Strategy Analytics: Google Bucks Downturn in Digital Media's Slowest Ever Quarter

Business Wire, August 19, 2008

BOSTON -- According to Strategy Analytics' Digital Media Index (DMI), revenue growth in digital media slowed to 0.8% quarter-on-quarter in Q2 2008, down from 3.3% in the previous quarter and 3.4% in the same period last year. Google, up 3.5% quarter-on-quarter, was the only one of the five largest companies in the index that went against the general trend.

On a trailing twelve months basis, Strategy Analytics' Digital Media Index grew 5.8% in Q2 2008 to reach 153, equal to a 53% increase from the index base year, as of December 31, 2006. Three companies managed to beat the quarterly index growth: Warner Music Group's Digital Business, up 8.5%, Google, up 8.3% and Apple iTunes, up 7.3%.

"The global digital media economy continues to expand quickly with an annual growth rate of 31%," said Martin Olausson, Director of Digital Media Research at Strategy Analytics, "but we are now seeing a considerable slowdown in quarter-on-quarter growth across the board."

"It seems that not even an emerging sector such as digital media is immune to the global economic downturn," added David Mercer, Vice President and Principal Analyst at Strategy Analytics. "Companies relying solely on digital revenues for growth may struggle in the second half of 2008, as consumers and advertisers alike tighten budgets."

Other findings from Strategy Analytics' Digital Media Index (GDMI) Q2 2008 include:

* Fox Interactive Media (FIM) was the fastest growing digital media company on an annual basis in the index with an impressive 55.6% growth in the last 12 months;

* Apple iTunes was down 7.0% quarter-on-quarter. However this decline is consistent with seasonality for iTunes, and is in line with a 6.9% drop in the same period the previous year.

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