Report: E&M $2.3trn business
June 21, 2022
The global entertainment & media (E&M) industry surged ahead last year, strongly outpacing overall global economic growth, according to advisory firm PwC’s Global Entertainment & Media Outlook 2022-2026.
Following a pandemic-related 2.3 per cent decline in 2020, E&M revenue rose a strong 10.4 per cent in 2021, from $2.12 trillion to $2.34 trillion (€2.24trn). With the industry becoming more digital, more mobile and more youth-oriented, virtual reality (VR) and gaming are powerful growth drivers, while digital advertising permeates all of the industry.
Findings in this year’s Outlook, the 23rd annual analysis and forecast of E&M spending by consumers and advertisers across 52 countries and territories, include:
- Global video games and esports revenue totalled $215.6 billion in 2021 and is forecast to grow at a 8.5 per cent CAGR to $323.5 billion in 2026. Asia Pacific generated the lion’s share of revenues in 2021 with $109.4 billion, almost double North America, the second highest region. Gaming is now the third-largest data-consuming E&M content category, behind video and communications.
- VR continues to be the fastest-growing E&M segment, albeit from a relatively small base. Global VR spend rose by 36 per cent y-o-y in 2021 to $2.6 billion, following on the hot 39 per cent growth in 2020. Growth between 2021 and 2026 is expected at 24 per cent CAGR, bringing the segment to $7.6 billion. Gaming content is the primary contributor to VR revenue, taking in $1.9 billion in 2021. This should increase to $6.5 billion in 2026, 85 per cent of total VR revenue.
- Advertising’s spread throughout the digital world has made it a dominant industry category. After a decline of nearly 7 per cent in 2020, advertising grew an impressive 22.6 per cent in 2021 to $747.2 billion. Driven almost entirely by digital, advertising is set to grow at a 6.6 per cent CAGR through 2026. Internet advertising revenue is seen growing even faster, expanding at 9.1 per cent CAGR. In 2026, advertising is projected to be a $1tn market and the largest E&M revenue stream, having surpassed consumer spending and internet access.
- After growing by 35.4 per cent in 2020, Over-the-top (OTT) video surged another 22.8 per cent in 2021, pushing revenues to $79.1 billion. The pace of OTT revenue growth will moderate somewhat; it is expected to grow at a 7.6 per cent CAGR through 2026, pushing revenues to $114.1 billion.
- Traditional TV, beset by competition from OTT streaming services, still generates considerable revenues, but its inexorable decline will continue, with global revenues projected to shrink at a -0.8 per cent CAGR from $231 billion in 2021 to $222.1 billion in 2026.
- Global cinema revenue is bouncing back, reversing its pandemic-driven losses, and is expected to reach a new high of $46.4 billion in 2023. Box office revenue is projected to reach $49.4 billion in 2026 from $20.8 billion in 2021, an 18.9 per cent CAGR. China surpassed the US to become the world’s biggest cinema market in 2020, and is expected to retain this leadership through 2026.
- Live music revenue is projected to exceed pre-pandemic levels in 2024. Digital music- streaming subscriptions are driving growth in the recorded music sector where revenues are forecast to rise from $36.1 billion in 2021 to $45.8 billion in
- The growth of content is fuelling massive data consumption – 2.6mn petabytes (PB) of data were consumed in 2021, and it is expected to rise at a 26 per cent CAGR to reach 8.1mn PB by 2026. Gaming will be the fastest-growing data consumer over the forecast period, with a 29.6 per cent CAGR expected. Mobile handsets will be the fastest-growing device category between 2021 and 2026, increasing at a 28.8 per cent CAGR and expected to push mobile data consumption up from 1.1mn PB to 3.8mn PB.
“Industry press tends to focus on the companies that have dominated the E&M industry,” suggests Werner Ballhaus, Global Entertainment & Media Industry Leader, PwC Germany. “But it is the choices that billions of consumers make about where they will invest their time, attention and money that are fuelling the industry’s transformation and driving the trends. We are seeing the emergence of a global E&M consumer base for the coming years that is younger, more digital and more into streaming and gaming than the current consumer population. This is shaping the future of the industry.
At a regional level, North America commands by far the highest E&M spend per capita, at $2,229, nearly double Western Europe’s $1,158. By contrast, Asia Pacific, which was the largest E&M region by revenue in 2021 at $844.7 billion, has per capita spend of $224. The Middle East and Africa have the lowest per capita E&M spend of any region globally, at $82.
The top ten growth markets by CAGR, meanwhile, are focused in Latin America, Middle East, Africa and Asia, with OTT video and gaming providing the majority of revenue growth, and esports and cinema seeing fast growth as well. Turkey (estimated 14.2 per cent CAGR), Argentina (10.4 per cent), India (9.1 per cent) and Nigeria (8.8 per cent) are top-ranked for E&M consumer spend growth prospects over the five year forecast period.
In the not-too-distant future, the metaverse could become a stunningly realistic world where individuals access immersive virtual experiences, through a VR headset or other connecting device. Because the metaverse is an evolution that may profoundly change how businesses and consumers interact with products, services and each other, its potential financial and economic value goes far beyond VR. In time, much of the revenues associated with video games, music performances, advertising and even e-commerce could migrate into the metaverse.
How big is the E&M opportunity in the metaverse? The fast-growing market for VR is a starting point to consider. It is currently one of the smaller segments tracked, but the 36 per cent rise in global spending over the past year is a hint of its long-term potential. The global installed base of stand-alone and tethered VR headsets is projected to grow from 21.6m in 2021 to 65.9m in 2026.
“With the impressive growth and potential of the E&M industry, comes tremendous volatility and what we describe as fault lines and fractures opening up between companies, within sectors and across geographies and generations,” advises Ballhaus. “For businesses, intense competition and continual disruption will remain the order of the day. Our data shows the mix of revenues and spending is changing rapidly. As fault lines proliferate and widen, every business in E&M stands to be disrupted. The challenge and goal must be to understand your consumer and end up on the right side of disruption.”