THE online content services market in Singapore is expected to see a robust 77 per cent growth this year to reach US$23.82 million, and hit US$120 million by 2013, according to the latest numbers released by Frost and Sullivan.

Kamlesh Kalwar, an industry analyst with Frost, told BizIT that the online content market here, which is dominated by online gaming, was worth US$13.4 million last year.

'Online gaming accounts for just under 50 per cent of revenues (in the online content market in Singapore), followed by online videos and online music, in that order,' Mr Kalwar noted.

'The market is expected to grow at a compound annual rate of 44 per cent till 2013 to reach US$120.16 million,' the Frost analyst said.

Mr Kalwar added that Frost identifies an online game as any computer or console-based game played over the Internet using a PC, gaming console or wireless device.

This includes extensions of stand-alone games that small groups of online players can play together, as well as Massively Multiplayer Online Games (MMOG) that thousands of online players play simultaneously.

'While in the near-term, online multiplayer is expected to be the key driver of gaming in Singapore; in the longer term, the main league console companies in partnership with the pure-play game publishers are expected to take online gaming to its rightly deserved position in the online digital content distribution business.'

He noted that the Infocomm Development Authority (IDA) of Singapore has been actively promoting Singapore as the region's premier infocomm hub.

'It also hosted the World Cyber Games (WCG) in 2005, an international e-sports event operated by the South Korean company, International Cyber Marketing,' Mr Kalwar noted.

Subscription-based

The Frost analyst observed that the big three players in the console games market - Sony, Microsoft and Nintendo - have joined the online gaming market by offering subscription-based gaming extensions of stand-alone console games through services such as Xbox Live.

'Online gaming, especially for massively multiplayer games are also gaining popularity due to the community feel that they promote.'

Talking about the digital music landscape in Singapore, the Frost analyst noted that it is more inclined towards consumption through mobile downloads and ringtones (90 per cent of all digital music consumption), as compared to online digital music consumption (which is less than 10 per cent of all digital music consumption).

'This is due to the higher mobile penetration rate as compared to broadband penetration rate, and use of music as an expression tool rather than a collection of titles,' Mr Kalwar noted.

He added that in most of the South-east Asian countries, music is used more as an expression tool. 'Hence we see greater consumption of music in terms of caller tunes, which is not for the buyer to hear, but as an expression of a person's tastes and feelings.'

Mr Kalwar noted that the premium video segment is rapidly emerging from the shadow of online music and gaming as a result of the advances in compression technology and high bandwidth broadband availability, which makes streaming video and video downloads feasible.

'Video-on-demand (VoD) operators in Singapore suggest that the main restraints for growth of VoD services are issues stemming from high set-up and operational costs.'

He added that players having operational services have indicated that the difficulties faced by their customers due to the limited bandwidth available to each of them from their ISPs (Internet Service Providers) has led to a slow uptake of these services.

In this context, Mr Kalwar noted that once Singapore's Next Generation National Broadband Network (Next Gen NBN) is up and running, the online content services industry would witness substantial growth.

'If the high-speed broadband network is able to deliver high-speed broadband connection to every home in Singapore at affordable rates, there is nothing to stop the growth of the online content industry,' Mr Kalwar said.

He added: 'Along with the prevalent strict anti-piracy laws in place, Singapore would have a good environment for both the content production and distribution ecosystem to grow.'

The high-speed broadband network would also enable ubiquitous network access, hence users would be able to access the content they want, anytime and anywhere they want, the Frost analyst noted.

In this context, Mr Kalwar observed that in the media industry, content has always been the key factor and will continue to be so.

'With the proliferation of distribution platforms like IPTV (Internet Protocol TV), we expect the online content market in Singapore to grow at a pace faster than ever before. Apart from Western content, the popularity of content from South Korea, Japan, China and India for local subscribers is also expected to increase.'

IPTV is capable of offering the interactivity of the Web to the TV, and hence holds good promise for the acceleration of the growth of online content services, he added.

'This would be a plus for both the content production and distribution industry, considering the high prices broadcasters have to pay for content exclusivity.'

Mr Kalwar noted that Singapore already has one of the highest household broadband penetration rates in South-east Asia, but it (broadband penetration) still lags far behind its mobile penetration rate of 118 per cent in 2007.

Mobile platform

This is the primary reason for digital media distribution being more on the mobile platform than broadband, he added.

'As 3G (third generation mobile telephony) adoption continues to grow in Singapore, even more 'low bandwidth' digital content such as music and video clips are likely to be accessed through mobiles.'

Having said that however, as high-speed broadband packages become affordable and IPTV gains its rightful place in the Singapore market, 'bandwidth hungry' content like HDTV (high definition TV) would begin to gain traction, he added.

'Also, we believe that broadband would still continue to be the preferred medium to access content like gaming which requires response in 'near real-time'.'