Media sector set for growth

12 June 2012

LONDON: Internet and TV advertising will provide a boost to global entertainment and media (E&M) expenditure over the next few years, a report from PricewaterhouseCoopers (PwC) has suggested.

The business services firm's new Global Entertainment & Media Outlook 2012–2016 forecasts that the sector will rise in value to $2.1tr worldwide in 2016, up from $1.6tr in 2011. This implies annual growth of +5.7% over the five-year period.

PwC predicted that E&M growth will lag behind GDP expansion, which is forecast to average +6.6% over the five years to 2016. The report cited the general shift to lower-cost digital distribution of media content as a key reason for this underperformance.

Further, PwC suggested that the industry is in the process of adapting to the "new normal", with expenditure shifting not just from print media to digital media, but from fixed-line to mobile consumption, and from mature markets to fast-growth economies in the global south.

Commenting on the report, Phil Stokes, lead entertainment and media partner at PwC, said: "E&M companies have reached what we're calling the 'end of the digital beginning': they've made the commitment to a digital future, and are now striving to make the necessary changes to their products, distribution and organisations to deliver sustainable – and profitable – growth."

Within the E&M total, adspend growth was forecast to outperform the sectoral average, rising by +6.4% per year to reach $661bn by 2016.

By media channel, online advertising is expected to record the sharpest increase in expenditure, up +15.9% annually. TV is also set to outperform the all-media average, rising +6.6% per year.

But these rapid increases are counterbalanced by print media, which are forecast to grow by around +3.5% annually.

Consumer spending on entertainment and media, the largest single component of the sectoral total, was earmarked for global annual increases of +3.8% over the years to 2016, reaching $966bn.

There are also likely to be large disparities between regions in terms of E&M sector spending, with the report earmarking Latin America as the top performer with an average annual expansion of +9.7%. But the EMEA region will find growth affected by the after-effects of the global credit crunch and sovereign debt crisis, rising by just 4.3%.

Nevertheless, EMEA is set to retain its position as the world's largest entertainment and media region, with $678bn spent there in 2016. North America will also remain in second place, rising +5.3% per year to reach $658bn, while Asia-Pacific will hit $651bn following annual growth of +7.1%.

Data sourced from PwC; additional content by Warc staff