While the Entertainment & Media (E&M) industry and the overall Italian economy have been rebounding from the depths caused by the health emergency, it is clear that the pandemic’s legacy is here to stay, as it reshaped most of the fundamental E&M industry’s traits and trends, such as consumer behaviour and digital consumption; however, the current picture only fully comes together when considering the most recent geopolitical instability that has been influencing the E&M sector as well (especially when it comes to production and supply chain activities), bringing a new wave of uncertainty on the map.
Once again, volatility seems to be the key factor, but as the E&M industry grows faster than the economy as a whole and people are more and more enticed by new and increasingly immersive E&M experiences, the Italian government and private firms try to lead the way with extensive investments in both infrastructural and technological terms, to cater for public welfare and consumers’ needs.
In this diversified landscape, the traditional connections across Entertainment and Media segments are now more than ever jeopardised by fault lines and fractures opening up.
In our Entertainment & Media Outlook in Italy 2022-2026, we predict that total E&M revenues in Italy will rise at a compound annual growth rate (CAGR) of +9.6% to reach €40.8bn in 2026. The growth is roughly doubled compared to last year’s forecast, confirming the strong recovery trend after the decline in revenues registered in 2020 due to the pandemic outbreak.
Having been reshaped under many facets, the E&M industry is still settling, as some sectors will maintain their newly acquired prominent position, while others will hardly sustain the massive growth experienced amid the pandemic scenario. Moreover, the effects of the hostilities outburst in Eastern Europe are yet to be fully reflected on the industry. Regardless, we believe that the optimism underlying the growing figures is not misplaced, as the E&M industry will be able to leverage on its peculiar resiliency and flexibility to keep the strong momentum going.
The Italian book market bounced back strongly from COVID-19 losses, with 10.9% year-on-year growth in 2021, despite an overall decline in the forecast period with a -0.3% 2021-2026 CAGR.
The Audiobook category revenue is set to increase at a +10.8% CAGR between 2021 and 2026, making it the fastest-growing part of the Italian books market.
For more information on the Italian book market and further insights on its categories, please download the full report.
The B2B market in Italy bounced back sharply in 2021, with annual growth of 13.1% comfortably outpacing the economic rebound of 6.6%.
Over the forecast period, business information - as the largest category in terms of revenue contribution - will grow at a +2.6% CAGR. At this time, it will be the only sub-segment with above 1.0% annual growth (1.1%) apart from trade directories.
For more information on the Italian B2B market and further insights on its categories, please download the full report.
Cinema market in Italy registered a year-on-year decrease of -5.9% in 2021, despite an overall massive growth in the forecast period with a +32.7% 2021-2026 CAGR.
As in other Western European markets, the post-pandemic recovery has been driven by US studio blockbusters. A strong slate of studio blockbusters is scheduled for the rest of 2022. As a consequence, the amount of revenues both from box office and advertising is going to bounce back in 2022 with a year-on-year growth of +146.1%.
For more information on the Italian cinema market and further insights on its categories, please download the full report.
Total data consumed in Italy will surge at a +25.4% CAGR between 2021 and 2026, driven by ultra-broadband infrastructure deployment by the Italian Government and increasingly immersive and heavy-data consuming contents.
While video is by far the biggest content category, gaming confirms itself as the fastest-growing one, with a +33.2% CAGR throughout the forecast period.
For more information on the Italian data consumption trends and further insights on its categories, please download the full report.
Italy has high overall 5G coverage but individual operators are at varying stages of network deployment. Providers are focusing on improving 5G coverage, introducing new technologies and services, and exploring the opportunities for 5G in vertical sectors.
The availability of 5G-enabled devices is increasing rapidly, and handset costs and service tariffs are falling. This, combined with the anticipated acceleration in network deployment, will drive 5G connections and revenue that will rapidly increase their contribution to the overall mobile Internet access revenue over the forecast period.
For more information on the Italian 5G market and trends, please download the full report.
Despite a slight -2.8% year-on-year decrease in 2021, the Italian Internet access market is expected to slowly surge at a 2.4% CAGR over the forecast period, with the mobile component driving the growth.
As the winners of tenders issued by the Italian government to expand fixed and mobile broadband coverage will receive funding from the post-pandemic National Recovery and Resilience Plan (NRRP), many of Italy’s alternative operators are creating new partnerships - which range from network-sharing agreements to full mergers - to reduce operating expenses and increase investments.
For more information on the Italian Internet access market and further insights on its categories, please download the full report.
Revenues from Internet advertising in Italy have bounced back strongly from the effects of the COVID-19 pandemic, as year-on-year growth for 2021 was an impressive 46.4%. In the years to 2026, total revenue from digital advertising is set to grow at a +6.7% CAGR.
E-mail is the smallest but fastest-growing Internet advertising category overall, with a +14.0% CAGR expected over the forecast period; on the other hand, Video is the key driver of Italy’s Internet advertising growth, with the increasing popularity of video on demand (VOD) services.
For more information on the Internet advertising market in Italy and further insights on its categories, please download the full report.
Italy’s trade and consumer magazines market continued to decline in 2021 down -2.3% from 2020 and well below pre-pandemic levels.
The negative impact of hostilities in Eastern Europe on production costs and supply chains will hamper growth in 2022. As a result, total magazine revenue for 2022 will fall by a further -2.0%. The persistent decline in print circulation and corresponding advertising investment over the next five years will continue to pull down the market, resulting in total trade and consumer magazine revenue in 2026 at a -3.0% CAGR.
