News — 12 June 2012

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Global spend on entertainment and media services, according to a new Global Media and Entertainment Outlook report out from PwC, will reach $ 2.1 trillion by 2016, from $ 1.6 trillion in 2011. But the continuing change to digital over physical distribution will mean that growth will come at a slower pace than in previous years — and at a rate slower than that of overall GDP, 5.7 percent versus 6.6 percent. PwC says digital spend will generate 67 percent of E&M spendng growth in the next five years.

Ironically, although the move to digital means more efficiency and therefore less spend on entertainment and media services, that trend is actually helping some sectors: music, led by digital purchases, will rise in 2013 after years of decline. PwC says that digital accounted for one-third of all recorded music spend in 2011, and it will overtake global spend on physical music (CDs mainly) in 2015. Similarly, PwC notes that spend on digital ads for consumer magazines will offset declines in print ads for that sector.

Digital also continues to cannibalize older formats: over-the-top and streamed video services will be worth $ 11 billion in 2016, overtaking spend for TV subscriptions in 2012.

Some other notable points in PwC’s annual outlook report:

– Other digital advances: digital paid circulation for consumer magazines will account for 6.5 percent of total circulation spend by 2016. In books, print spend will fall by 11 percent, while spend on e-books will rise by 30.3 percent to $ 20.8 billion (18 percent of all spend by 2016). The U.S. currently accounts for 61 percent of all global spend on e-books.

– Consumer spend: it will be nearly $ 1 trillion in 2016 ($ 966 billion). Video games will be the fastest-growing segment of consumer/end-user spending during the next five years; TV subscriptions and related fees follow. Spend on more analog services like printed magazines is on the decline.

– Internet access spend (both mobile and fixed) will go up to $ 493 billion in 2016 from $ 317 billion in 2011. Mobile internet access continues to take wallet share: it accounted for 40 percent of all Internet access spend, and will go up to 46 percent by 2016. There are now 1.2 billion people using mobile internet services; that number will rise to 2.9 billion in 2016. India, it says, is leading the pack on mobile internet growth, growing at over 50 percent in numbers and 42.4 percent in value.

– Overall, advertising is growing but still slower than it did back in 2007 or even 2010. It was up by 3.6 percent last year, compared to 7 percent in 2010, boosted by the World Cup and Winter Olympics — an impact that might get repeated in 2012 with the Summer Olympics. Spend in 2011 was $ 486b, and that will grow to $ 661b in 2016.

– Digital advertising growth is still outstripping that of more traditional formats, although it is still a relatively small portion of overall spend. Through 2016, internet advertising is growing at a rate of nearly 16 percent, with video games advertising growing by 11.2 percent — compared to formats like TV ads (6.6 percent growth); radio (3.8 percent) and print segments (less than 3.5 percent compounded annually).

– China’s internet advertising market will grow the fastest over the next five years, and will be with $ 31 billion in 2016, putting it second behind the U.S.

– Mobile advertising spend will be $ 24.5 billion in 2016, up from $ 5.2 billion in 2011.

– The U.S. is currently way ahead of the pack of individual countries when it comes to E&M spend. It accounted for $ 464 billion in 2011, almost one-third of all spend, with Japan the second-closed at $ 193 billion. But developing markets, led by Latin America, will continue to see faster growth in the future. The slowest-growing EMEA will remain the biggest overall region in the next five years, with $ 678 billion in annual spend by 2016.

– Country breakdown. PwC says in 2011 there were 13 countries with E&M spend above $ 25 billion. The top four: the United States at $ 464 billion, Japan at $ 193 billion, the PRC at $ 109 billion, and Germany at $ 99 billion. The PRC passed Germany in 2011 to become the third largest E&M market in the world, it says. Of the leading countries, the PRC and Brazil will be the fastest growing with projected compound annual increases of 12.0 percent and 10.6 percent, respectively. Brazil overtook South Korea in 2011 to move into ninth place, and during the next five years will pass Canada and Italy to become the seventh largest market.

[Image: espensorvik, Flickr]



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