Introduction

Israeli new media companies, bolstered by a digitally-saturated, media-savvy local culture of early adopters, are vital players in an increasingly digital world. Known for creating unique solutions, Israeli companies are sought-after by media outlets, operators and content providers for their novelty and utility, as well as for their ability to generate increased revenues while enabling a rich user experience. Israel is home to more than 700 new media companies whose offerings span the range of new media possibilities, including content creation, delivery and management, gaming, broadcast, digital & cable TV, IPTV and satellite services.

While Israel has a recognized global presence in Internet applications and services, e-commerce, online advertising, and social networks, many involved in the industry are now directing their focus to the entertainment sector. The Internet, digital television, home media center and mobile devices are all being used to deliver entertainment services. Set-top boxes are seen as the key to digital television service take-up around the world; HDTV, DVRs, home media centers and Internet services are also set to drive entertainment growth. Internet media companies (e.g. Google, Yahoo, etc.) are exploiting the added speed and capacity offered by increased broadband infrastructure, which will result in a whole range of new applications entering the market over the next decade.

Though the Israeli sector boasts global giants such as Adsmarket, Answers.com, BigBand, ICQ, Incredimail, NDS, Orca, Optibase, Pilat Media, Sintec Media, SpeedBit and Waves, more than 400 media companies are classified as start-ups. These start-ups are characterized by innovation and entrepreneurship, with low production costs aiding competitiveness, combined with a willingness to adapt solutions to customer requirements.

Highlights

·          Israel's New Media sector has developed rapidly over the last few years. In 2008, the sector's revenue totalled nearly $2 billion from a mix of direct exports and value-added sales recorded abroad.

·          Mobile penetration in Israel reached 125% in 2009 (i.e. there are more cell phones in Israel than people) and continues to grow by 7% annually.

·          Israel’s  ranking in technological availability is similar to that of Belgium and Singapore, similar to Germany in firm-level technology absorption, and equal to Japan and France in broadband Internet subscribers according to the 2008-2009 World Economic Forum's Global Competitiveness Report

·          Many multinational new media companies maintain R&D facilities in Israel, including AOL's ICQ, Relegence, Yedda, eBay, Google, Harmonic, Informatica, Open TV, PayPal, Thomson (VideoCodes), Yahoo and Ybrant.

Other technology giants active in the Israeli market include Apple, Cisco, Ericsson, HP, Intel, IBM, Microsoft, Motorola and Nokia-Siemens.

·          Many multinationals have chosen to establish their first R&D center in Israel, and have boosted their presence thereafter. Internet search giant Google opened its first R&D center in the Middle East in Haifa in 2006, and followed with a second R&D center in Tel Aviv in 2007. Microsoft and Cisco both built their first R&D facility outside the US in Israel and currently have about 600 and 1000 R&D employees respectively.

·          Given the small local market, many of Israel's most innovative companies are export oriented in order to exploit global economies of scale.

·          As products are developed for the international market and according to the highest standards, foreign investment in Israel's New Media companies has increased. In recent years LivePerson acquired HumanClick, eBay bought Shopping.com, Harmonic acquired Scopus, Yahoo bought FoxyTunes, and Orca was acquired by France Telecom.

Breakthroughs

Many of today's most widely used digital technologies were pioneered in Israel.

• Conditional access and DRM systems created by NDS

• Instant Messenger developed by ICQ

• VoIP invented by founders of VocalTec

• WiFi and WiMax pioneered by Alvarion

• USB flash drives invented by M-Systems

• MMX, Centrino, and Cure 2 Duo developed by Intel.