PwC Forecast: 80% of Hollywood Revenue to Still Be Nondigital in 2019

Hollywood Sign - H 2015
AP Images/Invision

Hollywood Sign - H 2015

Slower growth is expected in the entertainment industry as box-office money in China spurs a 5.7 percent worldwide growth rate.

This story first appeared in the June 12 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

For all the promise of digital distribution — Netflix, Amazon, VOD and the like — the importance of theatrical box office to the entertainment industry is expected to increase during the foreseeable future, according to a slightly downbeat study released June 3 by PricewaterhouseCoopers.

Globally, box-office revenue accounted for 43 percent of the $85.4 billion generated by the filmed-entertainment industry in 2014 — but that will rise to 46 percent in 2019, when the industry is projected to generate $104.6 billion. Leading the charge will be the Asia Pacific region (especially China), which will spur a 5.7 percent worldwide growth rate compared with 4 percent for the U.S. The research firm notes there is more room for ticket prices to grow in less developed areas of the world.

The worldwide media and entertainment industry is expected to reach $2.36 trillion in 2019, compared with $1.93 trillion in 2015 — a slower growth rate than PwC predicted in 2014. The firm reined in expectations because of unfavorable currency exchange rates and other economic trends. PwC's 16th annual Entertainment and Media Outlook forecasts several tipping points in the U.S. alone:

• Web ads will hit $83.9 billion in 2019, overtaking TV ads, which will generate $81 billion.

• Electronic home video (streaming and VOD) will generate $9.5 billion in 2015, overtaking physical home video (rentals and sell-through) at $7.8 billion.

• In 2017, electronic home video will hit $12 billion and pass box office at $11.8 billion.

• Music streaming will hit $1.8 billion in 2018, passing digital downloads at $1.7 billion.

Even as the digital transformation is driving growth, PwC predicts that in 2019, more than 80 percent of global revenue will come via sales of nondigital products. "It is too simplistic to say that digital media is replacing physical media," says Matthew Lieberman, PwC's entertainment and media marketing leader. "In some cases this is happening, though not uniformly across different segments and geographies."