The Digital And Traditional Media Divide Is Irrelevant Among Consumers, Says PwC US
June 3, 2015 at 4:00 AM (PT)
After more than a decade of digital disruption across the entertainment & media (E&M) industry, the distinction between digital and traditional media is deemed irrelevant in the minds and wallets of consumers, according to PwC’s annual Global Entertainment and Media Outlook 2015-2019 -- an in-depth five-year outlook for global consumer spending and advertising revenues directly related to entertainment and media content -- released today. The E&M industry is now a multifaceted ecosystem -- with new digital offerings creating a bigger, more diverse content universe and with digital accelerating delivery across platforms – whereby consumer choice is paramount.
The Outlook forecasts that global E&M spending is expected to rise from $1.74 trillion in 2014 to $2.23 trillion by 2019, growing at a compound annual growth rate (CAGR) of 5.1%. The U.S. remains the largest E&M market, growing at a 4.9% CAGR and reaching $723 billion by 2019, from $568 billion in 2014.
While global revenue from digital media is expected to generate stronger growth, non-digital media is still projected to be the significant contributor of global consumer revenues in 2019. A key takeaway of this multifaceted environment is the resilience -- and in some cases resurgence -- of some traditional media, including the shared, live experiences that consumers still love. In the U.S., spending on live music ticket sales (4.4% CAGR) and cinema box office (4% CAGR) is expected to outpace overall U.S. consumer spending at 2.9% by 2019. U.S. digital spending is expected to grow at 11.1% CAGR over the next five years and account for 46% of overall U.S. E&M spending growth, up from 34 percent in 2014.
“In today’s multi-platform environment, E&M companies must take a hard look at the talent, organizational structure and alignment of performance measures with overall strategy across their entire business,” said PwC's U.S. Entertainment, Media & Communications Leader DEBORAH BOTHUN. “While this may seem self-evident, it remains a major challenge that many companies are struggling to overcome as they transform their operations to engage today’s consumer. Mastering the user experience will be the critical success factor for monetizing consumers and sustaining growth.”
Notable U.S. Tipping Points:
- Mobile monetization is the next critical challenge. As the world’s second-largest mobile Internet access market trailing CHINA, U.S. mobile Internet subscribers is forecasted to increase to 292.8 million in 2019, at a 4.7% CAGR.
- TV and video consumption patterns are changing as consumers migrate towards flexible, on-demand viewing. The rise of OTT is contributing to the decline of U.S. subscription TV penetration, which is expected to fall from 79.5% in 2012 to 76.9% in 2016.
- Electronic home video is expected to overtake physical home video in 2015. Total electronic home video revenue is projected to rise from $8.4 billion in 2014 to $16.54 billion in 2019, a CAGR of 14.6%.
- Electronic home video ($12 billion) is expected to surpass box office ($11.8 billion) as the lead revenue driver by 2017.
- Digital music streaming is expected to overtake digital downloading in 2018, reaching $1.9 billion in 2019, up from $1.1 billion in 2014, a CAGR of 11.2%.
- Consumers are embracing digital for magazines (16.8% CAGR) and books (12.3% CAGR) faster than newspapers (4.4% CAGR) during the forecast period.
- Electronic consumer books revenues will be driven by high tablet penetration. By 2019, digital is expected to account for 45% of the U.S. total books revenue.