Broadband video search and online advertising revenue will dominate digital media in 2008 as the battle between Google and Microsoft intensifies, according to a leading digital media analyst.

Aleksandra Bosnjak, lead analyst at StrategyEye Digital Media, said that 2008 will see acquisitions and mergers in digital media driven by targeted online search advertising.

The analyst pointed out that new search advertising platforms allow operators in the digital space to translate user behaviour into revenue. The platforms analyse user search patterns to produce tailored advertising directed at that individual.

"It is all going to be about advertising revenue in 2008," said Aleksandra, citing a difficult wider economy for encouraging the focus on income streams.

"And the year will really be defined by the battle between Microsoft and Google for dominance in the digital space.

"Microsoft is currently buying a company a week to compete against Google, and it is all about adding successful new media and technology companies that allow it to generate more revenue."

2008 will also be the year when traditional media will finally embrace digital distribution. Disney and News Corp will lead the way after a year of challenges from IPTV players and open internet platforms such as Joost and Babelgum.

Aleksandra added that fixed-mobile convergence will push big brands deeper into the mobile application space, and Google will push forward with its Android open source mobile operating system.

This is expected to add pressure on mobile operators, already stretched by multiple revenue-sharing agreements.