The entertainment and media industry reconfigures amid recovery
2020 PwC Entertainment & Media Outlook
Wednesday, 2 September 2020 – According to PwC’s Global Entertainment & Media Outlook 2020–2024, the COVID-19 pandemic has accelerated and amplified ongoing shifts in consumers’ behaviour, pulling forward digital disruption and forging industry tipping points that wouldn’t have been reached for many years. As a result, the entertainment and media (E&M) world in 2020 has become more remote, more virtual, more streamed, more personal and – for now at least – more centred on the home than anyone anticipated at the start of the year.
Industry growth contracts sharply…but remains robust in the longer term
The pandemic afflicting the world has diminished the global E&M industry’s growth. Amid a global recession, 2020 will see the sharpest fall in global E&M revenue in the 21-year history of this research, with a decline of 5.6% from 2019 – more than EUR 100bn in absolute terms. In 2009, the last year the global economy shrank, total global E&M spending fell by “just” 3.0%.
Our projections show that in 2021, E&M spending will grow by 6.4%. Looking across the five-year forecast period, from 2019 to 2024, we’re forecasting overall revenue growth running at a 2.8% compound annual growth rate (CAGR).
Axel Smits, Chairman at PwC Belgium, comments: “While the shockwaves from 2020 will continue to ripple through the global economy, our forecast shows the global industry’s fundamental growth trajectory remains strong. In recent years, as media experiences have become ever more central to our lives, global E&M growth has typically outpaced GDP. After the challenges of 2020, we expect E&M to reassume its outperformance. A small market like Belgium will naturally follow these global trends, but given the volatility and uncertainty surrounding today's ever-changing context, concrete Belgian forecasts are difficult to make today.”
Tipping point timelines accelerate
As is the case in the economy at large, the current pain in E&M is not evenly shared around the industry. It’s most acute in segments that COVID-19 literally shut down, such as events: live music, cinema and trade shows. Spending on advertising likewise will fall by 13.4%. At the same time, the long-running transition in newspapers from print to digital has been fast-forwarded several years, cutting into papers’ print revenues, for example.
One result is that E&M segments are being transformed much earlier than was originally projected. Take cinema box office versus subscription video on demand (SVOD). As recently as 2015, box office revenue was three times SVOD. SVOD revenue will overtake box office in 2020 and is projected to surge away in the coming five years, reaching more than twice the size of box office in 2024. Or consider the amount of data consumed on smartphones versus on fixed broadband. Having taken a small lead in 2019, the smartphone is now set to pull away as the leading individual device used by consumers to access the Internet globally.
Winners and losers emerge
With people staying at home, over-the-top (OTT) video has seen global revenue surge by 26.0% in 2020. And it will keep rising strongly in the coming years, almost doubling in size from EUR 38.7bn in 2019 to EUR 72.4bn in 2024. The launch of the Disney+ streaming service in late 2019 could hardly have been better timed: having projected between 60mn and 90mn paying subscribers by 2024, Disney+ reached 60.5mn in early August 2020. Not surprisingly given the rise of streaming, global data consumption is another beneficiary of the digital acceleration powered by COVID-19. It will jump by 33.8% in 2020, and will more than double from 1.9 quadrillion megabytes (MB) in 2019 to 4.9 quadrillion MB in 2024.
At the other end of the scale are the segments that have been hit hardest. With many cinemas closed and major movie releases delayed, we project that total global cinema revenues will plunge by almost 66% this year. And it’s not likely that lost ground will be recovered; our forecast is that in 2024, cinema revenues for 2024 will be below their 2019 level. A further COVID-related impact is that the ongoing decline in global newspapers and consumer magazines has accelerated sharply in 2020, with overall revenues slumping by more than 14%, with consumer magazines suffering the most. That said, digital offers a silver lining: a tipping point for consumer magazines in 2023 will see their global revenue from digital advertising overtake that from print advertising. Other important sectors will struggle to claw back the growth they lost in 2019. For example, the global advertising sector – which will fall by 13.4% in 2020 to EUR 466.9 bn – is not expected to return to its 2019 level until 2022.
…as a vast industry reconfigures
Yet – perhaps counterintuitively – some “traditional” media has held its own despite the effects of COVID-19 and digital acceleration. Amid reports of book sales booming during lockdowns, total global consumer books revenue is projected to continue its upward trajectory, rising at 1.4% compounded annually between 2019 and 2024 to reach EUR 53,9bn. Significantly, technology is playing an important role, with increasing use of smartphones and smart speakers boosting uptake of audiobooks, enabling consumers to listen on-the-go.
