Newspapers across the world are sustaining slidding profile due to growing influence of the digital space.
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.
However, the year-on-year falls in newspaper advertising revenue have been more pronounced with advertisers deserting print editions in large numbers and publishers increasingly being squeezed out of the digital advert space by Google and Facebook.
According to a new report put together by PwC, the upshot is a historic shift in the dominant revenue streams, as newspaper circulation eclipses advertising.
PwC explained that 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.
Part of the report read: “That lead, thanks to the rapid growth of mobile ad revenues in particular, is set to increase significantly in the next five years.
“By 2021, global total newspaper circulation revenue will account for 54.0% of total newspaper revenue.
“Internet advertising now generates more revenue than TV advertising globally.
“However, at a global level, we forecast TV ad revenues will also continue to rise, albeit at a more modest rate.
“Both platforms are important to consumers, so brands seeking to engage future audiences effectively will need to keep developing and growing their ability to plan, deliver and measure co-ordinated campaigns across multiple platforms.
“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.
“Demand has shifted towards the more immediate and convenient video-on- demand (VOD) market, with content accessible via a wide range of connected devices allowing consumers to view when and where they desire.
“While there remains a strong market for ownership of content through transactional VOD (TVOD) services, growth will be mainly focused on subscription VOD (SVOD) platforms, with subscribers attracted to full seasons of original content and back-catalogues they can binge view.
“Global newspaper circulation revenue overtook global advertising revenue in 2016.
“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%.
“While digital recorded music accounted for 55.7% of overall recorded music revenues in 2016, that proportion is set to rise to 80.3% in 2021.
“Digital music streaming revenue also overtook its download counterpart in 2016, with streaming revenues rising 65.3% to US$6.6bn, and downloading revenue slumping 18.4% to US$3.5bn. Downloaded music is expected to fall from 32.5% of digital revenue in 2016 to just 6.4% in 2021.
“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. Spending on VR apps – software that is neither video or game, such as communications apps or utilities – remains modest, and will total just US$163mn by 2021.
“Spending in this category will also be in decline from 2018 onwards, as purchased utilities that make up for platform or OS shortcomings become integrated into the core platform, in the same way as smartphone apps have increasingly been integrated into new versions of iOS or Android.
“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.
“But the shift towards the smartphone will continue, especially in developing markets such as India and Indonesia, so that by 2020, overall smartphone data traffic across our 19 markets will exceed fixed broadband data traffic for the first time.
“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).
“This trend will reach a tipping point in 2019, when physical OOH revenue slips into decline, falling by -0.2%.
“By 2021, the rate of year-on-year decline will have accelerated to -0.8%.
“While physical OOH revenue will continue to grow in many markets – especially emerging ones – globally, it will be in terminal decline by the end of the forecast period, as DOOH takes over.
“China’s total number of cinema screens now exceeds those of the US. China had 41,056 cinema screens in 2016 compared to 40,928 in the US.
“This marks a significant shift, underlining the growing popularity of cinema among Chinese audiences of different ages and demographics – and especially among middle-class cinemagoers with disposable incomes.
“Although some of the cinemas being erected at such speed in shopping malls across China are not necessarily all premium quality, their existence will serve to hook yet more consumers on the cinema-going habit, and contribute to the longer-term replacement of the US as the number one market for box office revenue.
“Data consumption in Russia will overtake Japan in 2020, but the US and China will account between them for nearly half of all data traffic.
“Our analysis of data traffic in 19 countries shows that the US and China will continue to dominate traffic globally. They are not just the two largest markets individually, but together will account for nearly half of all the data traffic forecast across the 19 markets.
“Moreover, both will see high levels of growth in the next five years.
“However, the fastest levels of market growth will come from less developed markets, notably Russia and Brazil.
“Indeed, Russia is set to overtake Japan in 2020 to become the third-largest market for data traffic among the 19 countries, albeit some distance behind China in second place.
“By 2020, Asia Pacific will be the most digitised OOH region.
“Currently, North America gets a higher proportion of its OOH revenue from digital out-of-home (DOOH) than any other region – 37.9% in 2016. But there are signs that DOOH is approaching saturation point in North America; the region has lower-than-average public transport usage, and the digitisation of the billboard market is being limited by regulation.
“In Asia Pacific, by contrast, public transport usage is already high in markets such as Japan and South Korea, and soaring in others, as China and India invest in extending metro networks, and Indonesia, Vietnam and others open rapid transit systems.
“This increased room for growth in DOOH will allow Asia Pacific to overtake North America as the most digitised region in 2020; by 2021, DOOH will be approaching half of all OOH revenue in the region, with a share of 47.7%”.
