• by Jack Loechner , Staff Writer @mp_research, July 5, 2007

According to PricewaterhouseCoopers Global Entertainment and Media Outlook, the global Entertainment & Media industry is experiencing sustained growth and will increase at a 6.4% compound annual growth rate to $2 trillion by 2011. Digital and mobile spending in each territory during the next five years rising to $153 billion by 2011, says the report. And, spending related to the distribution of entertainment and media on convergent platforms (convergence of the home computer, wireless handset and television) exceed 50% of global spending by 2011.

The study shows that within the next five years, nearly half of the total industry growth is expected to be generated through online and wireless technologies and, during the same period, broadband households will grow by 300 million to 540 million subscribers and wireless subscribers will increase by 1.1 billion to 3.4 billion. The migration to digital formats is having an adverse impact on competing revenue streams while consumer-generated media is accelerating content fragmentation.

Jim O'Shaughnessy, Global Chairman, Entertainment & Media practice, PricewaterhouseCoopers, concludes that: "Content, distribution and technology companies need to... seek out new relationships to accommodate the shift towards convergence... companies will need to test new business models to address increased fragmentation and intellectual property in a digital era..."

The report goes on to say that:

• Global advertising will increase at a 5.4% CAGR during the forecast period, rising to $531 billion in 2011.
• Internet will remain the fastest-growing advertising medium, with a projected 18.3% compound annual increase to $73 billion in 2011.
• Advertising on the internet by 2011 will comprise 14% of the global advertising market.
• Out-of-home will be the second fastest growing advertising medium, with a projected 6.5% compound annual increase.

In every region of the globe, spending on convergent platforms will grow faster than other E&M platforms and will account for 72% of the total E&M growth during the next five years.

Marcel Fenez, Global Managing Partner, Entertainment & Media practice, PricewaterhouseCoopers, added: "The surge in broadband and wireless adoption is generating new digital revenue streams across multiple segments. Broadband growth is driving online advertising while the proliferation of next-generation wireless devices designed to play digital music, video games and receive TV programming is fuelling mobile distribution...."

Around the world, regional projections from the study include:

• The US remains the largest but slowest growing E&M market, growing at a 5.3% compound annual growth rate reaching $754 billion in 2011. US spending on Internet advertising and access will surpass spending on newspaper publishing in 2009.
• EMEA, the second largest market, will expand at a 5.5% CAGR to reach $617 billion in 2011.
• Asia Pacific will remain the fastest-growing region during the next five years, with the fastest economic growth and double digit increases in Internet, TV distribution, casino and other regulated gaming and video games. Spending in Asia Pacific will average 9.6% annual growth, the fastest of any region, increasing from $297 billion in 2006 to $470 billion in 2011.
• India will be the fastest growing during the next five years at 18.5% CAGR while China will continue to record double-digit annual gains that will average 16.8% CAGR.
• Latin America's E&M market, the second fastest growing region, is projected to rise at an 8.9% CAGR to $68 billion in 2011.
• Canada is projected to expand at a 5.6% CAGR to $47 billion in 2011, with double-digit growth projected for Internet and radio/out-of-home advertising.

Finally, considering selected segments of the industry:

• The global Internet market rose 21.8%, the fastest-growing segment in 2006 and the fourth consecutive increase in excess of 20%. Advertising rose 37.9% and access spending increased 18.8%. Globally, Internet advertising and access spending is expected to grow from $177 billion in 2006 to $332 billion in 2011.
• The global television distribution market, the second fastest growing segment, increased by 9.4% in 2006, and will increase from $161 billion in 2006 to $251 billion in 2011, says the report
• New Internet-enabled consoles and growing broadband penetration will spur growth in the online game market while next-generation wireless devices will drive demand for wireless games, expected to rise from $32 billion in 2006 to $49 billion in 2011.
• Spending in casino and other regulated gaming rose by 8.5% in 2006, and is expected to increase from $102 billion in 2006 to $144 billion in 2011.
• Globally, spending in the TV network market will increase from $172 billion in 2006 to $228 billion in 2011. Multi-channel advertising will be the fastest-growing sector in each region, buoyed by large increases in digital households.
• Spending in the sports segment is expected to increase from $96 billion in 2006 to $124 billion in 2011..
• Filmed Entertainment: Filmed entertainment rebounded in 2006 with a 2.9% advance following a 2.6% decline in 2005. Globally, filmed entertainment spending will rise from $81 billion in 2006 to $103 billion in 2011 at a 4.9% CAGR.
• The radio and out-of-home market rose 4.5% in 2006. Out-of-home advertising showed a 6.3% increase while radio rose by only 3.6%. Out-of-home will be fuelled by digital billboards. Globally, the radio and out-of-home advertising segment is expected to increase from $69 billion in 2006 to $89 billion in 2011.

For more about the PriceaterhouseCoopers study, please see this complete release.