Live physical events is another long-standing segment looking to adapt to the reality of an accelerated digital world. With concert halls, exhibition centres and stadiums closed for much of the year, some live events are using digital platforms to stay connected to their audiences. Tomorrowland, for example, organised a digital festival in Belgium with 3D stages and pre-recorded DJ sets that festival visitors could watch via their computer, smartphone or tablet. There have also been initiatives in other countries: in the UK, for example, London’s Wireless Festival teamed up with tech outfit MelodyVR in mid-2020 to deliver recorded virtual reality performances. More than 130,000 people from 34 countries attended virtually.
“Although 2020 has been a challenging and disruptive year for most industries – including many segments of E&M – it is clear that consumer demand for the varied and expanding array of media choices now on offer continues to grow. The revenue figures in this year’s Outlook reflect the full force of the economic downturns and digital acceleration triggered by COVID-19, but the longer-term outlook for the E&M industry as a whole remains bright. That said, it’s also clear that there will continue to be winners and losers.
It’s clear that COVID-19 has accelerated consumers’ transition to digital consumption and triggered disruptive change – both positive and negative – across many forms of media. Yet it’s equally evident that the E&M industry’s underlying strengths and appeal to consumers remain as strong as ever. While there will still be challenges for E&M companies, the digital migration that it has pulled forward will also generate opportunities in all segments – not only those that have benefited from its impacts to date”, concludes Axel Smits.
About the Global Entertainment & Media Outlook
PwC’s 21st annual edition of the Global Entertainment & Media Outlook is a comprehensive online source of global analysis for consumer and advertising spending. With like-for-like, five-year historical and five-year forecast data and commentary for 14 defined industry segments in 53 territories, the Outlook makes it easy to compare and contrast consumer and advertising spending across segments and territories. Find out more at www.pwc.com/outlook.
Segments covered by the Global Entertainment & Media Outlook
Business-to-business covers business-to-business media, comprising business information, directory advertising, trade magazines, professional books and trade shows.
Consumer books comprises revenue generated from the sale of consumer books (i.e. bought by consumers for personal use), including both print and electronic editions.
Traditional TV and home video comprises consumer spending on basic and premium pay-TV subscriptions; consumer spending on public licence fees where applicable; physical home video revenue; and on-demand video services via a TV subscription provider.
OTT video comprises consumer spending on video accessed via an over-the-top (OTT)/streaming service (such as Netflix).
Internet access considers spend on accessing the Internet and is split into two categories: mobile Internet and fixed broadband.
Data consumption considers the sum of IP traffic that crosses the Internet backbone. This represents cellular data traffic over 2G, 3G 4G and 5G networks, plus Wi-Fi and fixed broadband.
Newspaper and consumer magazines comprises revenue from both circulation (consumer spend) and advertising in newspapers and consumer magazines. It considers both physical print editions and digital editions.
The out-of-home (OOH) advertising market consists of advertiser spending on out-of-home media. OOH comprises total advertiser spending on all formats of out-of-home media, and is split between physical and digital. Advertising spend is tracked as net of agency commissions, production costs and discounts.
Video games and esports comprises consumer spending on video games software and services (not hardware or devices) across both traditional and social/casual gaming, as well as revenue from advertising via video games. It also includes revenue from consumer and advertiser spend on esports.
Virtual reality (VR) refers to a head-mounted system that immerses a wearer in a stereoscopic, wholly virtual environment or scene where they can look around, and optionally move and interact. This segment comprises consumer spending on VR video, VR games and VR apps.
TV advertising comprises all TV advertising revenue, including broadcast and online. Broadcast television covers all advertising revenues generated by free-to-air networks (terrestrial) and pay-TV operators (multichannel). Online TV advertising consists of in-stream adverts and reflects revenues from pre-roll, mid-roll and post-roll ads around TV content distributed by broadcaster-owned websites.
Cinema comprises cinema revenue (including box office and advertising). This revenue is non-digital, and includes both consumer and advertising spending.
Internet advertising comprises spending by advertisers either through a wired Internet connection or via mobile devices. The types of advertising (wired or mobile) are classified primarily by format rather than transport mechanism or device. This revenue is digital, and from advertiser spending.
Music, radio and podcasts comprises consumer spend on music, including both physical and digital recorded music and live music played at concerts, as well as revenue from sponsorship of live music, but does not include revenue from merchandise or concessions at live music events. It also includes revenue from consumer spend on radio licence fees (where applicable) and all advertising spend on radio stations and radio networks. Finally, it includes revenue from podcast advertising, podcasts being defined as a piece of principally spoken-word recorded audio content delivered over the internet, excluding audiobooks, that can be either downloaded or streamed. This segment includes both digital and non-digital revenue, and revenue from both consumer and advertising spending.
About Global Entertainment & Media Outlook data
Much of the content in this press release is taken from data in the Global Entertainment & Media Outlook 2020–2024. PwC continually seeks to update the online Global Entertainment & Media Outlook data. Therefore, please note that the data in this press release may not be aligned with the data found online. The online Global Entertainment & Media Outlook 2020–2024 is the most up-to-date source of consumer and advertising spend data.
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