PwC: Digital is the ‘New Normal’ in Entertainment, Media Business

NEW YORK: Bolstered by consumer demand for digital experiences, the global media and entertainment market is expected to grow from $1.4 trillion in 2010 to $1.9 trillion in 2015, a 5.7-percent compound annual growth rate, reports PwC in its latest outlook.

The U.S. E&M market alone will see a 4.6 percent CAGR, PwC notes, reaching $555 billion in 2015. in EMEA, E&M spending is forecast to rise to $614 billion in 2015, a 5.2 percent CAGR. In EMEA, Germany is the largest E&M market, followed by the U.K. and France. The fastest-growing market is the Middle East/North Africa, with a 13.1 percent CAGR, as compared with 10.1 percent for CEE and 3.8 percent for Western Europe. In the Asia Pacific, a 6.5 percent CAGR is predicted for the E&M segment, which is expected to reach $539 billion in 2015. Japan remains the dominant market, followed by China, South Korea, Australia, India and Indonesia. Latin America, PwC says, will remain the fastest-growing E&M market in the world with a 10.5 percent CAGR to reach $109 billion in 2015. Brazil and Mexico are the dominant markets.

According to PwC, the global E&M business is being driven by the need to engage consumers with content on multiple devices—in turn creating multiple opportunities for monetization.

"Triggered in large part by the device revolution, the consumer migration to digital has continued at an even faster pace and at the same time advertisers are responding by seeking a greater involvement with the consumer‚s media and entertainment experience," said Ken Sharkey, the entertainment, media and communications U.S. practice leader at PwC. "The biggest challenge for E&M companies is to turn five key attributes that matter to consumers—convenience, experience, quality, participation and privilege—into sustainable, profitable and engaged relationships by offering advantages that outweigh the attractiveness of free or pirated content."

Digital is expected to account for 33.9 percent of E&M spending in 2015, PwC says, up from 26 percent this year.

Advertising is also on the rise; in the U.S. there was a 5.4-percent bump in 2010 as compared with a 14.4-percent slump in 2009. Globally, television advertising, the largest segment, is expected to grow at a 6.5 percent CAGR from 2011 to 2015, reaching $232.6 billion, out of a total of $577.6 billion.

PwC also sees a 7 percent CAGR for TV subscription and license fees, which are expected to rise from $203.1 billion in 2010 to $285.2 billion in 2015. The global television subscription and license fee market increased by 5.9 percent in 2010, led by double-digit gains in Latin America and Asia Pacific. PwC sees tremendous gains in pay-TV penetration rates in those two regions over the next five years.