BizResearch

CEO 360 Degree Perspective - Global Pharmaceuticals & Biotechnology Industry

This research from Frost & Sullivan is a strategic overview of current issues and concerns in the global pharmaceutical and biotechnology industry. It presents the findings of approximately 1,000 interviews with CEOs and director level executives in the industry.  The report also includes research findings from econometric, advanced technology and several other business divisions of Frost & Sullivan.

Main findings from the report:

IP concerns: copycat drugs and reverse-engineered medical products create cautionary barriers to global market entry. Products developed in country often have more patent protection and drive local manufacturing and development strategies.

Price regulations: some governments are introducing protectionist and nationalist policies to strengthen the local pharmaceutical industry by implementing more stringent price regulation on foreign manufacturers.

Shift in growth from mature markets to emerging markets: Emerging economies could generate up to a fifth of global pharmaceutical sales by 2020. This shift creates new developer interest in patient groups, including new growth opportunities for chronic disease indications. Improved regulatory and IP protection promotes innovation, competition, and increased access to safe medications.

Tighter regulatory approval: high profile product withdrawals in recent years have resulted in regulatory bodies such as the FDA and EMEA becoming more rigorous in their approval procedures. This has resulted in longer product approval times, and in some cases delaying product launches. Pharmaceutical companies need to be able to ensure better rates of approval, right from the discovery stage to enjoy market success.

Cost containment pressures: escalating healthcare costs have put pressure on payers to contain pharmaceutical expenditures. There are multiple stakeholders in the R&D/product development process, which includes payers, patients, and pharmacists. As a result, pricing and reimbursement analysis should be taken into consideration earlier on in the R&D process.

This report is available to current London Business School staff, students and faculty from the Frost & Sullivan database located on the A-Z list of library databases via Portal

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Guide to Sources of Statistics 2009

The IFSL has accessed a wide range of sources in the process of researching many aspects of the financial sector and related professional services. This Guide, which is updated every year, lists sources of financial services statistics mostly found on the internet. Where possible a direct website link to the source has been included.  Each section in this Guide also refers to a separate IFSL report which can be downloaded free of charge from their website. The guide is divided into three main sections: sources of statistics for UK and international financial markets; Sources of statistics for professional and support services; Sources of statistics for international trade in services

Key areas of IFSL research include:

• 16 sector reports in the City Business Series
• 9 reports highlighting IFSL’s role in international promotion
• 6 research reports related to IFSL's role in international trade policy and liberalisation
• 9 regular reports featuring trends in financial sector exports, economic contribution of financial services, comparison of development of financial markets in Europe and the US .

Click here to access the guide

UK Film Market

This Market Review from Key Note examines the UK market for feature-length films. Currently this industry is experiencing a period of major change in the way that consumers access and watch films at home.  Alongside the traditional ‘release windows’ for major films, such as cinema release, video rental and buying DVDs, consumers can now use the Internet to download films or their digital televisions to subscribe to film channels or buy films on a ‘pay-per-view’ (PPV) or ‘video-on-demand’ (VOD) basis.

This fragmentation across distribution channels, or ‘windows’, represents an inevitable adaptation to new technology, but it has not benefited the industry economically. Key Note values the UK film industry at £4.2bn in 2008, down from an all-time peak of £4.47bn in 2004.  Income from selling films on DVD (£1.63bn in 2008) or renting them (£250m) is no longer increasing and the future lies with new channels such as VOD, up 250% since 2004, although it is still a fairly small market. Downloading films to home computers is still in its infancy but using the Internet to order DVDs is thriving, both for buying them (e.g. Amazon) or arranging rentals to be delivered (e.g. LOVEFiLM). The pervasive use of the Internet has put severe pressure on traditional high-street outlets.

Despite the negative economic factors, UK cinema audiences have stabilised in recent years and cinema-going, focused on the first window of release, is still the litmus test for the film industry. This stability, together with the occasional breakthrough, such as Mamma Mia!, bodes well for any industry entering depression-threatened 2009, and a trip to the movies has the added attraction of helping consumers cast aside economic worries, as in previous gloomy periods for the economy.

This report is available to current London Business School staff, students and faculty from Key Note Online which can be found on the A-Z list of library databases via Portal.  The print edition of this report can be found in the market reports collection

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Fair Trade

The purpose of this special issue of the Journal of Business Ethics is to discuss the growth of Fair Trade, in particular the increasing involvement of traditional business.

