Total worldwide entertainment and media revenues will rise at a Compound Annual Growth Rate (CAGR) of 4.4% in nominal terms over the coming five years, from US$1.72 trillion in 2015 to US$2.14 trillion in 2020, according to PwC’s Global entertainment and media outlook 2016–2020.
This growth rate represents a slowdown from last year’s 5.5% growth in industry revenues, and will lag behind overall global economic growth during the five years. But a closer examination brings a different picture into focus. Entertainment and media is a dynamic, diverse industry with steady and sustainable growth. And while its strong aggregate growth is not shared equally by all participants, impressive growth and opportunities can be found in many areas of the industry. Drastic slowdowns in some areas and stagnation in others coexist with spectacular expansion in “hot” countries, regions, and sectors, creating a multi-shifting global media landscape.
In fact, in 36 out of the 54 countries covered by PwC’s Outlook, entertainment and media spending is growing more rapidly than GDP, often by a factor of more than 50%. Venezuela tops the list; entertainment and media spending growth there is likely to outpace GDP growth by more than 14 percentage points in 2016. Many of the most populous entertainment and media markets—including Brazil, Pakistan, and Nigeria—will also produce comparatively higher entertainment and media growth rates.
The differences in growth rates at a country level are overlaid by wide variations between segments. The fastest-growing segment globally over the five years will be Internet advertising with a CAGR of 11.1%, ahead of Internet access at a 6.8% CAGR.
By contrast, magazine and newspaper publishing will suffer declines. However, even here there will be wide variations between territories: while newspaper publishing revenue will see a compound annual decline of 3.1% in North America, in India it’ll rise at a CAGR of 2.7%.
Against this diverse and multifaceted background, profound changes in spending patterns will continue. Revenue across entertainment and media is steadily shifting from publishing businesses to video and Internet businesses—in particular those that provide over-the-top (OTT) services and monetise consumer data. Direct consumer spending models will remain strong, while spending on Internet access, including mobile data, will rival advertising. This development creates more fertile ground for new entrants and traditional players alike to jump directly into new markets and segments, like OTT video and new e-commerce offerings.
Osere Alakhume, Partner and Technology, Information, Communication & Entertainment Leader, PwC Nigeria comments:
“Entertainment and media companies are facing an ever more complex global environment—one in which every market has its own unique growth dynamics, shaped by local factors ranging from demographics to content tastes to infrastructure to regulation. To see through the apparent chaos and pinpoint value opportunities, companies need a more intimate understanding than ever before of the forces at play at a local level. Armed with such insights, both established and emerging players are well-positioned to capitalise on the industry shifts and lead the next phase of growth.”
The report pinpoints five key shifts occurring in each of five dimensions of the entertainment and media landscape: demography, competition, consumption, geography, and business models. Simultaneous and interrelated, these five shifts influence and play off one another. They should serve as a serious call to action for both industry incumbents and new entrants to seek out growth opportunities in markets worldwide. As these five shifts play out, companies will need to combine responsiveness and local insight to drive value and maximise growth.
Osere Alakhume concludes: “Amid an ever more diverse and multifaceted entertainment and media landscape, the industry is learning from experience and striving to build agility to target and seize opportunities as they appear. To do this, companies must capture the attention of consumers with experiences—whether delivered digitally or non-digitally—that engage and resonate with them at a local level. For those global players that succeed in doing it, the opportunities are legion.”