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2022 Outlook segment findings

Macrotrends

Is uncertainty the new normal? After another tumultuous year—including continued COVID-19 spread, supply chain disruption, and chip shortages that hamper the flow of electronics and other consumer goods—it’s tempting to think so. Unfortunately, the advent of war in Eastern Europe has added yet more unpredictability into our forecasts, and Russia has been omitted from this year’s Global Entertainment and Media Outlook.

However, there are positives in this year’s Outlook. After a year-on-year fall of -2.3% in 2020, total global entertainment and media (E&M) revenue rebounded strongly to record a 10.4% rise in 2021, from US$2.12tn to US$2.34tn. Sustained recovery is set to come in 2022, with a 7.3% global year-on-year increase anticipated, bringing revenue growth back to a linear trend. A CAGR of 4.6% to 2026 will take global E&M revenue to US$2.93tn.

Internet advertising stands as the primary, even sole, driver of advertising’s recovery. For a sense of its scale, the 2021 figure for the US internet advertising market alone—US$189.3bn—is nearly US$40bn more than total global broadcast TV advertising revenue in that year. By 2026, we expect US Internet advertising revenue to be just US$8bn short of total global non-digital advertising revenue. These remarkable statistics have caused a shake-up in the balance between advertising, consumer and access revenue.

Other positive highlights in the internet advertising segment include mobile apps, a core component of the growth in mobile media consumption and associated ad revenue. TV advertising revenue growth will continue as more broadcasters pay greater attention to their OTT video app offerings and launch new AVOD services, and as more subscription-based video services turn to hybrid business models in search of profitability. By comparison, non-digital advertising will see only a 1.5% CAGR to 2026 and entering into decline from 2025 onward after a moderate recovery from COVID impacts. 

Amid the good news, there are a few cautionary notes. Internet advertising revenue is not evenly spread, with just one-quarter of net revenue outside of Mainland China untouched by Google or Meta before making its way to publishers, with heavyweights like Amazon taking a sizeable share of the remaining spend. The dominance of big tech companies is drawing increasing regulatory scrutiny across the globe, and future regulation could still impact the forecasts. But for now, the rise of Internet advertising is a phenomenon that will bring total advertising revenue above US$1tn in 2026—and total E&M revenue to new heights.

Reflecting the overall consumer shift to digital consumption, AR, VR and esports continue to grow while physical games, music downloads and ringtones decline. Mobile AR consumer revenue will see the fastest increase, at 39.1%, over the next five years as the technology is increasingly added to apps, both games and non-games. The second-fastest growing revenue line, eports consumer ticket sales, has been heavily hit by COVID-19’s impact on live events. VR gaming, the third-fastest growing segment, faces a chicken-and-egg problem, where game developers have been wary about investing heavily in VR until headsets are widely adopted by consumers, who are in turn reluctant to buy headsets until better content is available.

M&A activity is picking up in the games sector, including Microsoft’s announcement of its record US$750bn acquisition of Activision Blizzard in January 2022. Sony acquired five video games studios in 2021, including Bluepoint and Valkyrie Entertainment. The company continued its M&A activity in 2022 with the US$3.6bn acquisition of Bungie, the developer behind Halo and Destiny, and Haven Studios, which helped develop Assassin’s Creed. Outside the US, TikTok/Douyin owner ByteDance announced it would acquire Chinese gaming studio Moonton, the developer behind Mobile Legends: Bang Bang.

Mainland China accounted for 17.1% of global E&M revenue in 2021. While the US will remain, by far, the largest entertainment and media market through the forecast period, Mainland China is set to overtake the US in several key segments. In 2021, Maintain China took the number one spot from the US as the world’s biggest consumer of data, consuming 804.4k petabytes. Nearly a third of this consumption occurs across cellular networks, in stark contrast to the US, where just 4.3% of data consumption is via 4G and 5G networks. The US will also lose its lead in the mobile AR sub-segment as mobile AR gaming takes off in Mainland China due to heavy investment by local giants such as Huawei and Tencent. Lastly, Mainland China overtook the US to become the largest cinema market in 2020, and is set to surpass pre-pandemic levels in 2023 despite a post-COVID rebound in the US.

Consumer books

A pandemic-driven spike in digital uptake was not sustained as bookstores reopened, but the segment remains resilient, with global revenue set to grow at a 1.2% CAGR over the forecast period to US$74bn in 2026

  • Digital growth outpaces print at a 4.1% CAGR, compared to 0.3% for print. However, print still dominates the market, accounting for 77.4% of total revenue in 2021, with electronic books contributing 22.6%.

