Irish Entertainment and Media to grow by 2.7% compounded annually over the next five years to 2013 - says PwC at the launch of its 10th Entertainment and Media Outlook

Pictured at the launch of the 2009 PwC Entertainment and Media Outlook are (l-r): Paul O'Connor (Partner, Technology and InfoComms, PwC Ireland), Eamon Ryan T.D., Minister for Energy, Communications and Natural Resources, Susan Kilty (Partner, Entertainment and Media practice, PwC Ireland) and Bartley O'Connor (Entertainment and Media practice, PwC Ireland).

Irish internet access market to grow by 13% compounded annually for the next five years to 2013

Irish advertising to show compound annual decline of 1.3% over the five year forecast period to 2013

Bruised by the recession, the Irish entertainment and media (E&M) market will experience a 3.3% decline in revenue in 2009 (US$4.98bn). This will be followed by a bottoming out in 2010 and a return to modest growth in 2011. Overall, the Irish E&M market will grow by 2.7% compounded annually for the entire forecast period to US$5.9bn in 2013.

Winning sectors for Ireland
Many of the more traditional entertainment and media sectors will be badly hit by the recession, in particular those dependent on advertising spend. However, a number of sectors will continue to grow over the 5 year period including - internet access, internet advertising, TV subscriptions, filmed entertainment and video games - as shown below:

Internet access will grow by 13% compounded annually to US$759m;
Video games will grow by 7.5% compounded annually to US$709m;
Internet advertising will grow by 6.9% compounded annually to US$155m;
TV subscriptions will grow by 6.4% compounded annually to US$982m.

Much of this Irish growth will be driven by changing consumer behaviour. Overall, consumer demand will stagnate in 2009 and 2010 but will be back to relatively modest growth in 2011. By 2013 overall consumer demand in Ireland will have shown annual compound growth of 3.1% over the forecast period.

Irish Advertising
As expected, the Irish advertising market will suffer a decline with levels of expenditure in 2013 expected to be back to 2006 levels. The Irish advertising market is expected to fall by 13.7% in 2009 with a further decline of 4.5% in 2010. Traditional advertising channels will be the most severely impacted, but internet advertising will also be down in 2009.

2011 will see slight recovery but overall the advertising market will show a compound annual decline of 1.3% over the five year forecast period to US$1.57bn in 2013.

Launching the report, Eamon Ryan, T.D., Minister for Energy, Communications and Natural Resources said:

"This publication, celebrating its 10th anniversary, is an important industry benchmark on the trends and developments for all sectors in the entertainment and media space. It shows the Irish internet access and internet advertising markets will see major growth over the next 5 years.

This Government is committed to providing nationwide access to broadband by the end of next year. I have also pledged that broadband speeds in Ireland will equal or exceed those offered by our European counterparts in the next 3 years. Consumers are changing the nature of their consumption and digital and mobile devices will provide the competitive edge for the future.

This Government is prioritising broadband and the development of a knowledge economy so that we can play a leadership role in the global economy as the world emerges from recession, which it surely will.

This report shows the jobs and opportunities that exist for companies and countries who can keep ahead of consumer trends. The Government will ensure that digital revolution will be to Ireland’s advantage.”

Susan Kilty, Partner, Entertainment and Media Practice, PwC Ireland said:

"It is interesting to note that the trends in Ireland are similar to what is happening worldwide. Like our global counterparts, we anticipate fundamental structural changes in many of the business models across Irish E&M sectors to happen imminently. Perhaps surprisingly, a slowing economy will accelerate the migration to digital technologies among both providers and consumers of content meaning the industry that went into recession will be very different from the one that will emerge at the other side.

"Segments will have to consolidate. For each of the industry’s diverse segments, the winners will be those who focus on driving and leading change that delivers real value to customers.”

Digital migration key to embracing the upturn
Over the next five years, digital technologies will become increasingly widespread across all segments of E&M. However, companies are struggling to adapt their current business models to ensure that they are monetising their digital content to capture new revenue streams.

