Fault lines and fractures: Innovation and growth in a new competitive landscape
A continuing pandemic, supply chain disruption and geopolitical tumult: Uncertainty looms, and yet clearer market trends have begun to emerge, signaling new opportunities for growth. PwC’s 23rd annual Global Entertainment & Media Outlook offers an in-depth, five-year forecast of evolving forces that will likely shape an industry on track to be a $2.9 trillion market by 2026. Here’s a snapshot of what we found.
In the United States, live experiences have rebounded, and streaming is entering a new era — one marked by shifting priorities, flattening subscriber growth and cooling markets. Meanwhile, the use of mobile devices has exploded. Developing digital and live experiences that are “better together” will be a major concern moving forward.
One potential solution: metaverse technologies. Key players across industries are experimenting in this emerging field. Powered primarily by such tech giants as Meta and Microsoft, with some assistance from semiconductor and gaming companies, investment is pouring into these developing technologies.
An accelerated shift to the digital realm has recalibrated advertising as well. Retailers rapidly transformed business models to meet e-commerce demand during the pandemic, yielding a boon in digital advertising. The ability of online retail to provide measurable business outcomes for advertisers has been a motivating factor and will likely continue to drive growth.
The over-the-top market is large and growing. Despite recent setbacks, the market is expected to increase at an 11% CAGR over the next five years. While this represents a significant cooling, the Latin American market is poised to grow faster than any other worldwide, offering significant opportunity for US-based companies. In the next chapter of the streaming wars, free ad-supported TV (FAST) will likely be a key battlefield. The FAST market is expected to grow at a 25% CAGR from 2021 to 2023, driven by demand for low-cost content.
E-commerce will likely continue to expand internet advertising as retailers launch services to sell ad space in their own digital platforms. Shoppable ads also unlock new buying motions and are expected to add growth. As TV cord-cutting continues, ad-supported streaming is expected to increase along with ad-supported streaming music, video games and podcasts.
As the social and casual gaming market matures, growth will likely slow. Key players have begun to acquire game publishers and developers, aiming to “buy and scale” to suit consumer interests. Revenue is largely driven by in-app advertising, accounting for more than three-quarters of total projections. As metaverse technologies evolve, video games serve as strong use cases, offering immersive social interaction that may serve as building blocks.
Investments in the US metaverse market by such companies as Meta, Microsoft, Nvidia and Epic Games are expected to drive significant growth. While some organizations have begun to experiment with virtual facilities and advertising, widespread adoption is expected to grow as metaverse concepts evolve into more fully realized virtual reality platforms.
As technology advances, brands will likely employ NFTs in a number of use cases to enhance consumer experience and engagement. NFT growth can be driven by demand for access to decentralized ownership, as NFTs can be tied to real-life purchases to ensure authenticity of goods in primary and secondary markets. Further, NFTs could be used in concert with advertising to create powerful tools for marketing activation.
Understanding where consumers and advertisers are spending their money in the entertainment and media industry can help inform many important business decisions.
PwC’s Global Entertainment & Media Outlook provides a single comparable source of consumer and advertiser spending data and analysis. Updated annually, the intuitive online tool allows you to easily browse, compare and contrast spending and growth rates.
Principal, TMT Customer Transformation Consulting, PwC US
Technology, Media and Telecommunications Partner, PwC US
US Entertainment, Media and Communications, PwC US