According to a new study by McKinsey, global spending on media is forecast to rise at a compound annual rate of 5.1% during the next five years, to $2.1 trillion in 2019, from $1.6 trillion in 2014.
Projected Spending By Category ($ in Billions)
In-home video entertainment
Consumer magazine publishing
Source: Wilkofsky Gruen/McKinsey analysis, December 2015
Digital advertising was the fastest-growing category in 2014, says the report, with a 16.1% increase in spending, followed by video games at 14.3% and Sbroadband at 9.2%. Both digital advertising and broadband are entirely digital, and digital components fueled the growth of spending on video games. At the other end of the growth spectrum, expenditures for traditional non digital media, such as consumer magazines and newspapers, continued to decline.
According to the report, digital advertising, video games, and broadband are expected to be the fastest-growing segments over the next five years, with projected compound annual increases of 12.7%, 8.1%, and 7.8%, respectively, to 2019.
Spending on cinema will expand at a projected 5.4% compound annual growth rate, followed by TV advertising at 5.0%. While today’s stronger segments will continue to be strong over the next five years, they will probably grow more slowly.
The report expects expenditures on the slower growing or declining segments of 2014 to grow more quickly or to decline more slowly over the next five years.
These patterns reflect two primary drivers of spending on media:
Developing markets. Increasingly, developing markets play a critical role in the growth of spending on global media, concludes the report. Not only because traditional media remain strong in these regions but also because the markets, from Mexico and China to India and Malaysia, anticipate healthy economic expansion and higher household incomes. This growth will boost spending on both ads and content across the region. In fact, the Asia–Pacific media market will be the largest source of absolute growth for the global industry during the next five years.
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