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Research: Entertainment media spending in western countries booms over last decade

May 20, 2011

Consumer expenditures on entertainment media in North America and Europe grew 69 per cent to $234.8 billion in 2010, up from $138.8 billion in 2000, with cable and satellite television retaining its primacy as the leading form of entertainment media during the decade, according to IHS Screen Digest research.

Fending off competition from other segments such as home video, video games, music and cinema, cable and satellite television accounted for 59 per cent—nearly three-fifths—of all entertainment media expenditures last year on the two continents, compared to 40 per cent 10 years ago. Revenue from cable and satellite TV in 2010 reached $139.2 billion, up from $56.1 billion in 2000, with net growth since 2000 of 148 per cent.

While cable and satellite TV remained the dominant segment, some clear shifts in consumption have occurred in the course of the past decade.

“Ten years ago, consumers in North America and Europe spent more on music than on video,” observed Tony Gunnarsson, analyst for video at IHS. “However, the music segment has suffered from its failure to transition from physical to digital delivery.”

Spending on music across all physical and digital formats declined 55 per cent in the period 2000-2010 and reached $13.9 billion last year, accounting for just six per cent of total entertainment media spending compared to 22 per cent a decade ago, IHS Screen Digest data indicates. “As a result, music is now the smallest entertainment media segment—a steep fall from its previous number two perch a decade ago,” Gunnarsson added.

The second largest area in entertainment media during 2010 was video, which overtook music in terms of consumer spending as early as 2001. Video spending recorded net growth of 14 per cent during the decade, generating $32.3 billion of total entertainment media spending in 2010.

Nonetheless, video is not without its challenges, notes IHS Screen Digest.

“Spending on the video sector peaked in 2004 at $40.7 billion, and despite subsequent growth on new platforms such as online and mobile, overall video spending since then has fallen as the DVD format reached market maturity and consumers found themselves exposed to ever-greater entertainment media choices,” Gunnarsson said. “Video now makes up fourteen per cent share of the total entertainment market, compared to twenty per cent share 10 years ago.”

Games was the third largest area of entertainment media spending in 2010 and also boasts the fastest growth of any sector in the decade, up 193 per cent from $9.9 billion 10 years ago to $29.0 billion last year. Benefiting from expanded demographics and the boom in digital 3D, games made up 12 per cent of total entertainment media spending in 2010, compared to just 7 per cent in 2000.

Consumer spending on cinema, still the fourth largest of the five entertainment media sectors analysed, reached $20.4 billion in 2010, representing net growth of 49 per cent over the decade from $13.7 billion. However, as with the shift in spending from music to video, consumers now spend more on video games than on cinema tickets. Cinema’s share of the total entertainment media market was nine per cent in 2010, down one point from 10 years ago.

When cinema and TV are excluded from the analysis, the continuing dominance of packaged media over digital and mobile delivery is clear. Packaged media accounted for 82 per cent of spending, followed by digital at 15 per cent and mobile at three per cent, IHS Screen Digest analysis indicates.

Within the packaged media business, North Americans spent a greater proportion on buying and renting video than their European counterparts—56 per cent versus 43 per cent last year. The reverse is true, however, for packaged music: Europeans spent approximately double the nine per cent expended by North America on packaged music, reflecting the fact that consumers in North America bought more digital music than their European counterparts.

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