Growth outpaces forecasts: Russian entertainment & media market volume to hit USD 45.2 billion by 2012

June 18, 2008 — According to PricewaterhouseCoopers’ survey “Global Entertainment and Media Outlook: 2008–2012”, Russia’s entertainment and media market is becoming one of the largest in the world. Industry growth rates hit 12.2% in 2007, whereas the projected annual mean growth rate for 2008-2012 is 11.4%. PricewaterhouseCoopers professionals have estimated Russia’s entertainment and media (E&M) market at USD 26.39 billion, and in 2008 the market may hit the USD 29.6 billion mark. In terms of growth rates in Russia, the leading position is still held by the Internet sector, which includes consumer spending on gaining net access and advertising. The annual mean growth rate of the Internet advertising segment over the next five years will stand at about 43.6%, whereas consumer spending on gaining net access will be increasing by 22.5% per annum.

In terms of market volume, gambling holds first place (USD 4.6 billion in 2007), but it is expected that in 2008-2012 this segment will be shrinking at a pace of 17.9% per annum due to the enforcement of new regulatory limitations.

Filmed Entertainment

In 2007, consumer spending on motion-picture products, including cinema admission fee and purchase and distribution of movies in various formats, exceeded USD 1.1 billion. It is noteworthy that box-office takings reached USD 590m, which is 29% higher year-on-year. Over the last two years, more than 300 modern cinema screens have been built Russia-wide and at the moment, their total number stands at 1,300. In the context of the European market, experts forecast record-making growth rates for the Russian motion-picture industry in the next five years. According to forecasts, box-office takings will increase more than two-fold to hit USD 1.18 billion The motion-picture industry as a whole is rapidly approaching the USD 2 billion mark, with average annual growth of 12.3%.

TV, radio and outdoor advertising

The Russian TV advertising market volume has increased by 28% to reach USD 4.3 billion in 2007. In 2008, market growth is forecast to reach USD 5.47 billion, while the annual mean growth rate will be approximately 17.4%. Experts say the annual mean growth rate of the radio and outdoor advertising segment over the next three years will still be in the double digits at 11.6%, while the market’s overall volume will reach USD 3.8 billion by 2012. In 2007, Russia’s outdoor advertising industry scored second place in Europe in terms of size, hitting USD 1.6 billion. However, experts forecast a slowdown in market growth rates for the next 5 years. The slowdown will be due to the fact that all key outdoor advertising sites currently are occupied, and no new sites are expected to appear in the near future. For instance, in 2008 market growth will only increase to USD 1.8 billion, with an annual mean growth rate of 11.3% until 2012, to reach USD 2.7 billion

Print media market

In 2007, newspaper market turnover was USD 2.1 billion, of which USD 470m is attributable to costs incurred by advertisers. The newspaper advertising market is expected to grow at 15.4% per annum on average, whereas circulation will be declining by 0.4% annually.

Russia’s magazine advertising market (excluding professional periodicals and reference media) maintains its upward trend. In 2007, costs for placing advertisements in magazines were almost 25% higher as compared with 2006, that is, about USD 830m. USD 643m was spent on buying magazines in 2007. In the future, the annual mean growth of spending will be just 3.9%.

Book Publishing

In 2007, the Russian book market (excluding professional books) stood at approximately USD 2 billion. Experts believe it will reach USD 2.85 billion by 2012. In 2007, the professional books segment accounted for about USD 300m. Experts expect that e-books’ heyday will come in 2011-2012; in particular, the market for educational e-books will be demonstrating an average growth rate of 120% per annum.

Internet

PricewaterhouseCoopers believe that 90% of Russia’s households will have access to the Internet by 2012. In 2007, the number of households enjoying telephone or broadband access to the Internet was practically the same (about 5m for each). The number of households with broadband access to the Internet will be growing over the next five years at 31.8% on average every year. It is expected that further Internet penetration will be driven predominantly by broadband access, and by 2012 the number of households with broadband access will reach 19.5m. Experts forecast that the number of households with telephone access will be declining by approximately 1.2% per year. Consumer spending on gaining Internet access increased in 2007 by 37% to reach USD 4.5 billion and will, over the next five years, be growing by 22.5% on average per year. By 2012, Russia’s Internet access market volume will increase to USD 12.4 billion. The Russian Internet advertising market demonstrated 52% growth in 2007 to reach USD 352m. It is expected that Russia will, by 2012, obtain a leading position in CEE in terms of Internet advertising spending, with turnover of USD 1.9 billion and an average annual growth rate of 40%.

Notes to editor

1. For further information and commentary please contact Anna Kogosova, PR Assistant Manager, or Vera Totaskaya, PR Manager.
2. “Global Entertainment and Media Outlook: 2008–2012”, prepared by PricewaterhouseCoopers, is the ninth annual publication offering in-depth analysis and projection for 15 major industry segments in five regions of the world — USA, Europe, Middle East, Africa, Asia-Pacific Region, Latin America and Canada — as well as a global outlook for the industry.