  • The US remains the world’s largest consumer book market, going against the global trend, with print revenue growing faster than digital. EMEA—the largest regional market—will be the only market to shrink over the forecast period. China, India and Kenya are the world’s fastest-growing markets in the segment, with Hong Kong, Norway and Thailand the fastest-declining.

  • Primary drivers of consumer book sales include big-name authors, politics, current events, television and film. Social media, including TikTok and Instagram, also has an influence.

Business-to-business media

Total global B2B information revenues all but recovered to pre-pandemic levels in 2021, as demand for mission-critical information remained buoyant amid the uncertainty of the pandemic.

  • The sector will reach a high watermark of US$120.6bn in 2022 and is forecast to grow at a moderate 3.5% CAGR over the forecast period.
  • Trade shows were the most pandemic-sensitive sector in 2020 and the first half of 2021 but experienced a pronounced rebound in the second half of 2021. This rebound is expected to carry over into 2022 before decelerating and returning to pre-pandemic levels of growth in 2026.

  • North America is the largest B2B market, with 52.5% of global revenue, and will show the fastest growth through the forecast period. This growth will be buoyed by the rapid rebound in the trade shows sub-segment and the region’s large, sophisticated business information sector.

Cinema

The pandemic-driven losses of 2020 will be reversed, with the cinema segment hitting new heights in 2023. Box office revenue is set to reach US$49.4bn in 2026, after increasing at a CAGR of 18.9% from 2021.

  • Although a very insular market, China will remain the world’s biggest cinema market through the forecast period, with total revenue forecast to reach US$13.9bn in 2026.

  • In contrast to China’s strong domestic results, Hollywood blockbusters now look for two-thirds of their revenues from international markets, which contracted quickly during the pandemic, with US studio movies unavailable.

  • A handful of blockbuster studio movies are driving global cinema revenues, and this will continue through the next five years. In the early part of the forecast period, several films have the potential to break the US$1bn bar at the global box office, a milestone achieved by Sony’s Spider-Man: No Way Home in 2021 and early 2022.

Data consumption

The pandemic permanently changed global data consumption rates and established Internet access as an essential utility rather than a luxury. With wi-fi the dominant network technology and video the largest content category, global data consumption is set to rise at a CAGR of 26% to reach 8.1mn PB by 2026.

  • In 2021, wi-fi carried 50.8% of all data consumed, followed by fixed networks (27.6%) and cellular (21.5%). Through the forecast period, wi-fi will remain dominant, with cellular data increasing its share to 25.9%.

  • Mobile handsets are the most popular device category globally, accounting for 41.7% of data consumption in 2021 and rising to 46.6% by 2026. Factors driving projected growth include the mobile-first nature of developing markets and improving 5G technology.

  • Video continues its dominance among content categories, accounting for 77.9% of data consumed in 2021 and forecast to increase at a 27.1% CAGR to 81.5% by 2026. Gaming will be the fastest-growing category over the forecast period, but remains a relatively small part of the market, accounting for just 5.7% of data consumed by 2026.

  • China overtook the US as the world’s biggest data consumer in 2021 and will continue to be the largest market through the forecast period. Chinese data consumption will also grow at a much faster rate than the US to 2026, at a CAGR of 32.1%, versus 20.7% in the US.

Internet access

The COVID-19 pandemic accelerated the shift to digital in markets around the world, as consumers increasingly see high-speed Internet access as an essential utility rather than a luxury..

Mobile will increase its share of global Internet access revenue

Global internet access market split by share of revenue, 2021 and 2026 (%)

 

Source: Global Entertainment and Media Outlook 2022–2026, PwC, Omdia

  • The global Internet access market is set to grow at a 4% CAGR between 2021 and 2026, with total revenue increasing from US$754.9bn to US$919.4bn. 
  • The mobile sector continues to be a primary driver of growth in this segment, with market share increasing from 65.1% to 67.7% through the forecast period. Revenue will reach US$622.6bn in 2026, at a 4.8% CAGR.

  • As technology improves, and rollout of 5G continues, mobile will satisfy more of the world’s data and speed requirements. Through 2026, mobile Internet penetration will increase from 60.7% to 69.1%. Fixed broadband will grow at a slower pace, increasing from 72.7% in 2021 to 80.9% in 2026.

  • Globally, Asia Pacific is the largest regional market, followed by North America, EMEA and Latin America. This is not set to change over the forecast period, during which the fastest-growing regional market will be EMEA, followed by Latin America, North America and Asia Pacific.

Internet advertising

Internet advertising is now the world’s dominant advertising format, and its dynamic growth is wielding increasing impact on the overall media advertising space as advertisers and consumers shift both spending and attention toward online channels.

