Industries set to fly and fall in 2013

Industries to fall

1. Gaming and vending machines manufacturing

The gaming and vending machines manufacturing industry is set to follow suit in the overall decline of manufacturing in Australia, with revenue expected to fall by 6.4% in 2013.

The replacement cycle for gaming machines in Australia has increased from 12 years in 2005 to 35 years since 2008. This, along with legislative limits on the number of poker machines, has restricted demand for new machines.

With high labour costs and the Australian dollar remaining strong, production is increasingly moving offshore, with hardware going to Asia and software to the US.

2. Wired telecommunications carriers

Intense competition in the mobile space continues to have a negative effect on wired telecommunications carriers. The industry is expected to fall by 5.5% in 2013, bringing total revenue down to $9.7 billion, from its peak of $21.5 billion in 2002.

Competition in the mobile sphere is driving prices down to the extent that it is now cheaper for some consumers to disconnect their landlines and rely solely on mobile services. Increased wireless broadband penetration and strong growth in the number of naked DSL internet subscribers are also eating into industry revenue.

Prices for the industry’s services continue to be cut in attempts to retain clientele. Consumer confidence with email and SMS has grown significantly over the past five years, causing customers to move away from the traditional home phone. Branding and cross-selling are becoming increasingly vital to the industry, with product bundling being a popular strategy to reduce customer turnover rates.

3. Mineral exploration 

Revenue for mineral exploration is expected to fall to $3.7 billion over the coming year, a decline of 5.1% from 2012 – driven by falling investment (forecast to decrease by 6.5%) in the sector as firms shift their focus to production.

The combination of generally lower commodity prices, weak global growth, slowing demand from China and economic uncertainty is expected to result in reduced spending on mineral exploration over 2013.

4. Newspaper printing or publishing

As advertisers and consumers opt for other types of media, the newspaper printing or publishing industry continues to lose advertising market share – with revenue forecast to decrease by 4% in 2013. Printed newspapers’ share of advertising – which accounts for 75% of newspaper revenue – is expected to fall to under 30% of total advertising revenue in 2013, down from a 41.8% share in 2000.

Declining circulation over the past five years, caused by time restraints, the rising popularity of new media like the internet, pay TV, and mobile devices, and competition from consumer magazines has continued to adversely affect the industry. In the coming years, environmental concerns are also expected to affect demand for printed newspapers.

5. Recorded media manufacturing and publishing  

Recorded media manufacturing and publishing, including CDs and records, has declined steadily over the past five years. IBISWorld expects this trend to continue – forecasting a decline of 2.8% in 2013.

Physical format music sales have dropped by an estimated compound annual rate of 15.9% since 2007, compared with a compound annual rise of 32.6% for digital music.

Consumers have turned away from purchasing physical media in favour of paid online subscription services, such as Spotify and Pandora, and limited free services such as YouTube and VEVO. The industry also has been dramatically exposed to high levels of music and video piracy.

Online distribution of media has allowed companies to cut bottom line costs, and has resulted in a variety of new products on the market for consumers to view new media.

Licensing and publishing services have provided some reprieve for industry participants as the use of music, sound effects and video in advertising and marketing has increased, particularly with the rise of social media.

For more information on these, or any of Australia’s 500 industries, log on to www.ibisworld.com.au, or follow IBISWorldAU on Twitter.