Media Spending to Hit $1.2 Trillion by '05 - Report
- by June 7, 2001
Online distribution of content will continue to be a key driver of growth, the consulting firm said in a report about the sector's outlook.
"Digital technology, such as Internet access, broadband services, the expansion of the (high-speed) pipe into homes, satellite and wireless communications are going to be driving this growth," said Mike Kelley, one of the authors of the report and partner in the firm's media and entertainment practice.
High-speed Internet subscribers in the United States will soar to 28 million by 2005 from 4 million currently, with much of the growth kicking in at the end of 2002 and beginning of 2003, Kelley added.
Over the next five years, the consulting firm said it sees the industry developing new business models worldwide that will stimulate the shift from free distribution to paid Internet subscriptions, while solving copyright issues.
Despite a recent slowdown in online advertising spending that has caused much pain for many Internet media companies, the consulting firm said it sees double-digit growth globally in Internet advertising and access spending over the next five years.
Double-digit growth is expected in all regions within Internet advertising and access spending, with overall spending jumping to $90 billion in 2005 from $40 billion in 2000.
Streaming media will revitalize the online ad market and online retailers will integrate their activities with catalog and brick-and-mortar outlets to incorporate the benefits of traditional retailing.
Consolidation within the entertainment and media industry will be another key driver of growth, with mergers across national boundaries and companies expanding their control over means of distribution.
The ability of global media players to distribute their product and content throughout the world will make media companies stronger and better able to provide advertisers with efficient ways to reach consumers.
Spending worldwide in filmed entertainment will rise to $93 billion by 2005 from $68 billion in 2000. The U.S. market should reach $55 billion by 2005 as home video sales and increases in TV program spending offset modest box office growth.
The TV content market, which encompasses cable and broadcast networks, will reach $168 billion globally in 2005 from $107 billion in 2000. Interactive TV will gain a foothold in the market, but it will be used in conjunction with scheduled programs rather than as a substitute.
Spending in recorded music will grow at an estimated 5.1% compound annual rate over the next five years, reaching $49 billion in 2005.
In the U.S., fee-based online distribution of music, primarily through subscriptions, will become a significant factor in the market over the next two years. However, physical distribution via CDs and other media will remain dominant.
Worldwide spending on magazine publishing will grow to $111 billion in 2005 from $84 billion in 2000. The U.S. market will grow by only 1.7% in 2001, after a big year in 2000, due primarily to a slowdown in the economy and the loss of dot-com and tobacco advertising.
Spending in newspaper publishing globally will increase to $197 billion in 2005 from $155 billion in 2000.
The Internet is proving to be an engine of growth and a companion for newspapers, attracting new readers and additional advertising, and driving print subscriptions, the report found.
Spending in publishing globally will rise to $105 billion in 2005 from $85 billion in 2000. Electronic books will become a significant component of the U.S. industry, accounting for 30% of spending on professional books by 2005, 28% of college textbooks, and 11% of consumer books.
