Jun 12, 2012 at 12:46 PM
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Report: Digital To Drive Entertainment and Media Sector To $2 Trillion By 2016

Digital delivery of content and advertising around these digital channels to increasingly connected consumers will drive aggressive growth across the entertainment and media sector, according to PwC’s 13th annual Global Entertainment and Media Outlook. The report, which predicts that the global entertainment and media industry will grow by $500 billion between now and 2016, says digital is now embedded in business-as-usual and is moving to the heart of many E&M companies.

The Outlook forecasts that global E&M spending is expected to rise from $1.6 trillion in 2011 to $2.1 trillion by 2016, growing at a compound annual growth rate (CAGR) of 5.7 percent. The U.S. E&M market experienced the largest increase since 2007 with faster growth expected, growing at 5.2 percent CAGR reaching $597 billion in 2016, from $464 billion in 2011.

Change in consumer behavior is pervasive and accelerating and the E&M industry is in the front line of this change,” said Ken Sharkey, entertainment, media & communications US practice leader, PwC. “The past uncertainty triggered by the digital migration has given way to a sharper focus of E&M companies on executing their digital strategies. While experimentation will continue, the way forward is becoming clearer as companies focus on identifying, choosing and executing the right business models, organizational structures and developing the skill sets to understand consumer behaviors and motivations in their connected, multi-screen environments.”

According to the Outlook, the challenge ahead is in the implementation of digital strategies.

“By embracing digital as the engine of their business and using it to integrate and automate processes from content production to rights management, E&M companies are well positioned to meet the fast changing consumer demands through any channel and format more effectively and drive greater revenue growth than before,” added Sharkey.

PwC says that the rise of unpaid or earned media reflects an innovative new mix of advertising, content and analytics, bringing sweeping change to the roles and business models in advertising. The rise of socialization is feeding into the widely-accepted concept of bought, owned and earned advertising among agencies and advertisers.

The report points to the rise of a fourth emerging category – ‘managed’ advertising, which it says involves the orchestrated use of social media, such as engagement with bloggers. According to the report, U.S. advertising is expected to increase at a 5.9 percent CAGR from $172 billion in 2011 to $229 billion in 2016, enhanced by Olympic and political advertising in 2016. Internet advertising is expected to average 16 percent CAGR followed by video games, one of the smallest segments, at 11.4 percent CAGR. Television advertising, the largest segment, is expected to grow at 6.7 percent CAGR. Out-of-home advertising and cinema advertising are expected to grow by 4.9 percent and 4.5 percent CAGR, respectively. Newspaper advertising (-0.2 percent) is expected to be the only category to decline.