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Monday - July 10, 2000
$3 Billion to be Spent on
Online Sporting Goods
Consumers are expected to spend approximately $3 billion
in sporting goods, apparel, footwear, and event tickets online
in 2003 according to research unveiled today by Jupiter Communications,
Inc., a worldwide authority on Internet commerce. Unlike
many other Internet industries that have seen large-scale
cannibalization of traditional revenues and audiences, sports
content actually presents an incremental business opportunity.
According to Jupiter, fears
of cannibalization within the Internet sports category
are unfounded due to the near-term and future realities
of the narrowband Internet. Online sports consumption tends
to be one of the most important segments in the consumer
content pace. Jupiter research indicates that online sports
content is ranked as one of the top five favorite activities
of online consumers and consumption centers around complimentary,
rather than replacement, content.
Patrick Keane, senior analyst
for Jupiter's sports research, advises media companies
to focus on today's narrowband world. Less than five percent
of the US online population has broadband connection from
their home, indicating linear programming will not be a
reality in the next few years. "Leagues, teams, and
broadcasters securing high-dollar rights fees shouldn't
fear that the Internet will cannibalize viewership or effect
gate revenue," said Keane. "Sports content providers
will reap incremental revenue as the Internet continues
to exist as a complementary channel and medium."
Keane recommends that companies
engaging in the Internet sports sector must take advantage
of this growing sector by diversifying their revenue streams.
Depressed commerce margins must encourage commerce players
to diversify through advertising and content partnerships.
Media players should consider adding Internet commerce
revenue to help companies to experiment on expanded offerings
to consumers and advertisers.
Keane specifically advises sports
leagues and organizations, traditionally sustained on rights
and merchandising revenues alone, that the Internet affords
the opportunity to diversify revenues through paid content,
licensing, syndication, advertising, and commerce. Jupiter's
research on the Internet sports sector revealed that one
third of the expected $3 billion dollar market in 2003
will represent online purchase of sporting event tickets.
In addition, practical convergent programming will flourish
in sports media. Jupiter research indicates that more than
half of the online audience either sometimes or often watches
television while online.
Internet Health Commerce
to Reach $10 Billion
US consumers are expected to spend $10 billion on health-related
products online in 2004, but they are unimpressed by the
current online offerings, according to research unveiled
by Jupiter Communications, Inc, a worldwide authority on
Internet commerce. Since the health industry faces several
logistical, regulatory and delivery barriers, players must
partner to create a seamless, convenient online experience
in order to survive.
Jupiter's new online health
research, unveiled today during the opening session of
the inaugural Jupiter Online Health Forum in Orlando, Fla.,
indicated that 45 percent of online consumers access the
Internet for health information, but they remain skeptical
about purchasing health products online. In a Jupiter Consumer
Survey of more than 1,600 online consumers, 49 percent
of respondents stated that they do not buy health products
online because they feel that it is more convenient to
pick up such items when doing other shopping. Consumers
also cited difficulty in returning items to an online merchant
and slow product delivery as significant deterrents.
"The health industry has
seen a number of changes in the past year, but players
have not reached the point where they are offering the
features that would secure consumers' wallet share for
health products online," explained Claudine Singer,
an analyst with Jupiter's Health Market Module. "Players
in the online health field must develop both online and
off-line relationships, as necessary, to enable the delivery
of comprehensive, seamless convenience across products
and services."
Singer suggests that sites work
quickly to either partner or purchase other players to
create the best possible end-to-end offerings. To date,
many health partnerships have focused on exclusivity, which
may offer short-term benefits but will limit the value
for consumers in the long run by compromising the site's
future business prospects. Jupiter believes that the companies
that will ultimately succeed in owning customers are the
ones that can leverage the Web platform to enable the fulfillment
of those customers' continuum of needs-no matter what the
customers' health maintenance organization (HMO), pharmacy
benefits manager (PBM), or physician affiliation might
be, or what product, information, or service they might
need. Businesses must streamline and automate communications
across providers, consumers, and health insurance payers.
Consumers are expected to spend
$10 billion in health commerce by 2004, up from $200 million
in 1999. This spending surge will be fueled by several
factors: a burgeoning health sector with well-financed
players spending marketing dollars feverishly, a growing
online population that is more comfortable with shopping
online, and the emergence of women as online buyers. According
to Jupiter, commerce dollars for the online health segment
are highly fragmented:
- Pharmaceutical sales will
account for about $4.5 billion of the total $10 billion
spent in 2004, representing a dominant 45 percent of
online health spending; however, only 2.5 percent of
that $4.5 billion will have shifted from the traditional
channel, because players will continue to struggle
to adequately address reimbursement issues.
- Nutraceuticals will generate
$1.7 billion, or 17 percent of the online health market,
in 2004. This represents a channel shift of approximately
seven percent in this category, which includes vitamins
and other herbal supplements.
- Sales of personal care
and over-the-counter (OTC) products will reach $2.3
billion and $600 million, respectively. Similar to
the nutraceuticals segment, a multitude of players
will mark the competition for dollars in these categories.
Jupiter's research also showed
that online advertising dollars for the health space will
grow from the $100 million in 1999 to a still-modest $700
million by 2004. Online health will only represent five
percent of overall online ad dollars, a figure too low
to significantly impact the multitude of existing content
players. This suggests that the market cannot sustain the
current glut of players in this segment and a shakeout
looms. It also implies that despite the impressively high
margins advertising affords, content players cannot live
by ad dollars alone and that convergence with commerce
and ultimately connectivity players is thus inevitable.
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