A new collaborative Entertainment & Media industry emerges from the global recession

KUALA LUMPUR, 5 October 2011 – It’s the golden age of the empowered consumer, with the demand for digital experiences increasing and becoming the norm, according to the latest Global Entertainment & Media Outlook 2011-2015 from PwC. The improved economic conditions in 2010 played a major role in the recovery of overall entertainment and media (E&M) spending, which rose by 4.6%. Some countries, notably China and India, were largely unscathed by the global recession and experienced significantly higher growth rates in E&M spending. Total E&M spending in Malaysia for 2010 was US$4.4 billion, up from US$4.1 billion in 2009 (7.7% increase).

According to the Outlook, global E&M spending is projected to rise by 5.7% compounded annually, until 2015. E&M spending in Asia Pacific is projected to increase by a compound annual growth rate (CAGR) of 9.3% over the next five years. This growth is being led by countries such as Vietnam and Indonesia, which have CAGR of 17.3% and 11.9% respectively. Closer to home, growth of the Malaysian E&M industry is projected at a CAGR of 7.1%. This growth is mainly contributed by internet advertising, tv advertising, radio and newspaper publishing.

In many markets the global E&M industry emerging from the recession has been profoundly changed. This is spurred by the ongoing – and accelerating - consumer migration to digital, largely due to the device revolution.  Internet access spending was barely affected by the economic conditions. It’s expected to rise to US$408 billion in 2015, an 8.6% compound annual increase. Digital currently accounts for 26% of all spending, but it’s projected to rise to 33.9% by 2015.

“Simply put, digital is the new normal for businesses going forward - driving E&M operating models, consumer relationships and revenue growth. The whole E&M industry is being driven to create new experiences that engage the empowered consumer. Advertisers and agencies are becoming more sophisticated in exploiting these new brand opportunities, and this is driving an unexpected strong recovery in advertising,” says Sridharan Nair, Partner, PwC.

“We expect digital advertising revenue in Malaysia to increase from the current US$60 million to about US$127 million in 2015. That’s almost twice the current levels. Comparatively, we only expect non-digital revenue to hit US$1.45 billion in 2015, up from the current US$1 billion,” Sri added.

Advertising, the most cyclically sensitive of the three E&M spending streams, recorded the largest year-on-year swing, rebounding at 5.8% in 2010 from an 11% slump in 2009. Overall global advertising will increase at a 5.5% compound annual rate to US$578 billion in 2015. Consumer / end user spending also improved, rising 2.2% in 2010, after a fall of 0.4% in 2009.

“More and more advertisers will use mobility and social networking to develop consumer relationships, because consumers indicate that they feel closer to brands in the digital space. The shift from traditional formats to digital is only going to continue, and businesses need to be more creative in reaching out to their audience. One way to do this is to collaborate with others through what we call the collaborative digital enterprise (CDE),” he continued.

The Outlook highlighted three key themes for the E&M industry for the period spanning 2011 until 2015, namely:

  1. The digitally empowered consumer
  2. The involved advertiser, and
  3. The rise of the collaborative digital enterprise (CDE).

In the next five years, it’s projected that Latin America will be the fastest-growing region in terms of E&M spending, with a projected 10.5% compound annual increase to US$109 billion in 2015 from US$66 billion in 2010. Asia Pacific will be next, at 6.5% compounded annually from US$395 billion to US$541 billion.

For more in-depth data, visit www.pwc.com/outlook.



Notes to Editor:

