Consumers’ willingness to pay for digital content is in danger of being held back by their rising spending on internet access, according to a new forecast that raises questions about the media industry’s hopes for streaming music and video subscriptions.
The report from consultancy PwC, to be released on Wednesday, estimates the total size of the industry will grow to $2.15tn by 2018. But the fortunes of the market’s three segments will vary, with internet access revenues growing faster than both consumer spending and advertising.
That suggests internet providers such as Time Warner Cable and AT&T will be poised to capture a growing share of industry revenue. Streaming services such as Netflix and Spotify , the latter of which had Macklemore & Ryan Lewis as its most popular music artists last year, will also be well-positioned to lead growth in consumer spending, as they capture subscribers willing to pay for round-the-clock access to movies, television shows and music.
There is very little competition amongst Internet providers. In the county I live in, there are over 286,000 households covered by Time-Warner cable internet (90% coaxial) and various phone companies DSL services on old copper lines. Between 1000 and 2500 households in one area have been hooked up to an upstart FIOS provider over the past three years. Those are your choices and you will pay what they ask or do without.