The most rapid growth rates in Entertaiment and Media (E&M) revenues over the coming five years will be in less-developed markets and economies, where entertainment and media spending on a per capita basis is generally quite low, PwC’s Global entertainment and media outlook 2017 -2021 has predicted.
The report provides PwC’s most recent and up-to-date forecast of consumer and advertising spend data as well as related commentary for 17 entertainment and media segments, across 54 countries including Nigeria.
According to PwC, it is a powerful online tool that provides deep knowledge and actionable insights about the trends that are shaping the E&M industry.
Amid shifting consumer preferences, rapid advances in technology and ongoing disruption to business models, the new strategic imperative for E&M companies is to turn customers into fans – by innovating to create the most compelling, engaging, and intuitive user experiences.
According to the latest report, Nigeria with a 12.1% Compound Annual Growth Rate (CAGR) will be the world’s fastest-growing E&M market over the coming five years while the slowest-growing will be Japan, growing at a 1.7% CAGR.
While consumers in mature markets such as North America and Europe, and wealthier Asia-Pacific markets, spend a lot — more than US$500 per capita annually — on entertainment and media, growth rates are relatively slow in these areas.
PwC explained that in contrast, less developed economies feature much lower per capita spending and faster growth albeit from a very low base – less than US$50 a year in many cases.
The report noted that dramatic shifts are underway in how entertainment and media companies compete and generate value, as the quality of the experience they deliver to consumers becomes their primary basis for strategic differentiation and revenue growth.
To thrive in a marketplace that is increasingly competitive, crowded, and slower-growth, therefore, companies are developing strategies and building capabilities to engage and monetize their most loyal and passionate users — their fans.
This means they must combine compelling content with breadth and depth of distribution, and then connect it all to a great user experience, where content is discoverable easily on an array of screens and at an attractive price.
Femi Osinubi, Technology, Information, Communications and Entertainment (TICE) Industry Leader at PwC Nigeria, said:“A raft of changes in technology, user behaviour and business models have opened up a gap between how consumers want to experience and pay for E&M offerings, and how companies produce and distribute them. The right user experience bridges this gap. To deliver it, companies must pursue two related strategies. First, build businesses and brands anchored by active, high-value communities of fans, united by shared passions, values, and interests. And second, capitalize on emerging technologies to delight users in new ways and provide superior user experiences.”
Rapid advances in technology drive direct-to-consumer strategies.
As companies compete to create the most desired user experiences, advances in technology are at the heart of their strategies. Combined with a great user experience, companies can harness technology and data to create a virtuous circle – one in which increasing consumer engagement and attention lead to the capture of more data and more insights into what users want.
This understanding enables companies to further target and engage their core audiences, opening up new opportunities to generate revenue.
Increasingly, the models used to achieve this monetization are founded on direct-to-consumer (D2C) strategies, which are enabled by technology and characterized by greater choice and user control: over the next five years, Internet video will grow at an 11.6% CAGR, and music streaming at a 20.7% CAGR.
The focus on realizing new revenues by turning consumers into fans is being intensified by a slowdown in overall entertainment and media industry growth and pressures on advertising models.
Part of the report read: “Over the next five years, we project that the entertainment and media industry globally will grow at a Compound Annual Growth Rate (CAGR) of 4.2%, lagging behind the growth of global GDP.
“Within this overall increase, global advertising revenue will also grow at a CAGR of 4.2% – down from 5.1% in last year’s Global entertainment and media outlook. This slowdown reflects pressures on ad-supported business models, driven by consumers’ preference for ad-free experiences and advertisers’ dissatisfaction with the current measurement capabilities available with digital media. While advertisers are still willing to spend, growth in ad spend is now overwhelmingly driven by Internet advertising.
“Mobile advertising is growing apace – but still needs better measurement practices.
The growth of Internet advertising is being powered by mobile advertising, which grew by 58.7% in the past year, and will continue to expand at an 18.5% CAGR through 2021.
“But despite this growth, wired Internet advertising still accounted for 61.6% of total Internet advertising in 2016. Also, the robust growth of Internet advertising actually masks an embedded form of inertia. Without accepted measurement practices that can provide transparency on the efficacy and efficiency of the major platforms, premium brands are reluctant to take on the perceived risks inherent in concentrating more of their advertising in digital mediums, resulting in larger agencies and their clients holding back their ad dollars.
Osere Alakhume, Partner and TICE Industry leader for PwC West Africa added:“The steady march of digital technology has ushered in a more direct-to-consumer environment characterized by greater choice and user control.
“Amid an ever greater supply of media, businesses that are fan-centric will find themselves with audiences that are more engaged, more loyal, and spend more per capita. To thrive in the experience-driven marketplace characterized by this year’s Outlook, companies need to attract and harness the economic, social, and emotional power of fans. ”
Major digital tipping-points are 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.
“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.
The report explained that 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.
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 ad space by Google and Facebook. The upshot is a historic shift in the dominant revenue streams, as newspaper circulation eclipses advertising. By 2021, global total newspaper circulation revenue will account for 54.0% of total newspaper revenue.
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%.
