
Five commercial imperatives to help telcos regain an edge
Telcos can regain an edge by focusing on 5Cs: convergence, customer experience, commercial innovation, cost excellence, and complexity reduction.
For 26 years, we have been charting the growth and expansion of the highly dynamic entertainment and media (E&M) industry. In 2024, according to PwC’s Global Entertainment & Media Outlook 2025–2029, revenues rose by 5.5% to US$2.9 trillion, from US$2.8 trillion in 2023. Looking forward, we project that total E&M revenue will increase over the next five years at a compound annual growth rate (CAGR) of 3.7%, to reach US$3.5 trillion in 2029. The rate of growth will slow, to be sure. But this highly resilient sector will continue to expand steadily amid seismic technology changes as user engagement becomes more intense—and the sector’s growth rate will exceed that of the global economy. There will be US$577 billion in incremental new revenues by 2029.
The major trends transforming the world’s economy are placing an immense amount of value in motion in every industry and domain of human activity. The entertainment and media industry has long been at the forefront of these trends and at the nexus of converging industries. A few key themes emerge from the forecast and stand out in our analysis this year.
The annual rate of revenue expansion is set to decline in every year of our forecast period primarily because of ongoing constraints on consumer spending, which include economic uncertainty and slowing growth. Global advertising revenue overtook revenue generated from consumer spend in 2024. (Digital advertising in particular continues to rise at an impressive pace.) We expect that the gap between the two categories, will continue to widen, with advertising spending growing more than three times as fast—at a 6.1% CAGR over the forecast period against a mere 2.0% CAGR for consumer spending.
Although some consumer spending challenges may be driven by macroeconomic factors and inflationary concerns, another factor could be that more of consumers’ spending is being channelled into the necessity of having access to digital products and services. Connectivity—defined as fixed and mobile internet service revenue—remains the largest of the three major industry sectors. Driven mainly by mobile service revenue, spending on connectivity will top US$1.3 trillion in 2029.
A look at the top five fastest-growing and the five fastest-declining E&M metrics over the next five years reveals how value is in motion in this industry. As the chart below shows, internet advertising—whether generated from pure-play sources or from digital advertising revenues associated with other segments, such as ad-supported video-on-demand (AVOD) from companies like Netflix, Disney+ and Amazon Prime—dominates at the top end. Several of the fastest-declining metrics, including physical PC games and print advertising in magazines, have roots in physical media.
As advertising takes ever more market share overall, the value it generates will be dispersed to new places, driven by technological innovations and shifting consumer behaviour. Advertising itself is becoming increasingly digital and its targeting more precise, which may command higher rates. However, regulations may hamper such efforts. Digital formats, which accounted for 72% of overall ad revenue in 2024, will rise to account for 80.4% in 2029.
As growth slows for paid or subscription products in mature markets, companies are looking to advertising as a vital supplement. Take over-the-top (OTT) video. The segment’s overall revenues are projected to grow rapidly, from US$169 billion in 2024 to US$230 billion in 2029. But AVOD, which accounted for 20% of the segment’s revenues in 2020, will account for 27.1% of total revenues in 2029. In June 2025, Amazon Prime Video in India turned its entry-level offering into an AVOD service, in which subscribers receive ‘limited advertisements’ unless they switch to an ad-free version for a higher price. Netflix’s global ad revenues are still relatively low, but its ad-supported variant has been a major driver of subscription growth. Netflix expects its ad revenue to ‘roughly double’ in 2025.
The same dynamic is evident in one of the powerhouse segments: video games. Boosted by banner and video ads associated with free-to-play mobile games, the proportion of total video game revenue generated from advertising surged from just over one-quarter in 2020 to nearly one-third (32.3%) in 2024, and is heading to 38.5% in 2029. Consumers are willing to accept their entertainment choices being interrupted by advertising if this results in a lower price—provided the ads are not so intrusive as to outweigh the benefit.
