BANGKOK, 10 July 2013 – Entertainment and Media (E&M) spending in Thailand is expected to rise to $14.8 billion by 2017, up from $9.7 billion projected in 2013, fuelled by surging demand for Internet access, TV advertising and consumer and educational book publishing, a PwC forecast says.
The fast-expanding Thai E&M market will grow at a compound annual growth rate (CAGR) of 11.3% over the next five years—the fourth fastest-growing in Southeast Asia—compared with much slower growth in developed markets, including 4.8% CAGR in the US and 3% in Western Europe over the same period.
Globally, the E&M market is expected to see a CAGR of 5.6%, generating revenues in 2017 of $2.2 trillion, up from $1.6 trillion in 2012. The US will remain the largest E&M market, reaching $632 billion in 2017, from $499 billion last year.
However, a group of eight high growth markets—Brazil, Russia, India, China (the BRIC nations), the Middle East and North Africa, Mexico, Indonesia, and Argentina—will see the most growth. Buoyed by a growing middle class and increased urbanisation, these territories will account for 22% of total global E&M revenues in 2017, up from 12% in 2008 with their average CAGR more than doubling that of the global E&M sector as a whole.
According to the Organisation for Economic Co-operation and Development (OECD), by 2030 two-thirds of the world’s population will be ‘middle class’, with a daily expenditure of $10 to $100. This new middle class will appear primarily in Asia Pacific, meaning the E&M industry needs to understand its needs and motivations to capture the region’s spending power.
Nattaporn Phan-Udom, partner and leader of PwC’s technology, infocomm and entertainment and media (TICE) practice in Thailand, said that the consumer demand for E&M will continue to grow strongly, propelled by the rise of the Internet and growing use of smart devices, despite the recent economic slowdown, which resulted in a cut in the GDP growth forecast.
“Increasing access to the Internet and explosive expansion in the ownership of smart devices will continue to be significant driving forces behind this E&M market over the long term,” Nattaporn said. “Household broadband penetration globally will rise to 51% in 2017 from 40% in 2012. In contrast, mobile broadband penetration will surge by 31 percentage points from its 2012 level to reach 54% in the next five years,” she added.
“Regionally, Asia Pacific—driven by China and India—will lead the way in both numbers of households and growth rate, followed by Latin America, with slower growth in the more mature EMEA and North American markets.”
Even though traditional, non-digital media will continue to contribute the lion’s share of spending throughout the coming five years, the growth will be concentrated in digital media platforms and consumption, Nattaporn said. By 2017, global digital revenues will make up almost half (47%) of the total, up from 35% in 2012, according to the report.
Global spending on mobile Internet access will exceed that of fixed broadband lines in 2014, driven hugely by emerging markets.
Mobile Internet revenue will be worth $259 billion in 2014 and by 2017 will exceed $385 billion, accounting for 58% of overall Internet access expenditure, according to the report.
“After years of home broadband being the most popular way to access the Internet, a fundamentally different form will come to dominate: access via mobile broadband, most often via mobile phones rather than PCs and laptops,” she said.
PwC’s 14th annual Global Entertainment and Media Outlook 2013 – 2017 provides in-depth five-year historic and five-year forecast consumer and advertising spending data for 13 industry segments across 50 countries around the world.
The ongoing widespread expansion of Internet access in Thailand will lead the country’s overall growth in entertainment and media spending, with revenue reaching $4.67 billion in 2017, the data showed.
“In an era where mobile technologies have been central to broadband-market development in the emerging markets, a shortage of wireless spectrum had severely restricted growth in Thailand,” said Nattaporn. “Now, with the conclusion of 2.1GHz auction late last year—when three leading operators emerged with an additional 45MHz of bandwidth combined—adoption of mobile broadband is expected to accelerate rapidly during the next five years.
“By 2017, Thailand is expected to have just over 30 million mobile-broadband subscriptions, mostly via 3G, compared with 5 million at the end of 2012. This will push the mobile-broadband population penetration to 43% by the end of 2017,” she added.
Though the bulk of broadband growth in the next five years is expected to come from mobile services, fixed-broadband is expected to grow strongly to 6 million by the end of 2017 from 4.2 million subscriptions in 2012.
Urban fibre-network deployments are also expected to add to fixed-broadband access growth, but adoption of fibre services will remain at a relatively negligible level. The household penetration of fixed-broadband services will be about 34% in 2017, leaving a large gap in the market to be addressed by mobile broadband.
