Outlook segment findings
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Macrotrends
An already complicated entertainment and media (E&M) world is growing ever more so – now that the most prized assets in the digital age have been determined, competition for those assets is coming from every conceivable direction.
- The last 12 months have been marked by streaming services, TV companies and social networks competing simultaneously over both conventional sports and e-sports rights; TV companies, telcos, tech companies, OTT operators and movie studios competing to provide TV content; radio stations, podcast companies and streaming services competing to provide radio and podcast content; Google, iHeartMedia and ad tech companies competing to provide digital OOH services; news publishers transforming into media companies by hiring VR teams and video experts; and even automobile manufacturers and radio providers working hand in hand.
- Decision-makers need data of unprecedented detail and granularity to navigate this world and inform their business plans.
- In 2018, mobile Internet advertising spend is poised to outweigh that of wired for the first time, and in 2020, data consumed on smartphones will exceed data consumed on fixed broadband.
- The most disruptive, forward-thinking companies are striving to create an integrated ecosystem suited to a consumer-driven dynamic – one in which social media and e-commerce are interlinked with the entertainment experience itself.
- As big tech competes ever more fiercely in the entertainment and media spaces that have the most promising digital revenue prospects, such as OTT video and music streaming, new fronts continue to appear – including artificial intelligence, smart home services and virtual assistants.
- Total global E&M revenue will see a 4.4% CAGR rise over the five year forecast period through 2022, reaching US$2.4 trillion in that year, from US$1.9 trillion in 2017. This is marginally up on last year’s predictions of a 4.2% CAGR, but is predicated on renewed bullishness in worldwide Internet access spend.
- Digital revenue will continue to make up more and more of the industry’s income, accounting for more than 50% in 2018.
- The story behind these global figures is an accumulation of near-infinite microstories – a dizzying array of different trends at the country and segment levels.
Book publishing
Although book revenue had previously been on a downturn, it has now returned to growth.
- This change is largely driven by a revival in print consumer book revenue, which has been caused by the rise in the price of e-books.
- Print will continue to be the primary form of book consumption over the next five years with consumers, educators, students and professional book buyers all spending more money on print over digital.
- As e-book revenues continue to stall for the big publishers, growth in volumes in the lower-priced independently published sector will lessen the slowdown.
- Top-selling books are more reliant on support from other media forms than ever. Rather than popular books being made into movies or TV shows, movies and TV shows are turning books into best-sellers.
Business-to-business media
B2B media is becoming a more data-centric, digital product offering, both in how it’s delivered to and consumed by customers — that is, online and with the convenience of handheld devices — and also in the quantitative nature of products that are in demand.
- This is particularly true with regard to the business information segment, the growth engine of the overall B2B market worldwide.
- Total global B2B media revenue generated US$189.0bn in 2017, an annual increase of 2.9%.
- Growth will remain steady at close to this rate over the next five years, putting total B2B revenue at US$217.5bn by 2022.
Cinema
The global cinema industry is expected to experience a steady increase in revenues over the forecast period.
- This increase is driven by Asian-Pacific markets led by China, whose box-office revenue is on track to exceed that of the US in 2020.
- There will also be sharp rises in the Middle East and Africa, albeit from a low base, with the primary driver being Saudi Arabia’s reversal of its cinema ban, beginning May 2018.
- The Hollywood majors, which have traditionally relied on theatrical releases to drive their films through the ancillary pipelines, are now scaling up as they look to compete with Netflix and Amazon.
- Hollywood-made films will continue to dominate global box office, but these films will increasingly both be set and shot abroad.
Data consumption
The twin levers of smartphones and video continue to drive data consumption to new heights.
- Smartphones will overtake fixed broadband in 2020 as the premier means of data consumption, and video — with sports as its key driver — will account for no less than 77% of total data consumption type in every year of the forecast period.
- Video’s rate of growth will be exceeded by communications and games as multiple drivers spur on data consumption over the next five years.
- Over the forecast period, the connected car and eventually self-driving cars will provide a surge in data traffic, and technology suppliers are battling to be car manufacturers’ chosen platform.
Internet access
The internet access market will continue to grow strongly, with operators signing up more than 1bn first-time customers globally over the next five years.
- Growth will increasingly be driven by mobile Internet access in emerging markets, and by the end of 2022, 69.1% of the global population will be subscribed to mobile Internet services — most likely on a high-speed connection.
- Because many people have smartphones on them at all times, they will increasingly turn to these devices instead of PCs, laptops or tablets to access personal and work-related applications, both inside and outside the home.
- In 2022 revenue from mobile Internet services will account for nearly two out of every three dollars spent on Internet access worldwide.
Internet advertising
Internet advertising continues to be a major growth driver of media and entertainment revenue, and will, in fact, overtake the combined total of TV and print media advertising in 2018.
- Two key factors are involved: the growth of Internet access in emerging regions, and the increase in time that already-connected consumers in mature markets are spending online – and, crucially, on their mobile devices.
- As consumers continue to shift their attention toward digital and mobile media, more advertising spend will migrate to – or be set aside for – platforms that deliver ads to consumers in such a context.
- The total global market is expected to grow by a CAGR of 8.7% between 2017 and 2022 to reach a total value of US$339bn at the end of the forecast period.
Magazines
Magazine revenues continue on a downward trajectory as consumer magazine publishers struggle to monetise their digital content.
- Consumers are reluctant to pay for this content, and CPMs on digital are smaller due to intense competition from other publishers for ad revenue.