As it becomes more difficult to raise prices for consumers, retailers are seeking other revenue sources to offset tighter margins. And one of those revenue streams, particularly for online retailers, is advertising. Marketers are showing a greater willingness—even a sense of urgency—to place ads directly on e-commerce platforms. Amazon, which pioneered retail media as a category, reported in 2024 that its ad revenue had exceeded US$50 billion for the first time, driven largely by sponsored product searches on the core Amazon e-commerce platform. Walmart saw its retail media advertising revenue surpass US$4 billion. In Japan, Family Mart, a convenience store franchise chain with 16,600 outlets, has created an in-store media business using large digital signage. The company is looking to provide further advertising services and form marketing and branding alliances with other retailers. By 2029, retail platforms will account for nearly 45.5% of paid-search revenue, up from 39% in 2024.
Throughout the world, advertising—especially digital advertising—is flowing into new areas within continually evolving platforms. In China, the digital advertising market is dominated by short-form video platforms such as Douyin (TikTok’s Chinese counterpart, owned by ByteDance) and an estimated 10 million key opinion leaders, or social media influencers, who play a pivotal role in retail brands’ advertising and e-commerce efforts. Many Chinese brands selling through social platforms have their own advertising production studios. And in India, YouTube’s 450 million–strong subscriber base has fuelled the growth of a huge and dynamic economy of online creators and influencers. In 2024, YouTube alone paid close to US$2.8 billion to Indian content creators, a figure that it expects to rise by 30% in 2025.
A look at the broad category of paid content illustrates the digital shift. Total consumer spending on combined OTT video and pay TV will grow from US$291.3 billion in 2024 to US$318.5 billion in 2029, representing a CAGR of 1.8%. In 2027, a tipping point will be passed as consumer revenue from OTT video (encompassing both subscription video-on-demand [VOD] and transactional VOD) exceeds that from traditional pay TV for the first time.
Some of the global streaming players—including the likes of Amazon, YouTube, Paramount+ and HBO Max—have morphed into hybrid SVOD (subscription video on demand) and virtual pay TV providers, while steadily expanding their content, functionality and features. They’ve also routinely increased their subscription fees over the years, narrowing their traditional price advantage over traditional pay TV offerings such as cable without stalling their own growth trajectory. OTT platforms have coalesced around ad-supported plans as a key engine for growth. But OTT revenue growth is flattening too. That tapering off could be due to several factors, including intense competition and customer resistance to higher costs. The industry is also still relatively immature, which means it continues to work out the kinks in user experience and pricing. And as has long been the case, advertising dollars are often slow to follow eyeballs onto new platforms.
In India, the leading paid-for OTT services nationally are JioHotstar (formed in 2025 by the merger of Disney’s Indian operations with Reliance Industries’ Jio), followed by Amazon Prime and Netflix. India has a thriving industry of more than 50 OTT subscription platforms, many of which stream content in regional languages to consumers in specific geographic areas. The fragmented nature of the sector makes it ripe for horizontal consolidation and capital injections from private equity investors.
Meanwhile, some markets are seeing new types of content become more popular in the OTT segment. In China, demand for short-form ‘micro-dramas’ on platforms like Douyin, Bilibili and Kuaishou is booming, partly due to affordability pressures on subscriptions with the streaming giants Baidu, Alibaba and Tencent. These short-form dramas commonly feature minute-long, vertically shot episodes with frequent plot twists; and their popularity has made the platforms carrying them a major focus for brands’ e-commerce campaigns and revenue streams.
Additional strategies used to capture OTT value in various countries include internationalisation and free ad-funded services. Both strategies are being applied in Brazil. Globoplay, the OTT streaming arm of TV and media giant Grupo Globo, is expanding its reach across Latin America, the US and beyond through a series of global partnerships. These include a collaboration with NBCUniversal’s Telemundo Studios, under which co-produced films and series will be streamed as Globoplay Originals both in Brazil and over Telemundo’s US platforms. Also in Brazil, August 2024 saw a long-established Brazilian TV broadcaster—SBT—launch a free-to-view, ad-supported streaming platform called +SBT, aiming to monetise SBT’s wealth of content by generating revenues from advertising and e-commerce.