Nattaporn said that while many of the developed markets had got a head start with next-generation fibre and fourth-generation (4G) networks, ambitious operators and governments in emerging markets won’t be far behind, if not ahead.
“Getting spectrum policy right will be especially important in the advancement of mobile broadband services. The right pricing and packaging will be essential to success,” Nattaporn said, adding that pay-per-use or pay-per-app tariffs will open up mobile broadband to hundreds of millions of lower-income consumers, and increasingly generous bundles of digital media, Wi-Fi, over-the-top services and new connected devices will drive migration to super-fast broadband services.
On a global scale, the US is the largest territory in fixed broadband, with high penetration and high average revenue per user (ARPU). After exceeding the revenues of Japan in 2012, China is closing the gap on the US due to its aggressive double digit growth in subscribers, despite considerably low ARPU.
-- ENDS --
Other key findings for Thailand’s E&M market include:
After a period of relative stagnation in the Thailand TV advertising market, the market saw significant growth between 2010 and 2012, when net TV ad spending reached US$2.16 billion. However, this rate will slow down in the near term, with spending forecast to reach US$3.13 billion by 2017, a CAGR of 7.7%.
Commercial TV channels, notably Channel 7 and Channel 3, increased their shares of TV advertising revenue after TITV became ad-free in 2008 and are expected to retain this share. Since the broadcasting reform bill of 2007, pay-TV channels have been allowed to carry advertising provided they contribute to a central broadcasting fund. Even with this proviso, pay-TV providers in Thailand see advertising revenues as becoming an increasingly important revenue stream: Multichannel will account for 17% of total TV advertising revenues in 2017, up from a 7% share in 2012.
The market for consumer and educational books in Thailand was worth $1.13 billion in 2012, up from a revenue of $878 million in 2008. Revenue is forecast to rise by a CAGR of 6.7% to total $1.57 billion in 2017. AIS and B2S operate the main online bookstores, with AIS claiming to be the market leader.
By autumn 2012, eBooks only accounted for 1% of sales for the three big Thailand bookstores, AIS, B2S and Asia Books. AIS says more than 300,000 eBooks are downloaded each month, while B2S and Asia Books achieve 70,000 and 100 downloads a month, respectively. Asia Books has 700,000 eBooks available compared with 2,000 for AIS and 6,000 for B2S.
B2S recently partnered with mobile-only eBook site Ookbee to sell books through its platform. Sales of eBooks will account for 9% of the market by 2017 as sales of tablet computers rise.
Subscription TV operators in Thailand face some significant challenges as high levels of piracy, low disposable income and the expansion of free-to-air satellite services make it harder to attract paying customers. Even the market leader, True Corporation Pcl, has been struggling to retain users. Moreover, rollout of DTT (digital terrestrial television) has been slow.
True Vision, controlled by True Corp, had lower revenues in 2011 than in 2010. This was the result not only of high piracy levels, but also of increased competition in the market following the 2008 decision by the regulator, the National Broadcasting & Telecommunications Commission (NBTC), to open up the TV advertising market to new entrants. The NBTC redressed the balance and took further action against piracy in 2011 by requiring that all pay-TV operators must operate under its authority and demonstrate that all foreign programming is legally acquired.
There are some welcome signs that the market is picking up. The NBTC further stimulated the market by issuing new pay-TV licences in 2013 (although they are only valid for one year, discouraging long-term investment), and new entrant GMM is well placed to attract new customers for its satellite service.
Although cable penetration has historically been low, a growth in low-cost services to compete with pirated content means that cable will help to grow the platform, with 4.7 million paying subscribers forecast for 2017, along with 1.8 million pay-satellite households, and 420,000 IPTV subscribers.
The growth of cable will drive the pay-TV market overall. By the end of 2017, there will be 7 million pay-TV subscribers in Thailand, representing 32% of TV households, and generating revenues of $946 million.
With a CAGR of 7.6% over the forecast period, the B2B market in Thailand will be the eighth fastest-growing market in the world. It was worth $421 million in 2012, up 8.4% from 2011. The market has grown 20% since 2008, when it was worth $351 million. By 2017, it will be worth $606 million.
Business information is the largest B2B segment, accounting for 65% of revenue. In the next five years, it is forecast to grow by a CAGR of 8.5%, the fifth highest rate in the world, reaching $412 million in 2017. The business information segment will benefit from annual GDP growth of between 7.1% and 9.5% in Thailand over the forecast period.
