The digital entertainment industry is loosing out on $3.8 billion in the US market alone, according to the research released last week by IT research group, Forrester.
It lays the blame for this significant revenue loss on consumers failing to take full advantage of digital entertainment services like photo printing and high-definition television broadcasts.
Forrester found that only half of 14.6 million US households with a high-definition TV were subscribed to a digital television service. Only two-thirds of the 43 per cent of US households with a digital camera were making digital prints.
While customers were buying standalone digital products, the research found they were not installing home entertainment networks or taking advantage of media streaming technologies.
Although similar research had yet to be carried out in Australia, Forrester's country manager, Peter Carr, said the local market was facing similar problems that were compounded by challenges associated with broadband penetration.
"The opportunity in this market is huge but people are looking for plug-and-play," he said. "They want digital entertainment products to be simple and interoperable but, at this stage, home networking is just too complex.
"Australia will face the added challenge of needing to get its telecommunication infrastructure right, so that the content can be delivered."
According to market research carried out by IT industry research company, IDC, the penetration of digital home entertainment devices will grow throughout 2006, although home networking continues to struggle as resellers fail to provide the full gamut of services required to install digital home entertainment networks.
"They are buying into digital entertainment components, but they aren't buying into the connected home," IDC analyst, Sophie Lo, said. "To overcome this, resellers should be partnering to provide a fully interoperable solution. We see opportunities for resellers that can provide a one-stop-shop."
Lo said standalone digital entertainment products were expected to do well throughout 2006. Sales of digital cameras were predicted to top 2.7 million units, MP3 players expected to hit 1.7 million units, and sales of high-definition plasma and LDC TVs to grow to 548,000 units.
However, she predicted it would still be some time before such units were interconnected and home users began to take advantage of content streaming services.
"Home networking is still too complex for consumers, so they'll have a PC connected to iTunes, and a digital stereo, but they won't be streaming music from the PC to the stereo, or downloading entertainment from the Internet for a while yet," she said.