Outlook segment findings

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Macrotrends

  • Early contenders for the key theme of this year’s Global Entertainment & Media Outlook – the transformative effect of 5G, the emergence of AI for the consumer market, subscription fatigue,  the role of aggregators – were swept aside in March, when the COVID-19 pandemic swiftly uprooted norms in every aspect of life across the globe. In a short period of time, consumer habits changed drastically as attendance at live events came to a halt and Internet data usage soared. This year’s drop in global entertainment and media revenue will be the sharpest ever recorded, followed by the steepest year-on-year rise in 2021 – but 2020 will be a misleading base from which to judge growth.
  • Global entertainment and media revenue is set to fall nearly 6%, or more than US$120bn on 2019, after a solid 4.7% year-on-year growth in 2019. Advertising will be the slowest segment to recover and is not expected to exceed 2019 figures until 2022, although Internet advertising has emerged relatively unscathed as compared to print. Some advertisers are turning away from traditionally preferred channels hit hard by COVID-19 disruption – such as cinema or out-of-home (OOH) advertising – to podcasts, which are proving resilient.
  • Despite global disruption, fixed broadband is on course to reach one billion households in 2020, with unique mobile Internet subscribers nudging 3.4bn by the end of the year. Data consumption will see strong growth, and usage via smartphone will see the largest jump, especially as 5G is adopted across the forecast period.
  • Over-the-top (OTT) will thrive in 2020, though at the expense of cinema and traditional TV. Subscription video-on-demand (SVOD) revenue is expected to overtake box office in 2020 and is projected to surge away in the coming five years, reaching more than twice the size of box office in 2024. The pandemic will also accelerate cord-cutting trends, particularly in major traditional TV markets like North America.
  • Lockdowns and social distancing measures have kept cinemas, concert halls, exhibition centres and stadiums around the world closed for much of 2020 so far. Shifting performances and other events online has proved popular, and Epic Games’ Fortnite can now be credibly described as the world’s largest event space, capable of hosting major live music, cinematic and other experiences.
  • More consumers are interacting with artificial intelligence (AI) technology through AI assistants on mobile phones, but privacy concerns have limited uptake in other AI consumer technologies. Nevertheless, by 2024, there will be 543m smart speakers owned across the 20 countries covered in PwC’s forecast, with growth driven primarily by the Asia Pacific region, which is set to account for 43.8% of global smart speaker ownership in 2024.

Consumer books

Growth in the consumer ebooks segment – once thought to be the greatest threat to print – continues but has slowed, as print remains the dominant format overall.

  • Although the growth in ebook revenues outpaces that of print in some countries, it is slowing in mature markets like the US, where revenue growth in print and audio is running ahead of ebooks.
  • Sales of e-readers have slowed as people shift ebook consumption to phones and tablets, or to audiobook consumption via smart speakers.
  • Traditional publishers continue to face competition from a variety of smaller players, including the secondhand book market, independent publishers, and from self-publishing. Publishers also face competition from discounted book fairs, but many of these will be disrupted in 2020 as a result of the COVID-19 pandemic.
  • Prior to COVID-19, physical bookstores, particularly independent shops, were experiencing growth in the UK and US as bookstores remodel themselves as community hubs. However, many were forced to close temporarily or permanently during lockdowns to curb the spread of the virus.

Business-to-business media

Although the business-to-business (B2B) market typically outpaces underlying economic growth, this tendency will not sustain over the current forecast period. Typically, this segment is bolstered by trade shows, but fallout from the COVID-19 pandemic will lead to flat growth to 2024.

  • While a stronger rate of B2B growth will be hampered by weaker categories and by those most negatively affected by COVID-19, the global B2B market will surpass US$200bn in 2022.
  • All print-exposed segments are faltering, with trade directories experiencing negative growth and professional books revenue almost flat. Trade magazines are set to grow at half the rate of business information.
  • With General Data Protection Regulation (GDPR), Europe has emerged as the first global region to implement laws governing the collection and management of personal data, and as such the territory will see the slowest growth in B2B revenues through 2024.

Cinema

Despite global cinema revenue reaching US$45.1bn in 2019, the global cinema market is expected to contract sharply due to COVID-19 in 2020. Cinema revenue will likely fall by -65.6% in 2020, as many screens are forced to close and major Hollywood releases are delayed.

  • The whole cinema ecosystem is expected to be dramatically affected, from cinema owners with heavy rent payments, to the staff that work there, technology vendors, suppliers of food and beverage products, cinema ad providers, and marketing agencies. Over the next five years, cinema revenue is projected to contract globally at a -2.4% CAGR to total US$39.9mn in 2024.
  • Over the next five years, the US is expected to extend its lead as the world’s largest cinema market, despite revenue contracting over that time period. Mainland China’s fast-rising cinema market will be affected by the 2020 outbreak of COVID-19, with its total cinema revenue set to decrease at a -4.8% CAGR to 2024.
  • US studios are fundamentally changing how they reach customers, with most launching or planning to launch their own streaming platforms. Films will reach huge numbers of viewers via streaming platforms.
  • Local production will be bolstered over the forecast period as many territories demand streamers show a certain amount of local content.

