Entertainment spending on the rise
Revenue, driven by digital, will reach $1.6 trillion in 2013NEW YORK -- Global entertainment and media spending will rise to $1.6 trillion in 2013, amounting to 2.7% compound annual growth driven by digital gains, according to PricewaterhouseCoopers' annual "Global Entertainment and Media Outlook 2009-2013."
But U.S. gains will underperform the worldwide trend, with the domestic entertainment and media market expected to grow at a 1.2% compound annual growth rate to reach $495 billion in 2013.
The advisory firm also sees U.S. consumer spending on media and entertainment as the main growth driver over the five-year period, while advertising is projected to decline.
And the share of digital media revenue will further expand in the coming years. It will grow from 17% of U.S. revenue in 2008 to 25% by 2013, according to PwC's projections. Mobile and other digital platforms will account for the largest chunk of growth in the years ahead, it added.
"The current economic slowdown, shifting consumer behavior and new ad-supported revenue models are triggering acceleration of digital migration," said Bill Cobourn, U.S. leader, entertainment, media & communications practice at PwC. "The current decline in revenues is not because of declining demand. In fact, demand for E&M appears to be increasing. The challenge is to identify ad models that are able to withstand the downward pressure on ad rates in the digital environment and on subscription models that capture the consumers' preferences for premium content."
According to the PwC Outlook report, Internet access and advertising spending will continue to outperform other media sectors in the U.S. over the five-year period analyzed. They will show compound annual growth rates (CAGR) of 9.1% and 6.3%, respectively. Video games at 5.8% and TV subscriptions with 5.5% are projected to follow.
However, filmed entertainment CAGR will amount to only 3.3% in the U.S., and TV advertising is seen declining 0.6%, with recorded music expected to drop 4.7% on a compound annual basis.
Overall U.S. consumer spending rather than ad expenditures will be the main driver of gains. PwC sees 1.9% CAGR in the former, but a 1.7% decline in the latter over the five-year period.
The overall media and entertainment industry in North America will see a 7.1% decline this year and another 1.2% drop next year before returning to 2.9% growth in 2011, PwC forecasts. On a global basis, the industry will decline 3.9% this year and edge up 0.4% next year, it predicts.