Fair Trade is a form of international exchange that aims to help small producers in developing countries by guaranteeing a fair (above market) price for their products plus the provision of other forms of support.  There have been two major developments in the fair trade movement, which are outlined in the introduction to the special issue by Reed & McMurtry. The first was the introduction of a certification program in 1988. Before this, handicrafts were the most widely traded products, but since certification a wide variety of agricultural commodities such as coffee, tea, and cocoa among others have been made available. Initially these products were imported exclusively by alternative trade organizations and were offered for sale primarily through alternative retail outlets. The second major development in Fair Trade was the involvement of traditional businesses, especially large corporations. It is this latter development which makes the Fair Trade movement an important key topic for business ethics.

Proponents of ‘‘mainstreaming’’ Fair Trade argue that it is the participation by corporations that has helped to increase the size of current Fair Trade markets and to facilitate the introduction of new Fair Trade products. Critics argue that traditional businesses, especially large corporations, are not committed to Fair Trade values and participate primarily for public relations reasons. Further, they claim, their participation has served to undermine the original goals of Fair Trade, serving to undermine support for small producers.  These critics are also concerned that the current leadership of the certifying bodies is overly interested in increasing sales and has become distanced from the Fair Trade movement itself. For their part, small producers in the South often feel that they do not have a sufficient say in the decision-making of a movement that was developed to support them.

The special issue presents eight articles including two papers from the guest editors Darryl Reed on the different ways corporations have become involved in the Fair Trade practice and J J McMurtry discussing the ethics of Fair Trade.

Full-text access to this special issue (Journal of Business Ethics, Vol. 86, Sup.1) is available to current staff, students and faculty via Article Finder which can be found on the A-Z list of library database via Portal.

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Ageing and Unused Capacity in Europe: Is There an Early Retirement Trap?

Life expectancy has been steadily increasing over the last 50 years across all developed countries. The average life expectancy at birth in 1960 was around 70 years of age in most Western European countries and the US; it is now 79 or higher.  This dramatic increase in life expectancy, coupled with improved health conditions means that many individuals aged less than 70–75 are able to continue contributing to society in various ways, from paid and voluntary work, to caring for family members (grandchildren, old parents, etc.). The retirement age has increased in most countries, but less than life expectancy and this implies that individuals must make careful and skilful use of financial resources, that should support their consumption over a much longer retirement period than a few decades ago.

At present, Europe has large fractions of individuals who have retired aged 65 or younger. Most of the ‘young old’ who are currently retired were induced to retire early by substantial financial incentives Yet, newly released data on a host of European countries (e.g. second wave of SHARE – the Survey on Health, Ageing and Retirement in Europe), show large numbers of retired individuals experiencing financial difficulties.

This paper by Angelini, Brugiavini & Weberwe argues that the presence of financially attractive early retirement schemes in a world of imperfect financial and insurance markets can lead to what they describe as an 'early retirement trap'. Analysing data on 10 European countries, with differing pension and welfare systems, in prevailing retirement age and in households' access to financial markets, the authors find evidence that an early retirement trap does exists, particularly in some Southern and Central European countries.  The paper argues that governments should stop making early retirement attractive, let retirees go back to work, improve access to financial markets and make sure long-term care problems are adequately insured.

Full-text access to this article (Economic Policy Vol. 24:59) is available to current staff, students and faculty via Article Finder which can be found on the A-Z list of library database via Portal.

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Renewable Energy Capacity in the EU

The EU-27 countries are trying to lower carbon emissions and build an inter-connected, efficient energy system. New targets created by the EC call for the following by 2020: the reduction of greenhouse gas emission by a least 20%; improved energy efficiency by 20%; a 20% rise in the share of renewable energy; and a 10% increase in the level of biofuels transport fuel. In trying to meet these objectives, a new energy market is beginning to evolve.

In the last decade newly installed renewable energy technologies are starting to gain a notable share of the market. ‘This latest report from Business Insights documents the growth of this new market, showing its current status and projecting where it is likely to grow to in the foreseeable future. This report gathers the statistical data on the different types of energy generation and combines and contrasts them against each other to show the clear leaders, drivers to change and future growth.

Report highlights:

A fast growing wind market (7.9%) has recently overtaken the market share of fuel oil (6.9%). Biomass (1.0%), Solar (1.2%) and Geothermal (1.0%) maintain almost equal shares and are currently the minority parties in the capacity market.

