Going Global: Multimedia Marketing & Distribution
Going Global: Multimedia Marketing & Distribution, 1994-1995 is the Multimedia Development Group's first white paper on international multimedia. This research report is a comprehensive study of global opportunities for multimedia development, localization, marketing and distribution, covering multimedia markets and technology trends in over 25 countries across Europe, Asia, Africa and North America. It is designed to be used as a contact and statistical resource for developers, investors and marketers interested in selling multimedia products and services overseas.
A volunteer team of over 30 members of the MDG International Group worked for nine months to gather information via phone, fax and e-mail. The methodology was a detailed questionnaire covering many aspects of the marketing and distribution of multimedia. This questionnaire was distributed to market research firms, developers, publishers, and distributors. Public and university libraries, government agencies, and the Internet were also tapped for information about the business of international multimedia.
The Canadian government is a strong supporter of the advancement of Canadian technology and has been instrumental in the development of multimedia within Canada. The private and public sectors are working to integrate creative applications and systems that will allow the Canadian multimedia industry to be competitive, both domestically and internationally.
A consortium of Canada's nine major telephone companies will spend $8.5 billion Canadian dollars (US $6.09 billion) over the next 10 years to upgrade Canada's phone network to handle multimedia services. The investment is designed to enable 80% to 90% of Canada's businesses and homes to receive video transmission and interactive services over telephone lines, by the year 2005.
Mexico is perhaps the largest computer goods market in Latin America. Based on available statistics, of the 1.23 million computers shipped to Latin America in 1992, one third went to Mexico.
The United States, long recognized as the world leader in entertainment, and Hollywood, as the premier entertainment content provider, will have a significant impact on the worldwide multimedia industry.
As the consumer base for CD-ROM grows, the multimedia industry will eventually surpass the industries of entertainment, music and software combined. However, CD-ROM is not the ultimate platform. In fact, many industry leaders predict the medium will only have a life of 10 to 15 years before it is replaced by other mediums.
While entertainment and game titles are currently the most visible and popular products, non-entertainment business and educational applications will continue to make up the bulk of revenue-producing multimedia products in the U.S. and elsewhere.
The European telecommunications industry is still largely state-owned, but European industrialists are pushing for deregulation to proceed as far and as fast as possible. With deregulation on the horizon, European countries will be looking to the United States for content. By developing a strong localization policy and a strategy that involves forming joint ventures with European companies, American multimedia companies should be well positioned to enter this market.
Scandinavia (Denmark, Finland, Norway & Sweden)
Because English is a widely spoken language in the Scandinavian countries, barriers to market entry are minimal. Multimedia will see its biggest growth in the telecommunication and information technology infrastructure.
The CD-ROM format has finally established itself as a low-cost, mass distribution medium for in-house productions and commercially available software titles. Although the installed base of CD-ROM drives was 4-5 times greater this year than in 1993, with an estimated installed base of 7,000 to 10,000 drives, it is still low.
With an import market share of 80%, the United States is also Finland's market leader in multimedia hardware components (video and audio cards, CD-ROMs and CD-ROM stations) and software used in multimedia.
One of the most exciting multimedia developments is a video telephone system which transmits sound, live photographic images, and data through the ISDN network.
Almost all CD-ROM titles that are sold in Sweden are American. Like the U.S., Sweden is one of the strongest advocates of telecommunications deregulation in the world. As a result, multimedia will see its biggest growth in the area of telecommunications.
The installed base of CD-ROM drives in France doubled in 1993 and is expected to increase 316% in 1994. Although French companies have a high level of advanced technologies, the French market is the most difficult for outside companies to penetrate. Professional localization and mass advertising campaigns are important success factors for the French marketplace.
Germany is the leading European market for CD-ROMs. 1994 sales of CD-ROM drives increased 40% over 1993, and are expected to increase 90% by 1995. The development of CD-ROM technology has prompted German companies to enter the entertainment field for the first time. At present however, professional applications still dominate the market. Digital video processing and interactive information systems are the primary applications of multimedia, closely followed by business, presentations, computer-based education and training, and communications technologies, including video conferencing via PC and video LAN e-mail.
