Power shifts: Altering the dynamics of the E&M industry
Five-year projections of consumer and advertising spending data across 14 segments and 53 territories.
year on year (YOY), over the top (OTT)
Due to COVID, box-office revenue in the US plummeted by four-fifths year on year in 2020 to US$2.1bn. In March 2021, a year on from the start of the pandemic, nearly a quarter (23%) of all US cinemas were still closed. As such, box-office revenue is set to recover at a 37.3% CAGR over the forecast period. By 2025, it will be US$10.4bn – down -2.6% on 2019’s total.
After a peak period of revenue and subscribers, the Pay-TV market continues to decline. Subscriptions retracted by 23% from 97.9mn in 2016 to 75.6mn in 2020, and revenue from US$108.9bn in 2016 to US$87.3bn in 2020. It is expected that in the next five years we will see a loss of up to 25mn subscribers. Cost remains the key sticking point for consumers, and as such, many companies are driving critical cost-cutting measures within their traditional businesses and anchoring budget and resources to the broadband product and adjacent services (to include investments in 5G and IoT).
The US is still the largest OTT market in the world–by some margin–bringing in US$22.8bn across both subscription and transaction models in 2020. Existing services were boosted significantly by the impact of COVID-19, while uptake of new or recently launched services also contributed greatly. Though TVOD had a strong year of growth, SVOD is around 3.4 times the size, a ratio that will be maintained out to 2025. Overall, across the five-year forecast period, the OTT market growth will cool significantly, increasing at a 6.9% CAGR to reach US$31.9bn in 2025, a US$9.1bn increase from a total of US$22.8bn in 2020.
Total video games and esports revenue in the US was US$33.3bn in 2020, growing from US$28.0bn in 2019. Over the next five years, the outlook remains robust, with revenue set to rise further to US$44.4bn in 2025 at a 5.9% CAGR. Traditional gaming was overtaken by social/casual gaming for the first time in 2020, as the sector undergoes a shift to digital revenue, accelerated by the COVID-19 pandemic. Digital sales will exceed physical sales for the first time in 2021 (US$4.9bn to US$4.5bn). By 2025 the “traditional gaming” category will be overwhelmingly a digital one.
Despite an unusually turbulent year, the US Internet advertising market showed resilience, growing at an impressive rate of 12.2% to reach US$139.8bn. The market will continue to expand at a 7.4% CAGR between 2020 and 2025 to reach a value of US$200.2bn. This will come in the face of significant potential hurdles in the space, including anti-trust lawsuits against the leading players in the market, the continued crumbling of the cookie and policies restricting the viability of established mobile identifiers within programmatic advertising environments, and the continuing threat of ad fraud.
As a result of pandemic-induced economic disruption and consumer behaviour shifts, E&M revenues in 2020 experienced the sharpest contraction in the history of our research. These twin forces also accelerated progress toward industry tipping points by several years. In 2021, those tipping points have morphed and coalesced into power shifts that are rapidly reshaping the industry.
This year’s Outlook will help determine the defining trends that have set so many futures on a new footing.
Understanding where consumers and advertisers are spending their time and 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. Regardless of how you influence business decisions, the Outlook can help you understand industry trends so you can capitalise on new opportunities.
Vice Chair - Technology, Media and Telecommunications Consulting Leader, PwC US
