An overview of the key highlights of 15 relevant market segments, in English as well as Italian.
Now it's getting personal
The evolution of human behavior is the fundamental change that leads to the remodeling of the entire sector, increasingly oriented towards personalisation. Advances in technology and service offerings are finally enabling people to move from passive consumption to active. Numerous signs of this change are highlighted in the Outlook.
While E&M companies reinvent their organisations and their offers for an increasingly personalised world, four priorities take on an increasingly important position:
Reading the report we are confident that you will find relevant cues for better understanding and shaping the strategic evolution of your business.
An overview of the key highlights of 15 relevant market segments, in English as well as Italian.
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Understanding the opportunities in the sector provides key information for business decisions.
The Italian books market, comprising total consumer, educational and professional books revenues will return to growth in 2019, after a small contraction in 2018. The market will see modest growth of 0.2% CAGR to 2023, when revenues will remain at €2.2bn, with consumer titles driving this increase.
Despite the popularity of Italian authors, Italian publishers are often small, limiting the growth of the domestic market.
More work is needed to foster a strong reading culture in Italy, but the approval of the EU’s Copyright Directive and not-for-profit initiatives will support this.
The presence of streaming giant Netflix at the Bologna Children’s Books Fair in early 2019 signals a growing environment of cross-industry collaboration, with many believing that the streaming service is influencing what consumers want to read.
The rise in popularity of university textbook rentals, heavy discounting and textbook
Print books remain a consumer favourite, despite growth in digital, as print offers a unique reading experience which e-books cannot provide.
Italy is the third-biggest economy in the eurozone after Germany and France, but has the weakest growth rate of any country in Europe. Real GDP rose by 1.2% in 2018, according to figures from the IMF. These macroeconomic and fiscal headwinds prevent growth in Italy’s B2B market, which contracted slightly in 2018. But B2B revenue expansion will gather some pace over the next five years.
Italy’s B2B market saw a slight fall year-on-year in 2018, resulting in total revenues of €2.8bn. The market will return to growth in 2019 and revenue will continue to climb at a 1.0% CAGR to 2023.
Business information is forecast to be the fastest-growing segment, rising at a 2.2% CAGR. This will be driven by demand for industry information in Italy’s export economy.
Trade shows revenue will expand at a 2.0% CAGR, just behind business information. This rate of expansion means that trade shows and business information will be responsible for the majority of B2B revenue growth in Italy in the coming years.
Directory advertising revenue will return to growth in 2022, as digital directory products gain critical mass. By 2023 the segment will show annual growth of 2.1%.
Aside from business information and trade shows, the trade magazine advertising subsector will be the only remaining segment in growth to 2023. Overall trade magazines revenue will contract due to losses in print circulation.
Italian box office suffered a second successive fall in 2018, dropping by -5.0% year on year to €589mn, the lowest figure of the decade. Coming on the back of a -10.9% year-on-year box office decline in 2017, this has been a source of some concern for the Italian cinema industry.
In 2018 there was a further pronounced decline in box office revenue, which fell -5.0% year-on-year to €589mn. However, a strong pick-up is anticipated over the following five years, meaning box office revenue is predicted to hit €725mn in 2023.
Meanwhile, cinema advertising bucked the downward trend in box office in 2018, with a 6.4% year-on-year rise.
A united effort by the Italian film industry means that a strong slate of films will come out over the summer period, which has historically been avoided by major distributors, with an eye to long-term growth.
Notorious Pictures’ push into multiplexes will lead to a boost in premium cinema screens in the next five years, in turn helping average ticket prices to increase.
An “anti-Netflix” law announced in November 2018 will ensure all Italian-made films are shown in cinemas before being streamed, while guaranteeing a 105-day window between box office and streaming release.
In line with global trends, smartphones remain the most important single device driving data consumption in Italy, thanks to their ubiquity and convenience. In 2017, smartphones surpassed fixed broadband in share for the first time. This will remain the case to the end of the forecast period: in 2023, 24.5% of all data consumed will be via smartphones.
Total data consumed in Italy will reach nearly 59.0trn MB in 2023, having increased at a 25.9% CAGR over the forecast period.
The smartphone will continue to be the most significant single device driving data consumption, aided by the rollout of 5G, although its share will begin to plateau.
Video will continue to dominate data consumption by content, driven by increasing diversification in the VOD sector.
EU anti-piracy measures will have limited effect on the Italian market.
Internet infrastructure in Italy limits growth, but government interventions regarding ultra-fast connections and 5G should improve the outlook.
Emerging technology like the Internet of Things (IoT) will bring new demands on data and require new technical solutions.
Italy is Europe’s fourth-largest market in terms of total Internet access revenue and the forecast CAGR of 5.6% is above the average for Western Europe. Growth will be driven by the competitive mobile Internet sector, with high-speed mobile Internet penetration rising rapidly as smartphone penetration increases. Italy will have the highest mobile Internet penetration in Western Europe by end-2023.
