2023 Outlook segment findings: Markets and industries
Macrotrends
After the rebound comes the correction. In 2021, as the world began to emerge from the depths of the covid-19 pandemic, total global entertainment and media (E&M) revenue leapt by 10.6%. In 2022, new concerns, ranging from the uncertainties of war to a squeeze on consumers’ finances, took hold, and the industry’s revenue growth decelerated sharply to 5.4% (a rate that’s still healthy and impressive by historical standards). Over the coming five years, a colder reality will continue to bite, with global E&M revenue growth slowing sequentially, year-on-year; in 2027, industry revenue will rise just 2.8% from 2026.
The main brake on growth? Consumer spending. Beset by inflation, grappling with disruptions and the consequences of geopolitical tensions, consumers are pulling back. The consumer spending category of E&M will grow at a CAGR of only 2.4% between 2022 and 2027, triggering a major tipping point. Though consumer spending has historically been the largest of the three categories of E&M spending tracked in PwC’s Global Entertainment & Media Outlook, it’ll be overtaken in 2025 by advertising, which, fuelled by buoyant digital advertising, is expected to rise at a five-year CAGR of 4.5%. By 2027, consumer spending will slip behind internet access spending and become the smallest of the three main categories.
It isn’t hard to see why the industry’s revenue balance is shifting. Consumers’ spending on E&M products and services is declining as a share of their wallet. But e-commerce and time spent on digital platforms continue to grow. As a result, companies are looking to reach consumers not just at the point of purchase but at the point of decision—hence the strong growth in digital advertising dollars. However, even as digital advertising grows, it’s also getting spread more broadly: the share of global digital advertising claimed by the Meta–Alphabet duopoly is estimated to have slipped below 50% in 2022—as revenue from ad-supported video on demand is projected to nearly double over the next five years.
The streaming industry’s decision to embrace advertising is just one aspect of a renewed focus on restoring capital discipline and margins that spans E&M sectors. Advertising, a hotspot for growth, is central to this push, with the global ad revenue pot approaching US$1 trillion a year by 2027. But there are also several other enticing pools of revenue. Take video games, now coming into their own as a medium for creativity, with total revenue set to rise at a 7.9% CAGR to US$312 billion in 2027. Or live and in-person events, a rare bright spot for consumer spending, with a projected five-year CAGR of 9.6%. Or—looking at growth from a geographic perspective—the Asia market, powered by China’s advertising and consumer spending revenue expanding at a 6.1% CAGR over the forecast period (more than twice the rate of the US).
Across and beyond such segmented and geographic hotspots, opportunities for growth in E&M are being created by the convergence of new and existing technologies. As the metaverse’s hype cycle tails off, it’s regaining strength as a richer, more immersive environment for gaming, entertainment, work and commerce. But the metaverse has already been supplanted in the headlines by generative AI, with OpenAI’s ChatGPT rocketing to 100 million users in just two months. (It took Twitter more than five years to reach that milestone.) Generative AI’s applications in E&M range from automating routine tasks to dramatically accelerating content production to personalising and targeting ads more efficiently at scale.
As new technology uptake and experimentation continue, rising interest rates and the renewed focus on capital discipline have contributed to a dip in E&M mergers and acquisitions. Efficiency and scale are now the main motivations for deals. The US$43 billion Warner Bros.–Discovery merger, completed in April 2022, has been followed by efforts to restructure, reposition and refocus. In February 2023, the Competition Commission of India conditionally approved the US$10 billion merger between Zee Entertainment and Sony Pictures Entertainment. And there’s one megadeal still pending: Microsoft’s proposed US$68.7 billion acquisition of Activision Blizzard. At the time of writing, competition regulators in the EU have cleared the transaction, while their counterparts in the UK and the US are still blocking it, at least for now.
Regulation is a recurring theme: the combination of tightening data privacy rules in many jurisdictions and the imminent death of the tracking cookie by 2024 have intensified the search for ways to offer consumers personalised and targeted advertising and content while allowing them to remain anonymous. Much of this activity has focused on setting up clean rooms: secure data-storage and processing environments where users’ personally identifiable information is effectively anonymised. Meanwhile, the EU’s General Data Protection Regulation (GDPR) continues to influence data privacy regimes worldwide, with the US readying its own version, the American Data Privacy and Protection Act. Efforts to regulate—and self-regulate—will only take on greater importance as the E&M industry grows ever more reliant on digital products and services.
