PWC Releases 'Global Entertainment and Media Outlook'
June 15, 2010 at 6:47 AM (PT)
With economic conditions remaining uncertain and advertising showing a modest return to stability, consumer behavior is expected to be the catalyst of the entertainment and media (E&M) industry change over the next five years, according to PRICEWATERHOUSECOOPERS’ Global Entertainment and Media Outlook: 2010-2014, released TODAY (6/15).
The report affirms that digital technology is expected to progressively increase its impact across every E&M segment as digital transformation continues to expand and escalate. Following a year of decline in 2009, the Outlook forecasts that global entertainment and media spending is expected to rise from $1.3 trillion to $1.7 trillion by 2014, growing at a compound annual growth rate (CAGR) of 5%. The U.S. E&M market is expected to grow at 3.8 percent CAGR reaching $517 billion in 2014, from $428 billion in 2009.
Here are the radio highlights in the study:
* Globally, the radio market will rebound from a 9% decline to resume growth in 2010, and will expand by 3.5% compounded annually to $51.4 billion in 2014 from $43.2 billion in 2009.
* Global radio advertising, which slumped by 14.3% in 2009, will increase by 3.9% compounded annually to $33.7 billion in 2014 from $27.9 billion in 2009, as revenues recover from the effects of the economic downturn.
* Public radio license fees will rise at a modest 1.2% annual rate from $12.7 billion in 2009 to $13.5 billion in 2014.
* Satellite radio subscriptions will be the fastest-growing component, averaging 10% compounded annually to $4.1 billion from $2.5 billion in 2009.
PRICEWATERHOUSECOOPERS predicts the key drivers will be:
* Weak economic conditions worldwide lowered spending on radio significantly in 2009. We expect a modest rebound in 2010, and faster growth beginning in 2011 as economic conditions improve.
* Many broadcasters are exploring ways to expand their exposure through digital radio and Internet radio, but these alternatives are not expected to be major sources of revenue for some years.
* Satellite radio, which was hurt by poor auto sales in NORTH AMERICA in 2009, will boost spending in NORTH AMERICA.
* Modest increases in public radio license fees will help maintain the radio markets in EMEA and ASIA PACIFIC.
Specifically in the UNITED STATES:
* Terrestrial radio advertising, which fell by 18.1% in 2009 under the impact of the economic downturn and competition from the Internet, will show modest increases during the forecast period as traditional broadcasters expand their services through HD Radio and simulcasts on the Internet.
* As a result, terrestrial radio advertising will return to positive growth in 2010, boosted by political advertising and a rebound in auto advertising in the UNITED STATES. It will grow at 3.7% compounded annually to reach $17.3 billion in 2014 from $14.4 billion in 2009.
* Within terrestrial radio advertising, broadcast advertising will increase at a 3.5% rate through 2014, while online advertising will grow by 10.7% on a compound annual basis from $342 million in 2009 to $568 million in 2014.
* Satellite radio, which was hurt by poor auto sales in 2009, will exhibit more significant growth. Satellite radio advertising will increase from $61 million in 2009 to $110 million in 2014, a 12.5% compound annual increase. And satellite radio subscription spending will expand from $2.3 billion in 2009 to $3.6 billion in 2014, a 9,3% increase compounded annually.
* As a result, the overall satellite radio market in the UNITED STATES, including advertising, will grow by 9.4% compounded annually to $3.7 billion in 2014.
* Radio advertising as a whole will total $17.4 billion in 2014, up 3.8% on a compound annual basis from 2009.
* The overall radio market will total $21 billion in 2014, increasing by a 4.6% compound annual rate from 2009.