The challenge of getting people to pay—and to pay more—for digital products and services is highlighted by the comparative resilience of non-digital spending. Consumers may spend more of their free time online, whether gaming, exploring or streaming, but they spend more of their entertainment budget offline. In 2024, non-digital formats accounted for 60.8% of consumer revenue, and they will still account for the majority of consumer spending on E&M in 2029.
Smaller subsegments contributing to the lead held by non-digital media include live music revenue and cinema box office. In the US, the Sphere in Las Vegas—opened in 2023—achieved the highest gross revenue of any US arena in 2024, generating US$367 million from 70 shows. R&B star Chris Brown drew a record-breaking crowd of 94,000 fans at the FNB Stadium in Johannesburg, South Africa, in December 2024. Popular music events in China in 2025 have included Mariah Carey’s two-night appearance in May at the Hongkou Football Stadium in Shanghai and a series of six concerts in Haikou as part of Hong Kong singer Eason Chan’s latest world tour. Since its opening in March 2025, the 50,000-seat, US$3.86 billion Kai Tak Sports Park in Hong Kong has hosted such events as the Hong Kong Rugby Sevens and concerts by Coldplay.
Global consumers’ affection for live E&M experiences also generates major benefits for economies worldwide. In Brazil, Lady Gaga’s free concert in May 2025 on Copacabana Beach in Rio de Janeiro drew an estimated 2.5 million fans, making it the world’s largest concert by a female artist in history. The show—paid for by the city—resulted in more than 500,000 people flying in specifically to attend and is estimated to have generated some US$100 million for the local economy.
Global cinema box office spending is expected to rise from US$33 billion in 2024 to US$41.5 billion in 2029. China’s animated fantasy Ne Zha 2 smashed global financial records on its way to US$2.2 billion in box office revenues through May 2025. The US had its best Memorial Day box office results ever this year. And although Hollywood blockbusters (and Bollywood movies in India) remain popular, consumers’ preferences are continuing to move towards locally produced films. Globally, the market share of the top five US studios dropped from over 60% before the pandemic to 51.3% in 2024. In Brazil, demand for local movies is booming, spurred by the success of Globoplay’s first original feature, I’m Still Here, which won the 2025 Academy Award for Best International Feature Film. And in Japan, locally produced animated movies continue to dominate over Hollywood productions at the box office: Japan’s two highest-grossing films in 2024—mystery drama Detective Conan: The Million-Dollar Pentagram and sports-themed Haikyuu!! The Dumpster Battle—were animated films, and the third highest-grossing film was a live action remake of a popular anime movie.
Although movies and music often garner the most headlines, the global video game market far exceeds those two segments combined—and will continue to provide a solid source of revenues into the future. Technology is transforming the development and experience of gaming, creating value in some fundamentally new ways. The segment had total revenues of US$223.8 billion in 2024, and is expected to grow to nearly US$300 billion in 2029, fuelled in part by new releases such as Grand Theft Auto VI (scheduled for May 2026).
In August 2024, Chinese gaming developer Game Science launched Black Myth: Wukong, China’s first AAA video game. Rooted in Chinese mythology and based on the classic 16th-century novel Journey to the West, it quickly became the best-selling game ever produced in China, with its concurrent online players exceeding 1.4 million within a few weeks of launch. AI technology played a pivotal role in the production of Black Myth: Wukong, which has generated partnerships and product tie-ins with a wide variety of leading Chinese brands, including Lenovo Group and BYD Group.