There is little question that wind power is the success of the renewable electricity generation technologies in terms of recent capacity installed: the EU represents 55.1% of the global total installed capacity of wind power. It is clear that Europe is leading the world in the rapid installation of this technology, as North America has a market share of 23.4%, and Asia accounts for 20.7%.

Germany, Spain, Italy, France and the UK accounted for over 70% of new capacity installed in 2008. At the end of 2008, Germany and Spain accounted for over 60% of all European wind capacity (cumulative).

Solar capacity installed in the EU in 2008 recorded the industry’s largest one year growth volume.  Germany and Spain lead the field with Germany installing in 2008 1,505MW in addition to the countries existing 3,846MW, and Spain installing 2.6GW giving the county a total of 3.4GW.

The EEA forecasts growth of energy consumption at 19% (2004-2030), while the EIA forecasts 12.8% (2005-2030), in both cases well ahead of population growth rates.

Under this report’s the reference scenario forecast for wind and solar power generation, generation growth could increase from 172.3TWh in 2008 to 583.5TWh in 2020.

This report is available to current London Business School staff, students and faculty from the Business Insights database which can be found of the A-Z of library databases via Portal

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Millennials at Work: Perspectives From a New Generation

This latest report from PwC follows on from a report released in 2007 ‘Managing tomorrow’s people’, which used scenario planning to explore the future of people management. The focus of this report is on the new generation of workers, referred to as the millennials,  Although much has been written about millennials or Generation Y, how much do we really understand about their expectations of work? Demographic shifts show a steady increase in life expectancy in many parts of the world, whilst at the same time declining birth rates in most developed economies. These dramatic shifts will lead to an unprecedented shortage of younger workers and the need to keep employees working until well past current retirement ages.

PricewaterhouseCoopers surveyed a total of 4,271 graduates about their expectations of work.  Graduates from 44 countries took part in the research in September 2008. The regional breakdown included: 1,004 in North America and the Caribbean, 943 in Asia, 759 in Western Europe, 481 in Central and Eastern Europe, 215 in South and Central America, 139 in Australia and the Pacific Islands, 67 in the Middle East and Africa.

Findings from the report:

• Millennials expect job mobility with 80% wanting to work abroad and 70% expecting to use other languages during their career.
• Corporate responsibility is critical – 88% of millennials said they will choose employers who have corporate social responsibility (CSR) values that reflect their own and 86% would consider leaving an employer if CSR values no longer matched their expectations.
• The majority expect some element of office based work and only 3% expect to work mainly at home/ other locations. Most expect to be working mainly regular office hours with only 18% expecting mainly flexible hours.
• The notion of portfolio careers is not likely to become a reality for this group – 75% of whom believe they will have between two and five employers in a lifetime.
• Training and development is the most highly valued employee benefit. The number choosing training and development as their first choice of benefit is three times higher than those who chose cash bonuses. 98% believe working with strong coaches and mentors is an important part of their development.
• Only 7% of the sample said time off to do community/charity work would be one of the top three benefits they would value over the next five years.
• Over half the sample believes they will personally fund their retirement with only 5% believing their retirement would be funded by the government/ state and 17% by their employer.

The full report can be downloaded from the PwC website (pre-registration required)

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New centre for research and development in open access communications

Open Access
The Securing a Hybrid Environment for Research Preservation and Access (SHERPA) team at the University of Nottingham has announced the formation of the Centre for Research Communications (CRC).

Based at the University of Nottingham, CRC will house the portfolio of open access projects, services and initiatives currently undertaken by the University. These include the home of the SHERPA partnership; the open access services RoMEO, Juliet and OpenDOAR; the Repositories Support Project (RSP), and the University contribution to the European and international projects DRIVER, Dart-Europe and NECOBELAC. In addition, CRC will also explore innovative research and development activities across the whole field of research communications.

The formation of CRC is yet another boost to the growing open access movement. As demonstrated by the recent award of open  access institute of the year award, Nottingham University is now at the forefront of supporting and informing changes in the way that research is communicated around the world.

http://www.sherpa.ac.uk/

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Shariah-compliant funds: A whole new world of investment

The concept of Shariah-compliant investing goes back four decades and yet the sector has only really taken off in the last five years.

