NEW YORK, June 14, 2011 /PRNewswire/ -- As we move into thegolden age of the empowered consumer, the demand for digitalexperiences is increasing and becoming the norm, according to PwC'sGlobal entertainment and media outlook: 2011-2015 (Outlook) - themost comprehensive five-year outlook for global consumer spendingand advertising revenues directly related to entertainment and mediacontent - released today. The report finds that digital isacknowledged as the central driver of future operating models,consumer relationships and revenue growth. Emerging out of recessionand into recovery in 2010, the Outlook forecasts that globalentertainment and media (E&M) spending is expected to rise from $1.4trillion in 2010 to $1.9 trillion by 2015, growing at a compoundannual growth rate (CAGR) of 5.7 percent. The U.S. E&M market isexpected to grow at 4.6 percent CAGR reaching $555 billion in 2015,from $443 billion in 2010.
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According to the Outlook, the entire E&M industry is being drivento create experiences that engage today's empowered consumer byredesigning the content experience to be multi-purpose and multi-platform which, in turn, creates multiple opportunities formonetization.
"Triggered in large part by the device revolution, the consumermigration to digital has continued at an even faster pace and at thesame time advertisers are responding by seeking a greaterinvolvement with the consumer's media and entertainment experience,"said Ken Sharkey, entertainment, media & communications US practiceleader, PwC. "The biggest challenge for E&M companies is to turnfive key attributes that matter to consumers - convenience,experience, quality, participation and privilege - into sustainable,profitable and engaged relationships by offering advantages thatoutweigh the attractiveness of free or pirated content."
While digital currently accounts for just over a quarter of totalindustry revenues, it is expected to account for 58.7 percent of allgrowth in spending during the next five years, globally. Digitalspending in the U.S. is expected to account for 28.5 percent of allE&M spending in 2015, up from 20.6 percent in 2010.
Advertising rebounds with largest year-on-year swing
Advertising, the most cyclically sensitive of the three E&Mspending streams (advertising, consumer and end-user spending),recorded the largest year-on-year swing, rebounding in the U.S. at5.4 percent in 2010 from a 14.4 percent slump in 2009. Overall, U.S.advertising is expected to increase at a 4.2 percent CAGR from $170billion in 2010 to $208 billion in 2015. Internet advertising isexpected to average 12.2 percent CAGR, while video games and cinemaadvertising, the two smallest segments, are expected to grow by 8.0percent and 6.7 percent CAGR, respectively. Television advertising,the largest segment, is expected to grow at 4.9 percent CAGR.Directories (-1.8 percent) and newspaper advertising (-0.2 percent)are expected to be the only categories to decline.
According to the Outlook, as content providers leverage creativethinking and innovation to drive digital revenues, advertisers andagencies are becoming increasingly sophisticated in identifying andcreating new brand opportunities and ways to engage with consumerson digital content services and platforms - and they're listeningand engaging directly with consumers to a greater extent. These newapproaches are aiding the unexpected strong recovery in advertisingand restoring the attractiveness of advertising-funded models, whichare often blended with a subscription model.
Rise of the Collaborative Digital Enterprise
Digitization is opening up major opportunities for new types ofservices, business models, collaborative partnerships and consumerrelationships across the E&M industry. Advances in all these areasare emerging daily on the back of the ongoing flood of innovation indevices, delivery methods and pricing.
This is leading towards a new operating model specificallydesigned for the digital ecosystem - the Collaborative DigitalEnterprise (CDE) - an enterprise which is technology driven anddynamic, interconnected and continuously engaged with its entirecustomer, employee and supplier ecosystem.
According to PwC, a collaborative digital enterprise needs toembrace three industry-wide dynamics to achieve success in theemerging digital environment:
Digital: the rapid and accelerating digitization of elementsincluding content, business processes, and product innovation.Social media, mobility and the explosion of apps have already hadprofound impacts which will continue to grow.
Demand: Consumers are empowered, connected, able to influencelarge communities of people, and ready to play an increasinglycollaborative role in developing new E&M products and services.
Data: the proliferation of digitized content, web access andsocial media means companies have the ability to mine and analyzedetailed/contextual information which hasn't previously beenavailable. Data is key to the interface between consumers, contentexperience and brand as well as to innovation.
"The year 2011 has experienced a surge in collaborativepartnering spurring the transformation of the E&M industry over thenext five years into a digital collaborative ecosystem. This modelis expected to emerge as the template of success and by 2015, mostE&M companies and the vast majority of the winners will have digitalcollaboration infused into their DNA. The real question, then, ishow quickly it comes about," added Sharkey.
U.S. segment highlights
In the U.S., Internet access and Internet advertising is expectedto continue to outperform the other E&M segments, with 7.8 percentand 12.2 percent CAGR, respectively. TV subscriptions (5.6 percentCAGR), filmed entertainment (5.4 percent CAGR), and out-of-homeadvertising (5.4 percent CAGR) are set to grow more than 5 percentcompounded annually. TV advertising (4.9 percent CAGR), video games(4.6 percent CAGR), business-to-business publishing (4.1 percentCAGR), consumer magazine publishing (3.5 percent CAGR), radio (3.5percent CAGR) and consumer and educational book publishing (2.1percent CAGR) are expected to generate modest growth. Spending onrecorded music (-0.4 percent CAGR) and newspaper publishing (-0.4percent CAGR), and are expected to each be lower in 2015 than in2010. Overall, U.S. consumer/end-user spending is expected to growby 4.3 percent CAGR.
About the Outlook
PwC's Global Entertainment & Media Outlook 2011-2015, the 12thannual edition, contains in-depth analyses and forecasts of 13 majorindustry segments across four global regions: North America (USA,Canada), EMEA (Europe, Middle East, Africa), Asia Pacific and LatinAmerica. The Outlook offers a five-year outlook for global consumerspending and advertising revenues directly related to entertainmentand media content, along with insights into the technology,government, political, and business trends driving those forecasts.To order online access, visit: http://www.pwc.com/outlook.
Digital Spending
Digital spending, as included in the Outlook, consists ofbroadband and mobile Internet access, online and mobile Internetadvertising, video-on-demand, mobile TV subscriptions, digitalmusic, electronic home video, online and wireless video games,digital consumer magazine circulation spending, digital newspapercirculation spending, digital trade magazine circulation spending,electronic consumer, educational and professional books, andsatellite radio subscriptions.
About the PwC Network
PwC firms provide industry-focused assurance, tax and advisoryservices to enhance value for their clients. More than 161,000people in 154 countries in firms across the PwC network share theirthinking, experience and solutions to develop fresh perspectives andpractical advice. See www.pwc.com for more information.
(c) 2011 PwC. All rights reserved. "PwC" and "PwC US" refer toPricewaterhouseCoopers LLP, a Delaware limited liabilitypartnership, which is a member firm of PricewaterhouseCoopersInternational Limited, each member firm of which is a separate legalentity. This document is for general information purposes only, andshould not be used as a substitute for consultation withprofessional advisors.
SOURCE PwC
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