Our world is changing, people consume media in different ways and TV Producers, traditional Broadcasters and upstart Online Content Creators will all have to adapt because the convergence rallying cry of a decade ago was wrong. Content isn’t king, the consumer is and how and when, where and why they want to watch, listen and read will change everything. And of course since we are a forward looking media company we’re on it. And since we like you, we’re sharing this important new study on global media consumption habits.
Total entertainment and media spending on digital services is forecast to grow at a 12.2% compound annual growth rate (CAGR) between 2013 and 2018 and account for 65% of global entertainment and media spending growth, excluding spending on Internet access. Advertising is leading the way; in 2018, 33% of total advertising revenue is forecast to be digital, compared to 17% of consumer revenue.
However, profiting from the migration by increasing revenue from digital consumers will not just be about the application of digital technology. It will be about applying a ‘digital mindset’ to build the right behaviours, advancing from a digital strategy to a business strategy fit for a digital age, according to PwC’s Global entertainment and media outlook 2014-2018 (Outlook).
Marcel Fenez, PwC’s Global leader, entertainment & media, says:
“The bedrock of a strategy fit for the digital age is the digital mindset: getting ever closer to the customer – across the entire organisation, and in everything it does. We now see that mindset embedded in many entertainment and media companies. But the industry needs to get even closer to the consumer and adopt more flexible business models. To do this, companies must exhibit three behaviours: forging trust with consumers; creating the confidence to move with speed and agility; and empowering innovation. This will be an important step in monetising the digital consumer.”
Approaching a significant advertising tipping point
Mobile Internet penetration will reach 55% in 2018, which will help drive digital advertising to increase its share of total advertising revenue to 33% by 2018, up from 14% in 2009. With Internet advertising growing at a 10.7% CAGR (compared to a total advertising CAGR of 4.4%), the industry is approaching a significant tipping point: in 2018, Internet advertising will be poised to surpass TV advertising. In 2009, TV advertising was double that of Internet advertising; in 2018, Internet advertising will trail TV advertising by just US$20bn. Mobile Internet advertising is forecast to grow at a CAGR of 21.5%.
Monetising the digital consumer: challenge and opportunity
Spending on digitally delivered content will account for only 17% of total consumer spending in 2018 (excluding spending on Internet access), compared to 33% of total advertising spending. However, the growth of ‘24/7 access’ and micro-transactions suggest that the key to monetising the digital consumer is to adopt flexible business models that offer more choices and better experiences. Electronic home video over-the-top (OTT)/streaming and digital music streaming are two of the fastest-growing consumer sub-segments cited in the Outlook, set to rise at annual rates of 28.1% and 13.4% respectively.
Nine markets driving growth
Nine high-growth markets are powering global entertainment and media revenue. China, Brazil, Russia, India, Mexico, South Africa, Turkey, Argentina and Indonesia collectively are forecast to account for 21.7% of global entertainment and media revenue in 2018, up from just 12.4% in 2009. Also in 2018, China will overtake Japan as the world’s second-largest entertainment and media market, behind only the US.
Marcel Fenez, PwC’s Global leader, entertainment and media, says:
“What all these markets have in common is a growing middle class boosting spending in entertainment and media. But the similarities stop there. Realising the revenue potential of these markets demands a deep understanding of the local context.Given their intimate local market knowledge, domestic organisations are in prime position to realise the opportunity of the emerging middle class The optimal approach for international players will most certainly be to collaborate with local partners.”