In Japan, the spread of video game culture continues to expand the dimensions of the industry. A growing community of virtual YouTubers, or ‘VTubers,’ use computer-generated, anime-style 2D or 3D avatars enabled by motion capture technology to play video games and show off their skills, as well as vlog and chat with fans on platforms such as Twitch or YouTube. Tickets to the Nintendo Museum sell out almost every day. And in true oshikatsu (supporting your favourites) style, Japan’s VTubers are extending their brands across other media and merchandise: VTuber Cover recently announced a collaboration with New York–based bag brand Manhattan Portage.
The video game industry is also booming in India—a country with an estimated active user base of 500 million gamers, of whom 200 million are prepared to pay extra for enhanced experiences. In early 2025, South Korean gaming giant Krafton made a strategic investment in Pune, India–based gaming company JetSynthesys, which is now planning an IPO. Krafton has also announced plans to set up an R&D facility in India by 2026.
Headwinds and tailwinds are influencing the movement of value in E&M categories and segments. The same dynamics apply among countries. At the national level, the tailwinds include relatively high underlying growth rates both in emerging economies and in some already relatively large markets such as India. The main headwinds centre on anaemic growth in a number of mature markets. The US remains comfortably the leading global market across all E&M sectors, and (excluding connectivity revenue) will grow at a 3.8% CAGR over the forecast period, lagging behind the global average of 4.2%. E&M revenues in second-place China will rise at a CAGR of 6.1%, powered primarily by the country’s internet advertising segment, with a CAGR of 8.9%.
Among the fastest-growing markets globally over the forecast period are India, Indonesia and Saudi Arabia, all with CAGRs above 7.5%. In India, as in China, much of the growth will stem from internet advertising, which will grow at a CAGR of 15.9% and be driven by expanding internet penetration, rising 5G connectivity, and the popularity of social media and short-form video content. More mature markets such as Austria, Finland and Switzerland will see revenue growth well below the global average, recording CAGRs of between 1.0% and 2.0%.
In recent years, the changing environment, including the rise of the big tech players, has heavily influenced E&M deal-making. In the advertising world, Omnicom’s planned US$13.5 billion acquisition of Interpublic Group (IPG) is aimed at joining Omnicom’s creative capabilities with IPG’s wealth of data. This deal highlights the need for ad firms to consolidate and reduce cost structures at a time of AI’s looming threat to margins. Another major transaction agreed upon in 2024—Skydance and Redbird’s deal to buy Paramount Global for US$8 billion—was still awaiting regulatory approval at the time of writing. These large deals aside, the mantra for M&A in most E&M markets globally has been to keep it relatively small and targeted. Examples include Chinese gaming giant Tencent’s US$1.3 billion investment in Ubisoft; Italian TV group MFE-Mediaset’s full takeover offer for Germany’s ProSiebenSat; Bertelsmann seeking another shot at the US$4.1 billion merger between French broadcasters M6 and TF1 that was blocked by EU regulators in 2022; and the acquisition by Japanese entertainment group Toho of the North American animation producer and distributor GKIDS.
Some recent events could set the tone for further consolidation in the near future. Comcast announced it would spin off certain NBCU linear assets under the Versant brand to better position these assets for strategic alternatives, and Warner Brothers Discovery in June said it would restructure into two companies—one holding primarily its streaming assets and the other holding primarily its cable operations.
AI is already having a significant impact on major E&M sectors. Consumers and businesses carry out more of their searches via generative AI (GenAI) engines like ChatGPT and DeepSeek, while Google is posting AI-generated summaries of search results at the top of every page. As a result, the formerly headlong growth in spending on search advertising could stall or even go into reverse. At the same time, AI search platforms have the potential to eventually monetise their audience through ads. In response, Google has rolled out AI overviews in the basic search experience and OpenAI is exploring advertising as a possible revenue source. But the reality is that AI has shifted the goalposts. Tellingly, advertising agencies are calling for SEO to be redefined to cater to chatbots and AI agents rather than regular search crawlers.
