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MUMBAI: Global entertainment and media spending is expected
to rise from $1.6 trillion in 2011 to $2.1 trillion by 2016,
growing at a compound annual growth rate (CAGR) of 5.7 per
cent, according to PwC’s annual Global Entertainment
and Media Outlook 2012-2016.
The
U.S. E&M market experienced the largest increase since
2007 with faster growth expected, growing at 5.2 per cent
CAGR reaching $597 billion in 2016, from $464 billion in 2011.
Record
global sales of tablets and smart devices are underlining
the rising revenue opportunities from digital delivery of
entertainment and media (E&M) content and advertising
to increasingly connected and mobile consumers, the report
noted.
The M&E industry, the report states, is approaching the
‘end of the digital beginning’ with digital now
embedded in business-as-usual and moving to the heart of many
E&M companies.
The
report finds that growth in digital E&M spending will
continue to significantly outpace growth in non-digital spending
during the next five years. Digital spending is expected to
account for 67 per cent of all growth in spending during the
next five years, globally. Digital spending in the U.S. is
expected to account for 31.5 pe rcent of all E&M spending
in 2016, up from 21.7 per cent in 2011.
“Change
in consumer behavior is pervasive and accelerating and the
E&M industry is in the front line of this change. The
past uncertainty triggered by the digital migration has given
way to a sharper focus of E&M companies on executing their
digital strategies. While experimentation will continue, the
way forward is becoming clearer as companies focus on identifying,
choosing and executing the right business models, organizational
structures and developing the skill sets to understand consumer
behaviors and motivations in their connected, multi-screen
environments,” said PwC US practice leader entertainment,
media & communications Ken Sharkey.
“By
embracing digital as the engine of their business and using
it to integrate and automate processes from content production
to rights management, E&M companies are well positioned
to meet the fast changing consumer demands through any channel
and format more effectively and drive greater revenue growth
than before,” added Sharkey.
According
to the Outlook, the rise of unpaid or earned media reflects
an innovative new mix of advertising, content and analytics,
bringing sweeping change to the roles and business models
in advertising. The rise of socialisation is feeding into
the widely-accepted concept of bought, owned and earned advertising
among agencies and advertisers.
A
fourth category is emerging – ‘managed’ advertising,
which involves the orchestrated use of social media, such
as engagement with bloggers. Everything that agencies do for
their clients now has an embedded digital component with the
attention on measurement shifted towards earned, unpaid media
reach and purchasing intentions.
Overall,
U.S. advertising is expected to increase at a 5.9 per cent
CAGR from $172 billion in 2011 to $229 billion in 2016, enhanced
by Olympic and political advertising in 2016. Internet advertising
is expected to average 16 per cent CAGR followed by video
games, one of the smallest segments, at 11.4 per cent CAGR.
Television advertising, the largest segment, is expected to
grow at 6.7 per cent CAGR. Out-of-home advertising and cinema
advertising are expected to grow by 4.9 per cent and 4.5 per
cent CAGR, respectively. Newspaper advertising (-0.2 per cent)
is expected to be the only category to decline.
Recorded
music rebounds in the U.S.
In
the US, Internet advertising is expected to continue to outperform
all other E&M segments, with double-digit gains of 16
per cent CAGR. Recorded music will rebound with steady expansion
projected rising at a 5.5 percent CAGR to $19.8 billion in
2016 from $15.2 billion in 2011. Digital distribution of recorded
music is expected to overtake physical distribution in 2012
and will rise at an 11.7 per cent CAGR to $5.5 billion in
2016 from $3.1 billion in 2011.
Internet
access (9.3% CAGR), TV advertising (6.7% CAGR) and TV subscriptions
(5.4% CAGR) are set to grow more than 5 per cent compounded
annually. Out-of-home advertising (4.9% CAGR), video games
(4.1% CAGR), radio (4.1% CAGR), business-to-business publishing
(4% CAGR), consumer magazine publishing (1.6% CAGR), consumer
and educational book publishing (1.1% CAGR) and filmed entertainment
(0.6% CAGR) are expected to generate modest growth. Spending
on newspaper publishing (-1.4% CAGR) is expected to decline
moderately before it begins to expand in 2016. Overall, U.S.
consumer/end-user spending is expected to grow by 3.7 per
cent CAGR.
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