The Italian multimedia market was estimated at approximately US $157.8 million in 1993, an increase of over 60% from 1992. Italy ranks only behind Germany and France in its multimedia and CD-ROM use.
In 1994, an estimated 9,000 CD-ROMs are being used in almost 2 million CPUs, mostly in government offices, university libraries and ESL (English as a Second Language) schools.
Spain's primary source of imports is the U.S. (25% of all imported goods), so it is America's back door to the European Union (EU). Already a US $42 million market in 1992, the sales of CD-ROMs are expected to grow an estimated US $270 million by 1995.
The UK multimedia market has annual growth rates of up to 400% and currently accounts for 21% of European sales and 20% of all European multimedia publications. The UK should retain its position as the most dynamic creator of multimedia titles in Europe for the foreseeable future, due to its huge national archives and source materials, a highly computer literate school population, a high acceptance of PCs in the home (20%+ penetration) and a constant flow of innovators such as David Bowie's Jump CD and Peter Gabriel's Xplora!
Even though English is the primary language, content adaptation (i.e. localization) is still necessary, particularly in the professional and educational sectors, due to real cultural differences.
Russia has a legacy of rigorous world class science and technology. However, intellectual property rights, import tariffs, certification standards, distribution rights and other business and governmental relationships, which are relatively constant in other European countries, are best described as "in transition" for the new Russia. Having a Russian partner who can navigate the changing and capricious nature of law and tariff on the Russian side is almost imperative to success in this market.
Asia/Pacific Rim Countries
Australia represents 50% of the Asian Pacific market for multimedia. Forecasts indicate that the Australian in-home installed base of CD-ROMS in 1996 will represent 30% of the installed base outside the United States and Europe. CD-ROM title sales for 1993 were over 150,000 units. Projected sales for 1994 are expected to more than double.
The world's second largest computer and software market is forecasted to be worth US $33 billion by 1995, accounting for 20% of the entire world sales of software. In the future, the majority of multimedia software products will continue to come from the United States. The Japanese expect high quality in all products they buy. To meet Japanese competition, products will need to be thoroughly tested and bug-free before reaching the market, and companies will need to offer free customer support.
Growth in information and data transmission needs for the business sector will fuel Malaysia's future multimedia development. Rapidly rising consumer incomes will also push up demand for multimedia products.
Taiwan is the largest Chinese language CD-ROM market in Asia. The installed base of CD-ROM drives is approximately 130,000, with 25,000 to 30,000 of those in homes. It is anticipated that there will be an annual growth rate of approximately 34% for the installed base of multimedia capable equipment.
Thailand is investing heavily in an integrated telecommunications infrastructure that will include an integrated services digital network (ISDN), domestic satellite telecommunications; and an optical fiber network.
Singapore has established itself as one of the most technologically advanced nations in the world. The vision for the future of America's super information highway is already almost a reality in Singapore, whose ambitious plans are preparing it to become the world's first networked society, with all homes, schools, businesses, and government agencies connected in an electronic network.
The African computer market has quadrupled since 1986 and continues to grow at a fast pace, closing the gap with the rest of the world. There are approximately 40 significant metropolitan areas with government and corporate businesses utilizing computer technology. As a result, many African countries are striving to liberalize and modernize their telecommunications and computing infrastructures through the use of advanced technologies. Because these countries are not handicapped with existing networks to convert, they can leapfrog into the 21st Century with some of the best digital technologies, and offer a useful terrain for multimedia products and services.
The key for marketing in Africa is to understand that the continent is a diverse entity and a huge territory with 54 countries divided into two major regions: North Africa and Sub-Saharan Africa. Sub-Saharan Africa itself is comprised of 4 areas: South Africa, East Africa, Central Africa, and West Africa. Countries to keep an eye on are Egypt, Kenya, Nigeria and South Africa.
For more information or to purchase a copy of the white paper
contact: The Carronade Group 213/935-7600
Copyright 1994 Multimedia Development Group