Service Providers and Media Companies stand to make massive gains in the onset of what research firm In-Stat is calling a digital entertainment revolution where consumers take increased control of how they use media and entertainment devices.

In-Stat says that consumption of TV, film, music and video games is changing as consumer expectations increase. It sees on demand content, interactivity and mobility, Internet social networks and User Generated Content (UGC) competing for consumer mindshare as they integrate into the media consumption experience. Companies that navigate the rapidly changing landscape have the opportunity to tap into several revenue opportunities that In-Stat believes, in combination, will exceed $10 Billion in new revenue.

The result, as indicated In-Stat's whitepaper, The Digital Entertainment Revolution, is that advanced digital entertainment is transcending isolated TV, mobile or computer platforms. Services, applications and content are proliferating on mobile devices. TV sets, Blu-ray players and video game consoles are already shipping with built-in network connections that bridge Internet content to the living room. Industry players will need to manage their investments carefully as they enable multi-platform distribution, while still maintaining legacy services.

However, despite the optimism, the analyst warns that organisations that create and distribute media and content face challenges as content delivery methods and business models expand, and electronic delivery options begin to supplant old models. Such companies include production studios, record labels, gaming companies, publishers, sports leagues, broadcast networks, pay-TV networks and local broadcasters.

Another key challenge, says In-Stat, will be that existing IT infrastructures are not set up to handle the surge in new applications, and do not scale to support tens of millions of users generating billions of transactions.

In-Stat advises the entertainment industry to re-engineer its IT systems, interconnect with Content Delivery Networks (CDNs), enable advanced advertising capabilities, and create entirely new interfaces with existing and new distribution partners.