  1. The Collaborative Digital Enterprise is a new operating model specifically designed for the digital ecosystem. It’s an enterprise which is technology driven and dynamic, interconnected and continuously engaged with its entire customer, employee and supplier ecosystem. The CDE will require companies to harness the D-cubed drivers of digital, demand and data, in order to get ahead.
  2. PwC believes that to be a successful CDE a company needs to embrace three industry-wide dynamics which are the route to success in the emerging digital environment:
    • Digital: the rapid and accelerating digitization of elements including content, business processes, and product innovation.  Social media, mobility and the explosion of apps have already had profound impacts which will continue to grow.
    • Demand: Consumers are empowered, connected, able to influence large communities of people, and ready to play an increasingly collaborative role in developing new E&M products and services
    • Data: the proliferation of digitized content, web access and social media means companies have the ability to mine and analyse detailed/contextual information which hasn’t previously been available. Data is key to the interface between consumers, content experience and brand as well as to innovation.
  3. Latin America will be the fastest-growing region in terms of E&M spending during the next five years, with a projected 10.5% compound annual increase to US$109 billion in 2015 from US$66 billion in 2010. Asia Pacific will be next at 6.5% compounded annually from US$395 billion to US$541 billion. Europe, Middle East and Africa (EMEA) will expand at a 5.2% compound annual rate to US$614 billion in 2015 from US$477 billion in 2010. North America will increase by 4.7% on a compound annual basis from US$481 billion to US$607 billion.
  4. Twelve countries had spending above US$25 billion in 2010.  Of the leading countries, China and Brazil will be the fastest growing over the next five years with projected compound annual increases of 11.6% and 11.4% respectively.
  5. The Internet will be the fastest-growing advertising segment during the next five years, overtaking newspapers in 2012 to become the second-largest advertising category behind television.  Television advertising will continue to benefit from viewing and its association with Internet usage and the major sporting events over the next couple of years, such as the London 2012 Olympics, will drive double-digit increases during this period.  The trade magazines sector saw a dramatic decline of 20.4% in 2009 but by 2012 through to 2015 we expect it to be one of the faster growing sectors.   
  6. In 2010 digital advertising accounted for 15.9% of total global advertising and is projected to account for 22.5% in 2015.  Non-digital accounted for 84.1% of total advertising in 2010 and is projected to account for 77.5% in 2015.
  7. Overall digital spending increased by 12.9% in 2010 compared with a 2% increase in non-digital spending.  This pattern will continue and we project digital’s share to rise to 33.9% in 2015.  Digital spending will increase at a projected 11.5% CAGR during the next five years compared to compound annual growth of 3.3% for non-digital spending. Accounting for just a quarter of the market, digital will generate 59% of total E&M spending growth during the next five years.
  8. Broadband is a key driver of digital spending as broadband facilitates digital transactions. Latin America and Asia Pacific are currently the regions with the lowest broadband penetration and therefore the regions with the highest potential for growth.  Over the next five years we expect the number of broadband households to double in Latin America and in Asia Pacific to grow by 7%.
  9. Mobile Internet access growth is also an important driver of E&M spending with all regions experiencing significant growth through to 2015.  The number of mobile access subscribers will more than double in EMEA and Asia Pacific, will more than triple in North America and will increase by more than 400% in Latin America during the next five years.
  10. The filmed entertainment market is being boosted by 3D, Blu-ray and the growing electronic market.  The proliferation of tablets, expanding broadband penetration and faster broadband speeds is contributing to an increase in spending of 5.9 per cent compound annual rate to US$115 billion in 2015, from US$86 billion in 2010.  Asia Pacific and Latin America will be the fastest-growing regions.
  11. In the video games market, the overall market is projected to expand to US$82 billion in 2015, an 8.2% compound annual increase from US$56 billion in 2010.  Asia Pacific will be the fastest growing region over the next five years with an 11.8% compound annual increase, mainly fuelled by large increases in online games.

About the Outlook

PricewaterhouseCoopers Global Entertainment & Media outlook 2011-2015, the 12th annual edition, contains in-depth analysis and forecasts of 13 major industry segments across four regions of the globe: North America (USA and Canada), EMEA (Europe, Middle East and Africa), Asia Pacific and Latin America.  To access the Global Entertainment & Media Outlook 2011-2015 online go to:  http://www.pwc.com/outlook.

Digital Spending

Digital spending, as included in the Outlook, consists of broadband and mobile Internet access, online and mobile Internet advertising, video-on-demand, mobile TV subscriptions, digital music, electronic home video, online and wireless video games, digital consumer magazine circulation spending, digital newspaper circulation spending, digital trade magazine circulation spending, electronic consumer, educational and professional books, and satellite radio subscriptions. 

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