Leading the Way is a column written by PricewaterhouseCoopers professional staff. It appears in the Business section of the Bangkok Post twice each month. The column provides specialised advice to corporate decision-makers in Thailand on global and local business trends.
This article appeared in the September 18, 2007 issue of the Bangkok Post.
By Verasa Attanun
According to a recent PricewaterhouseCoopers' global survey, the entertainment and media (E&M) market in Asia Pacific rose 10.0% in 2006, making it the fastest growing region in the world.
This increase was fuelled by growth in a number of industry segments. Internet spending jumped 23% due to large increases in the broadband universe and a surging online advertising market. Filmed entertainment rose 7.5%, led by double-digit growth in box office spending and an emerging online subscription rental market. Interestingly, recorded music increased 15.6% in Asia Pacific, the only region in our survey to post a significant gain in this segment.
Which Asia Pacific countries are at the forefront of the E&M market, and where does Thailand stand in comparison?
Japan is the dominant E&M market in the region, with $112 billion spent in 2006. The Japanese market rose 4.5%, its largest increase in the past five years, reflecting the increased role played by domestic demand and the growing flexibility of Japan's economy. Given these trends, we expect growth in Japan's E&M market to average 3.3% compounded annually during the next five years.
China came second with $78 billion spent on E&M last year. In 2006, China's E&M market was the fastest-growing territory in Asia Pacific, with a 21.6% increase. China's E&M market will continue to record double-digit annual gains that will average 16.8% when compounded annually. By 2009, we expect China's E&M market to surpass Japan's in terms of overall spending.
In Thailand, $4 billion was spent on E&M last year, up 3.6% from the previous year. By 2011, the Thai E&M market is expected to reach $5.7 billion, at a 7.3% compound annual growth rate, which puts it somewhat lower than the regional average growth rate of 9.6%.
As advertising spending is growing in the region, what mediums are seeing the increase?
Advertising rose 6.5% in 2006, with internet advertising soaring 38.7% and the remaining segments growing at single-digit rates. TV network advertising climbed 5.5%, while newspapers increased 4.3%, out-of-home grew 4.2%, radio rose 3.8%, and magazines edged up 2.6%.
Over the next few years, the internet will continue to grow the fastest, rising at an 18.8% compound annual rate. This was driven by increased online penetration and an expanding broadband market. TV networks will grow by 6.5% compounded annually, with a double-digit spike in 2008 associated with the Olympics in Beijing.
Japan's $36 billion advertising market is the largest in Asia Pacific, accounting for 47% of the total. China is next at $11 billion. We expect China to be the fastest-growing advertising territory during the next five years, with a 15.0% compound annual increase. India will grow nearly as fast at 14.6%.
In Thailand, $1.4 billion was spent on advertising last year, down 1.5% from the previous year. Nevertheless, we expect advertising in Thailand to increase 4.9% over the next five years, which is slightly lower than the regional expected growth average of 6.8%.
Overall, we expect advertising in Asia Pacific to increase from $77 billion in 2006 to $108 billion in 2011.
What is the forecast for consumer and end-user spending?
Consumer and end-user E&M spending rose 11.2% last year. We expect faster growth during the next two years, and a 10.6% compound annual increase through 2011.
Subscription household growth and an emerging mobile TV subscription market will boost TV distribution by 18.1% compounded annually. Increases in internet households and broadband subscriptions will lift access spending at a 16.9% compounded annual rate.
In addition, new resort casinos in Macao and Singapore will contribute to a 15.7% compound annual increase in casino and other regulated gaming, and video games will average 10.0% compound annual growth, boosted by rising online and wireless growth and new console games.
Filmed entertainment will expand at a 6.8% annual rate as modern cinemas contribute to box office growth and mobile music more than offsets decreases in physical music spending. Spending will total an estimated $363 billion in 2011, up from $220 billion in 2006.
What is the forecast for Thailand?
Last year, consumer and end-user E&M spending in Thailand rose 6.8% to $2.5 billion. Over the next five years, it is expected to average an 8.6% annual growth rate, slightly lower than the regional average of 10.6%.
What can we expect from this market over the next five years?
We expect Asia Pacific to be the fastest-growing region during the next five years. The region will have the fastest overall economic growth, which will support steady increases in each of the other segments. We expect overall spending to increase to $470 billion in 2011 from $297 billion in 2006, growing at a 9.6% compound annual rate.
The above article is based on the eighth annual edition of PricewaterhouseCoopers' Global Entertainment and Media Outlook, which covers the forecast period 2007-2011.
