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Double-digit growth is expected for digital and mobile spending in each territory during the next five years rising to $153 billion by 2011. Spending related to the distribution of entertainment and media on convergent platforms (convergence of the home computer, wireless handset and television) is also growing at double-digit rates and will exceed 50% of global spending by 2011. According to PricewaterhouseCoopers Global Entertainment and Media Outlook 2007-2011, released today.
Within the next five years, nearly half of the total industry growth is expected to be generated through online and wireless technologies and, during the same period, broadband households will grow by 300 million to 540 million subscribers and wireless subscribers will increase by 1.1 billion to 3.4 billion. The migration to digital formats is having an adverse impact on competing revenue streams while consumer-generated media is accelerating content fragmentation, the report highlights.
Overall, the global entertainment & media (E&M) industry is experiencing sustained growth and will increase at a 6.4% compound annual growth rate (CAGR) to $2 trillion in 2011, according The Internet (13.4% CAGR), TV distribution (9.3% CAGR) and video games (9.1% CAGR) will be the fastest growing segments.
In every region, spending on convergent platforms will grow faster than other E&M platforms and will account for 72% of the total E&M growth during the next five years. Asia Pacific will be the fastest-growing convergent platform region with a projected 13.5% increase.
Marcel Fenez, Asia Pacific Leader, Entertainment & Media practice, PricewaterhouseCoopers, said:
"The surge in broadband and wireless adoption is generating new digital revenue streams across multiple segments. Broadband growth is driving online advertising while the proliferation of next-generation wireless devices designed to play digital music, video games and receive TV programming is fuelling mobile distribution. For example, Asia Pacific spending on distribution of television programming on mobile phones is expected to reach $6.5 billion in 2011 from just $26 million in 2006."
Global advertising will increase at a 5.4% CAGR during the forecast period, rising to $531 billion in 2011 from $407 billion in 2006. Internet will remain the fastest-growing advertising medium, with a projected 18.3% compound annual increase to $73 billion in 2011. Advertising on the internet has truly come of age, and by 2011 will comprise 14% of the global advertising market. Out-of-home will be the second fastest growing advertising medium, with a projected 6.5% compound annual increase.
Asia Pacific will remain the fastest-growing region during the next five years, with the fastest economic growth and double digit increases in Internet, TV distribution, casino and other regulated gaming and video games. Spending in Asia Pacific will average 9.6% annual growth, the fastest of any region, increasing from $297 billion in 2006 to $470 billion in 2011. India will be the fastest growing during the next five years at 18.5% CAGR while China will continue to record double-digit annual gains that will average 16.8% CAGR. Together growth in India and China will account for 17.5% of total global growth.
The China E&M growth story is propelled both by advertising growth at 15% CAGR and consumer spending at 17.1% CAGR. In addition to strong economic fundamentals, advertising growth is being driven in the run up to the 2008 Beijing Olympics, when growth in ad spend will reach 27%, but in the years following will level out at between 10-12% annually for 2009-11. All sectors benefit from the advertising growth but in particular on-line advertising stands out at 33% CAGR with the result that by 2011, 11.7% of advertising spending will be on line in China compared with only 5.6% in 2006. The growth is being facilitated by the level of broadband penetration, which will reach 160 million households by 2011 and facilitated by strong domestic portals.
Consumer spending in China is very strong in Internet access (16.9% CAGR), Film (12% CAGR), Video Games (10% CAGR) and TV distribution (18.1%). Spending on mobile platforms in the latter two categories will be significant elements of the growth with mobile TV revenues expected to be approx US$2 billion by 2011 from zero today.
While the E&M market in China is experiencing unprecedented growth, it remains out of reach for many overseas media companies. As a consequence "Foreign media companies are diverting their attention and investments to India, where although the market in overall size is smaller it presents similar growth rates and is easier to access" noted Mr Fenez. "The industry is patiently awaiting the opening up of the China sector to foreign investment and hopes that the approach of the Beijing Olympics will help provide the impetus for this".
The E&M market in Hong Kong is in a period of strong growth and has weathered the challenges of illegal downloads and piracy. Advertising spending is forecast to remain robust at 6.3% CAGR and, while spending on-line is forecast to grow at approximately 10% CAGR, both television and newspapers continue to dominate as compelling advertising medium. Mr Fenez noted that, "In the context of the Hong Kong market, Newspapers and Television, continue to deliver value to local advertisers in terms of helping to build brands and reaching the mass market"
Once known for its thriving Film industry, it is Hong Kong's television industry that has developed into the major medium and is set to account for 30% of the total E&M market by 2011. Hong Kong has emerged as the leading market for IPTV and is likely to be for mobile TV. Mr Fenez commented that "Hong Kong's TV industry has a competitive advantage in terms of production capabilities over many of its regional counterparts. This needs to be further harnessed and leveraged in order to ensure that the opportunities are maximised and that the advantage is not eroded".
During 2006, Casino revenues in Macau surpassed the Las Vegas Strip and new casinos and upgrades of existing casinos will boost overall revenues at a 17.1% CAGR, to reach US$15.5 billion by 2011. The rate of increase will begin to moderate towards the end of the forecast period as the Integrated Resort development in Singapore is completed. "Throughout the forecast period the growth in the sector remains supply driven" concluded Mr Fenez.
About the Outlook
PricewaterhouseCoopers Global Entertainment and Media Outlook: 2007-2011, the eighth annual edition, contains in-depth analyses and forecasts of 14 major industry segments across five regions of the globe - the United States, EMEA (Europe, Middle East, Africa), Asia Pacific, Latin America, and Canada - plus a Global Overview. It is available in hard copy or electronically (PDF) for US$995 at our global website. The Global Overview is available separately for US$95 in hard copy or electronically, and individual segment chapters are also available for US$95 in electronic format only. |