Consumers are taking control over where, when and how they consume content.

Bartley O'Connor, Senior Manager, Entertainment & Media Practice, PwC Ireland said:

"Over the 5 year period, a more important development than the recession for the E&M industry will be the acceleration of the migration to digital technologies and platforms such as on-line communities and social networking sites. This change in consumer behaviour, and how they interact with and use content is leading to a fundamental changes in advertising and business models.”

He added, "As audiences continue to fragment in the years ahead, we will see a structural change in the advertising world. A key challenge for traditional E&M businesses is to identify appropriate models for monetising their content in the digital world. "

The changing face of advertising. The migration to digital reinforces the need for greater transparency and accuracy over audience metrics together with greater accountability for advertising results.

Bartley O’Connor added:

"An ability and willingness to collaborate with partners to open up and exploit new areas will be vital. Going forward, the successful models will be those that provide enough product differentiation from free or low-cost substitutes to generate revenue from either consumers, advertisers or, more likely, both.”

"At a time of huge structural changes within the industry, significant opportunities exist for Ireland and Irish companies to identify niches and provide service offerings on a global scale. This is what the Government’s recent Smart Economy Framework is all about – leveraging our heritage and skills to capture high-value global opportunities for Ireland and Irish businesses.”

Susan Kilty concluded:

"The challenge is to identify advertising business models that are able to withstand the downward pressure on advertising rates in the digital environment and on subscription models that capture the consumers' preferences for premium content.

"Irish companies who take the steps to adapt their business models quickly and grasp the full potential of new revenue models will emerge as the strong survivors in our economy.”

ENDS

Note(s) to Editor:

Key Global findings:

Globally, the entertainment and media market is expected to grow 2.7% compounded annually over the five year forecast period to US$1.6 trillion in 2013
Initially, we expect to see a 3.9% drop in 2009 and a mere 0.4% advance in 2010, followed by a much faster growth during the remaining period to 7.1% in 2013.

Global advertising will fall to 12.9% in 2009 with a further drop of 2.7% in 2010 and returning to just under 2008 levels in 2013. Video game ads are expected to outpace the rest of the advertising industry (albeit from a low base) at 13.8% compounded annually compared to an overall advertising industry decline at a compound rate of 0.6 per cent during the forecast period. The growing proportion of Internet and mobile advertising in the overall global advertising mix will rise from around 12% in 2008 to 19% in 2013.

Global consumer spending in E&M will fall by a projected 1.2% in 2009, remaining weak in 2010 and seeing only relatively low growth at 3.2% in 2011. End-user spending through digital/mobile platforms accounted for 23.4% of the overall consumer/end-user/ access market in 2008 and we expect this to account for 78% of total growth during the next five years.

Responses to the recession will vary from country to country and region to region with some territories showing little ill effects while others experience steep declines. Latin America and Asia Pacific remain the fastest growing regions increasing at an annual compound rate of 5.1 per cent and 4.5 per cent through to 2013 reaching $73 billion and $413 billion respectively.. Excluding Japan, the dominant country in the Asia Pacific region which accounted for 45 per cent of total spending in 2008, E&M spending in Asia Pacific will increase at a projected 7.1 per cent compound annual rate over the period of the Forecast.

About the Outlook
PricewaterhouseCoopers’ Global Entertainment & Media Outlook 2009-2013, the 10th annual edition contains in-depth analyses and forecast of 12 major industry segments across four regions of the globe: North America (USA, Canada), EMEA (Europe, Middle East, Africa), Asia Pacific and Latin America. To order copies go to: www.pwc.com/outlook

The PricewaterhouseCoopers’ Global Entertainment & Media Outlook 2009 – 2013 contains chapters on the following market segments:

Television Subscriptions and fees
Television Advertising
Internet Access Spending
Internet Advertising
Filmed entertainment
Radio and out-of-home
Video Games
Newspaper Publishing
Business to business publishing
Consumer and Educational Book Publishing
Consumer Magazine Publishing

About PricewaterhouseCoopers
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