More tipping points loom, like global 5G penetration surpassing that of 4G in 2025. Meanwhile, themes such as regulation, personalisation, AI and virtual reality will remain central to E&M experiences. But whatever pathways to growth open up, it will be imperative for E&M players to identify a clear purpose and then innovate to deliver on it—which is really how things have always played out in this most creative of industries.
Business-to-business
Total global B2B information revenue has now fully rebounded from the covid-19 pandemic, setting a new record of US$161.6bn in 2023.
- The business information sector had recovered all losses from the pandemic by 2022, and the trade magazines sector will follow in 2023. Trade shows, however, are earlier on in their recovery cycle and will take a number of years to return to pre-pandemic revenues.
- Global trade show revenue reached US$21.5bn in 2022, 33.8% below its pre-pandemic baseline, but it’s expected to grow 21.4% in 2023. Despite the return of flagship events and virtual or hybrid offerings, it will take until 2027 for the segment’s revenue to recover.
- Bolstered by rapid economic growth and the mass adoption of technology, the Latin American B2B market is set to grow faster than any other global region, at a rate of 4.2% CAGR, to 2027.
Capex
In recent years, capital expenditure grew sharply as the industry invested in the build-out of 5G. But the growth rate in both fixed broadband and mobile broadband investment will decline every year through 2027. Although higher inflation and capital costs are instilling great caution, growth in telecom capex will be driven by operators in the US, Europe and Japan rolling out 5G, expanding their fixed fibre infrastructure, migrating systems to the cloud and exploring open-source network solutions.
- The US is by far the largest market for telecom capex spend, followed by China and Japan. The fastest growth will come from the emerging markets of Egypt, India and Peru.
- Between 2022 and 2027, spending on fixed broadband and mobile infrastructure will grow at a 1.4% CAGR from US$319.1 billion to US$342.1 billion.
- In 2026, capex on mobile broadband will surpass capex on fixed broadband networks for the first time.
Cinema
Global cinema revenue (including advertising) was worth US$28.3bn in 2022, down from US$43bn in 2019, before the pandemic. But revenue is set to rise at a 13% CAGR over the next five years to reach US$52.1bn in 2027, and will surpass pre-pandemic levels in 2025.
A handful of Hollywood blockbuster movies are driving global box office revenue, underlining the public’s continued enthusiasm for entertainment on the big screen. But several major territories are seeing local films outperform US franchise films, including India, where local market share has stayed well over 80%.
Box office revenues are growing faster than cinema advertising, at a 13.8% CAGR, from US$25.3bn in 2022 to an estimated US$48.4bn in 2027.
- Despite projected revenue growth, cinema admissions are forecast to stand at 7.2bn in 2027, which is less than the 7.9bn achieved in 2019.
- Total cinema revenue will rise faster in Asia Pacific than anywhere else, driven by the rebounding Chinese film market, topping US$24.8bn in 2027 at a 16.6% CAGR. By contrast, revenues in North America in 2027 will be US$12.8bn.
Data consumption
The levels of data consumption will continue to grow each year as new technologies, such as 5G and wi-fi 6, are released. These new technologies will allow for data-heavy use cases, higher-quality digital content and increased access to the internet. Global data consumption reached 3.4 million petabytes (PB) in 2022, an increase of 30.5% from 2021, and will nearly triple to 97 million PB in 2027. This fast growth will create a dilemma for telecom companies because they will need to improve their networks to keep pace while still turning a profit.
- Global data consumption will rise at a 23.3% CAGR to 9.7 million PB by 2027.
- Wi-fi, the dominant network technology, accounted for 53.5% of global traffic in 2022 and will maintain this level throughout the forecast period.
- Cellular networks will see the fastest growth in usage between 2022 and 2027, increasing at a 27.0% CAGR, compared with a 21.9% CAGR for fixed networks and a 22.7% CAGR for wi-fi.
Internet access mobile and fixed
Global internet access is on track to be a revenue market of nearly US$1.0 trillion by the end of the five-year forecast period, as telecom and pay-TV companies reap the benefits of soaring data consumption off the back of billions of dollars of investment in next-generation infrastructure. The data consumption boom is being fuelled by the inexorable growth in bandwidth-heavy activities, led by video streaming. The rollout of 5G and full-fibre broadband will reach an inflection point in the next decade as consumer penetration levels make them the standard technology for accessing internet services globally.
