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The coronavirus pandemic, its fallout and the reopening of economies in its aftermath are key themes of PricewaterhouseCoopers’ annual “Global Entertainment & Media Outlook,” which found a 3.8 percent decline in global industry revenue to $2 trillion in 2020, “the most significant year-on-year drop in the history” of the report.
The study looks ahead at the years 2021–2025, forecasting global industry revenue to bounce back 6.5 percent this year “as more territories emerge from lockdown” and a further 6.7 percent in 2022. “From 2020 to 2025, we project a healthy five-year compound annual growth rate of 5.0 percent, taking revenues to $2.6 trillion,” PwC finds.
The firm forecasts streaming, or OTT, video, to reach $94 billion by the end of 2025, up 60 percent. That includes spending on subscription (more than $81 billion) and transactional (nearly $13 billion) video on demand. But with economies opening up again after the pandemic and competition for time and money, some consumers may become more selective about their entertainment services, including some streaming products, PwC principal CJ Bangah tells The Hollywood Reporter.
“As consumer attention is going to get more and more fragmented and folks go back outside, that $5.99 that they may have been willing to spend or $7.99 on the fourth or fifth streaming service or that cable subscription may get reviewed,” Bangah says. “Consumers are going to take a fresh look at where their money is going and in some cases make different decisions. So, being in the top 1, 2, 3 kind of sources of entertainment and media consumption that really are adding value.”
In the U.S., 2020 media and entertainment industry revenue fell 4.5 percent from $717 billion to $685 billion, but it will consistently grow to reach $855 billion in 2025 after getting to nearly $724 billion in 2021, PwC projects. Excluding access services, the sector will for the 2020-2025 period hit a compound annual growth rate of more than 4 percent to reach $624 billion.
But the global cinema industry, including box office revenue, is facing a slow return to pre-pandemic levels that will take several years, according to the forecast. And many shifts in consumer mindset and behavior that started or accelerated in 2020 will take years to play out.
“A global recession, the first since 2009 and only the second since 1944, is being followed by a rapid but highly asymmetrical snapback,” PwC noted about the worldwide fallout from the coronavirus pandemic.
The most notable and global driver of industry change is the rise of digital consumption. “Historically, rising digitization was a challenge, as analog dollars were frequently replaced by digital dimes,” PwC noted. “But in 2020, consumers’ embrace of all things digital helped offset sharp revenue losses across the broader global E&M sector.”
When it comes to global advertising revenue, dollars are following eyeballs, with PwC forecasting a 6.5 percent compound annual growth rate from 2020 through 2025, driven by digital spending gains. “Internet ads follow attention and commerce,” the report stated. “Internet advertising, thought to be entering a period of slower growth, has been buoyed by the rapid global adoption of e-commerce.”
Meanwhile, the PwC report notes that “the music industry, which many analysts believed had been left behind by the digital era, is enjoying a renaissance, spurred by strong growth in digital streaming and a strong rebound in live performances.”
And “virtual reality is doing extremely well,” Bangah notes. “Gaming, including e-sports, is doing extremely well, too.”
But will people return to multiplexes and other shared entertainment experiences in huge numbers following the pandemic? “There are tensions between protecting populations and maintaining people’s economic and psychological wellbeing, including the freedom to enjoy collective E&M experiences,” PwC stated, while urging: “Don’t write off the blockbuster.”
Bangah adds: “We do expect some of the big blockbusters that are coming out over the summer and into the fall are going to help the industry have significantly healthier revenue this year. But looking ahead, cinema growth is so closely correlated to vaccination status, so cinema is going to take a few years to dig out of that very stark decline that we saw last year with consumers either being unable or unwilling to go to theaters given the risk profile. We are not forecasting cinema returning to 2019 revenue levels until 2024.”
Indeed, PwC calculates total cinema revenue, including advertising, fell from $44.4 billion in 2019 to $13.1 billion in 2020 and will grow to $25.4 billion this year and nearly $45.2 billion in 2024. Within that, it forecasts global box office revenue of $23.0 billion in 2021 after $11.8 billion in 2020, down from $40.7 billion in 2019, and a climb back to $41.6 billion in 2024.
In North America, PwC projects box office revenue will recover from less than $2.3 billion in 2020, after $11.4 billion in 2019, to $4.9 billion this year and, eventually, $11.1 billion in 2025. For the U.S. alone, PwC projects box office revenue to recover at a 37.3 percent compound annual growth rate over the forecast period to $10.4 billion in 2025, or 2.6 below the 2019 total of $10.7 billion.
While traditional film consumption methods were affected by the pandemic, traditional TV’s challenges may have also been underlined by it as consumers stuck at home gravitated towards the internet and streaming services, hitting TV viewership and advertising. Competition from online advertising is just part of the reason, with demographics, particularly younger people using streaming and other digital services more, also playing a role.
PwC’s Global Entertainment and Media Outlook predicts that broadcast TV revenue will not recover to pre-pandemic levels until 2025, by which time online and connected TV advertising revenue will contribute a combined $22.6 billion to the global industry, just $1 billion less than multichannel TV advertising.
And Bangah tells THR that marketers are looking to get the balance right in various ways these days. “There are a few things that marketers are doing differently when you look at everything that’s happened over the last 18 months. Not only have we had the pandemic, we have had heightened focus on social justice, equity and inclusion, and we have had a lot more focus on corporate responsibility, including environmental, social and government pressures.”
So not only are marketers focused on getting brand messages out, but also on advocating for their brand in a way that is authentic and showcases purpose. Bangah adds: “I think we are gonna see more fluidity in the way marketers are managing their spend and making decisions on how they approach the market and who they are willing to partner with.”
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