For more information on the Italian magazine publishing market and further insights on its categories, please download the full report.
The metaverse is a long-term project and new products such as augmented reality (AR) glasses, being suited to all day wear, will break down many of the barriers to mainstream adoption and accelerate uptake, as the utility of services also draws people into the metaverse.
With the value of intangible digital assets based on perception, the strength of Italian luxury brands and its design culture makes it one of the country's key strengths as opportunities in the metaverse are developed.
For more information on the metaverse and NFTs market in Italy and further insights on its trends, please download the full report.
After the huge decline in both ticket sales and sponsorship revenue due to live events being cancelled following the pandemic crisis, the Italian Music, radio and podcasts market experienced a strong 32.7% growth in 2021, a trend that will rapidly adjust to a +9.7% CAGR over the forecast period.
Despite vinyl sales booming in 2021 and being up 44.2% year-on-year, the physical recorded music sector is set for further shrinkage and is forecast to decline at a -5.3% CAGR. On the other hand, the number of monthly podcast listeners (defined as people who listened to at least one podcast in the last month) reached 18.6 millions in 2021, up from 15.6 millions in the previous year.
For more information on the Italian music, radio and podcasts market and further insights on its categories, please download the full report.
The Italian newspaper industry witnessed a degree of recovery in both its print and digital businesses during 2021 following the easing of COVID restrictions in the early part of the year. As a result, total newspaper revenues for 2021 were up +2.7% from the previous year. Total newspaper revenue for the industry in 2022 is expected to decline by -2.1% year-on-year.
The newspaper industry continues to offset the decline in print revenue by cutting costs and expanding its digital strategies. However, these initiatives still remain insufficient to compensate for the waning print sector so that total newspaper revenue by 2026 will decrease at a -2.4% CAGR.
For more information on the Italian newspaper publishing market and further insights on its categories, please download the full report
Italy's out-of-home (OOH) market growth will persist in 2022 as the post-pandemic rebound continues its momentum, with a year-on-year growth of 10.8%. Over the forecast period, total OOH revenue will rise at a +2.7% 2021-2026 CAGR.
Programmatic digital-out-of-home (DOOH) buying is quickly becoming the standard in Italy as booking platforms expand in the country. This means that by 2026 digital will account for 32.3% of total OOH revenues, as media owners digitalise their inventories as best they can amid ongoing supply chain challenges.
For more information on the Italian out-of-home advertising market and further insights on its categories, please download the full report.
Total OTT revenue in Italy registered a year-on-year growth of 56% in 2021, with continued COVID-19 lockdowns increasing the time Italians were spending at home seeking entertainment. OTT revenue growth will slow compared to pandemic levels but remain high at a +14.6% 2021-2026 CAGR.
TVOD revenues will play a smaller role in the market moving forwards due to the widespread success of SVOD. By 2026, SVOD will account for 95% of OTT market revenues. Netflix continues to lead an increasingly competitive streaming market in Italy, while DAZN will remain the second-largest platform due to its acquisition of key sporting content.
For more information on the Italian OTT market and further insights on its categories, please download the full report.
Italy’s traditional TV market revenues declined -6.5% in 2021 due to the difficult macroeconomic environment and the shift away from pay-TV and towards the OTT sector. The decline will continue over the forecast period at a -0.9% CAGR.
Increasingly intense competition for key content rights from the OTT sector has led to more “cord-cutting", with many opting for the flexible non-contract terms of streaming services. This trend will see pay-TV revenues decline at a -1.5% 2021-2026 CAGR.
For more information on the Italian traditional TV and home video market and further insights on its categories, please download the full report.
TV advertising revenue showed strong signs of recovery from the COVID-19 pandemic in 2021, with expansion of a year-on-year growth of 18.0%. The continued shift in viewing habits away from broadcast content and towards on-demand, catch-up and OTT services will contribute to the sector contracting at a -1.2% 2021-2026 CAGR over the forecast period.
Broadcast channels still dominate 93.3% of total TV advertising spend, although this will fall back to 89.8% by 2026 as online TV advertising continues to expand. Pay-TV advertising will decline at a -6.3% CAGR over the forecast period. Online TV advertising revenues will overtake pay-TV ad spend in 2022.
For more information on the Italian TV advertising market and further insights on its categories, please download the full report.
With the digital component of the segment leading the way, after experiencing a 12.2% growth in 2021 Italy’s total video games and esports market is expected to increase at a +6.6% CAGR over the forecast period.
Italy’s total esports confirmed itself as the smallest but also the fastest growing sub-sector of the market, with a 39% year-on-year growth in 2021 and a +20.7% CAGR expected to 2026.
For more information on the Italian video games and esports market and further insights on its categories, please download the full report.
Considering the 6.20% year-on-year growth in 2021 and the +21.3% CAGR expected to 2026, it is clear that VR continues to take small steps toward becoming a mass-market proposition in Italy, boosted by significant improvements in VR hardware, software and content over the past few years.
VR gaming is the main driver of consumer spending and the fastest-growing category, with VR games accounting for 57.5% of total revenue in 2021, a number set to increase to 73.4% by the end of the forecast period.
For more information on the Italian virtual reality market and further insights on its categories, please download the full report.
Maria Teresa Capobianco
Partner | Technology, Media and Telecom Leader, PwC Italy