- North America—home to the world’s largest internet access market, the US—will see total revenues grow broadly in line with the global average; China is set to see the slowest growth of any country to 2027.
- In 2023, revenues in the Middle East and Africa region will overtake Latin America, driven by Nigeria—the nation with the fastest-growing internet access revenue globally across the forecast period.
- In 2025, 5G will overtake 4G as the leading smartphone connection type.
Internet advertising
After rapid revenue growth of 30.8% in 2021, the global internet advertising market experienced a pronounced slowdown in 2022 to 8.1%, resulting in a total market value of US$484bn.
- A less favourable macroeconomic outlook in the near term, combined with industry maturation over the next five years, will limit growth during the forecast period. Overall revenue is expected to increase at a 6.5% CAGR to US$663bn in 2027.
- Although devices such as connected TVs will continue to increase their share of internet ad revenue, mobile will still expand from 67.8% in 2022 to 73.4% in 2027. Mobile-first advertising will again claim the market lead.
- Industry giants Google and Meta will remain dominant players in the market, but they face multiple headwinds as their digital ad businesses start to mature, including a reduction in advertising budgets and unfavourable exchange-rate fluctuations in key markets. Disruptors such as Tiktok and Amazon continue to capture the attention of younger digital audiences and advertisers.
- Video internet advertising revenue continues to grow and, fuelled by social video, is set to reach US$189bn in 2027. Mobile dominance of the video internet ad segment will persist through 2027, with the platform generating US$140bn in revenue and accounting for 74.2% of the total video segment.
IOT
Rising consumer demand for new devices—from smart watches and cars to internet-enabled appliances and hospitals—is making the internet of things (IOT) a reality. The installed base of IOT-enabled products will surge, from 16 billion devices worldwide in 2022 to 25 billion in 2027, representing an 8.8% CAGR.
- China and the US are the world’s two biggest IOT markets by a significant margin.
- Consumer IOT devices—home appliances, PC peripherals and printers, and sports and fitness trackers—will command the largest share in 2027, with the number of devices reaching 9.7 billion. Smart thermostats and lighting systems, which can help reduce energy costs and emissions, will gain more salience.
- With coverage and infrastructure uneven, especially in indoor locations and rural areas, the 5G IOT market is still at an early stage.
Music, radio and podcasts
The live music sector, having fully recovered from the pandemic, will see revenue exceed pre- pandemic levels in 2023 and will grow in every year of the forecast period. Digital music streaming subscriptions remain popular, with global revenue rising from US$21.4bn in 2022 to US$27.6bn in 2027.
- Physical recorded music is in decline, and revenue will continue on a downwards trend, from US$6.1bn in 2022 to US$4.5bn at the end of the forecast period. Digital recorded music will increase its share of recorded music revenue, rising from 74.3% in 2022 to 80.7% in 2027.
- Podcast audiences are growing exponentially, with the total listener base expected to reach 1.4bn and total advertising revenue forecast to hit US$3.4bn in 2027.
- Radio advertising is recovering slowly from the effects of the pandemic, rising 4.1% in 2022 to US$29.5bn. Further growth is expected, with the market set to reach US$31bn in 2027.
Newspapers, consumer magazines and books
Global consumer books revenue is set to grow by a 1.2% CAGR between 2022 and 2027, rising to US$70.4bn. By contrast, newspaper revenue will decline overall at a -2.0% CAGR, to US$77.4bn, over the forecast period. Similarly, total consumer magazine revenue will fall at a -2.8% CAGR, to US$47.7bn, but digital advertising is set to overtake print advertising in 2025.
- Across all three sectors, digital growth outstrips that of print. In books, digital publication is growing at a CAGR of 4.6% compared to a 0.1% CAGR for print. Yet print still dominates. Print accounted for 76.9% of total revenue in 2022, compared to 23.1% from ebooks, and will continue to produce around three-quarters of sector revenue through 2027.
- Print revenues for newspapers will decline across all but one region. Revenue from digital circulation is expected to grow with a CAGR of 7.1%, but print continues to dominate the newspaper circulation market, producing 85.7% of revenue in 2022.
- In the consumer magazines market, it’s a similar story: print revenue dominates but is declining, while digital revenue grows. The advertising sector will reach a tipping point in 2025, when digital ad revenue will overtake its print counterparts.
Out-of-home
The out-of-home (OOH) advertising market has completely recovered from the pandemic, with revenues at an all-time high of US$36.6bn.
