Global findings

Dramatic shifts are underway in how entertainment and media companies compete and generate value, as the quality of the experience they deliver to consumers becomes their primary basis for strategic differentiation and revenue growth. Below are some major tipping-points, which are occurring or will happen across various segments.

Internet advertising now generates more revenue than TV advertising globally

In 2016 an important tipping point was reached in the global advertising industry, with revenue from Internet advertising exceeding that generated by TV advertising for the first time. That lead, thanks to the rapid growth of mobile ad revenues in particular, is set to increase significantly in the next five years. However, at a global level we forecast TV ad revenues will also continue to rise, albeit at a more modest rate. Both platforms are important to consumers, so brands seeking to engage future audiences effectively will need to keep developing and growing their ability to plan, deliver and measure co-ordinated campaigns across multiple platforms.

Global newspaper circulation revenue overtook global advertising revenue in 2016

While newspaper circulation revenue has been on a downward trajectory since 2015, publishers have had the useful lever of cover price rises to partly offset the rapid fall in units. However, the year-on-year falls in newspaper advertising revenue have been more pronounced, with advertisers deserting print editions in large numbers, and publishers increasingly being squeezed out of the digital ad space by Google and Facebook. The upshot is a historic shift in the dominant revenue streams, as newspaper circulation eclipses advertising. By 2021, global total newspaper circulation revenue will account for 54.0% of total newspaper revenue.

By 2020, Asia Pacific will be the most digitised OOH region

Currently, North America gets a higher proportion of its OOH revenue from digital out-of-home (DOOH) than any other region – 37.9% in 2016. But there are signs that DOOH is approaching saturation point in North America; the region has lower-than-average public transport usage, and the digitisation of the billboard market is being limited by regulation. In Asia Pacific, by contrast, public transport usage is already high in markets such as Japan and South Korea, and soaring in others, as China and India invest in extending metro networks, and Indonesia, Vietnam and others open rapid transit systems. This increased room for growth in DOOH will allow Asia Pacific to overtake North America as the most digitised region in 2020; by 2021, DOOH will be approaching half of all OOH revenue in the region, with a share of 47.7%.

Global physical OOH revenue will slip into decline in 2019

Global growth in physical out-of-home (OOH) revenue has been trending downwards for some time as an ever-growing share of advertising spending is diverted to digital out-of-home (DOOH). This trend will reach a tipping point in 2019, when physical OOH revenue slips into decline, falling by -0.2%. By 2021, the rate of year-on-year decline will have accelerated to -0.8%. While physical OOH revenue will continue to grow in many markets – especially emerging ones – globally, it will be in terminal decline by the end of the forecast period, as DOOH takes over.

China's total number of cinema screens now exceeds those of the US

China had 41,056 cinema screens in 2016 compared to 40,928 in the US. This marks a significant shift, underlining the growing popularity of cinema among Chinese audiences of different ages and demographics – and especially among middle-class cinemagoers with disposable incomes. Although some of the cinemas being erected at such speed in shopping malls across China are not necessarily all premium quality, their existence will serve to hook yet more consumers on the cinema-going habit, and contribute to the longer-term replacement of the US as the number one market for box office revenue.

Less-developed markets with low E&M spending on per capita basis will experience most rapid growth rates

The fastest-growing markets are those which currently spend the least, while those which have high spending are growing slowly. In the lowest spending markets, an increase of just a few dollars per year in E&M spending will represent substantial growth. As disposable incomes rise steadily in these markets such modest increases in E&M spending are all but inevitable. In the highest-spending markets, by contrast, consumers would need to be a substantial increase in spending per year to produce a similar increase, which is virtually impossible in the context of much slower economic growth in these markets.

Globally, not all markets or segments are slowing or in decline; there are pockets of divergence and growth opportunities available throughout

The broad pattern in the global E&M market is clear: as countries become more developed, E&M spending per capita relative to its GDP increases and growth slows. In fact, most E&M segments will fail to keep pace with GDP growth over the next five years. Although only two segments, newspapers and magazines, are declining in absolute terms, many others are slow-growing and not keeping pace with the general rate of economic growth.

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