Data consumption

Video and smartphones remain key market drivers, and demand for data-hungry content plus improvements in broadband speed and capacity will drive global data consumption to 4.9 quadrillion MB in 2024.

  • The continuing shift toward smartphones as the primary means of data consumption is arguably the most notable market driver, but significant increases are being seen across nearly all device and content types.
  • Some 82.0% of online data consumption is video content, due to dedicated video-on-demand services, social media services and conventional websites increasingly preferring video to traditional text and images.
  • Gaming is set to be the third-largest consumer of data by 2024, with a projected global growth rate of 31.6% CAGR over the forecast period.
  • Growth in data consumption is spread fairly evenly around the globe except in India, where data consumption today is ten times higher than it was in 2015 and forecast to be nearly four times larger again by 2024.

Internet access

The smartphone continues to be the device of choice for accessing the Internet, with more than 5.1bn connections worldwide by 2024. In emerging markets, a smartphone with a broadband connection is and will be many consumers’ first and only means of Internet access.

  • Consumers increasingly choose smartphones over other devices, as increases in processing power and screen size lead to stagnation in the tablet market and further cannibalisation of PC and laptop use.
  • As nations with mature infrastructures approach saturation in the broadband space, countries with less developed infrastructures will drive uptake of mobile Internet. By the end of the forecast period, mobile revenue will account for 67.7% of the global Internet access market.
  • Most operators will launch commercial 5G services within the next three years, initially promoting them alongside existing applications like video, gaming and augmented reality, which work better over the technology’s faster and more responsive connections.
  • Total Internet access revenue is projected to grow from US$680.0bn in 2019 to US$848.3bn in 2024.

Internet advertising

  • Strong growth in Internet advertising revenue continues in all regions, although some geographic divergence has begun. Emerging markets, led by Asia Pacific and Latin America, are forecast to continue to experience the fastest growth. India, Indonesia and Vietnam will be the three fastest-growing markets over the forecast period, while growth decelerates in mature markets in North America and Europe, the Middle East and Africa (EMEA), where digital’s share of ad spending approaches saturation and COVID-19 causes more disruption to the sector.
  • Mobile is still the major growth story of the Internet advertising market, taking 88.4% of growth and nearly 60% of revenue in 2019. Advances in mobile-first formats, measurement and targeting options – e.g. geolocation – will sustain strong growth over the coming years, a period that will see more social video content in mobile-first emerging markets and 5G rollouts that ease the consumption of video content when out of the home.
  • The sector’s challenges include competition from connected TV devices, concerns about privacy, and ad fraud. In addition, some major tech players have begun to give users more control over, and protection from, third-party cookies. The so-called death of cookies makes for a difficult environment for some vendors and advertisers.

Music, radio and podcasts

Streaming remains the industry’s headline story, and while the segment as a whole will continue to expand despite disruption from COVID-19, the rate of growth will slow as streaming products reach less-developed markets at necessarily lower price points.

  • Global market revenue is forecast to reach US$119.4bn in 2024, with North America remaining the world’s largest music market through the forecast period. The fastest growth will take place in Latin America, which nevertheless remains the smallest market by revenue, rising to US$2.0bn in 2024.
  • Consolidation is trending in the live music sector, with major players acquiring smaller assets to broaden their reach. This sector is experiencing serious disruption in 2020, as the outbreak of COVID-19 causes large events to be cancelled across the world.
  • Physical recorded music sales and digital music downloads continue to suffer as a result of the ongoing consumer shift to streaming, with 2019 revenues down -60.4% from 2015.
  • Traditional radio will get a boost from the growing number of new platforms and distribution routes, including smart speakers, the launch of 5G and cheaper mobile data packages.

Newspapers and consumer magazines

Prior to the COVID-19 pandemic, circulation revenue was already trending downward, and the crisis will cause continued declines in newspapers and consumer magazine revenue. Global revenue will fall by -14.3% in 2020, with consumer magazines to be hit hardest.

  • The impact of higher paper, production and distribution costs combined with shrinking advertising revenue is sharpened by the pandemic, and all global regions will see reduced newspaper revenues through 2024.
  • Globally, daily newspaper consumption fell sharply in 2020 due to COVID-19, but will return to pre-COVID trends towards the end of the forecast period.
  • Competition for consumer magazine publishers increasingly comes not from other magazines but from major tech players, magazine aggregators and digital publishers.
  • New business models, including the use of paywalls, horizontal branding and joint ventures with other publishers, will continue to drive rising digital revenues.

Out-of-home advertising

The global out-of-home (OOH) market will see severe impact from the COVID-19 pandemic in 2020, but the sector is resilient and is set to bounce back in 2021. Overall, the sector is experiencing a shift as digital OOH (DOOH) enters the mainstream and drives profound change, and will also drive the industry’s recovery from 2021.

