report illustrates not only the significant growth of entertainment/lifestyles spending, but the declining growth of personals/dating and business/investment. Still, personals/dating managed to take in $227.9 million in the first half of 2004, and comfortably led the pack in growth for the tenth consecutive quarter. "We see personals remaining on top through 2009," said JupiterResearch analyst Niki Scevak.

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