A number of structural and behavioural changes in Islamic countries have produced this take-off and the probability is that the sector will now go from strength to strength.

Many asset management firms are currently sizing up the opportunities and this paper aims to help them deepen their knowledge of the sector, understand current developments and navigate through the main challenges of creating a Shariah-compliant fund range.

Written by PricewaterhouseCoopers’ professionals from around the world, this is the third paper in a series aimed at briefing mainstream financial services companies about opportunities in Islamic finance

  Download Shariah-compliant funds (92kb)

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Green Marketing Will Grow In 2009

This latest report from Forrester discusses the future of green marketing. It argues that green strategies are more important than ever with 60% of US adults expressing concern about the environment and 33% willing to pay more for products and services that are environmentally friendly.  Similarly, 71% of Europeans are concerned about the environment. The report argues that these concerns should be seen as opportunities for marketers.

Green initiatives can help both companies and consumers save money. Whether these initiatives take the form of internal programs to help companies save money or consumer-facing programs that help customers save money, they do not have to be about spending more.  Organizations are launching a number of green activities focused on product development and innovation, improved operations, corporate behaviour and marketing efforts. The report argues that marketing leaders should base green initiatives on their specific target consumer expectations and provide trustworthy information to avoid green-washing accusations.

Future challenges include:

• The need to make green claims credible: According to a recent Forrester survey, only 15% of US adult consumers believe company advertisements about their green products, and only 13% agree that companies are doing everything that they can to make their products greener.  Consumer scepticism has been fuelled by media accusations of green-washing against firms including easy Jet, Mattel, Royal Dutch Shell, and Woolworths.

• Developing standards: at present there is no unified definition of what it means for a product to be “green” or “environmentally friendly,” resulting in consumer’s confusion and distrust of eco-labels. This means that marketers of products that are truly more sustainable have a hard time communicating their points of difference.

• Dealing with consumer price sensitivity in the recession: with the current economic climate consumers are expecting to have less disposable income in 2009.  Marketers are not immune from recession discussions: Many have seen budget cuts in 2009

The full report is available to current London Business School staff, students and faculty from the Forrester database located on the A-Z list of library databases in Portal

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Reforming Financial Markets

The world economy has been hit by a severe financial crisis, resulting in the worst global economic downturn for over 60 years. Triggered by difficulties in the housing market that exposed the way that banks and other lenders had been underestimating real risks for too long, the crisis quickly spread throughout global financial markets destabilising banking systems around the world. As a result, the impact has spread beyond the financial system, hitting economic growth, prosperity and jobs throughout the world.

This document for H M Treasury sets out the Government’s analysis of the causes of this financial crisis, the action already taken to restore financial stability and the regulatory reforms necessary to strengthen the financial system for the future, so that consumers, businesses of all sectors and the economy as a whole continue to have access to the stable credit, essential for future growth, investment and innovation.  It argues that the crisis has been caused by the failure of the banking sector across the world, to understand the true risks created by the innovation and rapid growth of interconnected, globalized markets for financial services in recent years. The firms that have failed in the typically allowed their businesses to become overextended through: excessive leverage and risk taking; over-reliance on wholesale funding; overdependence on particularly risky product streams, such as buy-to-let mortgages or derivatives; or poor management decisions in respect of acquisitions.

 

As a result, Government intervention has been necessary to: protect depositors in banks and building societies; enable banks to continue to lend to the economy during the recession; and to restore financial stability. In the Budget 2009, the Treasury estimated that the cost of Government action could eventually be as high as £50bn. But the costs of Government inaction would have been far higher, as a modern economy cannot function without a stable banking system. The way firms manage risk, the quality and quantity of capital they hold, and the way regulators monitor firms need to change. Further regulations on how banks operate globally are also necessary in order to prevent global financial crises from recurring in the future.

 

Direct link to report

Direct link to impact assessment

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EU ETS Exchange Trading in First Half 2009 Exceeds Full Year 2008

EU ETS Exchange Trading in First Half 2009 Exceeds Full Year 2008

Trading in the rapidly expanding global carbon markets jumped 61 per cent in 2008, with the volume of carbon dioxide emissions transacted worldwide rising from 2.98 billion tonnes of CO2 to 4.81 billion tonnes.

This finding is reported in the latest edition of the Carbon Markets report from International Financial Services London (IFSL), the independent organisation promoting UK financial services around the world, which also reveals that London is continuing to build on its leading position in global carbon markets.
 
