According to the recently released annual edition of PwC ‘Global entertainment and media outlook 2014-2018’, nine high-growth markets are powering global entertainment and media revenues. China, Brazil, Russia, India, Mexico, South Africa, Turkey, Argentina and Indonesia are collectively forecast to account for 21.7 per cent of global entertainment and media revenue in 2018, up from just 12.4 per cent in 2009. Also in 2018, China will overtake Japan as the world’s second-largest entertainment and media market, behind only the US.
Marcel Fenez, PwC’s global leader, entertainment and media, said, “What all these markets have in common is a growing middle class boosting spending in entertainment and media. But the similarities stop there. Realising the revenue potential of these markets demands a deep understanding of the local context.Given their intimate local market knowledge, domestic organisations are in prime position to realise the opportunity of the emerging middle class The optimal approach for international players will most certainly be to collaborate with local partners.” This study is 15th annual update of the Global entertainment and media outlook 2014-2018. With like-for-like, five-year historical and five-year forecast data and commentary across 13 industry segments in 54 countries, the Outlook makes it easy to compare and contrast consumer and advertising spend across segments and countries.
Total entertainment and media spending on digital services is forecast to grow at a 12.2 per cent compound annual growth rate (CAGR) between 2013 and 2018 and account for 65 per cent of global entertainment and media spending growth, excluding spending on Internet access. Advertising is leading the way; in 2018, 33 per cent of total advertising revenue is forecast to be digital, compared to 17 per cent of consumer revenue, according to the PwC report.
The report further lists the emerging trends:
· In 2018, Internet advertising will be poised to surpass TV advertising: Mobile Internet penetration will reach 55 per cent in 2018, which will help drive digital advertising to increase its share of total advertising revenue to 33 per cent by 2018, up from 14 per cent in 2009. With Internet advertising growing at a 10.7 per cent CAGR (compared to a total advertising CAGR of 4.4%), the industry is approaching a significant tipping point: in 2018, Internet advertising will be poised to surpass TV advertising. In 2009, TV advertising was double that of Internet advertising; in 2018, Internet advertising will trail TV advertising by just US$20bn. Mobile Internet advertising is forecast to grow at a CAGR of 21.5 per cent.
· Electronic home video over-the-top (OTT)/streaming and digital music streaming are two of the fastest-growing consumer sub-segments: And is set to rise at annual rates of 28.1 per cent and 13.4 per cent respectively. Spending on digitally delivered content will account for only 17 per cent of total consumer spending in 2018 (excluding spending on Internet access), compared to 33 per cent of total advertising spending.
• Internet TV advertising will double its share of total TV advertising revenue in the next five years. Internet TV advertising revenue from traditional broadcasters will increase from US$3.7bn in 2013 to US$9.7bn in 2018, and more than double its share of total TV advertising from 2.2 per cent in 2013 to 4.5 per cent in 2018. Traditional broadcasters still dominate and are adapting to the Internet video opportunity, creating a significant new revenue stream despite competition from Internet rivals.
• Mobile advertising will overtake classified Internet advertising in 2014. Global mobile Internet advertising revenue is forecast to leapfrog classified Internet advertising to become the third-largest Internet advertising channel with revenues of US$18.9bn in 2014. But after four particularly strong years, driven by the launch of a range of tablets, the annual rate of mobile revenue growth is falling back to the levels seen prior to their introduction. Advertisers now must do more than simply migrate large-screen banners to handhelds to sustain such growth.
• Digital consumer magazine advertising revenue is much larger than digital circulation. Global digital consumer magazine advertising revenue will be US$12.4bn in 2018, rising at a 17.6 per cent CAGR; digital circulation revenue will be just US$5.7bn in the same year. This compares to a decline of -3.9 per cent CAGR for consumer magazine print advertising revenue. Currently advertising is centred on magazine websites, but, as digital circulations increase, electronic editions will become increasingly popular for advertisers.
• Digital out-of-home (DOOH) advertising revenue will see significant growth in fast-growth markets. DOOH advertising is driving overall OOH advertising growth globally at a CAGR of 16.2 per cent. However, in certain fast-growing markets, DOOH advertising revenue is forecast to grow even more rapidly, with CAGRs in excess of 30 per cent. China is set to become the largest DOOH advertising market in the world by 2017.
Fenez said, “The bedrock of a strategy fit for the digital age is the digital mindset: getting ever closer to the customer – across the entire organisation, and in everything it does. We now see that mindset embedded in many entertainment and media companies. But the industry needs to get even closer to the consumer and adopt more flexible business models. To do this, companies must exhibit three behaviours: forging trust with consumers; creating the confidence to move with speed and agility; and empowering innovation. This will be an important step in monetising the digital consumer.”