TORONTO and BANFF – Thanks to higher spending on Internet access and TV subscriptions, the Canadian entertainment and media market is on pace to grow faster than the American market, says a new report from PwC which will be officially unveiled today at the Banff World Media Festival.
The Global Entertainment and Media Outlook 2012-2016 shows Canada's E&M market growing at a 6.5% compound annual growth rate (CAGR) compared to 5.2% in the U.S through 2016.
But growth of Internet advertising in both countries will continue to be significant, highlighting mobile advertising opportunities. In Canada, mobile advertising will grow at a 42.6% CAGR, followed by other internet advertising segments including video (31.9%), banner display (16.8%) and search (13.5%). Other fast growing segments will be Internet access at 11.8% and TV subscriptions and license fees at 8.6%.
"Mobile advertising is still a small market but it's soaring in North America. Between 2010 and 2011 the segment grew by almost 149% in the U.S. and 109% in Canada," says Michael Paterson, a partner in PwC's Canadian Entertainment & Media practice, in a release. "Given the amount of time consumers are spending on their devices outside of making phone calls, it's glaringly apparent how much of an opportunity this advertising medium is."
Over the forecast period, U.S. mobile advertising is expected to grow slightly slower at 42.4% CAGR. Paterson says there are challenges in monetizing the amount of time consumers spend on their mobile devices and Canadian and U.S. companies will need to act fast to capitalize on the opportunities. "As networks are upgraded, new location-based marketing services are developed, and the capability to mine customer data improves, mobile advertising dollars will begin to flow."
The report also shows that the overall advertising market was healthier in Canada than the U.S. last year, growing by 5% compared here to 2% south of the border. Over the next five years it's expected that American and Canadian advertising spend, on a combined basis, will grow similarly at almost 6%, driven in part by mega-sporting and political events such as the Olympics and elections – from US$184 billion in 2011 to US$245 billion by 2016. Internet advertising (wired and mobile), in-video game advertising, TV and out-of-home are expected to be advertising's winners.
In 2011, entertainment and media spending in North America grew by 3.3%, the largest increase since 2007. The Canadian market grew by 5.7% in 2011 due to higher spending in Internet advertising (22.8%) and Internet access (17.5%). TV subscriptions, radio and out-of-home advertising were other winners, each expanding more than 6%.
Faster growth is expected over the next five years with the overall North American market expected to reach US$658 billion by 2016 from US$508 billion in 2011. "We will see double digit growth from Internet advertising, and increases of 5% CAGR or more from segments that continue to be important to consumers and advertisers like Internet access, Internet Advertising, TV subscriptions, specialty TV advertising, music and out-of-home advertising," says Paterson.
Consumer spending in Canada will increase at 5.3% CAGR to 2016, compared to 3.7% in the U.S.
Tipping points
This year's Outlook shows some interesting Canadian tipping points that will occur over the next few years, especially for those segments taking advantage of digital revenue streams:
• Internet ads beat out TV ads by 2014: Canadian spending on internet advertising will overtake TV advertising by 2014 and be 23% larger by 2016.
• Video games overtake consumer books: spending on video games will overtake spending on consumer and educational books in Canada this year, to be almost 20% larger by 2016.
• Music: Canadian spending on music rose 2% in 2011, the first gain in many years, thanks to the growth in the concert and music festival market and a slower decline in recorded music spending. As a result, and due to increased spending on digital music, overall spending will increase from now through to 2016 at 4.1% CAGR.
PwC's Global Entertainment and Media Outlook: 2012-2016, released Tuesday to media worldwide, provides forecasts and analysis on 13 major E&M industry segments in 48 countries.
