PwC: U.K. to Remain Leading E&M Market in Europe

The U.K. is projected to maintain its position as the leading entertainment and media market in Europe over the next four years, according to PwC’s latest Global Entertainment & Media (E&M) Outlook 2023-2027.

U.K. E&M revenue is expected to reach £85 billion this year, with growth forecast at a compound annual growth rate of 4 percent over the next four years to generate revenue of £100 billion overall by 2027.

Internet access is forecast to generate significant revenue, with the Outlook expecting £16.7 billion this year before growing to £20 billion by 2027. By 2027, mobile internet access revenue will account for 55 percent of total internet access revenue.

SVOD revenue is forecast to grow from £3.6 billion this year to £4.7 billion by 2027. In 2025, it is forecast that SVOD (£4.2 billion) will overtake TV subscriptions (£4.1 billion) in terms of revenue, reflecting a shift in audiences from linear to streaming.

Overall advertising revenue in the U.K. is expected to be £35.7 billion in 2023, within which digitally captures the lion’s share. Internet advertising revenue of £27.5 billion is forecast for 2023 before reaching £35.5 billion by 2027, at a CAGR of 6 percent. TV advertising is expected to decline by 3 percent in 2023 as budgets have tightened but then recover with 4 percent growth in 2024 (£4.8 billion).

The VR market in the U.K. is expected to see steady growth in the next four years. Total U.K. VR revenue is set to increase from £1.3 billion in 2023 to £2 billion in 2027 at 10 percent CAGR.

Mary Shelton Rose, partner and U.K. technology, media and telecoms leader at PwC, said: “2022 was a challenging year for the UK entertainment and media industry as the economy struggled to return to normality. In the midst of continued change and disruption, the industry reassessed its strategies and refocused on core operations.

“For years, the overarching story in E&M has been a technology-inspired shift to digital and mobile. But this year, very quickly, a new force is coming into focus: Generative AI. Going forward, leaders must evaluate and embrace the potential power of AI holistically as an enabler for productivity and creativity.”

Dan Bunyan, partner at PwC Strategy, said: “The internet advertising sector remains highly dynamic. We continue to see spend moving into new channels (e.g. retail media, gaming), new data sets (e.g. cookieless solutions, contextual data), as brands reassess the most fruitful ways to engage consumers online. This spending growth is underpinned by continued product innovation in the sector, as well as M&A activity to enable vendors to deliver these services.

“Generative AI is likely to play a growing role in the U.K. internet advertising market, across a range of channels and content creation. For example, within the search segment of the market, we have seen the integration of Generative AI technology into search engines, starting with the inclusion of Chat GPT in Microsoft’s Bing and the launch of Google’s own Bard platform. Further adoption and calibration of Generative AI tools across the digital marketing ecosystem is likely to drive further competitive innovation.”

Bunyan added: “The media industry continues to add significant value to the UK via inbound investment, export value, new creative IP, tech infrastructure, and high levels of consumer engagement. Brands and media owners should be confident to be on the front foot as the economy recovers and consumer confidence returns.”