US edition: Global Entertainment & Media Outlook 2019‑2023
How will the Technology, Media and Telecom industries change? Which media segments will emerge... or disappear? How will AI and AR improve user experience? The Outlook provides the kind of clear insight and data that can help you identify opportunities across an ever-changing landscape.
Based on advertising and consumer spending data across 14 industry segments and 53 territories, PwC's Outlook is your trusted source for a reliable view of the future.
year on year (YOY), over the top (OTT)
Subscription TV revenue of US$94.6bn in 2018 will contract at a -2.9% CAGR to US$81.8bn by 2023, due to a mature market and cord-cutting, largely resulting from SVOD competition. The United States, however, still remains the world’s biggest pay-TV market by some distance, accounting for 46% of the total global revenue in 2018.
Traditional pay-TV providers continue to transform their business models, implementing strategies to help minimize churn. This includes a focus on offering value-added products and packages to drive loyalty (and profits) from core customers, while also launching slimmer or “skinny” bundles that appeal to the cost-conscious.
Total US cinema revenue reached $12bn in 2018, up 7.2% year-on-year. Yet despite this record increase, we can expect to see only modest revenue growth over the forecast period at a 0.8% CAGR, reaching US$12.5bn by 2023. Slow but stable growth in both admissions and gross box office is also expected.
Notably, cinema advertising revenue is a rising star, predicted to reach US$1.1bn in 2023, up from US$952mn in 2018 at a 3.6% CAGR.
The market overall is becoming increasingly polarized—the rise in attendance and box office has been driven by only a handful of films, with over one-third of 2018’s revenue coming from just 10 films, out of the more than 700 released during the year. Nonetheless, production levels remain high, as do the number of cinema screens in the United States (there were 40,535 by the end of 2018, up from 40,393 the year before).
The United States remains the largest OTT video market globally, accounting for more than half (55.6%) of all OTT revenue in the world in 2018. OTT video revenue in the US reached US$14.5bn in 2018, following a 15.5% year-on-year growth. Although year-on-year growth rates will slow as the market matures, further expansion at a 10.3% CAGR will produce revenue of US$23.7bn in 2023.
Notably, SVOD’s share of total revenue will increase over the forecast period (from 68.7% to 75.2%), as the popularity of streaming services continues to grow. The increase in competition means new entrants will have to work to differentiate themselves from mainstream SVOD players in order to attract subscribers. One way to do this is through content—particularly exclusive and original commissions, which have proven to be the crucial determinant in the battle to attract subscribers to streaming services. The level of content spend being poured into the market by both new and existing players is prodigious and shows no signs of lessening any time soon.
To learn more about consumer attitudes and behaviors, visit the Consumer Intelligence Series page.
The US virtual reality market saw US$934mn in revenue in 2018, and is expected to grow at a 16.6% CAGR to reach US$2bn in 2023. Gaming remains the primary application of VR, accounting for 57.4% of total VR revenue in the US in 2018. VR video, however, will see the most growth over the forecast period, climbing at a CAGR of 22.4% to reach US$861mn in 2023.
The US VR market fell short of recent predictions and is far from meeting expected growth expectations; however, there is much to be optimistic about regarding long-term prospects. The expansion of VR from an impressive novelty to a mass-market product will hinge on further improvements to the technology itself, and there are some encouraging signs emerging. For instance, untethered (wire-free) head-mounted displays at significantly lower price points are imminent, which should undoubtedly help the market.
In 2018, total video games and eSports revenue in the United States was US$24.4bn, up from US$22.7bn in 2017, and is set to grow to US$31.1bn in 2023 at a CAGR of 5.0%. Although still smaller than the console market, PC games continue to increase their share of overall traditional games revenue in the US, thanks to a growth rate that’s consistently higher than that of the console sector.
The US continues to be the world’s largest eSports market, with 2018’s revenue of US$222mn significantly ahead of the only other markets to have broken the US$100mn barrier—China (US$151mn) and South Korea (US$183mn). Media rights is the fastest-growing sub-sector of the US esports market, rising at a 26.8% CAGR to reach near-parity with sponsorship revenue by 2023.
The United States remains the largest global internet advertising market, growing by US$19.2bn to reach a total value of US$107.5bn in 2018, equivalent to nearly 40% of the global total. Strong growth will continue over the forecast period, with the market expanding at an 8.4% CAGR between 2018 and 2023 to reach a value of US$160.8bn.
While the US still lags behind China and other Asian markets in some areas, it remains a hotbed of innovation and consolidation. Furthermore, some of the defining recent trends in the internet advertising market, like the rise of video and mobile advertising, have taken hold much earlier in the US than in many other markets. Mobile is now dominant, accounting for 65.1% of US internet ad spend.
Yet, despite the substantial growth we’ll see from the internet advertising market over the next five years, it will not completely fulfill its potential until a simplified, industry-wide consensus on measurement and transparency is reached.
An increasingly tailored world has major implications for every E&M business across every segment. Whether the subject is business and revenue models, emerging technologies or regulation and trust, companies must keep on top of current and future developments, as well as being sufficiently agile and ready to respond proactively and at pace.
Our data, analysis and perspective offers insight into how E&M companies are adapting, investing and innovating by the increasing need to get personal:
The move to personalized, active E&M experiences has profound implications for how companies go about framing and developing offerings. At the same time, it will impose new responsibilities and, occasionally, limitations, on how they market and present their products and services. These new dynamics apply across different platforms, content types and digital and physical experiences—though their ultimate impacts can vary among different geographic markets.
As media and e-commerce experiences become more personal, gratification for consumers is becoming more instant and immediate. In response, content creators and distributors are devising new ways to appeal to consumers as individuals, and marketers are busy figuring out how to meet people at the point of consumption—and guide them instantaneously towards purchase. The result is a rapid expansion of and evolution in consumer touch points.
In the 1980s, the great leap forward was the advent of the PC—the personal computer. In the 2020s, amid the fourth industrial revolution, the next significant evolutionary step may be personalized computing. That is to say, the smart use of data algorithms and AI will spur E&M companies to enhance the digital products and services they offer, or to introduce entirely new ones.
As consumers increasingly push to be at the center of their own world of media experiences, it's unavoidable that their personal data—whether the music they stream or the products they buy—become a central player in the process. In a digitized world, billions of small transactions and activities are captured and tracked as a matter of routine, and every interaction with a customer has the potential to build or damage trust.
The central theme of this growing world of media is that it's personal and increasingly digital. And it's one that is constructed by the individual for his or her own enjoyment and gratification, and delivered through personal devices. Companies, in turn, are tailoring their offerings and business models to revolve around personal preferences, using data and usage patterns to pitch their products not at audiences of billions, but at billions of individuals.
Global Technology, Media and Telecommunications Leader, Partner, PwC China
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Technology, Media and Telecommunications Advisory Leader, PwC US