EU ETS: The EU’s Emissions Trading System (EU ETS) continues to dominate international activity in allowance-based markets. Exchange trading on EU ETS totalled 3.2 billion tonnes of CO2 in the first half of 2009, exceeding the full year total of 2.7 billion tonnes in 2008. Spot trading on EU ETS has mushroomed since last autumn as companies have used allocated allowances as a ready source of finance. Trading in EU ETS futures and options has risen in parallel with the spot market.
 
The bulk of futures and options trading in EU ETS takes place on the London-based European Climate Exchange (ECX), with 92 per cent of exchange trading in 2008 and 99 per cent in the first half of 2009. Trading of energy brokers in London rose by 82 per cent to 1.13 billion tonnes CO2 in the first five months of 2009, up from 618 million tonnes in 2008.
 
Project Market: China dominates the project-based market with 84 per cent of volumes supplied under the Clean Development Mechanism (CDM) in 2008. India, Brazil and Mexico are also important countries for CDM investment, although projects tend to be smaller. CDM investment has slowed since mid-2008 due to the financial crisis; constraints in the registration process; and uncertainty about the outcome of the Copenhagen summit in December.
 
Duncan McKenzie, IFSL’s Director of Economics, said, “Alongside the dominant position of ECX in the EU ETS and prominent role of London-based energy brokers, the UK remains the leading investor in project-based transactions with 39 per cent of CDM credits purchased in 2008. Major verification agencies are based in the UK and LSE’s Alternative Investment Market (AIM) is a magnet for companies developing renewable technologies.”

A total of 78 companies developing renewable technologies are listed on AIM raising a cumulative £1.6 billion. About 70 of these companies have joined AIM since 2004 although less favourable market conditions meant that there were only 2 IPOs in 2008.

Read the report

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2009 UK Superbrands

The results of the 12th annual top 500 Superbrands survey have just been released. This year sees US computer giant Microsoft winning back the number one spot as the UK’s top consumer brand. Coming in second is Rolex, closely followed by Google, British Airways and the BBC. The survey shows that the economic climate has done wonders for fast food retailers, who have shown the strongest year-on-year improvement in the survey.  Krispy Kreme doughnuts are the highest new entry (No 68) in this year's list.

The selection process for the ranking is administered by The Centre for Brand Analysis (TCBA) who put together a list of the UK’s leading brands using a wide range of sources. This year a list of around 1,400 brands were shortlisted and then scored by an independent panel of experts. The lowest scoring brands (approximately 40%) are then eliminated, leaving the remaining brands to face the vote by a nationally representative sample of more than 2,100 British consumers aged 18 and above. These individuals are accessed via a YouGov panel.  The number of consumer votes each brand receives determines its position in the final rankings. Only the top 500 brands in this ranking are deemed to be Superbrands. The following definition of a Superbrand used by the expert council and the consumers is:  ‘A Superbrand has established the finest reputation in its field. It offers customers significant emotional and/ or tangible advantages over its competitors, which (consciously or sub-consciously) customers want and recognise.’

Click here to see the full ranking

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File-Sharing and Copyright

The advent of file sharing has considerably weakened effective copyright protection. Today, more than 60% of internet traffic is made up of consumers sharing music, movies, books and games. Yet, despite its popularity, a recent working paper from the Harvard Business School argues that file-sharing technology has not undermined the incentives of artists and entertainment companies to create market and distribute new works.  While policy discussion surrounding file-sharing has largely focused on the legality of the new technology and the question of whether declining sales in music are due to file-sharing, the paper suggests that the debate has been too narrow. Copyright protection exists to encourage innovation and the creation of new works—in other words, to promote social welfare.  The working paper analyzes the landscape and identifies areas for more research.

Main findings:

• Empirical work suggests that in music, no more than 20% of the recent decline in sales is due to sharing.

• Digital technology has lowered the cost of producing movies and music and allowed artists to reach their audience in novel ways.  It’s difficult to argue that weaker copyright protection has had a negative impact on artists’ incentives to be creative.

• File-sharing has not discouraged authors and publishers. The publication of new books rose by 66% during 2002-2007. Since 2000, the annual release of new albums has more than doubled, and worldwide feature film production since 2003 is up by more than 30%.

• File-sharing has been shown to increase the demand for complementary goods (such as concerts, electronics, and communications infrastructure) adding to artists' incomes.