Trade show revenue is growing by a CAGR of 8.1%, the fifth highest rate in the world, and is forecast to reach $72 million in 2017. The market is centred on Bangkok and benefits from the city’s infrastructure investments, its international airport and its ambition to be the exhibition hub for the ASEAN region, which has included bidding for World Expo 2020.
Mobile Internet spending in Thailand is booming, growing by a CAGR of 40% over the forecast period, but this development has not resulted in digital becoming the dominant format for directory advertising or trade magazines.
The Thai consumer magazine market will be worth $440 million by the end of 2017, up from $409 million in 2012, a CAGR of 1.5%. Growth will be driven by a $25-million increase in advertising spending over the forecast period, and a $6-million rise in circulation spending in the same period.
Some 56% of total revenue in the sector was attributable to circulation spending. The figure will decline slightly, to 54%, by 2017.v
Thailand’s economy is forecast to expand, and magazine advertising revenue will reach $204 million by the end of 2017—a CAGR of 2.6% over the forecast period. In February 2013, leading fashion magazine brand Vogue launched its first local edition, which highlighted the popularity of the fast-growing fashion-magazine and magazine-advertising market in Thailand.
Digital magazine circulation, which is currently a nascent sector, will begin to grow over the forecast period, as the number of mobile broadband subscribers continues to rise between 2012 and 2017, at a CAGR of 44%. In the period 2010 to 2012, major magazines launched paid apps for smart devices, especially the iPad, which were charged at the rate of $0.99 to $2.99 per digital issue. Digital magazine advertising is forecast to grow strongly in the forecast period to reach $8 million by 2017, a CAGR of 34.7%.
The Thai filmed-entertainment sector will be worth $775 million by end-2017, up from $471 million in 2012, a CAGR of 10.5%.
Thailand’s endemic piracy problem costs its local film industry more than Baht 10 billion ($321 million) a year. The legal DVD market was worth about 18% of that figure in 2011. There are estimated to be 50,000 outlets selling pirated DVDs throughout the country. Thailand remains on the US government’s Priority Watch List for copyright violation.
The country’s physical-home-video market, consisting of sell-through and DVDs, is expected to contract by a 4.2% CAGR between 2012 and 2017, to be worth $44 million. This is almost half its value in 2008. Sell-through will be hardest hit, dropping by a 7.2% CAGR to $8 million, despite retailers offering collectors’ editions and specially designed packages to tempt buyers.
Illegal cable television stations that broadcast unlicensed movies are another problem. Nonetheless, legitimate movie channels will see strong growth. But no over-the-top (OTT) movie-streaming services are expected to launch.
Cinema advertising will be another bright spot. It grew significantly during 2012, and revenue will continue to grow at a CAGR of 14.4% over the next five years to $533 million by 2017. Box office revenue will also grow, rising to $164 million by 2017, a CAGR of 4.2%.
Thailand is one of the fastest growing advertising markets in Asia, rivalling even India and China in its growth rate, and despite the advertising market and the economy in general continuing to struggle to recover from the debilitating 2011 floods.
At only 26%, Thailand has low broadband penetration, and this is reflected by the fact that the online share of total ad spending is still very low, comprising less than 1% of Thailand’s total spending on advertising. In 2012, online advertising spending was $18.4 million and this is forecast to increase to $55.7 million in 2017, a CAGR of 24.7%.
As is usual for a developing Internet market, display currently takes the biggest share of online spend with 44% of the 2012 total. Search, which is driven by Google, one of the dominant players in Thailand, only accounted for 15% of online spending in 2012 – and this share is forecast to drop to 12% in 2017.
Thailand’s music market was worth $250 million in 2012, up from the 2008 revenue of $238 million. Annual revenue is forecast to grow by a CAGR of 9.6% to reach $396 million in 2017.
Thailand has embraced its digital future, unlike most of its neighbours. It’s a country of almost 70 million whose music market has been ravaged by piracy. In just five years, the market for physical product has halved, to $33 million in 2012 down from $66 million in 2008. The upshot is a vibrant, growing space for digital music products. During those same five years, the digital market has grown from $76 million to $105 million – the gains in digital almost offsetting the decimation of the physical business. Thailand’s digital market ranks among the top 20 in the world, though its physical market falls below the top 30.
