Thursday, 22 June 2018 – Canada’s entertainment and media sector has entered a dynamic new phase and according to PwC’s Global Entertainment & Media Outlook 2018-2022 (Outlook), total revenue for the industry is projected to rise at a compound annual growth rate (CAGR) of 3.7% ( vs. 2.8% last year) over the next five years. The outlook within each entertainment & media subsector varies considerably with growth of varying degrees and stability across most sectors. Canadian companies are changing strategies, and creating supercompetitors - combining content, technology, and telecom. By doing so, Canada’s traditional television sector is expected to remain the fourth largest market globally by subscription revenues through 2022.
Canadians are increasingly choosing the Internet to view content instead of watching traditional television, forcing entertainment and media organizations to reinvent their business models and tap new revenue streams. The report shows that only 23% of 18-34 year-olds view content online, and by 2022, video streaming will account for well over 80% of online traffic. Older age groups are also becoming comfortable with the medium, with the report finding that 55% of Canadian adults streamed music videos in 2017.
Advertisers are also continuing to shift their plans from traditional television or print to Internet advertising. which totalled CAD$6.5B in 2017, up 10.6% from 2016 due to an increase in mobile internet advertising. Over the next five years total revenue will rise at a 5.5% CAGR, hitting CAD$8.5B in 2022.
“The Canadian entertainment and media industry is no different from its global counterparts experiencing a third wave of convergence aiming at business models that revolve around comprehensive direct-to-consumer relationships,” says John Simcoe, National Entertainment and Media Outlook Leader, PwC Canada. “With more attention being placed on digital-first content and streaming content online, Canadian companies are transforming their products to adapt to online platforms to help retain and attract new audiences and customers. The game changer goes beyond content, it’s also about targeting fans and connecting more effectively to develop a more loyal customer base.”
For the first time, the eSports sector has made its way to the Canadian report, representing projected total revenues of CAD$40M and a CAGR of 22.7% over the next five years. Canada’s eSports market has been building strongly with total revenue in the sector greater than that of Italy and Spain combined.
The following sectors represent the areas with highest growth rates and fastest declines.
Internet Access: Due to an already mature market, Canada’s fixed broadband penetration will increase only slightly but the ongoing rollout of gigabit services will result in rapid migration from medium-speed to high-speed services. In general, cable TV subscription numbers are falling while IPTV is still making gains, but all operators have had to come up with over the top (OTT) mitigation strategies.
Over the Top (OTT) Services: Revenue grew 3.4% year-on-year in 2017 to reach CAD$1.5, making Canada the fifth-largest OTT video market globally after the US, China, Japan and the UK. The segment is expected to continue to grow at a more moderate pace with a 5.2% CAGR through 2022. Canada has been one of Netflix’s biggest markets and was estimated to have reached 6.9M subscribers by the end of 2017.
Traditional TV: Canada’s highly developed subscription TV market is characterized by lively competition between cable, satellite and IPTV operators. Although the number of subscription TV households continues to rise, the emphasis on strong price competition due to the threat of OTT video and new government regulations has seen pay-TV revenues decline. Revenues fell 2.5% in 2017 to CAD$9.3B in 2017 and will decline at -0.3% CAGR to just under CAD$9.1 by 2022.
Newspapers: Daily unit print circulation has fallen from an average 6.1M copies in 2013 to 4.4M in 2017 and is expected to hit 3.8M in 2022., Publishers can find greater success by migrating their existing print customers to digital subscriptions as well as seek out brand-new digital buyers. Still, this growth will be insufficient to offset a 5.6% CAGR reduction in print circulation revenue over the next five years.
“Canada’s cultural industry, including entertainment and media, has garnered a lot of attention in the past year as the Government of Canada introduced new initiatives to stimulate innovation, content creation on various platforms, and provide internet access to all Canadians. There are many opportunities ahead but only those players who are agile will be able to shape the future of the industry,” adds Simcoe.
At PwC, our purpose is to build trust in society and solve important problems. More than 6,700 partners and staff in offices across the country are committed to delivering quality in assurance, tax, consulting and deals services. PwC Canada is a member of the PwC network of firms with more than 236,235 people in 158 countries. Find out more by visiting us at www.pwc.com/ca.
© 2018 PricewaterhouseCoopers LLP, an Ontario limited liability partnership. All rights reserved.
PwC refers to the Canadian member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see http://www.pwc.com/structure for further details.
Manager, Public Relations, PwC Canada
Tel: +1 416 687 8643
Manager, Communications, PwC Canada