Modest gains for Canada's media spending

PwC report predicts 2.2% annual growth

TORONTO -- Slowed by the recession, Canadian entertainment and media spending will grow at a modest 2.2% compound annual rate to $36.7 billion by 2013, PricewaterhouseCoopers said Tuesday.

At the same time, consumer spending on media and entertainment product, and with that traditional and online ad expenditures, will dramatically slow in the short term and shift significantly over the next five years, the consultancy said as it released its latest global entertainment and media outlook.

In Canada, as elsewhere, the recession has produced a steep pull-back in consumer spending, which in turn has forced a dive in TV ad revenue and DVD sales.

"What we are sure about is that this recession will last longer than previous ones due to a steeper downturn and that the impact on advertising will be particularly significant," said Tracey Jennings, leader of the PwC Canada entertainment and media practice.

In the Canadian market, video game, Internet advertising, and anything "digital" will prove the biggest draws for consumer and ad spending over the next five years as the current digital migration takes hold.

But in 2009, Canadian consumers are projected to spend 4.9% less on media and entertainment product, and the market will remain weak in 2010 before it recovers with modest growth by 2013, the report said.

Jennings said faster access speeds and new Internet applications will drive the Canadian broadband market over the long term, and video-capable smart phones and network upgrades will spur the domestic mobile phone market.

The big losers over the next five years include newspaper and radio advertising and the physical recording music market.

When it comes to TV and filmed entertainment over the next five years, the PwC report indicates Canadian consumers will continue to call the shots as they employ time-shifting, digital video recorders and VOD to "watch what they want when they want." And film downloads to TV sets and subscription VOD will fuel Canada's online video distribution market.

PwC projects Canada's VOD subscription market will grow by 14.9% on a compound annual basis from $110 million this year to $214 million in 2013.