Mobile subscription penetration is beyond 100% and more than 5 million are connected to the Internet. The digital music market should mature as the big brands make their presence felt. Apple launched its iTunes Music Store in Thailand in 2012 and Deezer will follow in 2013. In a deal billed as the first of its kind in that market between a major international music company and a telecoms firm, Universal Music struck a deal with domestic telecoms operator True to provide music to local mobile subscribers: the 2012 arrangement sees True make its content available to listen, watch and download through its H Music applications.
Thailand has a diverse and competitive newspaper industry. Even so, the sector has been hit by rising costs in newsprint, thanks to surging demand from India and China, and by competition from satellite and TV. However, although the newspaper sector remains unregulated and chaotic, further growth is expected.
Newspaper advertising expenditure decreased in 2009 but has been rising again and is set to grow to $514 million by the end of 2017 from $487 million in 2012, a CAGR of 1.1%. Circulation in the period will rise from 7.9 million copies sold per day in 2012 to 9.8 million in 2017. The country’s biggest-selling mass circulation daily, Thairath, is estimated to have a circulation of about a million.
Consumption of digital media is growing, but overall levels of broadband penetration remain relatively low, at 26% of households in 2012, rising to 34% by 2017.
Thailand’s out-of-home revenues rose 34% to $240 million in 2012 from $179 million in 2008. The market is forecast to grow by an annual growth rate of 7.6% over the forecast period and will see revenues of $346 million in 2017.
The OOH market has benefited from growth in the numbers of retail chains, shopping malls and hypermarkets in the country and is characterised by a switch to digital out-of-home formats, which is now approaching 50% of spending, according to the local OOH advertising trade association.
Over the forecast period, OOH spending will be boosted by two major factors:
Thailand has 524 radio stations across AM and FM frequencies. In 2010, the Thai parliament passed legislation that provided for the creation of a new combined media and telecoms regulator, with a strong remit to encourage privatisation. Thailand is a mid-ranking radio market. Its total radio revenues in 2012 of $203 million came from advertising, and there is no public radio licence fee. The Thai radio advertising market was hit hard by the global recession with revenues declining between 2009 and 2011. However, in 2012, revenues recovered and further growth (with a CAGR of 3.9%) is expected through to 2017, when revenues will reach $246 million.
The market for video games in Thailand was worth $145 million in 2012, up from 2008 revenues of $76 million. Revenues are forecast to grow by a CAGR of 9.2% to reach $226 million in 2017.
The majority of the Thai gaming industry’s revenues will be generated on the mobile platform by the end of the forecast period. Though console and PC ownership are low compared with those in Western nations, mobile penetration is rapidly opening up access to casual and social games. Mobile devices also bring with them a means of payment via the operator, which allows games to be monetised even where credit card ownership is far from ubiquitous.
Mobile games revenues reached $73 million in 2012 and are set to grow at an average annual rate of 10.5% to $120 million by 2017. These revenues are composed of both download revenues and revenues from micro-transactions. The rise in mobile gaming will also cause an increase in video games advertising revenues over the forecast period, from $4 million last year to $7 million in 2017, a CAGR of 14.6%.
Advertising revenues will grow more rapidly than mobile games revenues over this period since the expansion of mobile gaming, in particular the time spent gaming on the mobile platform, means that this is becoming an increasingly efficient way of advertising to Thai consumers.
PwC’s 14th annual update of the Global Entertainment and Media Outlook 2013 – 2017, is a comprehensive online source of global analysis for consumer and advertising spend. With like-for-like, five-year historical and forecast data across 13 industry segments in 50 countries, the Outlook makes it easy to compare and contrast regional growth rates and consumer and advertising spending. Find out more at http://www.pwc.com/outlook.
Digital spending 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 spending; digital consumer magazine circulation spending; digital trade magazine circulation spending; consumer, educational and professional eBooks; online and mobile Internet advertising and digital music.
The year-on-year percentage growth rate of an investment over a given period of time. It’s calculated by taking the nth root of the total percentage growth rate, where n is the number of years in the period being considered.
A regional designation used for government, marketing and business purposes.
PwC helps organisations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with more than 180,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.
In Thailand, PwC has had a presence for more than 50 years. Our client base includes some of the largest Thai and multinational companies, as well as government institutions. We have 1,300 people working for our Bangkok-based office. Learn more about PwC Thailand by visiting us at www.pwc.com/th or following us online: @PwC_TH and www.facebook.com/PwCthmarketplace.