Consumers switch on UK media & entertainment recovery
The UK E&M market dropped in 2008 and a further 3.8% in 2009 to US$73.2 billion (about R550 billion) The latest PricewaterhouseCoopers LLP (PwC) Global Entertainment & Media Outlook 2010 - 2014 forecasts an incline in 2010, that gathers pace in 2012/2013 and is estimated to reach US$87.7 billion (about R658 billion) in 2014 - a 20% overall rise in five years.
Economic uncertainty took hold of the global E&M industry in 2009, with some notable exceptions, particularly China and India. Recession in countries such as the UK led to steep declines in advertising. However the downturn did nothing to slow the pace of change - which, in some areas, has been even faster than predicted 12 months ago.
It takes disruptive technologies in its stride
Phil Stokes, head of Entertainment & Media, PricewaterhouseCoopers LLP, said: "E&M is an industry accustomed to embracing disruptive technologies; however the current wave of change is of a different magnitude to previous ones - in its speed and simultaneous impact across all segments, accompanied by falling barriers to entry.
"The recession has not slowed the ever advancing digital transformation or the rapid consumer uptake of new media experiences," he added.
With economic confidence remaining subdued and advertising showing a modest but uncertain return to stability, the industry has turned to consumer feedback and customer usage for steer on product development and services.
"The consumer base is now a huge test-bed for new products - a trend reflected and supported by the rise of social networking. This is not just a profound behavioural shift but also a dramatic illustration of the power of shared information and communication."
Advertising on the rebound
Advertising revenues were hit particularly hard by the turbulent markets and saw an 11.5% compound annual growth rate (CAR) fall in 2009. Slow recovery is expected in 2010 (1.5%) and 2011 (2.4%) but by 2014 revenues should have picked up to show a 3.8% CAR over the five years.
Internet advertising now has a reach that commands major advertising investment in the UK with an increase of 10.5% CAR from 2009 to 2014 - at which point predicted revenues just sit below US$10 billion (US$9.3 billion) (about R75 billion and R65.75 billion respectively).
TV advertising in the UK should experience growth of 4.3% CAR from 2009 (US$4.9 billion, about R36.75 billion) to 2014 (US$6 billion, about R45 billion). Free digital terrestrial TV and high definition (HD) penetration growth will expand audiences and boost broadband, while new online streaming sites and web enabled TV sets will drive online TV advertising.
Mobile comes of age
Advances in mobile technology and products will see increasingly converged, multi-functional and interoperable mobile devices come of age as a consumption platform by the end of 2011.
Wireless network upgrades are facilitating faster transmission speeds which is enticing users to access the internet via their mobiles. In addition, the proliferation of smart phones, with touch screens and large displays, make is easier to get online this way. These factors plus customised mobile sites suitable for access by smart phones with dedicated advertising, are encouraging the advertising world to focus on mobile. In the UK mobile advertising spend is estimated to grow from US$111 million (about R832.5 million) in 2009 to US$524 million (about R3.93 billion) in 2014 - a 36.4% growth rate, compounded annually.
Revolutionising the business
Digital migration and the changes in consumer behaviour have put extreme pressure on existing business models and caused the industry to radically rethink the monetisation of content.
Inevitably this results in individual companies repositioning themselves as they strive to capture new sources of revenue.
Partnerships (through which to share cost and risk) are becoming increasingly more important as are strategic flexibility, economies of scale and scope and the ability to monetise brands/rights across all platforms.
"However companies structure themselves, be it through formal partnerships, looser collaborations, or outsourcing, they need to deliver the best consumer experience against strong competition and be sufficiently flexible to capture revenues from an increasingly fragmented market," says Stokes.
Not surprisingly, digital services will provide most of the industry's future growth - a prospect reflected by the fact that digital technologies are now effectively a given in all segments. But it is vital to remember that legacy off-line revenue streams are still significantly larger than digital revenues.
"The industry needs to ensure it embraces digital not as a competitor to traditional, physical analogue but as a compliment. Over the next five years it will become apparent where consumer absolute loyalty lies: brand, device or content. A riddle that will be answered to benefit of consumers and the companies who meet their needs," Stokes concluded.
E&M Outlook: the global story
Following a year of decline in 2009, the global E&M market, as a whole, will grow by 5% compounded annually for the entire forecast period to 2014 reaching US$1.7 trillion (about R12.75 trillion), up from US$1.3 trillion (about R9.75 trillion) in 2009.
Fastest growing region throughout the forecast period is Latin America growing at 8.8% compound annual rate (CAR) during the next five years to US$77 billion (about R577.5 billion) in 2014.
Asia Pacific is next at 6.4% CAR through to 2014 to US$475 billion (R3562.5 billion). Europe, Middle East and Africa (EMEA) follow at 4.6% to US$581 billion (about R4357.5 billion) in 2014.
The largest, but slowest growing market is North America growing at 3.9% CAR taking it from US$460 billion (about R3450 billion) in 2009 to US$558 billion (about R4185 billion) in 2014.
About the Outlook
PricewaterhouseCoopers Global Entertainment & Media Outlook 2010-2014, the 11th annual edition, contains in-depth analyses and forecasts of 13 major industry segments across four regions of the globe: North America (USA, Canada), EMEA (Europe, Middle East and Africa), Asia Pacific and Latin America. To order copies go to: www/pwc.com/outlook. For press copies contact Fiona Scholes, moc.cwp.ku@selohcs.anoiF.
Chapters include: Film, Radio, Recorded music, B2B publishing, Consumer magazine publishing, Consumer book publishing, TV advertising, TV subscriptions & fees, Internet access, Internet advertising, Video games, Newspaper advertising.
Digital spending, as referenced in the Outlook, includes: Broadband and mobile access; wired and mobile internet advertising; video on demand; mobile TV subscriptions; online and mobile TV advertising; digital recorded music distribution; online movie subscription rentals and digital downloads; online and wireless video games; digital advertising in newspapers and consumer magazines; satellite radio subscriptions and online radio advertising; electronic consumer; education and professional books; digital directory advertising; trade magazine digital advertising.
