PricewaterhouseCoopers Releases E&M Outlook

NEW YORK: PricewaterhouseCoopers forecasts that global entertainment and media spending will rise from $1.4 trillion to $1.6 trillion in 2013, growing at a compound annual growth rate (CAGR) of 2.7 percent. 

The newly released Global Entertainment and Media Outlook: 2009-2013 notes that the digital transition will create a more fragmented entertainment and media landscape in the next five years, yielding a variety of revenue models. The key to being profitable, the report says, is delivering a content experience that cannot be readily duplicated elsewhere, whether the revenue model is ad-supported, subscription or a combination. 

“The current economic slowdown, shifting consumer behavior and new ad-supported revenue models are triggering acceleration of digital migration," said Bill Cobourn, U.S. leader of the entertainment, media & communications practice at PricewaterhouseCoopers. "While the impact of these new models and dynamics throughout the entertainment and media industry will be strong, it also opens up new creative opportunities for the industry. The current decline in revenues is not because of declining demand. In fact, demand for E&M appears to be increasing. The challenge is to identify ad models that are able to withstand the downward pressure on ad rates in the digital environment and on subscription models that capture the consumers’ preferences for premium content."

The recession, the report continues, is accelerating the digital migration, pushing companies towards more efficient distribution and ad models, as consulers seek out higher value from their acquisitions. Digital spending will remain the industry’s main growth engine, rising in the U.S. from 17 percent of total industry revenues in 2008 to 25 percent in 2013. The overall U.S. E&M market will grow at 1.2 percent CAGR, reaching $495 billion in 2013. PwC forecasts that the growth rates of more digitally-driven segments such as Internet advertising and TV subscriptions will outperform the industry as a whole during both the downturn and the recovery.

With consumers seeking out greater control over how they access content, digital and mobile platforms will account for 78 percent of total consumer/end-user/access growth by 2013, expanding at a 12.2 percent CAGR to reach $387 billion (from $218 billion in 2008). This is compared with only a 1.2 percent CAGR for the non-digital marketplace. Digital and mobile platforms in the U.S. will account for 51 percent of total consumer/end-user/access growth, expanding at an 11.5 percent CAGR to $82 billion in 2013 from $48 billion in 2008, compared with 2.3 percent CAGR for the non-digital marketplace.

PwC also points to a new generation of ad-supported revenue models emerging to capitalize on new consumption habits. The Internet will account for 19 percent of U.S. advertising in 2013, compared with 13 percent in 2008 and only 5 percent in 2004.