Global entertainment & media revenues surge to $2.3 trillion; OTT growth to moderate: PwC

E&M sales increased by a solid 10.4 per cent in 2021, from $2.12 tn to $2.34 tn.

Mumbai: Last year, the global entertainment and media (E&M) industry grew significantly faster than the world economy as a whole. Following a 2.3 per cent dip in 2020 due to the pandemic, E&M sales increased by a solid 10.4 per cent in 2021, from $2.12 trillion to $2.34 trillion.

Virtual reality (VR) and gaming are significant growth drivers for the industry as it becomes more digital, mobile, and youth-focused, and digital advertising permeates every aspect of the industry. These conclusions are drawn from PwC's Global Entertainment & Media Outlook 2022–2026, which represents the 23rd annual research and forecast of E&M spending by consumers and advertisers across 52 countries & territories.

Findings in this year’s Outlook include:

- After growing by 35.4 per cent in 2020, OTT (over-the-top) video revenues increased by 22.8 per cent in 2021, to $79.1 billion. The rate of OTT revenue growth is anticipated to slow slightly; it will increase at a 7.6 per cent CAGR (compound annual growth rate) through 2026, pushing revenues to $114.1 billion.

- Traditional TV still brings in a sizable amount of money, but it is facing intense competition from OTT streaming services. Global sales are expected to shrink at a CAGR of -0.8 per cent, from $231 billion in 2021 to $222.1 billion in 2026.

- Revenue from video games and esports worldwide was $215.6 billion in 2021, and it is anticipated to increase by 8.5 per cent CAGR to $323.5 billion in 2026. With $109.4 billion, Asia Pacific produced the majority of the world's revenues in 2021, more than double the second-highest region, North America. Gaming has overtaken video and communications as the third-largest data-consuming E&M content category.

- Despite starting from a small base, VR continues to be the fastest-growing E&M segment. Following a strong 39 per cent growth in 2020, global VR spending increased by 36 per cent y-o-y to $2.6 billion in 2021. The segment is anticipated to grow at a CAGR of 24 per cent between 2021 and 2026, reaching $7.6 billion. With $1.9 billion in revenue in 2021, gaming content is the main source of VR revenue. By 2026, this should rise to $6.5 billion, or 85 per cent of all VR revenue.

- Due to its widespread use in the digital sphere, advertising now dominates its own industry sector. After falling by almost seven per cent in 2020, advertising increased by an astonishing 22.6 per cent in 2021, reaching $747.2 billion. Advertising is expected to expand at a 6.6 per cent CAGR through 2026, driven nearly entirely by digital. The revenue from internet advertising is expected to increase even more quickly, increasing at a CAGR of 9.1 per cent. Advertising is anticipated to exceed consumer spending and internet access in 2026 to become a one trillion dollar business and the largest E&M revenue stream.

- In 2023, global cinema revenue is anticipated to hit a new high of $46.4 billion after experiencing losses due to the pandemic. Box office revenue is anticipated to grow by 18.9 per cent CAGR from $20.8 billion in 2021 to $49.4 billion in 2026. In 2020, China surpassed the US to become the world's biggest cinema market, and it is predicted that it will continue to hold this position through 2026.

- In 2024, live music revenue is anticipated to surpass pre-pandemic levels. Recorded music sales are expected to increase from $36.1 billion in 2021 to $45.8 billion in 2026, driven by the development of digital music streaming subscriptions.

- Massive data consumption is being fueled by the expansion of content. Data consumption was 2.6 million petabytes (PB) in 2021, and it is projected to increase by 26 per cent CAGR to 8.1 million PB by 2026. With a predicted CAGR of 29.6 per cent, gaming will consume data at the quickest rate during the projection period. The fastest-growing device category between 2021 and 2026 will be mobile handsets, growing at a CAGR of 28.8 per cent and predicted to increase mobile data usage from 1.1 PB to 3.8 PB.

PwC Germany Global Entertainment And Media Industry Leader Werner Ballhaus said, “Industry press tends to focus on the companies that have dominated the E&M industry. But it is the choices that billions of consumers make about where they will invest their time, attention and money that are fueling the industry’s transformation and driving the trends.  We are seeing the emergence of a global E&M consumer base for the coming years that is younger, more digital and more into streaming and gaming than the current consumer population. This is shaping the future of the industry.”

North America dominates per capita E&M, but faster growth resides elsewhere: Regionally, North America has by far the biggest E&M expenditures per capita at $2,229, nearly double that of Western Europe's $1,158. In contrast, Asia Pacific, which had E&M sales of $844.7 billion in 2021, had a per-capita expenditure of $224. Of all regions in the world, the Middle East and Africa spend $82 less per capita on E&M.

While OTT video and gaming account for the majority of revenue growth, esports and the cinema industry are also experiencing rapid expansion. Latin America, the Middle East, Africa, and Asia make up the top ten growth markets by CAGR. The countries with the best prospects for E&M consumer spend growth over the five-year forecast period are Turkey (estimated 14.2 per cent CAGR), Argentina (10.4 per cent), India (9.1 per cent), and Nigeria (8.8 per cent).

The metaverse awaits: The metaverse may soon develop into a wonderfully realistic environment where people may access immersive virtual experiences using a VR headset or other connecting device. The potential financial and commercial worth of the metaverse extends far beyond VR because it is an evolution that might fundamentally alter how companies and customers engage with goods, services, and one another. Over time, a significant portion of the profits from video games, musical performances, advertisements, and even online shopping may move into the metaverse.

How big is the E&M opportunity in the metaverse?  

One place to start is the rapidly expanding VR sector. Although it is now one of the less significant areas studied, the 36 per cent increase in global spending over the previous year gives an indication of its long-term potential. The number of stand-alone and tethered VR headsets installed worldwide is expected to increase from 21.6 million in 2021 to 65.9 million in 2026.

Ballhaus added, “With the impressive growth and potential of the E&M industry comes tremendous volatility and what we describe as fault lines and fractures opening up between companies, within sectors and across geographies and generations. For businesses, intense competition and continual disruption will remain the order of the day. Our data shows the mix of revenues and spending is changing rapidly. As fault lines proliferate and widen, every business in E&M stands to be disrupted. The challenge and goal must be to understand your consumer and end up on the right side of disruption.”

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