London – The Digital World has reported a sizable drop in revenue during 2012, with growth decreasing to 2.7 percent after two steady years of recovery. The finding come from DigiWorld Yearbook, a reference manual of the digital world from IDATE, the European Internet think tank. The Yearbook includes key figures and a look at the latest innovations and events that marked telecom, Internet and media markets during 2012.

Didier Pouillot, who heads up the DigiWorld YearBook project, says, “Equipment markets took a severe battering in 2012, with unit sales shrinking in virtually every category and pressure on prices almost wiping out any of the benefits of customer upgrades. The TV market was the hardest hit, which dragged the entire consumer electronics market down by 7 percent.”

IDATE Institute Chairman, François Barrault, warns readers that, “the current state of affairs is not solely the result of the economic crisis, or Schumpeterian creative destruction [the cycle of new models destroying previous ones], especially at a time when digital innovation remains an essential vehicle of productivity and a new growth cycle.”

But increased competition in the smartphone and tablet markets offers a glimmer of hope for the other two sectors. And although services markets can be said have weathered the storm, relatively speaking, it seems highly unlikely that they will find their way back to the growth rates of the mid-2000s, and even less to the double-digit increases of the late 1990s.

OTT Bucks the Trend with Growth
The sole exception here being internet (OTT) services which continue to grow by an average 20 percent. Pouillot expands, “Telcos do have certain leverage to deal with this change, starting with creating more value from network access now that OTT services are increasing user consumption. NGN technologies allow telcos to increase speeds (‘best network’ strategy) and to introduce noticeable quality improvements, both of which can differentiate their offerings. But it is clear 2013 is a pivotal year and telcos must embrace innovation. A simple Darwinian case of evolve or die!”