Rapid tech advances are driving direct-to-consumer strategies, marked by greater choice and user control
London, 7 June 2017 – Burgeoning entertainment and media industry segments such as virtual reality (VR), e-sports and music streaming illustrate an intensifying focus on users and the vital role of “fans” as a source of competitive advantage.
According to PwC’s Global entertainment and media outlook 2017-2021, the consumer VR content market will grow at a compound annual growth rate (CAGR) of 77.0% over a five-year period and be worth US$15.1bn by 2021. Meanwhile, total global e-sports revenue will rise to US$874 million in 2021, increasing at a 21.7% CAGR, and music streaming will experience a 20.7% CAGR over the five-year forecast period.
“Accelerating change in technology, user behavior and business models has opened up a gap between how consumers want to experience and pay for E&M offerings, and how companies produce and distribute them,” said Deborah Bothun, PwC Global Entertainment and Media Leader. “The right user experience bridges this gap. To deliver it, companies must pursue two related strategies. First, build businesses and brands anchored by active, high-value communities of fans, united by shared passions, values, and interests. And second, capitalize on emerging technologies to delight users in new ways and provide superior user experiences.”
Rapid advances in technology drive direct-to-consumer strategies
As companies compete to create the most desired user experiences, advances in technology are at the heart of their strategies. Combined with a great user experience, companies can harness technology and data to create a virtuous circle—one in which increasing consumer engagement and attention lead to the capture of more data and more insights into what users want. Increasingly the models used to achieve this monetization are founded on direct-to-consumer (D2C) strategies, enabled by technology and characterized by greater choice and user control.
“Amid an ever greater supply of media, businesses that are fan-centric will find themselves with audiences that are more engaged, more loyal, and spend more per capita,” said Christopher Vollmer, PwC Global Advisory Leader for Entertainment and Media. “To thrive in the experience-driven marketplace characterized by this year’s Outlook, companies need to attract and harness the economic, social, and emotional power of fans.”
E&M growth will lag GDP as advertising comes under pressure
PwC projects the entertainment and media will grow at a CAGR of 4.2%, lagging behind the growth of global GDP. Global advertising revenue will also grow at a CAGR of 4.2%—down from 5.1% in last year’s Global entertainment and media outlook. This slowdown reflects pressures on ad-supported business models, driven by consumers’ preference for ad-free experiences and advertisers’ dissatisfaction with the current measurement capabilities available with digital media. While advertisers are still willing to spend, growth in ad spend is now overwhelmingly driven by Internet advertising.
Mobile advertising is growing apace—but still needs better measurement practices
The growth of Internet advertising is being powered by mobile advertising, which grew by 58.7% in the past year, and will continue to expand at an 18.5% CAGR through 2021. But despite this growth, wired Internet advertising still accounted for 61.6% of total Internet advertising in 2016. Also, the robust growth of Internet advertising actually masks an embedded form of inertia. Without accepted measurement practices to provide transparency on the efficacy and efficiency of the major platforms, premium brands are reluctant to take on perceived risks in concentrating more of their advertising in digital mediums, resulting in larger agencies and their clients holding back their ad dollars.
Major digital tipping-points are occurring or in prospect across all segments…
…and in geographies worldwide
“In many of the largest markets, and hence in the industry as a whole, entertainment and media businesses are approaching or have reached a form of saturation,” said Bothun. “This effectively puts us on an industry plateau—one where some traditional, mature segments are in slow growth or decline, the Internet and digital E&M content are growing but at a slowing rate, and the next wave of content and entertainment is in areas such as e-sports and virtual reality that are just beginning to ramp up.”
There are immense opportunities for navigating and thriving within the challenges of a mature market, technological change and regulatory uncertainty. Not all markets or segments are slowing or in decline. Moreover, not all growth opportunities are captured in E&M revenue spend categories. The data, analysis and perspectives in our Global entertainment and media outlook provide compelling insights into how companies are adapting, investing, experimenting, and innovating to succeed in this new world.
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About the Global entertainment and media outlook
PwC’s 18th annual edition of the Global entertainment and media outlook 2017-2021, is a comprehensive online source of global analysis for consumer and advertising spend. With like-for-like, five-year historical and five-year forecast data and commentary across 17 industry segments in 54 countries, the Outlook makes it easy to compare and contrast consumer and advertising spend across segments and countries. Find out more at www.pwc.com/outlook.
Books, Business-to-business, Cinema, Data consumption, E-sports, Internet access, Internet advertising, Internet video, Magazines, Music, Newspaper, Out-of-home advertising, Radio, Traditional TV and home video, TV advertising, Video game, Virtual reality.About Global entertainment and media outlook data
Much of the content in this press release is taken from data in the Global entertainment and media outlook 2017-2021. PwC continually seeks to update the online Global entertainment and media outlook data. Therefore, please note that the data in this press release may not be aligned with the data found online. The online Global entertainment and media outlook 2017-2021 is the most up-to-date source of consumer and advertising spend data.About PwC
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