14 December 2015

PwC upbeat about digital entertainment and media, traditional media resilience

Global entertainment and media outlook 2015 to 2019 presented in categories
Source: PwC website.

PwC Middle East has launched Middle East and Africa insights from PwC’s 16th annual edition of the Global Entertainment & Media Outlook 2015-2019* (Outlook) at the Dubai Film Market on December 10, 2015.

According to the Outlook, the rise of mobile Internet is an important opportunity for data-driven advertising. Mobile Internet subscribers in the Middle East and Africa are expected to grow at a CAGR of 21.9% to 2019, and global smartphone connections are forecast to double from 1.92 billion in 2014 to 3.85 billion in 2019 (half the world’s population). PwC forecasts that the global mobile Internet advertising spend will be second only to search spend, surpassing display by 2018, growing at a CAGR of 23.1%.

In the Middle East and Africa, entertainment and media spend will increase from US$38.8 million in 2014 to US$61.1 million in 2019. Consumers now want flexible, on-demand TV and film viewing across platforms, with over the top (OTT)/streaming reaching US$19.2 billion globally by 2019.

In the Middle East, Saudi Arabia is expected to have the highest film market revenue growth (albeit from a low base) at a CAGR of 18.5% from 2014-2019, driven by OTT/streaming and because there is no cinema sector in the country. In the UAE, popular TV and film intellectual property (IP) is going omnichannel. It is being integrated beyond the big screen into leisure attractions, including several upcoming theme parks. The UAE has a relatively large filmed entertainment industry for the region, expected to reach US$141.9 million by 2019.

Philip Shepherd, PwC Middle East’s Entertainment and Media Partner said: “With the availability of all digital resources at our fingertips, consumers will choose the most convenient, flexible and fastest methods to connect digitally.”

Jayant Bhargava, Middle East Digital Media and Entertainment Partner with Strategy& (formerly Booz & Company) said: “Time spent with media and video viewing is at an all-time high. Proliferation of devices and connectivity is driving a culture of media snacking and multitasking. Today, consumers have access to a wide range of content and a multitude choice of how and when to view it. This is driving an explosion in video content and new genres are being introduced by emerging artists world over.”

Globally, worldwide entertainment and media revenues will rise at a CAGR of 5.1% over the coming five years, from US$1.74 trillion in 2014 to US$2.23 trillion in 2019, PwC said.
Global highlights include:
The content experience trumps delivery platforms

PwC notes that consumers disregard distinctions between ‘digital’ and ‘non-digital’, instead exploiting the digital medium in what, when and how they consume. "In making these choices, they’re migrating to offerings that combine relevance and convenience - attractive content, easy discovery, social community - with an inspiring, personalised experience, however it’s delivered," the company noted.

As a result, non-digital media will still contribute well over 80% of global consumer revenues in 2019. Spending on live music ticket sales and cinema box office will rise at a combined global CAGR of 4.7% to 2019, outpacing overall consumer spending at 2.9%. In China, box office revenues will rise at a CAGR of 15.5%.

Marcel Fenez, PwC’s Global leader, entertainment and media, comments: "Digital or non-digital - for consumers it’s all about content experiences. Given the wide variations in consumer preferences, the challenge for entertainment and media companies is to blend data insights and consumer intuition to maximise the value of the experiences they offer. The prize for achieving this is heightened by the fact that the consumer has never been more up for grabs than today."
Advertising growth is primarily digital

Turning to advertising, total global advertising revenues will rise at a CAGR of 4.7% to 2019. Again there will be wide variations by territory, with Indonesia the fastest-growing ad market at a CAGR of 12.9% to 2019. Like consumer revenues, advertising will see digital growth and non-digital resilience: while global digital advertising revenue will rise at a 12.2% CAGR against just 1.2% for non-digital advertising, non-digital will still contribute over 60% of global ad spend in 2019.

The direction is toward digital, however. By 2019, digital advertising as a whole - including digital out-of-home - will account for 38.7% of total global advertising revenue, up from just 16.6% in 2010. Mobile Internet advertising will surge at a 23.1% CAGR to 2019, and video advertising spend globally will rise at a CAGR of 19.5%, supported by a near-doubling of global smartphone connections to 3.85 billion in 2019.

Alongside Internet advertising, digital out-of-home advertising (DOOH) will be another high-growth area, with revenues rising at a 13.2% CAGR. Given the high costs of upgrading OOH to digital formats, the most lucrative markets for DOOH advertising will be major cities. By 2019, Singapore will see DOOH advertising account for 60.4% of total OOH advertising revenue.

Consumers migrate to new media consumption behaviours

Underlying the trends in entertainment and media spending detailed in the Outlook is the migration by consumers worldwide to new ways of consuming content. One of the clearest shifts is in TV and video consumption, with consumers increasingly demanding high-quality original programming in a flexible, on-demand manner across numerous devices - thus enabling ‘binge viewing’ and greater convenience. OTT services offer the best outlet for this type of consumption.

A further shift toward social/casual gaming is underway, spending on which will exceed traditional gaming in nine markets by 2019, including India. While territories with long-established console and PC game markets continue to be dominated by traditional gaming revenue, the global growth of social/casual gaming will create a US$22.52 billion market by the end of the forecast period.

Newspaper consumption is also changing, with consumers increasingly willing to pay for premium content. Online paywalls are now making up for newspapers’ lost print circulation revenues globally, with a wave of subscription offerings boosting newspapers’ digital circulation revenues to nearly US$2.5 billion in 2014. In aggregate, as digital subscription revenues gain momentum globally and print subscriptions continue to shrink, total global newspaper circulation revenue is set to record year-on-year increases - a pattern that began in 2013.
*PwC’s 16th annual update of the Global Entertainment & Media Outlook 2015-2019 (Outlook) provides a single comparable source of five-year forecast and five-year historic consumer and advertiser spending data and commentary, for 13 entertainment and media segments, across 54 countries. Segments covered by the Outlook include TV subscriptions and licence fees, TV advertising, Internet access, radio, Out-of-home advertising, Video games, Filmed entertainment, newspaper publishing, Magazine publishing, Business-to-business, Internet advertising, book publishing and Music. Information may not align with the online version as the data is constantly updated. Refer to the online Outlook as the most up-to-date source of consumer and advertising spend data.