Entertainment software provided on physical disc – CD, DVD, video games – is in terminal decline. Paradoxically, this means that the content industries need to provide more support to the tangible medium, not less. The disc is still a hugely important part of the revenues of the entertainment sector.

Discs provide irreplaceable services. They can be easily bought on impulse, as a gift and for shared use of family and friends. Even dedicated digital buyers still purchase physical discs of the material that has greatest emotional relevance to them.

People over 35 are generally reluctant to switch to all-digital purchasing. These consumers now buy a clear majority of all entertainment software and will simply stop buying films and music when the disc dies. The content industries should spend more time and effort serving these people, slowing the decline of physical media.

The development of the Digital Britain infrastructure, introduction of tablets, increasing connectivity of TV sets and launch of on demand OTT services over the internet have greatly intensified interest in connected viewing and its impact on the traditional broadcast model No single source of audience measurement for viewing of long- and short- form video content across all screens yet exists, though current market data suggest that connected viewing occupies a c. 8.5% share of total viewing across all screens By 2020, we project the connected viewing share of total viewing across all screens will reach 20%, with tablets being the primary drivers of growth, in part incremental and in part substitutional to viewing to the TV set, where we expect the connected viewing share to remain under 5%

Persistent, anaemic economic growth continues to constrict all spend on recreation and culture, especially for lower income consumers. Female readers, the bedrock of the magazine industry, will be especially hard hit by government austerity measures, which will begin to bite in 2013

Smartphone and tablet ownership amongst wealthier consumers has already impacted their spend on magazines. The industry can expect further shocks as mobile device penetration grows among older and also lower income demographics

New publishing platforms pose familiar challenges: publishers must compete with new online players from very different sectors; complexity and rapid change are a constant; historically low print magazine subscription volumes make the transition for publishers to data strategies and to develop flexible charging models more demanding than might otherwise be the case

Facebook’s announcement of Graph Search, the company’s first move into socially-powered search which now in beta trial in the US, leaves many details unanswered including full launch and monetisation plans. Reliance on user-generated content from Facebook friends limits the usefulness of Graph Search as a conventional search engine and hence its impact on Google and other web search businesses in the near term. In the longer term, Graph Search could become a powerful recommendation engine for certain categories like travel, but its dependence on user data and privacy restrictions are likely to limit its wider utility and revenue potential.

Press advertising performed worse than we expected in 2012, with double digit declines both last year and this year now a very real possibility.

Previously resilient areas of the press have weakened. Popular national titles have seen sharp advertising declines, while faltering circulation in celebrity magazines exposes an underlying decline in demand.

Retail and services advertisers continue to pull spend from print, largely in favour of online, though TV is also very resilient. Industry efforts to offset these structural shifts include the development of trading platforms, further consolidation and a number of commercial editorial tactics.

YouTube continues to evolve away from user-generated content with the expansion of its native Original Channels initiative in the US, Europe and Japan

Professional and semi-professional content is key to increasing YouTube’s sellable video inventory, raising advertising yield and attracting brand advertisers

Whilst YouTube is the leading global distribution platform for professional short-form video, it poses little immediate threat to TV viewing or revenues

The BBC Trust has given its provisional approval to the BBC Executive’s proposals for Project Canvas, the JV between the BBC and five partners that aims to enable DTT homes with broadband connections to access IPTV content on their TV sets

Canvas promises to enrich greatly the DTT platform; however, it is likely to encounter fierce opposition during the coming consultation from equipment manufacturers and the pay-TV platform operators, Sky and Virgin Media, especially in relation to its attempts to prescribe the user experience (UX)

We think that the BBC Trust will give its final approval, subject to the conditions specified in its provisional statement, but further delays seem likely and we do not expect Canvas devices to appear in the shops before 2011

In The Netherlands, KPN faces strong competitive pressure on voice and broadband from cable operators historically addressing subscription TV services due to their superior fibre/coax networks – KPN needs to upgrade its ADSL network to increase IPTV coverage and bandwidth to compete effectively on the triple play

KPN is pursuing a multi-technology approach to its network upgrade, deploying VDSL over the existing copper access network as a ‘transitional’ solution, accompanied by deployment of FTTC and FTTH. Currently, 13% of Dutch homes are passed by fibre, with KPN setting a ‘medium term’ coverage target of 30-60% of households

KPN says that FTTC and FTTH trial results show material increases in ARPU and market share, supporting the case for deployment. KPN is assuming entirely the costs of FTTC, but the investment in more expensive FTTH is being made by joint venture KPN-Reggefiber, whose need for finance in mid-2010 will require it to convince debt markets of its business plan for FTTH

This report sets out our thinking on the audience growth potential in the UK during the next decade of video on demand (VOD) programming that viewers can call up via interactive return pathways. VOD may be delivered by cable TV transmission networks directly to the TV set or by wireline broadband IP (Internet Protocol) networks directly to the PC and to the TV in homes equipped with the necessary receiving equipment

The question being asked by many is whether VOD will provide a paradigm shift that sees the decline of linear broadcast channel audiences in favour of non-linear on demand viewing in a TV Anytime future, where people can choose what they want to watch at whatever time they want

After reviewing the evidence from a growing body of research into viewing habits and audience measurement and examining the commercial constraints, we conclude that the traditional linear broadcast model will continue to hold centre stage for many years to come

France Télécom’s Orange TV premium strategy presents an interesting example of diversification into low cost ‘light’ pay-TV offers by an incumbent telecoms operator. Orange Sport and Orange Cinéma Séries are offered exclusively to Orange's 2.55 million TV subscribers, and five quarters after launch, adoption is 20%. This report draws several lessons on this type of venture for other incumbent operators