Buoyed by expenditure on mobile Internet, total Internet access revenue will rise from €11.9bn in 2018 to €15.7bn in 2023, a CAGR of 5.6%.
Italy’s 5G auction raised €6.55bn, well above the government’s reserve price of €2.5bn, with the four incumbent mobile network operators (MNOs) and Fastweb securing licences. TIM and Vodafone are now in discussion over mobile infrastructure sharing as they seek to reduce costs and accelerate their 5G rollouts.
The fixed broadband sector is witnessing a rapid growth in fibre-to-the-home/building (FTTH/B) and fibre-to-the-cabinet/VDSL (FTTC/ VDSL) deployment and take-up as the number of connected devices per household increases, though high-speed fixed broadband penetration remains low.
Italy’s media landscape is traditionally dominated by TV, and broadcasters remain the most important platform for advertising. But the gap is closing at ever-faster rates, and on current trends Internet advertising is set to surpass TV advertising in 2019.
In 2018, Internet advertising in Italy generated revenue of €3.0bn, an increase of 11.7% from 2017.
By 2023, digital advertising revenue is projected to reach €4.5bn. This represents a CAGR of 8.5%.
All sectors of the market will see growth, with the exception of wired paid search (which will see a slight fall) and wired other display internet advertising (which will decline by a -6.9% CAGR over the forecast period).
The most significant expansion over the next five years will be seen on mobile, as the transition to 5G bolsters the continuing consumer preference for mobile devices, with a CAGR of 15.0% over the forecast period.
The Italian government is showing increasing willingness to intervene in online content, both to restrict fake news and to control specific industries, with a ban on gambling advertising.
The Italian magazine market continues to suffer from declining print revenues, although publishers are beginning to see some of that downward flow stemmed by a corresponding increase in the returns from their digital properties.
The total magazine market in Italy is expected to be worth €1.3bn in 2023, down from €2.1bn in 2014 and €1.7bn in 2018.
The consumer magazine market declined from €1.8bn in 2014 to €1.5bn in 2018 and will continue to decrease to €1.1bn in 2023, at a -5.3% CAGR, with increased revenue from publishers’ digital offerings still failing to compensate for the fall in the traditional print sector.
Consumer magazine publishers have sought in previous years to increase their online presence through the acquisition of existing successful Web properties. The focus in Italy is now on the upgrade of publishers’ current digital portfolios to ensure production quality, services and audience interaction are at the high level expected from leading online brands.
Publishers are becoming increasingly savvy as to how best use their online presence. Some are training up their own social media influencers as a means of promoting their brands. Others are launching new magazines in digital formats, building up an online profile before going on to publish in print.
Trade magazine publishers will fare better than their commercial counterparts, with increased revenues from both digital circulation and advertising helping to withstand some of their print losses. However, the trade magazine market will still see a fall in total revenue from €264mn in 2018 to €231mn in 2023.
Total music revenue in Italy reached the €1.0bn mark for the first time in 2018, an increase of 5.3% on the previous year and up from €801mn in 2014. But, as in many other markets, overall growth in recorded music revenue does not tell the entire story of the sector.
The Italian music, radio and podcast market grew by 5.4% in 2018 to reach just over €1.5bn. Over the next five years, revenues will grow annually at a 5.4% CAGR, hitting the €2.0bn mark in 2023. Streaming is a key driver of growth, and local players have launched rival services to compete with global players.
In an attempt to tackle secondary ticketing activities, Italy is introducing named tickets to events and concerts in mid-2019. However, this new ticket law has been badly received by the live music sector.
As major smart speaker models launch in the Italian market, it remains to be seen what this new technology will have on radio listener habits in Italy.
Italians spend over 3 hours listening to the radio per day and these lengthy radio listening times will remain key to attracting high-profile advertisers to stations.
Both podcast listenership and advertising revenues will rise rapidly over the forecast period. However, there is still a significant lack of awareness about podcasts, including what they are and how to access them.
Italy is set to remain the fifth-largest newspaper market in Western Europe over the next five years. Despite a historically strong tradition of leading print titles, Italian publishers have been in significant decline in recent years.
The rate of annual decline in total newspaper revenue is expected to lessen in the next five years, shrinking at -2.7% in 2023, as publishers raise print prices – but this may be an unsustainable measure.
Total newspaper advertising revenue is expected to decline at a -5.2% CAGR to €459mn in 2023. Advertisers will continue following readers away from news products if publishers cannot build engaging experiences.
Low broadband penetration and the predominance of TV has contributed to Italy having the worst-performing digital newspaper business by circulation and advertising revenue growth of any country measured. Proprietors may be able to capitalise on new-found distrust of social media.
The local newspaper sector in Italy is declining at a slower rate than nationals. However, while there is more value in this unique information, publishers will struggle to monetise local titles.
In 2019, Italy’s OOH advertising market will continue to grow, but not at the rate witnessed in 2018, which followed two years of contraction. Intermittent national events such as general elections, sporting tournaments and expos typically give the OOH market a boost.
