Solid Growth Forecast For Media Industry
The global entertainment and media (E&M) industry has entered a solid growth phase and will increase at a 6.6% compound annual growth rate (CAGR) to $1.8 trillion in 2010, according to PricewaterhouseCoopers’ Global Entertainment and Media Outlook: 2006-2010.
Video-on-demand (VOD) is predicted to do well in the US, growing to $3.9 billion in 2010, and in Cananda where PwC predicts that it will generate more revenue than pay-per-view by 2009. In addition, the television network market in Canada (consisting of advertiser spending on broadcast and cable networks) is forecast to grow from $4.5 billion in 2010 from $3.7 billion in 2005.
A study by Magna Global predicts that by 2010 video-on-demand (VOD) will reach 65 million US households compared with 25.1 million VOD households (23.5% of total TV households) at the end of Q1 2006 (see US VOD And DVR Households To Increase By 2010).
The radio and out-of-home advertising market in the U.S.(consisting of advertiser spending on radio stations and radio networks, plus out-of-home media) will see satellite radio increasing from $1 billion in 2005 to $5.4 billion in 2010, a 39.5% compound annual increase.
In the US magazine market PwC predicts that advertising will total $29.2 billion in 2010 with consumer magazines reaching $16 billion and business magazines rising to $13.2 billion. In addition, newspaper websites are forecast to drive advertising growth as online distribution becomes a major delivery channel.
The report also predicts that Italy’s television network market will break through the $10 billion mark by 2010, up from $7.8 million in 2005 behind the United Kingdom ($10.7 billion) and Germany ($10.1 biilion) as the third largest market in Europe, Middle East, Africa (EMEA). In the television distribution market (consisting of revenues generated by distributors of television programming to viewers), Italy will be the fastest growing country in EMEA, with 22.9% compound annual growth fueled by a quickly expanding satellite market and growing IPTV.
PwC forecasts that the radio and out-of-home market in EMEA will expand from $23.1 billion in 2005 to $29.2 billion in 2010, while the online game market will grow thanks to increased broadband penetration and new consoles which are increasingly emphasising online play. A recent study by DFC Intelligence, The Online Game market forecast that online gaming will grow from $3.4 billion in 2005 to $13 billion in 2011 (see Online Games Could Hit $13 Billion By 2011).
The report also shows that the UK has the largest magazine advertising market in EMEA and ranks second in circulation spending, with the market having been bolstered by new magazines which target men, while over the next four years PwC predicts that new formats and giveaways will give a temporary boost to newspaper circulation in EMEA. However, in the long run it will be increased investment in presses (thus improving the appearance of newspapers) that attracts readers. Recent research by GroupM forecast that this year the internet will overtake national newspapers to become the third biggest advertising medium by spend (see Internet Advertising To Overtake National Press)
In Asia, Japan’s television network market is forecast to expand at a 3.9% annual rate through 2010, which PwC says is: “a significant improvement compared with the 0.2% growth compounded annually during the past few years.” In addition, the report foresees the radio and out-of home market increasing from $11 billion in 2005 to $14.1 billion in 2010, with growth at a 5.0% compound annual rate. The report goes on to say that excluding Japan, growth for the remainder of the region will average 8.2% compounded annually.
Wayne Jackson, global leader of PricewaterhouseCoopers’ Entertainment & Media Practice, said: “Virtually every segment of the entertainment and media industry is shifting from physical distribution to digital distribution of content. As this shift continues, we see more revenue opportunities for entertainment and media companies. So while physical distribution of content is declining, that decline will be offset somewhat by digital distribution, which is driving and creating new growth opportunities.”