Digital to drive entertainment and media spend to USD2.1 trillion by 2016 – PwC

Posted on June 18, 2012

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PwC claims that “we are at the end of the digital beginning”… I am not 100% sure what that means. new technologies in the digital space are still emerging and will continue to do so and each time that happens we go through the adoption cycle again.

By: Drew Heatley

Digital services are set to drive more than two-thirds of the growth in entertainment and media services in the next five years, with global spend topping USD2.1 trillion by 2016, according to PricewaterhouseCoopers (PwC). The firm’s annual ‘global entertainment and media outlook’ report forecasts that 2016’s total will be up from the total USD1.6 trillion spend recorded in 2011, but warns that growth will be slower than that witnessed in recent years as industries continue to reposition themselves as digital-first. In addition, the typically lower-price points for digital goods and services, coupled with consumer reluctance to spend, will keep entertainment and media spend to a 5.7% compound annual growth rate, below the predicted GDP annual growth rate of 6.6%.

Perhaps the most positive forecast from the report concerns digital music and magazines, with PwC forecasting a return to growth for both as the industries continue to grapple with the shift to digital. PwC claims that digital accounted for a third of overall music spend last year, and adds that it will surpass physical spend in 2015. Digital music revenue already surpassed physical in the UK during Q1 this year, according to separate stats from the BPI, making up 55.5% of the UK record industry’s sales income.

The continuing growth of online ads is expected to drive global ad revenues to USD513bn this year, up 5.6% year on year, according to PwC, before hitting USD661bn in 2016. Online ad growth is set to outpace more traditional formats in the next five years, though the value of the relatively nascent market is still a small portion of overall global spend. Nevertheless, spend continues to increase as marketers dedicate more of their budgets online, driven by new formats such as social media. Global online ad spend is expected to hit USD88bn this year, according to recent stats from ZenithOptimedia, representing 18.2% of total worldwide spend.

Mobile ad spend is also set to grow, topping USD24.5bn in 2016, according to Pwc’s report, nearly five times the USD5.2bn recorded last year. Marketers are also increasingly following consumers onto smartphones and tablets, as adoption of the devices continue. This, coupled with consumers accessing the internet via feature phones in emerging markets, helped mobile to account for 40% of the USD317bn spent on global internet access in 2011, and PwC forecasts that it will rise to account for 46% of the USD493bn expected total in five years’ time.

PwC’s forecasts illustrate the extent of the digital shift, with the firm stating that media industries are now approaching the “end of the digital beginning”, as they embrace and implement new business models. “Digital is no longer something over there. Instead it is embedded in business as usual and embedded in the consumers’ lives every day,” says PwC partner, Stefanie Kane.

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