Outlook segment findings
Macrotrends
Twenty years ago, in 1999, the first edition of the Global Entertainment & Media Outlook was published. The pace of change has been astonishing. Back then, Amazon was less than five years old, Netflix less than two and Google less than one. These are many of the companies that have moulded the current global entertainment landscape into their own image.
- Over the next five years, digital — especially mobile — revenue will continue to make up more and more of the industry’s income, boosted by big gains in Internet advertising and data consumption. Virtual reality (VR), OTT and Internet advertising lead the segments in terms of growth rates. Despite having difficulties meeting high expectations thus far, VR is overcoming challenges. Video games, which are expected to get a lift from new 5G networks, are the principal driver of VR headset adoption. India leads as the market with the greatest growth, but China will reach an important milestone.
- Total global E&M revenue is set to see a 4.3% CAGR from 2018 to 2023, sending an overall figure of US$2.1tn up to US$2.6tn by the end of the forecast period. This pace is close to historical trends, even as shifting consumer behaviours reshape the industry.
Over the next five years, China’s absolute growth in entertainment and media will exceed that of the US for the first time. In that period, the US will add US$71bn (a 2.5% CAGR), while China will add US$84bn (a 7.7% CAGR).
By 2023, marketers will allocate more than 50% of their budgets to digital advertising. The Internet is already the single-largest advertising segment, accounting for 40.6% of all ad revenue in 2018.
Globally, digital music-streaming revenue is rising rapidly, accounting for 50% of recorded music revenue in 2018. To capitalise on this growing market, key players will redefine themselves as “audio” providers — becoming one-stop shops for consumers browsing music, radio and podcast content.
It is to nobody’s surprise that this is, increasingly, a mobile world. We see mobile continuing to soar, with smartphone data consumption overtaking that of fixed broadband in 2020. In many developed markets, penetration is at or approaching saturation. Meanwhile, in certain markets such as India, Indonesia and Nigeria, which are highly populous but spread over vast and challenging geographies, operators have poured their efforts into mobile growth.
Book publishing
The publishing market is no longer a battleground between print and digital. Instead, it is becoming an ecosystem that embraces all formats and is increasingly influenced by consumers.
- Print will remain the primary form of book consumption over the forecast period, but more people are listening to audiobooks on the go or on smart speakers at home. Audiobook rights are as important for publishers as foreign and e-book rights.
- Digital books, independent publishers, self-publishing platforms, textbook rental, and the secondhand market are all eating into publisher revenue, and publishers must capitalise on online learning trends and embrace tech innovation to maximise profits.
- In terms of total cinema revenue, China will overtake the USA in 2020.
- Growth is significant in India, where the economy is strong, literacy rates are rising, and more people are joining the middle class. In Southeast Asia, a population with a high rate of smartphone ownership represents a huge untapped market for digital books. EMEA, with more mature markets, is growing more slowly, but may be ripe for new formats.
- Global total books revenue was US$122bn in 2018 and will reach US$129bn in 2023, reflecting CAGR of 1.2%.
Business-to-business media
The rise of digitisation will deliver growth in some segments — such as the delivery of business information in real time, or the ability to provide new and richer information — and ongoing challenges for others, including print-exposed segments like directory advertising.
- The US, which represents the world’s largest B2B market, experienced a tipping point in 2018 when B2B revenues became predominantly digital. On a global basis, this shift will not occur until 2020.
- Smartphone adoption will continue to drive the shift from print to digital. By 2023, 80% of the world’s mobile phone connections will be smartphone connections, due to the availability of cheaper handsets and entry- and mid-level 4G devices in emerging markets.
- Trade shows, which are largely immune to the effect of digitisation and offer distinct value for exhibitors and attendees, will grow at a faster rate than any other source of B2B revenues for the foreseeable future.
Cinema
Global box office revenue will exceed US$50bn during the forecast period, due to both rising admissions in all major regions and renewed interest and investment in cinema outside the major regions.
- As the Hollywood majors continue to release mega-budget films, exhibitors are tempting consumers away from streaming platforms at home and back to theatres with high-quality screening facilities. Membership schemes can soften the impact of increased admissions for cinemagoers and are expected to become more popular over the forecast period.
- Netflix and other streaming platforms are increasingly influential and continue to invest in original and feature-length content, but are still not considered to be competing directly with the Hollywood majors.
- In terms of total cinema revenue, China will overtake the USA in 2020.
- Screen numbers in the Middle East and Africa are rising faster than in any other region, at a 7.3% CAGR over the forecast period. In Saudi Arabia, where cinema going was reintroduced in 2018 after a 35-year ban, growth has been especially rapid.
