TORONTO – Internet advertising, mobile technology adoption, and over-the-top (OTT) streaming will drive Canadian entertainment and media revenues through 2020, says a PwC report released Monday.
According to Global Entertainment and Media Outlook 2016-2020, Canadian entertainment and media revenues will rise at a compound annual growth rate (CAGR) of 3.5% in nominal terms over the coming five years, from US$43.8 billion in 2015 to US$50.0 billion in 2020. This growth rate represents a slowdown from last year's 5.0% growth in industry revenues, and will lag behind overall global economic growth during this period.
Overall, what emerges from the report is media companies that combine technology with industry-assets like relationship management, customer insights, and data collected through various platforms will thrive. Millennials, a demographic that adopts and multitasks using new technology quicker than any other age group, will inform the type of content produced for audiences. The report draws a strong correlation between the size of a country's under-35 population and its growth in entertainment and media spending, confirming that younger consumers are now the primary drivers of global growth in the sector.
Globally, revenue across entertainment and media is steadily shifting from publishing businesses to video and Internet businesses – in particular those that provide OTT services and monetise consumer data. Direct consumer spending models will remain strong, while spending on Internet access, including mobile data, will rival advertising. This development creates more fertile ground for new entrants and traditional players alike to jump directly into new markets and segments, like OTT video and new e-commerce offerings, continues the report.
Trends that will continue to reshape the Canadian media landscape include Internet advertising, where revenues will rise at a CAGR of 9.8% to 2020, and music streaming, which is predicted to rise at a CAGR of 27.3% by 2020, though music downloads will see a decline of 10.0% by the same year. OTT streaming will dominate Canadian TV viewing with a CAGR of 10.3% to 2020.
"Canadians now have access to multiple OTT or TV on demand services, each with their own exclusive content, and the same can be said of the various music streaming services. It can be difficult to get all your favourite content in one place," said Anita McOuat, partner, Entertainment and Media, PwC Canada, in the report’s release. "There is an opportunity for technology firms to create a one-stop-shop by aggregating all content, making it easier and more flexible for Canadians."
The report identifies five key shifts that will emerge amid the continuing disruption:
– Shift 1. Demography: Youth will be served
Entertainment and media revenue growth in the world's 10 youngest and 10 oldest markets in demographic terms reveals that, on average, entertainment and media spending in the 10 youngest markets is growing three times as rapidly as in the 10 oldest markets.
– Shift 2. Competition: Content is still king
The reality is that content is being redefined by forces of globalisation and localisation simultaneously—and that while much of the industry is growing more global, content tastes and cultures remain steadfastly local.
– Shift 3. Consumption: The joy of bundles
The bulk of digital OTT mass-market services will gradually be reabsorbed into aggregated offerings that will echo the traditional analogue-style bundle, but that will be more flexibly priced and available on a full range of devices.
– Shift 4. Geography: Growth Markets
The dynamics are shifting rapidly as disruption pushes markets to develop in different ways, meaning "opportunity" economies—even within the same region—can display significantly varied growth patterns.
– Shift 5. Business models: Transforming with trust
This underlines how the growth of technology and digitisation is acting as a centripetal force—breaking up existing relationships; pushing large, generalist entities to give way to smaller specialists; and allowing smaller, nimble competitors to beat out incumbents.
PwC’s Global entertainment and media outlook 2016-2020 provides a single comparable source of five-year forecast and five-year historic consumer and advertiser spending data and analysis, for 13 entertainment and media segments, across 54 countries.
