PwC: Digital innovation will drive world media growth
Consumers’ access to Entertainment & Media content and experiences is being democratised around the world by ever increasing access to the Internet and explosive growth in the ownership of smart devices. According to a PwC report, growth in the industry will come from spending on digitally delivered media during the next five years, although most spending will continue to be on non-digital media.
In response, E&M businesses are continuing to heighten their customer insight and transform their business models to become more agile, as constant digital innovation becomes the industry’s new licence to operate. Overall, the report forecasts that global E&M spending will rise from $1.7 trillion in 2012 to $2.1 trillion by 2017, with a 5.6 per cent compound annual growth rate (CAGR).
China, Brazil, India, Russia, the Middle East and North Africa, Mexico, Indonesia, and Argentina will see the most growth, nearly doubling their share of total E&M revenues by 2017 to 22 per cent from 12 per cent in 2008. The average CAGR for these markets is more than double that of the E&M industry as a whole. In addition, the impact of a growing middle class and increased urbanisation in these markets will help reverse the fortunes of some segments of the industry.
At the same time, more mature and technologically advanced markets within North America, Western Europe and Asia Pacific, will be instrumental in driving the global shift towards digital consumption of E&M services.
As digital innovation and growth continues to dominate the E&M industry landscape, the strong momentum behind digital spending will trigger significant tipping points in many of the more mature markets of North America, Western Europe and Asia Pacific during the forecast period.
- In 2014, mobile Internet revenues, at $259 billion, will account for over 50 per cent of total Internet access spending, overtaking revenues from fixed-broadband. Mobile Internet spending is expected to exceed fixed broadband spending in the US and South Korea in 2013 and the UK in 2015.
- Digital E&M spending, encouraged by widespread ownership of smart devices, will constitute 44 per cent of all spending in the mature markets by 2017, almost double the level in 2008 and up from 34 per cent in 2012.
- Every territory is showing double digit growth in the online TV category (from a low base) with the mature markets clearly leading the way. The top 5 in 2012 were the US, the UK, Germany, France and Canada.
- The annual value of North America’s electronic home video market—both pay-TV and OTT streaming services—will surpass box office value for the first time in 2017. North America’s electronic home video market will be $14.78 billion in 2017 compared to box office $13.5 billion.
- Mobile advertising is becoming a reality, with growth forecast across all regions over the next five years. A 27 per cent CAGR will ensure mobile advertising revenues in excess of $27 billion in 2017, representing 15 per cent of Internet advertising revenues.
China, Brazil, India, Russia, the Middle East and North Africa, Mexico, Indonesia, and Argentina will see the most growth and will challenge the existing ranking of markets by revenue.
- While there is no change in the markets in the top 10, there is considerable reshuffling. Looking solely at consumer spending on E&M, China will rise from fifth in 2012 to third in 2017. While Brazil will reach number seven. India will surpass Australia but remain just outside the top 10 consumer spending markets.
- Brazil will surpass the UK, Canada and India in 2013 to become the third largest market for TV subscriptions (excluding licence fees). Brazil is one of the fastest growing markets for consumer spending within the subscription segment at 13 per cent CAGR.
- When including all TV revenues, China will surpass both the UK and Japan in 2014 to reach the third spot (behind the US and Germany). China will also become the second largest TV market.
- Indonesia will be the fastest-growing TV market with 21 per cent CAGR in revenues and a market of $1.7 billion in 2017, while Kenya, Thailand and Vietnam also all show impressive growth (13 per cent+ CAGR). In the mature markets of Europe, growth will generally be limited to 1-3 per cent.
- The global trade-show business will be worth over $36 billion in 2017, up from approximately $29.4 billion in 2012. The US, Germany, France, the UK and Japan will again be the key markets. Following a fall in spending towards the end of the last decade, the out-of-home (OOH) advertising market will enter a sustained period of growth as spending increases from $33.8 billion in 2012 to $42.8 billion in 2017, a 5 per cent CAGR, helped by innovative technologies and infrastructure improvements.
Marcel Fenez, Global leader, Entertainment & media, PwC, said: “The growing affluence of a rapidly emerging middle class consumer with a propensity to spend on entertainment and media experiences — combined with improving infrastructure in many high growth markets — is bolstering overall growth rates in a number of key segments. Universally, E&M companies need to invest in developing and distributing content in ways that compel customers to loyalty and take advantage of their tendency to engage in sharing content experiences. This will require enhanced digital media measurement tools and business models that respond to the changing patterns of consumer behaviour.”