New York, 3 June 2014 – Total entertainment and media spending on digital services is forecast to grow at a 12.2% compound annual growth rate (CAGR) between 2013 and 2018 and account for 65% of global entertainment and media spending growth, excluding spending on Internet access. Advertising is leading the way; in 2018, 33% of total advertising revenue is forecast to be digital, compared to 17% of consumer revenue.
However, profiting from the migration by increasing revenue from digital consumers will not just be about the application of digital technology. It will be about applying a ‘digital mindset’ to build the right behaviours, advancing from a digital strategy to a business strategy fit for a digital age, according to PwC’s Global entertainment and media outlook 2014-2018 (Outlook).
Marcel Fenez, PwC’s Global leader, entertainment & media, says:
“The bedrock of a strategy fit for the digital age is the digital mindset: getting ever closer to the customer – across the entire organisation, and in everything it does. We now see that mindset embedded in many entertainment and media companies. But the industry needs to get even closer to the consumer and adopt more flexible business models. To do this, companies must exhibit three behaviours: forging trust with consumers; creating the confidence to move with speed and agility; and empowering innovation. This will be an important step in monetising the digital consumer.”
Mobile Internet penetration will reach 55% in 2018, which will help drive digital advertising to increase its share of total advertising revenue to 33% by 2018, up from 14% in 2009. With Internet advertising growing at a 10.7% CAGR (compared to a total advertising CAGR of 4.4%), the industry is approaching a significant tipping point: in 2018, Internet advertising will be poised to surpass TV advertising. In 2009, TV advertising was double that of Internet advertising; in 2018, Internet advertising will trail TV advertising by just US$20bn. Mobile Internet advertising is forecast to grow at a CAGR of 21.5%.
Spending on digitally delivered content will account for only 17% of total consumer spending in 2018 (excluding spending on Internet access), compared to 33% of total advertising spending. However, the growth of ‘24/7 access’ and micro-transactions suggest that the key to monetising the digital consumer is to adopt flexible business models that offer more choices and better experiences. Electronic home video over-the-top (OTT)/streaming and digital music streaming are two of the fastest-growing consumer sub-segments cited in the Outlook, set to rise at annual rates of 28.1% and 13.4% respectively.
Nine high-growth markets are powering global entertainment and media revenue. China, Brazil, Russia, India, Mexico, South Africa, Turkey, Argentina and Indonesia collectively are forecast to account for 21.7% of global entertainment and media revenue in 2018, up from just 12.4% in 2009. Also in 2018, China will overtake Japan as the world’s second-largest entertainment and media market, behind only the US.
Marcel Fenez, PwC’s Global leader, entertainment and media, says:
“What all these markets have in common is a growing middle class boosting spending in entertainment and media. But the similarities stop there. Realising the revenue potential of these markets demands a deep understanding of the local context.Given their intimate local market knowledge, domestic organisations are in prime position to realise the opportunity of the emerging middle class The optimal approach for international players will most certainly be to collaborate with local partners.”
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About the Outlook
PwC’s 15th annual update of the Global entertainment and media outlook 2014-2018, is a comprehensive online source of global analysis for consumer and advertising spend. With like-for-like, five-year historical and five-year forecast data and commentary across 13 industry segments in 54 countries, the Outlook makes it easy to compare and contrast consumer and advertising spend across segments and countries. Find out more at www.pwc.com/outlook.
Segments covered by the Outlook
TV subscriptions and licence fees, TV advertising, Internet access, Radio, Out-of-home advertising, Video games, Filmed entertainment, Newspaper publishing, Magazine publishing, Business-to-business, Internet advertising, Book publishing and Music.
About Outlook insights
Much of the content in this press release is taken from Outlook insights, which is drawn from data in the Global entertainment and media outlook 2014-2018. PwC continually seeks to update the online Outlook data, therefore please note that the data in Outlook insights, and this press release, may not be aligned with the data found online. The online Global entertainment and media outlook 2014-2018 is the most up-to-date source of consumer and advertising spend data.
Digital revenue consists of fixed broadband and mobile Internet access; satellite radio subscriptions; digital PC and console gaming; online and mobile gaming; electronic home video; digital newspaper circulation revenue; digital consumer magazine circulation revenue; digital trade magazine circulation revenue; consumer, educational and professional e-books; online and mobile Internet advertising; digital out-of-home advertising revenue and digital recorded music revenue.
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