Click on the link to read the paper in full (HBS Working Paper Number: 09-132)

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Global Books

Global books from Datamonitor provides an industry overview for the book publishing market, which includes the sales of academic and professional textbooks, general readers books (fiction and non fiction) and other traded books.  For the purpose of this report the global figure is deemed to comprise of the Americas, Asia-Pacific and Europe.

Highlights from the report:

The global book market generated total revenues of $119.1 billion in 2008, which represents a compound annual growth rate (CAGR) of 2.6% for the period spanning 2004-2008.

General readers/trade sales proved the most lucrative for the global book market in 2008, generating total revenues of $51.1 billion, equivalent to 42.9% of the market's overall value. In comparison, sales of student’s textbooks generated revenues of $38.4 billion in 2008, equating to 32.3% of the market's aggregate revenues.

Growth within the mature global books market has been sluggish over last years, and prospects for the future growth are not promising, meaning new players will have to face increased rivalry from already established competitors. Pearson, Bertelsmann AG, or Reed Elsevier publishers represent the leading players within the market; they benefit from large scale of geographically diversified operations, and may compete more intensely on price.

Possibilities of substitution exist within the book market. The scope of publishing has expanded and includes variety of media formats and entertainment forms, such as the electronic versions of books (so called e-books) and periodicals, as well as websites or blogs, etc.  They may present significant indirect competition to established traditional channels moving forward, however at present they represent a relatively small proportion of distribution. Such substitutes have their advantages – usually it is less expensive to reproduce them and they are eco-friendly since they are delivered to customers in digital form and there is no need for paper, ink or other resources that are used to produce print books. Also they take less physical storage space and are easy to travel with since hundreds of them may be carried on one device and easy to read in the dark with a back-lit device.

This market report, plus a range of country-specific overviews for this industry are available to current London Business School staff, students and faculty from Marketline which can be found on the A-Z list of library databases via Portal.

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Global Trends in Venture Capital: 2009 Report

Are venture capitalists battling the global recession blues or feeling optimistic about the new opportunities for investing in technology?  When Deloitte conducted the first global venture capital (VC) survey five years ago, the community was recovering from the tech bubble bursting and was just beginning to see significant movement toward globalization of the industry. Given the severity of the current global recession, this year’s survey focused on issues surrounding its impact on venture capitalists. The survey questions asked how the global recession is affecting strategy; how future investments are being planned, both by sector and region; what the anticipated size of the next fund will be and who VCs think their limited partners will be. This year’s report looks broadly at the results in a global context, but an appendix is included that breaks out survey responses by geographic regions.

The survey was conducted with venture capitalists (VCs) in the Americas, Asia Pacific, Europe and Israel. There were 725 responses from general partners of venture capital firms with assets under management ranging from less than $100 million to greater than $1 billion.  Multiple responses from the same firm were allowed, as the survey was a general measurement of the state of global investing from all general partners, not attitudes of specific firms. If respondents did not answer a question, the count for the question was adjusted accordingly.

The findings uncovered that globalization of the venture capital industry will intensify in coming years, posing significant competitive questions for the United States, and opportunities for emerging markets such as China. Additional findings include:  The clean tech sector is poised to become the leading investment category.  Levels are more likely to increase in countries outside the US Governments of all countries have a crucial role to play in fostering competitiveness and innovation.  Just over half of VCs surveyed remain optimistic that it is a terrific time to invest in promising entrepreneurial companies.

The full report can be downloaded from the Deloitte website

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Entertainment in the UK in 2028

This latest report from Ofcom assesses the spectrum requirements for both the distribution and production of entertainment by 2028. It compares spectrum demand with likely supply, identify problems of increased scarcity, and suggest possible ways of dealing with them.  For the purposes of this study the term entertainment covers four main headings: watching, listening, reading and playing

The main trends which shape Ofcom’s scenarios for 2028 include the following:

There is an enduring consumer need for entertainment. The average consumer spends 4.5 hours per day consuming various entertainment services, a figure which is likely to grow slightly as the UK population ages and becomes more sedentary

The revenues generated by entertainment are in decline. Revenues shrank by 0.7% per annum over the last five years1 while UK GDP grew at 2.2% per annum. The decline reflects a shift in advertising spend, away from entertainment-based and toward search-based Internet advertising. Public funding and end user spend, the other two components of entertainment revenues, have remained roughly constant over the past five years.