  • As DOOH increases in importance relative to the overall performance of the OOH market, the twin levers of construction and infrastructure spending will exert even more influence. Markets without major construction projects to create new inventory – or with projects called off or on hold due to worldwide contraction due to the pandemic – can leverage DOOH to grow revenue, but only at the expense of retrofitting existing displays and cannibalising physical OOH revenue.
  • As consumers exercise more control than ever over personal media preferences, advertisers continue to gravitate to OOH, which cannot be blocked or skipped. However, the growth of home working and online shopping, with consumers spending more time indoors in the wake of COVID-19, could erode the importance of OOH.
  • DOOH technologies will play a central role in quantifying advertisers’ return on investment, leveraging tools such as display-mounted cameras and AI analysis to determine audience composition and more precisely target OOH ads.
  • OOH remains largely immune to changing consumer behaviour, resulting in a market that continues to be remarkably stable, with 49 of 53 global markets showing growth in 2019. That pattern is expected to hold over the forecast period, with 50 of 53 expected to register growth, including every market outside the Middle East North Africa (MENA) region.

OTT video

As new over-the-top (OTT) services challenge the global dominance of streaming giants, consumer viewing habits will shift as global spending on TV content climbs throughout the forecast period.

  • These factors are expected to drive a significant increase in the subscription video-on-demand (SVOD) market, which is projected to grow at a 14.5% CAGR to US$75.1bn by 2024.
  • In the US, growth of SVOD is expected to slow as the emergence of new services accelerates market maturation, and rapid development in other world markets will eat into the US’s share of global OTT revenues.
  • With multi-platform viewing already the norm, mobile will become an increasingly important driver of video viewing as next-generation 5G services roll out around the world and smartphone connections climb in both established and emerging markets.
  • The traditional practice of buying and renting DVDs and Blu-rays from retail outlets will see further decline, with VOD purchases set to overtake the physical home video market in 2022.

Traditional TV and home video

The global traditional TV market will decline over the forecast period, as consumers continue to make the move to streaming and on-demand services.

  • Most mature markets are struggling to drive meaningful growth. Indeed, the US will see the fifth biggest percentage fall in subscription TV revenue of any country between 2019 and 2024, as operators drive media consolidation in pursuit of cost savings and invest heavily in developing streaming subscriber bases.
  • Emerging regions such as Asia Pacific will drive global growth in subscription TV revenue and household adoption over the forecast period, with global subscription TV household numbers set to approach 1bn for the first time, though this is expected to  happen beyond the forecast period.
  • Increased competition and the continued growth of streaming will drive total over-the-top (OTT) revenues to nearly double, from US$46.4bn in 2019 to US$86.8bn in 2024, becoming a much bigger portion of the US$200bn global subscription TV market.

TV advertising

The ongoing shift in consumer viewing habits – driven by the migration to streaming and heavily affected by the COVID-19 pandemic – is leading advertisers and broadcasters to rethink how they market to consumers.

  • The rise of full-fiber broadband networks and 5G mobile technology will continue to increase video viewing both in and outside of the home, driving broadcasters to adopt 4K and 8K picture quality to attract viewers to the big screen experience.
  • Competition in the market will intensify as streaming services spend billions on new content to attract and retain viewers and subscribers.
  • As a result of continuing fragmentation of TV viewing habits and the effects of the COVID-19 pandemic, terrestrial TV advertising is projected to contract globally from US$110.0bn in 2019 to US$106.8bn in 2024. By the end of the forecast period its share of the global TV ad market will likely drop slightly to 65.9%.

Video games and esports

Although the global video games and esports industry continues to enjoy growth across all segments, esports revenue, having passed the US$1bn mark in 2019, will achieve growth at a level unseen in almost any other media and entertainment category.

  • Leading technology and gaming companies will look to the lucrative subscription model as a new source of revenue. While consumer uptake of subscription gaming has been slow due to low awareness, technical shortcomings, and low global penetration of high-speed Internet access, the recent entry of tech giants like Microsoft and Google are set to accelerate adoption.
  • As several major gaming console makers prepare to introduce next-generation equipment, the reality is that consoles have been eclipsed by social/casual gaming and PC-based gaming as a source of revenue.
  • Growth in developing markets will be almost entirely driven by mobile games due to the ongoing global proliferation of smartphones, while India and Mainland China will drive a slight increase in console household penetration among emerging markets.
  • Microtransactions will continue to be a significant and growing source of revenue for all game makers.

Vitual reality (VR)

Despite a slower growth rate than forecasted three or four years ago, the market for virtual reality (VR) continues to grow as the industry overcomes technical challenges and becomes more established.

  • Over the forecast period, the VR market will benefit from increased investment from game developers and the emergence of more appealing content, which will drive VR headset adoption.
  • Although uptake of VR headsets was once predicated on the growth of mobile VR, the mobile VR headset category is now forecasted to experience significant decline. The installed base of mobile VR headsets is projected to decrease from 12.0m units in 2019 to 8.4m in 2024.
  • Video games account for the majority of VR content revenue, making up US$835m or 57.3% of total spending in 2019. Gaming is expected to remain the primary driver of VR content through the forecast period.
  • The US and Mainland China lead the top five VR markets in terms of revenue and installed base, with Mainland China set to outpace the US over the next five years to reach 19.5m units in 2024.

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Global Entertainment & Media Industry Leader, PwC Germany

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