1. Wired telecommunications carriers
Unfortunately, the wired telecommunications carrier sector has made its second consecutive appearance on IBISWorld’s “bottom 5” list, rising from third to top of the poor performers for 2011.
While the industry’s inclusion on the list is certainly not a reflection of the overall communications sector, there has been, and will continue to be a large fall in revenue growth driven by a strong reduction in the number of wired access lines taken up as a result of substitution to mobile lines.
The pricing war between fixed line and mobile carriers has not only reduced revenue, but eroded profitability, forcing wired telecommunications carriers to heavily reduce both employment and wages, expected to fall by 4.7% and 8.4% respectively.
Once upon a time, wired telecommunications carriers were at least able to compete on price. Now, so-called naked DSL and VoIP products have eroded their ability to even do that,” he added.
With consumers increasingly opting for unwired options which allow cost saving benefits – such as eradicating line rental expenses, industry revenue will drop by 8.1% ($943.30 million) in 2011.
2. Apple and pear growing
Revenue growth will decline by 6.8% ($43.80 million) in 2011 as the opening up of the Australian market to more imported produce will prompt increased competition – and lower prices.
Relatively new competitors, such as China, are rapidly ramping up production of fruit varieties currently grown by Australian farmers and the industry is also facing challenges from stagnate local fruit consumption and limited export markets.
Other factors leading to the industry’s poor outlook in 2011 include the recent heavy rains in south eastern Australia, which mean diseases such as blight and mildew may become a significant problem as despite high volumes, quality – and therefore the prices farmers can command – will decline this year.
3. Telecommunications resellers
Australia’s telecommunications reseller industry has faced intense and increasing competition in recent years, exerting considerable pressure on pricing and eroding margins – especially in the mobile phone sector.
Operators such as iiNet and TPG have purchased the rights to use existing infrastructure in large quantities at heavily discounted prices, giving them the ability to undercut the major players at the retail end – including Telstra, Optus and Vodafone.
The popularity and massive rollout of smartphones in recent years has driven up the number of providers, and by not needing to own any telecommunications infrastructure, barriers to enter the industry have been extremely low.
Since 2006-07 this fierce competition, combined with unfavourable pricing regulations, has led a number of key industry players – including Optus, Virgin Mobile and AAPT – to exit the resale industry either entirely or in part, causing many resale customers to transfer onto direct network services.
In 2011, the industry will experience a 5.4% ($146.90 million) decline in revenue growth.
4. Recorded media manufacturing and publishing in Australia
It’s certainly no surprise to see Australia’s recorded media industry on the list of sectors with poor growth prospects, since the huge shift towards downloading music and video content and online streaming is all but eliminating CDs and hard-copy DVDs from our entertainment libraries.
Driving this change has been the incredibly large storage capabilities of the modern computer, coupled with fast internet speeds and massive monthly download limits provided by most ISPs.
According to IBISWorld, this loss of CD and DVD sales is hugely significant, since these sales account for 63.5% of the industry’s revenue and the share of sales lost doesn’t simply translate into revenue received on the back of licensing and publishing online content. As such, it’s anticipated a further 2.1% ($19.35 million) slowing of the industry’s growth in 2011.
5. Professional photography
Over the last five years, professional photographers in Australia have weathered the twin storms of a declining industry and an economy-wide slowdown, and figures reveal 2011 will not be any better.
Nearly half of the industry’s revenue is derived from wedding photography and competition is intense with more than 9,000 professionals competing for a share of the nuptial pie. In addition lower costs have forced prices down and professional photographers are feeling the impact of the growing popularity of digital SLR cameras which make it easier for amateur enthusiasts to take professional quality pictures.
As a result, it’s estimated a downward drift of 1.2% ($10.25 million) for this sector in 2011.
Robert Bryant is the general manager of business information firm IBISWorld.