A further fast-growing area of impact from AI is production processes for movies, video games and music. Although integration of AI is initially being used as an efficiency play, the knock-on effects go much further. Take video game production, where the benefits from AI include dramatically shortening the time required to code the use and behaviours of NPCs (non-player characters) and to place three-dimensional objects into games. Given that launching a new AAA game is now a major financial gamble (typically costing US$200 million to US$300 million), AI’s ability to drastically reduce cost, development time and risk can be a game changer. AI is also having an impact at the point of delivery for games, with video game companies now using it to predict the likely churn point of customers in different demographics and target them with ads for the next game at the right time.
The implications of using GenAI to augment the production of video advertising are equally profound. The resulting cost and time savings in content creation, combined with the ongoing maturation of data-driven, addressable, programmatic TV, will democratise the TV advertising ecosystem—in turn, spurring growth in the connected TV segment. Now that technology is increasingly able to address lingering fears over measurement inaccuracies, connected TV advertising has become a more powerful sector. Advances in generative AI are permitting small and medium-sized enterprises to access the sort of connected TV ad spots that had previously been beyond their budgets. In 2020, connected TV advertising revenue represented just 5.9% of total traditional broadcast TV advertising. By 2024, this figure had jumped to 21.5%—and by 2029, it will surge still further, to 44.7%.
Markets are advancing at different speeds in different areas, reflecting their own specific strengths. In Japan, where anime content dominates, an especially active area of AI adoption is animation studios, which use AI for activities like creating backgrounds and narrating stories. In recent years, Japanese animation producers had made heavy use of lower-cost animators or resources located offshore in markets like China or South Korea. Now, AI is enabling Japanese animation studios to reshore the work and switch from using people to using technology, compounding the cost benefits and time benefits. In early 2025, Toei Animation—producer of the popular Dragon Ball series—and several other anime studios collectively invested over 5 billion yen (about US$35 million) into one of Japan’s leading AI research companies, Preferred Networks (PFN).
In India, AI is being used by brands to make campaigns more flexible and engaging, leveraging advanced analytics and automation to boost targeting and adaptability. High-profile examples of personalised AI-enabled campaigns include Zomato’s in-house developed “New Gym Buddies” aired during the Tata Indian Premier League 2024 season. In China, companies across all segments are using the technology to simultaneously improve efficiency in back-office and production processes and target their audiences more accurately. In February 2025, Tencent announced the integration of DeepSeek into its popular web chat app WeChat, and both Alibaba and Douyin are continuing to expand their AI-powered offerings. In March 2025, ByteDance integrated its AI chatbot, Doubao, into the Douyin app, and Alibaba launched a new version of the Quark AI assistant, powered by its Qwen reasoning model.
Although AI has huge potential in E&M worldwide, concerns and doubts remain in many territories over two areas that could present potential headwinds: its effect on human jobs and the regulatory frameworks needed to govern its use—including the use of copyrighted material to train AI models. Worries among artists and creators hit the headlines in mid-2025, when Elton John fronted a campaign aimed at changing UK Government policy on this issue. He said artists were being ‘betrayed’ by proposals to allow technology companies to ingest and use copyright-protected artistic works without first seeking permission. Before the full benefits of AI can be harnessed, there’s a need for regulatory clarity on these types of issues—although policies may well continue to vary among jurisdictions.
To a large extent, the adoption of AI in the E&M industry is following the pattern set by previous waves of technology innovation. When companies first embrace it, the new technology is largely used as a cost- and labour-saving device to enhance speed and efficiency in back-office processes, thereby improving the bottom line and, in turn, boosting profitability and valuations. The much greater long-term impact from emerging technology comes when it presents the ability to operate in new ways, create new business models and access previously untapped revenue streams. With AI, this value-creating potential is likely greater than with any previous technology. As more people become fluent in AI tools, it will have an amplifying effect on ingenuity and creativity and will emerge as a powerful innovation and collaboration partner. And as E&M companies across the industry start to realise this potential through their own advances, they will create more personalised, relevant and compelling experiences for customers than was previously imaginable.
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