- It remains unclear what, if any, consequences the UK’s exit from the EU will have on the European film industry.
Data consumption
Data protection, cybersecurity and content quality will be major challenges as the global data consumption market continues to expand, with strong growth expected for the next five years.
- This growth will be driven by network expansion and the availability of cheap smartphones and affordable data plans. The demand for video will also drive data consumption, accounting for 81% of total data traffic in 2018.
- Widespread 3G and 4G network availability offers consumers cheaper and more viable Internet alternatives, and will account for more than 90% of the world’s mobile Internet connections by the end of the forecast period.
- 5G mobile technology will fundamentally change the way the Internet is consumed with high data transfer rates and short response times, which will prove disruptive in many industries.
Internet access
The emerging availability of 5G will give operators the opportunity to rethink everything from pricing and packaging to overall positioning in the wider telecom, media and technology market.
- Increasing affordability and accessibility of broadband and mobile Internet access will contribute to continued growth in this segment, with mobile access taking an increasing share of total revenue.
- A slowdown in smartphone sales won’t change the device’s dominance for Internet access, but artificial intelligence technology, paired with digital assistants, will represent the most significant change in how people access the Internet.
- It is unlikely that any new operators will enter the market to challenge industry giants, who can exert considerable pressure on rivals by bundling telecom and TV assets in their existing broadband markets.
Internet advertising
The ongoing shift from digital to mobile media is the landmark consumption trend impacting this market, reshaping the context in which Internet advertising is delivered.
- This is because most consumer time spent on mobile media and services is spent in mobile apps rather than on a browser, offering new opportunities for context-specific forms of mobile paid search advertising.
- New types of connected devices — such as digital assistant-enabled smart speakers and smart TVs — are changing the way consumers interact with digital media services and content, opening new pockets of competition for digital advertising players.
- The twin forces of consumer privacy concerns and advertiser fears over brand safety have affected dominant market players, opening a door for prospective competitors and driving consolidation in the digital media and ad tech space.
- Some segments of the market are outperforming others — in the wired sub-segment, for example, growth across paid search, display, and video is much lower than within the mobile equivalent.
Latest trends in advertising
The shift towards Internet advertising continued in 2018, as marketers pursued consumers on the platforms they use the most. We are approaching a tipping point. According to PwC's Global Entertainment & Media Outlook, marketers will allocate more than 50% of their budgets to digital advertising by 2023. Find out more on key trends driving advertising.
Music, radio and podcasts
Significant milestones are on the horizon: In 2019, recorded music revenue will exceed that of live music for the first time, and podcast advertising revenue will pass US$1.0bn.
- Worldwide, music downloading has continued a precipitous decline, down -23% in 2018. This dropoff is expected to continue as consumers increasingly favor streaming.
- Increased adoption of smart speakers will boost accessibility to all forms of audio, including radio, though networks must rely on brand awareness to keep consumers tuning in.
- Developed markets such as North America and Western Europe continue to drive global music revenue, but Asia Pacific will be the fastest-growing streaming region over the forecast period.
- Although podcasts feature fewer advertising minutes than radio — two and ten minutes per hour, respectively — advertisers may pay a premium for podcasting’s more engaged audiences.
Newspapers and consumer magazines
Despite the demand for quality journalism from trusted sources, the global newspaper and magazine industries continue to face gradual overall declines in revenue from both circulation and advertising.
- This will likely force consumer magazine and newspaper publishers to consider new business models and diversification strategies in order to evolve.
- Newspapers and magazines are experiencing an increase in digital consumption across all regions, and the newspaper industry’s overall rate of decline is slowing. Total average daily circulation of newspapers across all regions and formats is expected to remain flat through the forecast period.
- As publishers compete with online channels offering a constant stream of free content, diversification strategies will include video, broadcast, voice, merchandise and events that augment print and digital titles.
- Digital newspaper circulation is increasing, but year-on-year revenue growth will continue to slow. Expect to see diversification in digital payment models, including membership and donations.
Out-of-home advertising
Technology will continue to drive growth in out-of-home (OOH) advertising, as more static displays are digitised and advertisers increasingly leverage audience measurement and programmatic buying tools.
- This is partly because OOH is one of the few forms of traditional advertising to benefit from digitisation. Although they cannot be highly personalised like ads delivered on smartphones, digitised billboards and displays can reflect changing conditions like traffic or weather to make them more relevant and effective.