Consumers’ willingness to pay for entertainment has changed with the growth of Internet-based entertainment. Large amounts of what was premium video content are now available free of charge on the Internet, albeit often in low quality formats. So the basis on which consumers are willing to pay for entertainment is shifting towards a high-quality viewing experience and physical ownership.

Entertainment on the move is increasingly important to consumers as ownership of personal devices like the MP3 players, net books and iPhone-like personal devices grows. But most consumers prefer to read or to listen rather than to watch on the move. Those who own mobile devices with Internet capability are more likely to use them to check e-mails or browse the web than to watch streaming videos.

In combination these trends suggest that we might see radical changes to the business models used to deliver entertainment over the next 20 years. For example it might be reasonable to expect that:

• Internet-based entertainment will lead to disruptive new value chains
• Targeted advertising will help shape future value chains. In particular the organisations which are best able to collect information on entertainment consumption patterns are likely to exert strong control over the entertainment value chains.
• There will be a move from value chains based on vertical integration and bundling to value chains based around horizontal specialists.
• Mobile personal devices will play an important, but uncertain, role in the delivery of entertainment services in future.

The report can be downloaded from Ofcom’s website

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Consumers in Europe

The 2009 edition of Consumers in Europe presents a comprehensive set of data and related information concerning consumer markets and consumer protection issues within the European Union. The aim of the publication is to bring together the most relevant and useful information for the evaluation and development of consumer policy, not only as a tool for policy-makers, but also for those interested in end-markets and consumer affairs, such as representative organisations, public authorities, or suppliers of goods and services. Much of the data that has been used will feed into the consumer markets scoreboard which has been designed to monitor outcomes in the single market and to make European Union policy in this area more responsive to the expectations and concerns of consumers.

The publication starts with an overview of the single market from the consumer’s perspective, presenting a profile of European consumers and the retail network, as well as issues relating to access and choice, before looking at key indicators for consumption and prices. The overview also presents information on consumer satisfaction, the quality and safety of goods and services, as well consumer representation and protection. The remainder of the publication is devoted to 12 specific consumer markets:

• Food and non-alcoholic beverages
• Alcoholic beverages and tobacco
• Clothing and footwear
• Housing, water, electricity, gas and other fuels
• Furnishings, household equipment and maintenance
• Health
• Transport
• Communications
• Recreation and culture
• Education
• Restaurants and hotels
• Miscellaneous goods and services

Each chapter covers one top-level heading within the classification of individual consumption by purpose (COICOP), the main classification used to provide detailed data on consumer prices, price levels and consumption expenditure. The chapters are structured in a similar manner to the overview, in an attempt to present harmonised data and a range of key indicators that may be compared across the publication.

Click here to read the report in full

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Economic Survey of the United Kingdom 2009

The OECD has just published the 2009 economic survey for the United Kingdom. The surveys are published every 1½-2 years, providing assessment and recommendations on the main economic challenges for each of the OECD countries.

Selected highlights from the survey

The United Kingdom, like most OECD economies, is experiencing a severe economic downturn, and there is enormous uncertainty about the macroeconomic outlook. Business investment will decline owing to the challenging prospects and tight financial conditions. While sterling has depreciated by around 20% in effective terms since 2007, exports will decline due to the sharp fall in external demand. However, imports are expected to fall faster meaning that net exports will contribute positively to growth.

House prices have fallen after an extended period of large increases which left many households over-extended. Financial conditions are tight, and the financial market crisis has threatened the stability of the financial system. External conditions are also highly unfavourable. The recovery is likely to be slow and unemployment is expected to climb significantly reaching close to 10% by 2010. Both monetary and fiscal policies have eased to cushion the severe downturn with the policy rate now at historically low levels and quantitative easing measures under way. The authorities have also moved quickly to introduce a wide range of measures to stabilise the financial system.

In the short term, the policy priority must be to further improve conditions in credit markets. This is essential for reviving the economy. Alongside this, policy should aim at damping the severity of the downturn and its impact, particularly on the labour market. Policy actions that could undermine longer-term objectives need to be avoided. Over the medium term, fiscal consolidation needs to be underpinned by an effective fiscal framework and financial market regulation and supervision needs to be overhauled. The financial crisis and its consequences are likely to lead to a permanent fall in the level of potential output. Therefore, measures to raise long-run living standards will have renewed importance.

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