  • TV advertising has rebounded strongly from COVID-19-related fallout, with the connected TV advertising segment seeing the fastest growth, expanding at a 17.3% CAGR over the forecast period. 

  • Mobile remains the biggest revenue driver in terms of format, set to be worth US$532.3bn by 2026.

  • Tech giants that dominate the global internet advertising market are largely US-based, and accordingly, the US will remain the single-largest individual market over the forecast period.

  • Asia Pacific will make gains on North America as the largest regional market, reducing the difference between the two regions from US$38.6bn in 2021 to US$18.6bn in 2026, thanks to the dominance of the Chinese market and dynamic growth in emerging markets like India and Indonesia.

Music, radio and podcasts

Hit hard by the COVID-19 pandemic, the global live music sector experienced a mild recovery in 2021 as lockdowns eased, but is set to exceed pre-pandemic levels in 2024, with the segment reaching US$31.2bn by 2026.

  • The news is also good for digital music streaming as subscriptions attract consumers around the world, driving growth in the recorded music sector, where revenues are forecast to reach US$45.8bn in 2026. Despite healthy vinyl sales in many regions, physical recorded music revenue will continue to decline as digital recorded music accounts for a growing piece of the market, rising to 81.2% to the end of the forecast period.

  • Globally, North America remains the world’s largest music market, with 42.9% of revenues in 2026. Latin America is expected to be the fastest-growing major region, albeit from a much smaller music revenue base.

  • The global podcast audience will continue to grow, increasing from 895mn in 2019 to more than 1.5bn in 2026. Revenues will rise accordingly and pass the US$3bn mark in 2025 before reaching US$3.3bn at the end of the forecast period.

  • While total radio revenue is increasing, growth is at a far slower rate than that of podcast advertising revenue. Radio revenue will total US$45bn in 2026, increasing at a 1.5% CAGR over the forecast period.

Newspapers and consumer magazines

While the segment rebounded slightly from COVID-19 impacts in 2021, a lack of meaningful recovery reflects the ongoing shift of readers and advertisers to digital platforms—a market dominated by Alphabet’s Google, Meta-owned Facebook, and Amazon.

  • Globally, newspaper and magazine publishers face losing another US$15.5bn in combined revenue through the forecast period. Both industries will decline at a -2.1% CAGR.

  • While digital revenues are growing, they will not make up for the decline in print income. Total global sale of print newspapers will fall from 451mn per day in 2021 to 411mn in 2026 as readers and advertisers seek other media outlets for spending their time and money.

  • India remains an outlier in terms of newspaper readership, and will overtake China to become the world’s biggest market for print newspaper readership in 2025 and the only market to show growth in print unit sales and print newspaper circulation revenue.

  • In the consumer magazines market, digital advertising revenue will overtake its print counterpart in 2026. In the newspapers sector, this same tipping point will not occur over the forecast period, with print accounting for nearly two-thirds of advertising revenue in 2026.

Out-of-home

The outlook for the global out-of-home (OOH) advertising market is positive, as COVID-19 vaccine programs gain critical mass and the disease shows signs of becoming more manageable. A pattern of increased OOH spend in spring and summer months, when infection rates are lower, has helped to partially insulate the OOH market from more severe revenue damage.

  • The OOH segment will reach a new high of US$38.5bn in 2022, following the steep contraction of 2020 as COVID-19 restrictions reduced time spent outdoors in city centres and on transport.

  • Physical OOH revenue growth, already experiencing a deceleration prior to the pandemic, will begin to contract in 2025 following a post-crisis uplift.

  • Brands continue to gravitate toward digital, programmatically powered campaigns offering better targeting capabilities and more efficient ad spend. While digital OOH revenues will decelerate after a post-pandemic rebound, they will continue to rise through the forecast period.

  • Regionally, the OOH segment will reflect the wider trend of seeing China overtake the US. This will occur in 2024, and by 2026, China will lay claim to 25.4% of global OOH spend.

OTT video

COVID-19 variants, periodic lockdowns, consumer unease, and a slower-than-expected “return to normal” contributed to strong revenue growth of 22.8% for the OTT video market, compared to the 2020 peak of 35.4%.

  • In large parts of the world, implications of the pandemic have propelled the industry years ahead of where it would otherwise have been.
  • While TVOD performed well across 2020 and 2021, SVOD will continue to account for the majority of revenue growth in the segment. TVOD will experience a year of negative growth in 2022, mainly driven by a reversal of cinema window changes in the US.

  • The US is the largest TVOD market globally and will remain so through the forecast period, despite Asia Pacific’s faster growth. China is the largest single market in that region and is set to be the largest contributor to growth over the next five years.

