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The global entertainment and media (E&M) industry will reach $2.2 trillion in 2012, growing at a 2008-2012 compound annual growth rate (CAGR) of 6.6 percent, according to PricewaterhouseCoopers’s “Global Entertainment and Media Outlook: 2008-2012,” writes MarketingCharts.
E&M companies over the next five years will need to accommodate dramatic changes in devices, as well as market and consumer behavior, by striking strategic business alliances if they are to drive growth, PwC said.
The report also underscores the importance of continuing to extract revenues from traditional business segments while emerging technologies continue to solidify their consumer position.
Below, some findings from the PwC E&M report.
Technology Tipping Point
Several critical technologies - e.g., broadband, mobile, digital cinema, HD TV - are reaching tipping points that will deeply influence both the pace and direction of entertainment and media growth over the next five years, PwC said.
The global broadband boom continues unabated, fuelling overall growth, and more than doubling again to 661 million households in 2012, a 16.4 percent compound annual increase during the forecast period.
With the exception of recorded music, in which case digital distribution will surpass physical distribution in 2011, established and traditional business segments will continue to dominate revenues.
For example, TV subscription and license fees will show growth in all regions (see table), growing at a 10.1 percent CAGR overall, from $173.5 billion in 2007 to $280.8 billion in 2012.
Nevertheless, digital and mobile are driving growth. Although digital and mobile distribution comprised only 5 percent of global E&M spending in 2007, these revenues will account for 24 percent of all growth throughout the industry during the next five years.
For example, mobile television will become a factor in each region and will be particularly significant in Asia Pacific - view table.
By 2012, digital and mobile revenues will account for just 11 percent of total E&M spending, or $234 billion of the $2.2 trillion global market.
The US Market
The US remains the largest but slowest-growing E&M market, growing at a 4.8 percent CAGR and reaching $759 billion in 2012.
Internet advertising and internet access spending will be the only two segments with double-digit growth during the next five years, boosted by continued growth in broadband.
“In the US, consumers are taking a preference for free, or heavily discounted, ad-supported content and services in the new digital and mobile environment,” said Jim O’Shaughnessy, Global Chairman, Entertainment & Media practice, PricewaterhouseCoopers.
“This ensures that the importance of advertising will continue to grow - both to entertainment and media companies themselves and to their customers.”
Segment Highlights - Growth Driven by Online and Mobile
Although internet advertising growth will moderate, it will see the most robust growth, at 19.5 percent CAGR through to 2012 globally.
Internet access (12.1 percent CAGR), video games (10.3 percent CAGR) and television subscriptions and license fees (10.1 percent CAGR) will all experience double-digit growth.
More established segments - television advertising (5.9 percent CAGR), theme parks (5 percent CAGR), casino gaming (6.5 percent CAGR), filmed entertainment (5.3 percent CAGR) and sports (6.5 percent CAGR) - are all set to grow at between 5 percent and 7 percent compounded annually.
The publishing segments, including Newspapers (2.2 percent CAGR), Consumer Magazine (3.5 percent CAGR), Consumer & Educational books (2.8 percent CAGR), Business-to-business publishing (3.2 percent CAGR) as well as recorded music (-0.6 percent CAGR) face the stiffest challenges, where the declines in physical distribution are at their most significant and growth in digital distribution-although rapid-is struggling to make up for the shortfall.
“Companies are rapidly embracing new and emerging technologies in the entertainment and media industry, while adapting to the demands of the net generation. And rightly so, because it will help to drive their business forward and remain competitive in a marketplace driven by innovation,” said Marcel Fenez, Managing Partner, Global Entertainment & Media practice, PricewaterhouseCoopers.
“However, they must also remain focused on managing their traditional businesses, a key component and driver of their revenues. By effectively managing emerging and traditional business lines, they will be able to identify opportunities they can exploit so they can migrate to the new digital environment and meet the demands of the net-generation,” he added.
MarketingCharts has more findings from the study.
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