- The global magazine market, which is made up of total revenue for both consumer and trade magazines, will see revenues of US$88.1bn by 2022, down from US$91.9bn in 2017.
- Turbulent times are bringing more mergers and acquisitions as well as publisher diversification in order to grow revenues outside of the core business, with offerings including events, custom content, brand licensing, e-commerce and affiliate marketing.
Music, radio and podcasts
After years of rapidly declining revenues, the music industry continues to experience a significant uptick in fortunes.
- Total global music, radio and podcasts revenue will increase at a 3.6% CAGR from US$94.9bn in 2017 to US$113.4bn in 2022, with growth largely generated by the recorded music segment.
- Consumers in developed markets are signing up for subscription-based music-streaming services from leading providers, as well as from more niche streamers, as the demand for owning music recordings wanes.
- Despite its current resilience, growth in global radio revenue will begin to slow over the duration of the forecast period, although all subsegments will still increase.
- It is proving challenging to monetise podcasts with the same efficiency as radio, leading podcast producers to explore new business models by looking to proprietary platforms for distribution.
Newspapers
The global news publishing industry is responding to an ongoing devaluation of its product offerings, which is continuing even as it successfully grows overall consumption levels.
- New Asian demand is driving up regional print circulation, helping to offset the continuing loss of print readers in the West, where publishers are attracting online readers in large numbers.
- These regional and cross-format trends cancel each other out: when paid print circulation and paid digital circulation are taken together globally, total average daily circulation is forecast to grow at a 0.8% CAGR.
- These trends are failing to drive consequential business growth, as cheaper products in emerging markets and intense competition for digital advertisers deny any associated revenue uplift.
Out-of-home advertising
The out-of-home (OOH) advertising industry is enjoying the benefits of the strengthening global economy — particularly in emerging markets — which in turn is driving investment in new digital OOH infrastructure.
- Digital OOH now accounts for more than one-third of all OOH spending and is bringing profound changes to the market as the buying, selling and displaying of the OOH industry is overhauled.
- The measurement and targeting of OOH are also seeing major improvements driven by digital forces.
- The global OOH market has sustained steady growth in recent years, increasing in value from US$31.0bn in 2013 to US$37.1bn in 2017, and — driven almost entirely by digital — is forecast to see a CAGR of 3.9% over the next five years to reach US$44.9bn in 2022.
OTT video
The OTT video market maintains its rapid growth, with major players Netflix and Amazon continuing to significantly increase investment in TV and film content.
- Netflix remains the biggest force in the market, and Apple has announced its intention to be the third major international OTT player with a US$1bn investment in high-end original programming. Traditional pay-TV providers are responding by investing in their own VOD and stand-alone OTT services.
- Emerging markets, which have skipped traditional computer use to make smartphones their primary Internet device, are driving OTT video services globally.
- As the number of services proliferates, exclusive content and key sports rights have become critical in growing subscriptions and defending market share.
Traditional TV and home video
Organic subscriber growth is becoming difficult in mature markets, fuelling consolidation as companies seek to grow scale to compete in an increasingly globalised market punctuated by the rise of Netflix and Amazon.
- The US market is set to lose almost 5m subscription TV households between 2017 and 2022, and traditional operators in mature markets are focusing on upselling core customers to premium products — such as Ultra HD, advanced set-top boxes and on-demand services — to fuel revenue lost to the growth of the OTT sector.
- There is significant scope globally for subscriber growth in the billion-plus population markets of China and India, which are seeing the emergence of middle classes larger than the population of the US.
- The critical importance of exclusive and original content is key in the modern TV market.
TV advertising
Consumers increasingly expect to be able to view content across multiple devices, which has put pressure on the traditional TV advertising model.
- Terrestrial TV advertising remains dominant globally — accounting for 70.0% of the US$168.2bn TV advertising market in 2017 — but its market share is being eroded by newer, Internet-delivered viewing platforms and will account for a diminished 67.0% of the US$192.1bn TV ad market by 2022.
- Traditional TV companies are attempting to retain TV ad share by keeping viewers within their own online viewing ecosystems.
- Harnessing viewer data is becoming critical, with broadcasters launching addressable advertising services in response to the demand from brands seeking a more granular targeting of viewers.
Video games and e-sports
All four major categories of revenue in the global video games and e-sports market — traditional gaming revenue, social/casual games, video games advertising, and e-sports — are set to grow respectably through 2022.
- E-sports will grow the fastest, from US$620m in 2017 to US$1.6bn by 2022 at a CAGR of 20.6%.
- Although revenue growth continues in most markets and segments, power is still shifting to platform/app-store owners and publishing houses.
- One of the most noteworthy likely developments in the market’s near future is the further emergence of mobile games as an important e-sports vehicle. The lower barrier to entry for such games — a smartphone as opposed to a PC — could lead to a major democratisation of the viable competitor base for e-sports.
Vitual reality (VR)
After approximately two years on the market, the new collection of consumer VR headsets has reached a steady growth curve.
- This growth has not been as exponential as some expected, but the necessity of expensive hardware — or a top-of-the-range smartphone — to access VR has been a factor in its adoption. By 2022, 175.2m VR headsets will be in consumers’ hands in the ten markets covered, up from an estimated 37.6m at the end of 2017.
- Because VR is now in a long-term growth phase, many firms are diversifying beyond the dominating content categories of gaming and video to find new opportunities, especially in enterprise VR apps or venue-based VR experiences.
- Cumulatively, content will generate US$21.2bn a year by 2022, with gaming revenue staying ahead of that of video.