  • For total OTT video revenue, Latin America will double in size over the forecast period, from US$2.5bn in 2021 to US$4.6bn in 2026, despite being the smallest global region. Asia Pacific is the second-fastest-growing market to 2026, followed by EMEA and North America.

Traditional TV and home video

Global subscription-TV households will continue to contract over the forecast period, facing competition from cheaper, unbundled SVOD alternatives and platforms that combine low-cost TV with data provision.

  • The number of global subscription-TV households will fall from 869mn in 2021 to 861mn in 2026, with the bulk of losses experienced in markets where traditional pay-TV is significantly more expensive than SVOD or IPTV.
  • After five years of significant losses and pandemic-related impacts to brick-and-mortar stores, physical home video is still declining strongly, with many retailers likely to stop stocking physical media and further reducing accessibility of this segment in the casual spend market.

  • Total traditional-TV revenue is set to reach US$222.1bn at the end of the forecast period, with TV subscription revenue taking the largest share at 83.2%, with physical home video representing just a 2% share.

  • While licencing is set to remain the main source of funding for public broadcasting in some markets, the practice is increasingly seen as outdated, leading governments to explore other means of funding. In 2026, public licence fee revenue will account for 14.8% of total traditional TV revenue.

TV advertising

The segment will continue to grow in 2022, with both terrestrial and multichannel advertising recouping lost revenue from the pandemic and finishing the year with revenues of US$164.3bn, ahead of 2019 levels.

  • Online advertising grew strongly throughout the pandemic, increasing from US$7.9bn in 2019 to an anticipated US$13bn by the end of 2022. Online’s share of total advertising revenue increased from 4.9% in 2019 to 7.9% in 2022 and will continue to outpace the rest of the market to 10% in 2026.

  • Online’s growth will come at the expense of terrestrial’s, which will decrease from 66.6% in 2021 to 63.1% in 2026.

  • At a regional level, the status quo of advertising revenue share will be maintained over the forecast period, as rapidly growing markets are seeing increases from a low base and will not have a significant effect on the overall balance of revenues generated around the world.

Video games and esports

Social and casual gaming will grow as traditional gaming contracts, and the world’s leading market, Asia Pacific, will continue to expand—though not as fast as Latin America.

  • The segment is forecast to grow at a 8.5% CAGR to US$323.5bn in 2026, with the majority of that growth coming from social/casual gaming. Over the same period, revenue from traditional gaming will fall as the focus shifts from console and PC gaming toward mobile.
  • Asia Pacific is the largest region in terms of total video games and esports revenue, contributing double the US$56.2bn contributed by the second-largest region, North America. While Latin America has the smallest market in terms of revenue, at US$3.5bn, it will be the fastest-growing over the forecast period, with a CAGR of 11.6% to reach US$6bn in 2026.

  • The largest esports sub-segment, sponsorship revenue, will grow from US$650mn to US$1.1 billion through 2026, driven by an increasing number of companies looking to advertise via esports teams and leagues and the broader exposure the sport is receiving from broadcasters and online.

  • Consumer contribution is the fastest-growing esports sub-segment, forecast to grow at a CAGR of 43.5% over the next five years. Ticket revenue, the second fastest-rising sub-segment, was heavily impacted by COVID-19 restrictions on live events. Revenue will grow from US$46mn to US$176mn over the forecast period.

Vitual reality (VR) and augmented reality (AR)

Continuing its march toward mass-market appeal thanks to improvements in VR hardware, software and content, VR global spending is expected to increase at a 24.1% CAGR over the forecast period to US$7.6bn. The AR market, buoyed by the pandemic, reached US$18.9bn in 2021.

  • Growth in VR is driven by the shift to capable standalone and tethered headsets rather than cheap slot-in smartphone VR headsets, as well as by the hype being generated by, and investment in, the metaverse. A turning point in the market was the strong showing of the Meta Quest 2 headset, which is broadening the appeal of VR.

  • Following the success of the Meta Quest 2, tech giants and hardware manufacturers are likely to enter or re-enter the market, leading to a wider choice of headsets and platforms for consumers.

  • VR gaming is the primary contributor to total segment revenue, bringing in US$1.9bn in 2021 and increasing to US$6.5bn in 2026. Revenue from VR video content will also rise from US$690mn to US$1.1bn over the forecast period.

  • The US is the largest mobile AR market globally, with revenue of US$7.9bn in 2021. However, mainland China’s faster growth through the forecast period will see the country overtake the US and become the world’s largest mobile AR market in 2025.

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Werner Ballhaus

Global Entertainment & Media Leader, PwC Germany

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