PwC Projects Strong Gains for OTT, SVOD Revenues

NEW YORK: OTT and on-demand revenues will reach $17 billion in the U.S. by 2018, PwC indicates in its newest Entertainment & Media Outlook, far eclipsing physical home video revenues of $8.7 billion.

According to the Global Entertainment and Media Outlook 2014-2018, SVOD revenues alone are set to rise from $3.3 billion last year to $10.1 billion in 2018, making this one of the fastest-growing E&M segments in the U.S. Physical home video revenues, meanwhile, are expected to continue declining. Box office revenues, however, are projected to rise from $11.6 billion last year to $13.4 billion in 2018.

Overall E&M spending is projected to increase from $1.8 trillion in 2013 to $2.3 trillion in 2018, a 5 percent compound annual growth rate (CAGR). The U.S. will remain the largest E&M market, with spending reaching $724 billion in 2018.

Digital remains a key growth driver. As such, PwC advises that companies "operate with a digital mindset," focusing on developing trust with consumers, creating an environment that encourages innovation and being confident enough to move with speed and agility.

“The consumer is now at the center of their own entertainment and media world, pivoting from finding to being found by content experiences via every channel and device,” said Ken Sharkey, PwC’s U.S. entertainment, media & communications practice leader. “The battle for relevancy has never been greater as E&M businesses are being joined by companies from other industries such as retailers, automakers and utilities to compete head on for the same consumer relationship. E&M businesses may need to look beyond technology, and adopt more flexible business models that allow them to get closer to the consumer. What’s important to the consumer is the specific experience—whether it’s live or on-demand and on any screen.”

Deborah Bothun, PwC’s U.S. advisory entertainment media and communications leader, added: “As entertainment and media companies increasingly cross traditional boundaries to compete in each other’s core area, the race to achieve relevancy to the individual consumer and a greater share of lifetime value is expanding. Those players that achieve relevancy can join the consumer’s ‘inner circle of trust’. To stay there, they’ll need to apply innovation and agility to keep pace with the rollout of new ways to deliver, package and price content and services.”