- New entrants to OOH such as streaming platforms, search engine providers and e-commerce companies — attracted by the increasing value of data collection within the format — are shifting the competitive landscape.
- Infrastructure expansion in Asia Pacific, led by China, is boosting capacity for new OOH inventory. The region will contribute 50% of the increase in global OOH revenue over the forecast period.
- In 2021, physical OOH revenues will begin to decline as a result of ongoing digitisation, as static billboards and displays in key markets are converted to digital.
OTT video
New entrants to the over-the-top (OTT) video market will challenge the dominance of services like Netflix and Amazon, who will turn their focus to international markets for the next cycle of subscriber growth.
- These factors will contribute to significant growth in the global OTT video market, which will double in size over the forecast period to US$72.8bn.
- Customers increasingly expect all of the TV services they want to watch to be available through a single provider, and operators are responding by integrating streaming platforms into their traditional offerings.
- The global market will hit a tipping point in 2021, when Asia Pacific will overtake North America as the world’s biggest region in terms of OTT video revenue.
Latest trends in advertising
The shift towards Internet advertising continued in 2018, as marketers pursued consumers on the platforms they use the most. We are approaching a tipping point. According to PwC's Global Entertainment & Media Outlook, marketers will allocate more than 50% of their budgets to digital advertising by 2023. Find out more on key trends driving advertising.
Traditional TV and home video
New offerings such as pared-down bundles, advanced set-top boxes and delivery of 4K TV quality are not slowing the decline in the traditional pay-TV industry.
- In the US, TV subscription revenue will fall by -2.9% CAGR to US$81.8bn in 2023. In China, the world’s second-largest market, revenue will grow modestly across the forecast period to US$17.9bn. India will emerge as the fastest-growing subscription TV market in the world and is poised to overtake China in 2024.
- Consolidation is ongoing in a market forever changed by the rise of streaming. Major players see this as a way to fend off new competitors.
- Publicly funded broadcasters have proven unable to achieve significant increases to their income, and even historically strong players are increasingly challenged to compete with the growth of Netflix and Amazon.
TV advertising
Thanks to its ability to deliver mass audiences, terrestrial television advertising continues to dominate the market, but the fastest area of growth in this segment will come from online TV advertising.
- The US is the world’s largest market for TV advertising, but its share of the global market will shrink from 43% in 2018 to 41% in 2023, with emerging markets taking an increasingly larger share.
- An increase in households with broadband access worldwide is a major factor in the growth of streaming and online video services. China is the largest market with 446mn broadband households.
- Live sports events — which are among the most-watched programming and offer an increasingly rare opportunity to reach large, engaged audiences — represent the most valuable properties for both broadcasters and advertisers, with Olympic and World Cup years ranking as highwater marks.
Video games and esports
The global video games and esports industry continues to grow across all segments and markets, with traditional (console and PC) gaming experiencing a transition to online-focused revenues. The esports category remains the smallest, but fastest-growing, sector.
- All four major categories of revenue in this segment — traditional gaming, social and casual games, video games advertising and esports — will experience continued growth.
- Although they are declining steadily, physical games are holding up surprisingly well. Consumers still perceive greater value in physical games over CDs or DVDs, and physical games revenue still represents a sizable share of total video games revenue.
- Expect increased competition in the PC retail space, as titles become available through more outlets and direct from publishers. The balance of power will shift to China, which is the world’s largest video games market, with its revenues forecast to reach US$34.9bn by 2023.
- The next few years will see a full generational shift in gaming consoles as the current generation reaches its end. Competition and increasing consumer familiarity will drive innovation and development in this area.
Latest trends in video games and esports
According to PwC's Global Entertainment & Media Outlook, 2019-2023, the video games and esports sector, which topped US$118bn in 2018, continues to grow across all segments and markets. Esports remains the fastest-moving area of the video games markets with 18.3% annual growth rate through 2023. Find out the latest trends driving this dynamic industry.
Vitual reality (VR)
Still a relatively new commercial proposition, VR technology must overcome technical shortcomings to attract a mass-market audience for both content and hardware.
- Despite these limitations, there is opportunity for growth in relatively cheap, portable dedicated devices, which gained on home headsets in 2018 and will continue to lead at the end of the forecast period.
- Recent introductions of bleeding-edge VR technology will not have immediate mass-market impact but provide a glimpse of where the technology is headed. However, the inflection point at which VR can truly go mainstream remains many years off.
- China is the global leader in terms of total VR units sold, demonstrates a superior growth rate to all other regions, and will exceed US figures for home VR units by the end of the forecast period.
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