PwC: Golden age of the digitally empowered consumer
June 14, 2011
It’s the golden age of the empowered consumer, with the demand for digital experiences increasing and becoming the norm, according to the latest Global Entertainment & Media Outlook 2011-2015 from PwC. In many markets the Entertainment & Media (E&M) industry emerging from the recession has been profoundly changed as the ongoing consumer migration to digital has accelerated due largely to the device revolution.
2010 saw the global economy begin to recover from its steep decline in 2009 and these improved economic conditions have played a major role in the recovery of overall E&M spending which rose by 4.6 per cent. Some countries, notably China and India, were largely unscathed by the global recession and experienced significantly higher growth rates in E&M spending, but others who were, and are still burdened with high government debt or political unease, are struggling to grow at similar rates.
Over the next five years, PwC forecasts that aggregate E&M global spending will rise from US$1.4 trillion in 2010 to $1.9 trillion in 2015, a 5.7 per cent compound annual advance driven by economic growth, but masking the accelerating shift of spending from traditional to digital platforms. Currently digital accounts for 26 per cent of all spending but by 2015 it expects digital’s share to rise to 33.9 per cent.
Advertising, the most cyclically sensitive of the three E&M spending streams, recorded the largest year-on-year swing, rebounding at 5.8 per cent in 2010 from an 11 per cent slump in 2009. Overall global advertising will increase at a 5.5 per cent compound annual rate from $442 billion in 2010 to $578 billion in 2015.
Consumer/end-user spending also improved, rising 2.2 per cent in 2010 after a fall of 0.4 per cent in 2009. In contrast internet access spending was barely affected by the economic cycle growing at 9.2 per cent in both 2009 and 2010 and is expected to rise from $270 billion in 2010 to $408 billion in 2015, an 8.6 per cent compound annual increase.
PwC suggests the whole E&M industry is being driven to create experiences that engage today’s empowered consumer, by redesigning the content experience to be multi-purpose and multi-platform which, in turn, creates multiple opportunities for monetisation.
Marcel Fenez, Global Leader, E&M practice, PwC said: “This is a golden age for consumers, who have never had it so good when it comes to accessing premium content (often free) over multiple devices. E&M CEOs are having to adapt business models to capture the shifting nature of consumer demand. The bottom line is that in order to continue to create quality content, someone has to pay.”
According to PwC, many consumers increasingly expect content to be free. Convincing people to pay will be difficult and require a deep understanding of what consumers’ value. Convenience, experience and quality are the key ingredients that matter to consumers when choosing from the menu of content and delivery channels available. Alongside these sit participation and privilege. Consumers enjoy playing an active role in shaping their content plus they are happy to pay for privileges which enable them to “jump the queue” to get earlier access to content. The challenge for companies is to turn these five attributes – convenience, experience, quality, participation and privilege – into sustainable, profitable and engaged relationships with the consumer by offering advantages which outweigh the attractiveness of free or pirated content.
Establishing content and brand engagement is one half of the equation. The other is the mechanics of how people will pay for the content or enhanced experience. Various models are being tried including freemium, micropayments and selling bundled access to the same content over a variety of platforms. At the same time, a significant shift is emerging away from payments models that involve buying and “owning” content that is stored on a device and towards paying for the right to consume it on a “rented” basis via streaming from cloud-based services.