Emerging markets hold high earning potential for online media, says report

Online media companies should look to China, India, Russia, Mexico for high earnings potential, says EY report.

Emerging markets will hold some of the highest earning potentials for online media and entertainment companies as more of the world gains access to the internet, according to a new report from Ernst & Young.

China, India, Russia and Mexico are cited as the markets to watch out for and could even catch up to match the earning potential of the US, which currently has the highest potential out of all nations for online media and entertainment firms.

Figures highlight that the internet penetration rate will continue to accelerate until the number of broadband connections is double that of mature markets by 2016.

The top emerging market for online media companies, China, is forecast to have 500 million wireless broadband connections by the end of next year and will still have a large potential for growth - as it’s less than half of the nation’s population of 1.36 billion people.

But, while getting through the country’s regulations might be tricky, there’s potential to take advantage of the massive online advertising market, the value of which is forecast to rise to $23 billion in 2016.

India represents something of a challenge due to its limited smartphone and broadband penetration. However, it provides a number of long-term growth opportunities as India is one of the fastest growing markets in the Asia-Pacific region.

The Russian and Mexican markets have a lot of distinct advantages but suffer from corruption and instability.

Russia has high penetration rates of both broadband and smartphones, but first companies will need to get round the roadblocks for foreign companies and the high level of digital privacy.

Mexico suffers from a reputation of corruption and bribery, while smartphone penetration rates are also quite low. But with the highest per capita consumer spending out of any emerging market, it definitely has its attractions.

While these markets might take some time to catch up with established digital markets such as the US, they will be ones to keep an eye on as technological developments continue to take hold and change the way they operate.