TORONTO – Internet access and advertising are expected to see the largest growth as the overall Canadian entertainment and media market reaches US$47 billion in 2011, according to a report released Thursday by PricewaterhouseCoopers (PwC). The figure in 2006 was US$36 billion.
PwC’s latest edition of Global Entertainment and Media Outlook: 2007-2011 forecasts a consistent 5.6% compound annual growth rate (CAGR) between now and 2011; the figure is comparable to the global projected growth rate of 6.4%.
The Internet access and advertising segment is expected increase 12.2% CAGR to reach US$4.5 billion in 2011 from US$2 billion in 2006.
Internet advertising leads the way, growing at 23.5% CAGR to US$2 billion in 2011, according to the report.
Internet access spending is predicted to grow at a 6.3% CAGR to US$2.5 billion in 2011 fueled by a 9.9% CAGR increase in broadband access spending, which will be offset by a decline in dial-up.
Tracey Jennings, leader of PwC’s entertainment and media practice for the Canadian market, stated, "Online advertising is growing explosively in each region fuelled by the growth of the Internet as an entertainment centre for social networking and a distribution channel to access entertainment content.”
She added, “Speed is important to enable access to content such as playing video games or other content including music and video downloads. Increasing broadband and high-speed wireless networks in Canada are, therefore, fuelling growth in Internet and wireless distributions of other segments, most significantly video games and music.”
Digital and mobile spending is expected to rise during the next five years to US$153 billion by 2011.
The reports also predicts that spending related to the distribution of entertainment and media on convergent platforms, such as on the home computer, wireless handset and television, is growing at high single-digit rates and will overtake other traditional platforms in 2008.
But “traditional” markets such as radio/out-of-home in Canada are expected to advance 11.7% CAGR to US$2.8 billion in 2011 from US$1.6 billion in 2006.
Radio will expand to US$2.3 billion in 2011 from US$1.3 billion in 2006, a 12.4% CAGR, according to the report.
Propelled by high broadband penetration in Canada, the video gaming sector is expected to grow to US$1.4 billion in 2011, a CAGR of 9.4%.
Wireless games are predicted to jump 20.9% CAGR to US$230 million by 2011 from US$89 million in 2006. The increase represents the largest growth rate of the video gaming market.
Console/handheld games will increase at a 5.4% annual rate to US$554 million in 2011 from US$425 million in 2006.
Online games will grow 13.9% CAGR to US$476 million in 2011 from US$248 million in 2006, according to the report.
In the television market, telephone companies entering TV distribution will likely drive up total subscription penetration, and the Canadian market will expand at a 5.7% CAGR to US$5.5 billion in 2011.
Premium subscriptions will rise to US$853 million, a 4.5% increase that reflects Canada’s relatively mature premium market, according to the report. Video-on-demand will continue to be the fastest-growing category, with a 28.9% CAGR increase to US$498 million in 2011, and specialty channel advertising grow a projected 7.6% CAGR to US$1.1 billion.
The report also predicts that filmed entertainment spending in Canada will grow at a 4% CAGR to US$6.9 billion in 2011 from $5.6 billion in 2006.
"There are some very interesting trends in Canada in the filmed entertainment market,” said the director responsible for PwC’s Canadian Entertainment and Media Advisory Practice Jerry Brown. “First of all, the arrival of digital distribution in the theatres will help open the market to Canadian and specialty films and enable them to find a larger audience as reduced duplication costs will allow for a wider release.”
The eighth annual edition of PwC’s Outlook contains in-depth analyses and forecasts of 14 major industry segments across five regions of the globe – the U.S., EMEA (Europe, Middle East, Africa), Asia Pacific, Latin America and Canada.
