Digital Drives Growth and Business Models in E&M Industry
A 3.9% drop is expected in 2009 and a 0.4% advance in 2010, with a period of much faster growth during the remaining period to 7.1% in 2013. The forecast anticipates that the impact of the recession on consumer spending will last longer and be steeper than previous ones due to a steeper downturn. Consumer spending in E&M will fall by a projected 1.2% in 2009, remaining weak in 2010 and seeing only relatively low growth at 3.2% in 2011.
Responses to the recession will vary dramatically from country to country and region to region:
- Latin America and Asia Pacific remain the fastest growing regions increasing at an annual compound rate of 5.1% and 4.5% through to 2013 reaching $73 billion and $413 billion respectively
- Excluding Japan, the dominant country in the Asia Pacific region which accounted for 45% of total spending in 2008, E&M spending in Asia Pacific will increase at a projected 7.1% compound annual rate over the period of the forecast
Though the current economic downturn has impacted virtually every sector of the E&M marketplace, says the report, it has also accelerated and intensified the digital migration among both providers and consumers of content. The switch to digital will drive divergences in revenue performance between different segments and geographies, however.
Marcel Fenez, Global Leader Entertainment & Media practice, PricewaterhouseCoopers, says: "... companies who grasp the opportunities... in this fast changing marketplace... will be able to take full advantage of the potential and new revenue models as they emerge."
Fenez added: "... the Net Generation and... their demands are driving the industry towards new business models... (they are) exerting influence over older generations who are... taking a growing interest in new and emerging platforms. End-user spending through digital/ mobile platforms accounted for 23.4% of the overall consumer/end-user/access market in 2008, and the study expects this to account for 78% of total growth during the next five years."
Consumers are adopting "time-shifting" and broadband penetration to get what they want from wherever they want. In addition, growth in mobile access is allowing consumers to access the Internet from any location, giving rise to the popularity of smartphones, iPods, and the Kindle that combine mobility and access.
The advances in digital music are also allowing consumers to purchase songs individually through digital channels (unavailable in physical format) and generating growth in sideloading, which allows consumers to buy music less expensively online and transferring it to mobile devices.
Over the next five years, predicts the study, advertisers will shift their resources to reflect the increasingly fragmented ad market. In the mobile arena, advertising continuum opportunities will enable the growth between brands and consumers, ranging from click-through banner ads and pre-roll ads on video clips through coupons and online subscriptions.
Video game ads are expected to outpace the rest of the advertising industry at 13.8% CAGR compared to an overall industry decline at a compound rate of 0.6% during the forecast period. The growing proportion of Internet and mobile advertising in the overall global advertising mix will rise from around 12% in 2008 to 19% in 2013.
Fenez concludes "... accelerating digitization... (provides) no place to hide from new models and dynamics across the industry... for each of the industry's diverse segments to participate fully in this growth, they will first need to embrace the digital future."
For more about the PricewaterhouseCoopers Global Entertainment & Media Outlook 2009-2013, please visit here. Or, to order copies ot the 10th annual edition in-depth analyses and forecast of 12 major industry segments across four regions of the globe: North America (USA, Canada), EMEA (Europe, Middle East, Africa), Asia Pacific and Latin America, please go here.