Digital to drive media growth in 'golden age for the empowered consumer'

A total of 13 media segments, including subscription and advertising across internet, television, radio, newspaper and magazine businesses, in addition to book publishing, recorded music and video games industries were assessed by PwC for its Global Entertainment & Media Outlook report.

The UK is expected to keep its position as the world's fifth biggest media and entertainment market in terms of value by 2015, driven by digital products, though its growth is set to be among the slowest of the mature markets.

Of the 12 countries with adspend in media and entertainment markets above $25bn, only earthquake-affected Japan and developed Germany are expected to experience slower growth than the UK.

China's market is expected to enjoy growth of 11.6% over this period to $148.2bn by 2015. Brazil will see a similar level of growth (11.4%) to $56.7m.

France is tipped for 4% growth annually to a valuation of $80.9bn by 2015; Italy is expected to grow by the same figure to a valuation of $51.3bn while Spain will grow by 4.8% to a 2015 valuation of $33.5bn.

The US, still the largest global media and entertainments market by a considerable distance, is expected to record growth of 4.6% to be worth $555.3bn by 2015.

PwC concluded the next four years would represent a "golden age for the empowered consumer" as the demand for digital experiences increases and becomes the norm.

After shrinking between 2008 and 2009, provisional data supplied in the latest report suggests 2010 witnessed a return to growth for UK media business as a whole, with a sector-wide value of $76.8bn.

This represented a 3.2% bounce-back from the previous year's decline and is expected to set off four years of steady growth.

However, the only segment of the UK market set for double-digit growth over the period will be internet advertising (11.2% annually to 2015) with these revenues representing new sources of income for traditional media owners expanding onto new platforms and devices, the report said.

Globally, PwC said it expected digital to grow from a 25.9% proportion of adspend in 2010 to 33.9% by 2015.

The report stated: "In many markets, including the UK, the entertainment and media industry emerging from the recession has been profoundly changed as the ongoing consumer migration to digital has accelerated, due largely to the technology revolution in devices."

In the UK, PwC predicted that the payment of subscriptions and the licence fee would keep the television industry as the most valuable media sector by 2015 with a value of $14.7bn, an average yearly increase of 4.2% over the four years.

Mobile and fixed internet supply business, the report said, would be marginally behind with an overall valuation of $14.2bn by 2015 after an estimated annual growth of 5.2% in the four previous years.

However, by 2015 internet advertising is expected to be worth $10.8bn annually as the UK’s third most valuable media sector.

PwC’s E&M Outlook concludes that convenience, experience and quality are the key ingredients that matter to consumers when choosing from the menu of content and delivery channels now available.

Alongside these sit participation and privilege. Consumers enjoy playing an active role in shaping their content plus they are happy to pay for privileges which enable them to "jump the queue" to get earlier access to content.

The challenge for companies is reported to be in turning these five attributes – convenience, experience, quality, participation and privilege – into "sustainable, profitable and engaged relationships" with the consumer, by offering advantages which outweigh the attractiveness of free or pirated content.

Phil Stokes, head of entertainment and media at PwC, said: "As consumers choose where to spend both their time and their money the key word for media executives to focus on is relevance.

"Why is their brand relevant to people, why is their content relevant? Ultimately, why will people choose to spend time and money with them rather than their competitors?

"Answering that question requires management focus on the core fundamentals on why that company exists. Action as a result across the industry will include a wave of acquisitions and disposals, innovative collaboration and new business models in order to satisfy the needs of the increasingly powerful customer."

Top 12 entertainment and media markets (US$ millions)
Country	2006	2007	2008	2009	2010p
United States	455,520	469,713	461,737	429,912	443,144
Japan	164,687	174,732	178,279	172,768	174,036
Germany	81,733	85,129	86,131	85,106	87,296
China	47,583	58,020	68,992	75,085	85,543
United Kingdom	70,857	76,304	77,223	74,404	76,794
France	56,269	60,247	62,584	64,626	66,676
Italy	40,709	42,822	43,901	41,715	42,213
Canada	33,052	35,221	36,902	36,421	38,155
South Korea	26,473	28,896	30,842	32,018	33,831
Brazil	21,192	24,829	27,756	28,718	33,104
Australia	23,859	26,208	28,949	29,480	32,157
Spain	26,721	28,841	28,465	26,063	26,510

 

Forecasts: Top 12 entertainment and media markets (US$ millions)
Country	2011	2012	2013	2014	2015
United States	458,842	484,835	503,901	531,718	555,277
Japan	169,095	177,535	185,770	191,797	197,035
Germany	89,859	92,812	96,532	99,952	103,010
China	96,002	108,094	120,492	134,880	148,229
United Kingdom	78,960	82,119	85,352	88,643	92,063
France	69,244	72,339	75,601	78,132	80,989
Italy	43,329	45,217	47,189	49,280	51,336
Canada	40,107	42,665	45,452	48,659	51,400
South Korea	35,674	37,438	39,128	40,837	42,618
Brazil	37,478	42,239	46,869	53,860	56,731
Australia	33,494	34,972	36,855	37,764	39,459
Spain	27,213	28,426	29,864	31,486	33,479

Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

This article was first published on mediaweek.co.uk