PwC has released its annual ‘Global Entertainment and Media Outlook 2016–20′, an in-depth five-year outlook for global consumer spending and advertising revenues directly related to entertainment and media (E&M) content. Despite a relative slower growth projection for the industry at large, PwC’s outlook forecasts US E&M spending to reach $720 billion by 2020, from $603 billion in 2015.
Despite continued widespread industry disruption and intense competition for consumer attention, growth opportunities abound for companies to capitalise on the new media environment.
“Today’s entertainment and media reality is one of companies intensely competing for dollars with the increasing proliferation of free online media alternatives. This global multi-speed media landscape has created unprecedented challenges for companies in the battle for customers and value. The acceleration of digital and technology innovation is expected to continue to force companies to innovate and re-imagine the industry as we know it,” said PwC global and US entertainment, media leader Deborah Bothun.
Globally, E&M worldwide revenues are expected to rise at a CAGR of 4.4% over the next five years, from $1.7 trillion in 2015 to $2.1 trillion in 2020.
Key US E&M highlights
Internet advertising in the US remains the largest in the world with $59.6 billion in revenue for 2015, and a projected revenue of $93.5 billion by 2020 (9.4% CAGR). While China’s forecast (14% CAGR) is higher, the US should remain the largest market by some distance in revenue terms.
By 2017, internet advertising ($75.3 billion) is poised to overtake broadcast TV advertising for the first time in the US. However, broadcast TV advertising has responded robustly to digital disruption and is expected to remain healthy with a projected 2.8% CAGR and $70.4 billion by 2017.
Mobile advertising continues to be one of the big growth stories, making up 34.7% of total internet ad revenue at $20.7 billion in 2015, and is projected to rise to 49.4% by 2020. But the rise in mobile video ad revenue will be the most remarkable, from $3.5 billion in 2015 to $13.3 billion in 2020 (30.3% CAGR). PwC expects that the planned rollout of 5G will further accelerate the shift towards mobile consumption of video.
“Consumers are engaging with media increasingly on their mobile phones and even at work. These mobile behaviours are challenging the traditional value of attention and the ability to monetise advertising dollars. There is no one perfect metric to inform advertisers of the value they get when you consider the shifting consumer behaviours. However, the market will be hindered by consumer resistance to a poor ad experience and potential widespread adoption of ad-blocking technology,” said Bothun.
As for cinema, China is expected to overtake the US in box-office revenue in 2017, marking this as the first time the US has not held the leading position in an E&M segment. By 2020, China box-office revenues are expected to reach $15.1 billion versus $11.0 billion in the US.
“Studios are facing increasing international competition with foreign governments. The challenge will be how to tap into this opportunity given strict market conditions,” continued PwC’s Bothun.
TV and video is expected to rise from $121.4 billion to $124.2 billion in 2020 (0.5% CAGR). The continued growth of video-on-demand (VoD) and over-the-top (OTT) services is putting pressure on the ‘theatrical window’ period traditionally enjoyed by cinemas. In fact, electronic home video sales ($11.2 billion, 9% CAGR) eclipsed box-office sales ($10.3 billion, 1.2% CAGR) in 2015—two years earlier than last year’s Outlook projected.
Internet access revenue is expected to rise to $181.7 billion over the forecast period (7.2% CAGR). Internet users are increasing the time they spend with digital media—especially rich media such as video, which is expected to rise to 85.5% of total data traffic by 2020. Considerable investments are being made to improve infrastructure speed and quality to enable both the traditional use of internet access as well as streaming online TV, videos, video games, and other media consumption. The need to profitably grow, reach a large audience at scale and engage users online is creating an attractive M&A environment.
Video games revenue is expected to rise from $17.0 billion to $20.3 billion by 2020 (3.6% CAGR). Despite the high price, the quality of the experience on virtual reality devices (for games, interactive entertainment and VR video) is expected to draw more consumers into trying them, setting the stage for the real sales drive in 2017 and 2018. In contrast, VR on mobile devices will likely go mainstream in 2016 with cheap headsets that can be slotted into a phone.
Newspaper publishing is expected to decline at a -2.9% CAGR in the years to 2020. In a world where social networks are internet on-ramps for many consumers, publishers are recognising they are no longer destinations but suppliers of content. Further industry consolidation can be expected as publishers search for efficiencies to create new consumer touch points and respond to digital competition.
Live experiences remain a key differentiator in the digital world. With consumers now having an astonishing array of choice via the content available on a smartphone, an increasing premium is placed on the live experience, including the rapid growth of e-sports tournaments.
Other industry segments
- Business-to-business is expected to rise from $85.6 billion to $99.8 billion in 2020 (3.1% CAGR).
- Book publishing revenue is expected to rise from $37.8 billion to $43.7 billion in 2020 (2.9% CAGR).
- Magazine publishing revenue is expected to grow from $30.5 billion to $30.7 billion in 2020 (0.1% CAGR).
- Out-of-home advertising is expected to rise from $8.8 billion to $10.9 billion by 2020 (4.3% CAGR).
- Radio is expected to rise from $21.4 billion to $23.1 billion in 2020 (1.6% CAGR).
- Music revenue is expected to increase from $15.2 billion to $18.0 billion in 2020 (3.5% CAGR).
- TV ad revenue is expected to rise from $69.9 billion to $81.7 billion in 2020 (3.2% CAGR).
By: Television Post Team.
Photo: Screen Media Daily.
Review: Emerging Market Formulations &
Research Unit, FLAGSHIP RECORDS.
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