- After a surge in post-pandemic demand, growth in OOH advertising will soon plateau before declining from 2025 onwards. Budgets continue to migrate to digital in line with the uptake of programmatic platforms.
- Digital OOH remains on a clear upward trajectory and, beyond the forecasted period, is expected to overtake physical for the first time to become the dominant OOH channel.
- The US will remain the largest OOH market throughout the forecast period.
OTT video
One of the chief beneficiaries of pandemic-era changes in consumer behavior, over-the-top video (OTT), is adjusting to a slower growth path. By 2027, annual revenue will be growing at a 4.6% rate.
- In 2022, OTT services were forced to reassess costs and strategic direction to maintain profits after the record growth of 2019–21. Slower growth to 2027 is set to mark a new phase in the evolution of the global streaming market.
- Subscription video-on-demand (SVOD) will remain the largest sector of the OTT market, rising from US$77.9bn in 2022 to US$109.1bn in 2027.
- The advertising-based video-on-demand (AVOD) segment will see the fastest growth as operators look to get a foothold in the growing medium, with a 13.8% CAGR leading to US$54.8bn in revenue by 2027.
- The US will increase total OTT revenue at an 8.8% CAGR between 2022 and 2027, broadly in line with the world average at an 8.4% CAGR.
Spectrum owners
Spectrum is a scarce and critical resource because the demand for spectrum for mobile communications exceeds the amount on offer. Regulators must decide which telecom operator would make use of this scarce resource most efficiently and provide the maximum socioeconomic benefits.
- Among global markets, the US has the highest amount of spectrum available, with virtually all of it in the high-band category.
- Auctions, the traditional means of allocating spectrum, may not achieve the most efficient allocation in all aspects.
- With the expiry of existing spectrum licences, regulators around the world have started exploring alternative approaches to spectrum allocation.
Traditional TV and home video
The global TV subscription market reached an inflection point in 2022, when, for the first time, it accounted for less than half of global traditional TV revenue. TV subscription revenue will be US$21bn less in 2027 than it was a decade earlier, driving traditional TV companies to seek growth from advertising.
- The global online TV advertising market will increase at a 6.4% CAGR to 2027—a rate that will more than make up for the decline in broadcast advertising, making the most of audiences turning to broadcaster-owned video-on-demand services.
- The number of households with cable TV is rapidly declining, in line with an ongoing shift in viewing habits away from traditional TV. More than 38mn homes will give up cable over the forecast period.
- North America, the world’s largest traditional TV market by some distance, will be the only region to see a decline in total revenue across the forecast period.
Video games and esports
Global video games and esports revenue stands out for its rapid growth: revenues are projected to rise from US$214.5bn in 2022 to US$314.6bn in 2027, representing at a 8.0% CAGR. Social and casual gaming continues to grow—from a 71.1% market share in 2022 to 78% in 2027.
- The gaming industry will see a shift from devices and consoles to mobile over the forecast period to 2027.
- Although it garners a good deal of press, esports represents only a small portion of revenues of the sector: about 1.0% in 2027.
- Asia Pacific is the region with the largest video games and esports market, with revenue set to rise from US$108.5bn in 2022 to US$175.2bn in 2027—approximately double the size of the second-largest region, North America.
Vitual reality (VR) and augmented reality (AR)
Despite the economic challenges affecting the market for consumer devices, virtual reality (VR) continues to grow in popularity. Building on a strong 2020, thanks to the success of the Meta Quest 2 launch and heightened spending during the pandemic, 2022 delivered a 36.2% year- on-year increase in revenue from 2021.
- The market with the highest expected growth in VR hardware is the US, which will account for 23.7mn more headsets by 2027, followed by China, which will add 10.1mn.
- Gaming is driving revenue growth in the VR market. VR gaming revenue was US$2.5bn in 2022 and will grow at a 19.5% CAGR to US$6.2bn in 2027, increasing its share of total VR revenue from 76.5% to 83.3%. VR video revenue will grow much more slowly, reaching US$1.2bn in 2027, up from US$779mn in 2022.
- Global mobile AR revenue increased 28.9% from 2021, hitting US$22.1bn in 2022. It is expected to more than double by 2027, to US$47.4bn at a 16.5% CAGR.
- The US is AR’s largest market, followed by China—and the two countries accounted for 77.6% of revenue in 2022. South Korea is the smallest but the fastest growing of the ten markets profiled.
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