Italy’s OOH advertising market will show steady growth over the next five years. OOH revenue will rise at a 1.8% CAGR to total €202mn in 2023.
Italy has the smallest OOH market of Western Europe’s five largest economies, due in part to regulations protecting the country’s cultural heritage.
In 2023, digital revenues will account for 50% of the total market, as physical revenues continue to contract at a -3.2% CAGR and digital revenues rise at a 9.1% CAGR.
Demand for OOH is set to grow in Italy despite some regulatory hurdles, including a ban on gambling-related advertising across all media.
Despite Italy’s historically slow uptake of OTT services – fuelled by the relatively late arrivals of global leaders – Italy will retain its position as the fourth-largest market in Western Europe over the forecast period.
Driven primarily by SVOD, the Italian OTT video market will rise at a 14.5% CAGR to 2023, when revenues will reach €821mn.
Growth in the number of OTT subscribers in Italy has been exponential, from 307,000 in 2014 to 5.0mn in 2018. The number will rise at a 14.9% CAGR to 2023, when they will exceed 10mn.
The buying and renting of films and TV shows via digital services (TVOD) will overtake the physical equivalent in Italy in 2022.
Localisation will become increasingly important, as international markets provide the next leg of growth for US-based platforms.
New services are set to enter the Italian market in the coming months.
Italy is the fourth-largest TV market in Europe, behind Germany, the UK and France, and it will hold this position for the duration of the forecast period.
The Italian traditional TV market contracted by -0.5% in 2018 and will continue to fall at a -0.4% CAGR to 2023 when total revenues will reach €5.1bn.
Subscription households are expected to contract at a -0.9% CAGR to 2023, with satellite TV remaining the dominant platform.
Traditional operators are focusing on upselling premium products to core customers, as well as expanding on-demand and OTT services to compete with streaming rivals.
As competition for viewers’ time increases, TV advertising will continue to come under increasing pressure. Changing TV viewer habits embodied in the rise of the global ad-free, subscription streaming players poses the biggest threat to linear TV viewing and the traditional advertising model.
The Italian TV advertising market will grow at a 0.9% CAGR from 2018 to 2023, when revenues will grow to €3.3bn. Italy will grow faster than the 1.1% CAGR seen by Western Europe over the forecast period.
Online TV advertising revenue will continue its rapid growth to rise at a 12.5% CAGR to 2023.
Collaboration among traditional rivals continues to be key as competition for ad spend and viewers intensifies.
Live sport content and top-quality entertainment and drama remains key to attracting mass audiences and advertisers.
Advertising technology advances are making widespread targeted addressable TV ad targeting a reality.
All segments of video games in Italy will continue to see solid growth over the next five years, with mobile gaming continuing to be the key driving force. The traditional market remains dominated by console gaming. Esports will continue to grow and revenues are expected around €40 mn in 2023.
The Italian video games market continues to show impressive growth, largely driven by the success of the social/casual segment. Total video games and esports revenue is set to grow from €1.8bn to €3.5bn by 2023. However, growth will begin to slow towards the end of the forecast period as the mobile games market begins to mature.
Video games is experiencing a positive cultural shift in Italy, where games have carried negative connotations in the past. There is a strong movement for recognising games as a creative industry and games are increasingly seen as positive and family-friendly.
In line with the global trend, total sales of physical games in Italy (console and PC games) continue to decline, although this is happening gradually at a CAGR of -4.8% – nowhere near as fast as the contraction seen in other forms of physical media.
The free-to-play model has proved extremely lucrative for leading mobile game publishers. However, smaller developers are struggling to compete and stand out in app stores.
Despite the looming threat of cloud gaming, console revenue is set to grow over the forecast period, helped by the anticipated release of next-generation consoles in 2020.
Mobile games accounted for over half of all video games revenue for the first time in 2018, but will eventually see growth decline from the current very high rates as the market matures.
Esports will see a 51.6% CAGR to 2023, boosted by involvement of a major esports company in ESL and a major sponsor in Vodafone.
In line with a global trend, the Italian VR market has failed to match early growth expectations, with sales of both headsets and VR content failing short of initial projections.
Italy’s VR revenue rose by 44.4% in 2018 to €46mn in the technology’s second full year of availability.
VR remains a niche category, but the industry is slowly overcoming important challenges such as content availability, comfort, compatibility and affordability. Many companies recognise VR’s potential and, despite the slow progress, players involved in this space remain committed.
Gaming will remain the low-hanging fruit for the technology in terms of content revenue, video is not far behind. Portable mobile VR headsets currently dominate, but its market share will be gradually squeezed by both portable dedicated VR headsets and home VR headsets.
Due to the low installed base, content makers are increasingly looking to enterprise and venue-based VR for revenue growth. Italian tourism companies and theme parks in particular are increasingly utilising VR for providing differentiated experiences.
Partner, PwC Italy
Tel: +39 02 66720021
Maria Teresa Capobianco
Partner, PwC Italy
Tel: +39 02 66720021