TORONTO, June 20, 2017 /CNW/ - To address slower-growth rates and increased competition, leading entertainment and media companies are developing innovative strategies and improving their capabilities to engage their most loyal and passionate users — their fans. According to PwC's Global entertainment and media outlook 2017-2021, companies are creating more compelling and accessible content with comprehensive distribution that better connects the user to a great experience, and at an attractive price.
Canadian entertainment and media revenues are projected to rise at a compound annual growth rate (CAGR) of 2.8% in nominal terms over the coming five years, from US$42.98 billion in 2016 to US$49.40 billion in 2021, according to the report. This growth rate represents a slowdown from last year's 3.5% growth in industry revenues, and will lag behind overall global economic growth during the next five years. Total data consumed in Canada will grow by CAGR 18.1% and reach 27trn MB by 2021.
These trends reveal that the entertainment and media industry is facing increased disruption due to the shift in consumer behaviour towards online entertainment, particularly over the past few years. "As Canadian content creators develop their digital strategies, they are being compelled to prioritize the user experience in order to compete with online options," says John Simcoe, National Entertainment and Media Outlook Leader, PwC Canada. "User experience is becoming a key business driver that will differentiate what will thrive in the long term as opposed to be a one hit wonder in this sector."
Internet video (SVOD), Internet advertising, and Out of Home (OOH) advertising top the list with steady and sustainable growth in Canada. Canada has an advanced Internet advertising market, valued at US$4.4bn in 2016. Widespread Internet access has boosted online advertising spending, and in 2016 fixed-line broadband household penetration rate stood at 96.4%.
Canada has been an early adopter of Internet video, with Netflix launching in 2010 and domestic operators launching OTT platforms to counter the threat of cord-cutting. With growth of 7.1% CAGR over the forecast period, Internet video will produce revenues of US$1.6bn in 2021. Over 70% of this revenue will be attributable to subscription-based VOD, with transactional sites such as Apple's iTunes accounting for the remainder.
Canada's total out-of-home (OOH) revenue in 2016 came to US$572mn, up from US$436mn in 2012. Growth is set to continue at a 5.1% CAGR over the next five years, reaching US$732mn by 2021. Canada's OOH market has benefitted from steady economic growth in recent years, and this is expected to continue through to 2021. OOH advertising is a particularly strong proposition in Canada, given over 80% of the population lives in cities. Toronto, Montreal and Vancouver alone house one-third of the country.
Globally, there are major digital tipping-points occurring or in prospect across all segments…
- Internet advertising now generates more revenue than TV advertising globally. In 2016 an important tipping point was reached in the global advertising industry, with revenue from Internet advertising exceeding that generated by TV advertising for the first time. That lead, thanks to the rapid growth of mobile ad revenues in particular, is set to increase significantly in the next five years.
- Internet video revenues will overtake physical home video in 2017. The Internet video segment has expanded rapidly in recent years, and will overtake the physical home video market for the first time in 2017. Internet video revenues are projected to grow at a CAGR of 11.6% to reach US$36.7bn in 2021, while the terminally declining market for DVDs and Blu rays will have fallen to US$13.9bn.
- Global newspaper circulation revenue overtook global advertising revenue in 2016. While newspaper circulation revenue has been on a downward trajectory since 2015, publishers have had the useful lever of cover price rises to partly offset the rapid fall in units.
- In 2016, total digital recorded music revenue overtook physical – and streamed music overtook downloads. The digital recorded music segment was worth US$10.7bn in 2016, surpassing that for physical recorded music, at US$8.5bn, for the first time. Music streaming services grew apace during 2016, pushing global digital revenues up by US$1.8bn year-on-year, or 20.3%, as the physical segment declined 9.6%.
- Virtual reality video revenue will exceed interactive application/gaming revenue in 2019. The consumer virtual reality (VR) content market will grow at a CAGR of 77.0% over the forecast period to be worth US$15.1bn by 2021. Of this, US$8.0bn will be spending on VR video (rising at a CAGR of 91.2%), surpassing interactive experiences and games in 2019.
- Smartphone traffic will exceed fixed broadband data traffic in 2020. Although mobile usage is a key driver of growth in overall data traffic, fixed broadband will continue to account for the majority of data traffic in the 19 markets for which we have developed detailed forecasts. Many consumers still prefer to access data-heavy content – notably high-quality video – via fixed broadband rather than their mobile device.
- Global physical OOH revenue will slip into decline in 2019. Global growth in physical out-of-home (OOH) revenue has been trending downwards for some time as an ever-growing share of advertising spending is diverted to digital out-of-home (DOOH).
To request press access to the online Global entertainment and media outlook 2017-2021, please contact Pierre Campeau at [email protected].
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SOURCE PwC (PricewaterhouseCoopers)