TORONTO – A study done by PricewaterhouseCoopers released today says that the Canadian entertainment and media market (E&M) is expected to have the most consistent growth globally during the next four years with an estimated 6% compound annual growth rate (CAGR) to US$37 billion by 2009.
That’s $48.5 billion in Canuck bucks, according the the exchange rate used by PwC in its research.
According to the latest PricewaterhouseCoopers’ (PwC) Global Entertainment and Media Outlook: 2005-2009, the entire global entertainment and media industry is in its strongest position since 2000, and revenues are expected to increase at a 7.3 % CAGR to US$1.8 trillion in 2009. The Asia Pacific region will lead with 11.6% CAGR.
The PwC Outlook forecasts and analyzes 14 major industry segments across five regions of the globe – the United States, EMEA (Europe, Middle East, and Africa), Asia/Pacific, Latin America, and Canada. The PwC Outlook found that the U.S. remains the largest E&M market but is projected to be the slowest-growing region at a 5.6% CAGR, reaching US$690 billion in 2009.
While U.S. economic conditions will generally remain favourable, rising interest rates and higher energy costs will lead to slightly more moderate growth rates during the next five years. After several years of sluggish growth, the EMEA region will recover, growing at a 6.5% CAGR to reach US$572 billion in 2009, says PwC.
In 2004, Canadian E&M spending increased 6.6%, led by double-digit growth in the Internet, filmed entertainment, and video game segments. The projected growth between 2005 and 2009 will again be led by these sectors. Additionally, recorded music will grow by 7.9% reflecting last years turnaround after four years of losses.
Radio/out-of-home, TV networks and casino gaming will grow by 5.4%, 5.4% and 4.9% respectively. The remaining segments (business information, magazine, book and newspaper publishing, sports and TV distribution and theme and game parks) each by less than 5%.
“Canada’s projected growth for 2009 is being fuelled by the double-digit increases in video games and the Internet,” said Jerry Brown, director responsible for PwC’s Canadian Entertainment and Media Advisory Practice, in a press release. “The E&M industry continues to display an extraordinary ability to reinvent itself and create new revenue streams through innovative offerings that barely existed as recently as 2000. Examples include products enabled by broadband Internet access and wireless.”
According to PwC, a healthy increase of 8.4% CAGR to US$7.2 billion is expected for Canadian filmed entertainment and 7.9% to US$1.1 billion for recorded music, which will benefit from increased spending on mobile music and an emerging digital distribution market. This compares to the global industry where filmed entertainment growth will be moderate with an increase of 7.1% CAGR to US$119 billion in 2009 and recorded music spending will rise at an 8.3% CAGR to $56 billion in 2009.
“The key drivers of the global E&M industry include a favourable economic environment and new spending streams that are going to offset declining categories,” added Brown. “Broadband Internet will be the major growth catalyst across all regions. Canada’s high levels of penetration in urban areas and initiatives to expand and access across all parts of the country will boost overall Internet access spend and create new opportunities for online advertising and make it easier to conduct online transactions.
“In addition, entertainment companies are increasingly licensing a greater amount of content to digital distribution services, which will help to alleviate the negative impact of piracy.”
Advertising growth in Canada slowed to 5% in 2004 down from 6.1% in 2003. It is expected to grow at a CAGR of 5.3% between 2005 and 2009. “We expect the Internet to continue to be the fastest growing category at 16.7%, followed by out-of-home at 6.9%,” says Brown. “For the advertising market as a whole, spending will climb at 5.3% CAGR, rising to US$8.2 billion in 2009 from US$6.4 billion in 2004.”
The Canadian projections compare to global advertising spending which is expected to increase at a robust 5.9% CAGR during the 2005-2009 period, rising to US$477 billion in 2009 from US$358 billion in 2004. Globally, television remains the largest advertising medium, rising to US$186 billion in 2009; and Internet advertising is the fastest-growing advertising medium with a projected 15.8% CAGR to US$32 billion globally in 2009.
Canadian consumer spending is also forecast to grow 6.3% between 2005 and 2009 led by video games which will average a growth rate of 16.7% CAGR and Internet access spending at 10.5%. In the same time period, global consumer spending is forecast to grow by 7.8% CAGR – again led by video games at 18.5% CAGR and Internet access spending at 17.1%.
