PwC has released their special report on the annual Global Entertainment & Media Outlook. Now in its 22nd year, the Outlook is the premier source of information and insight into the evolution of this dynamic, diverse and fast-changing sector.
In 2020, the pandemic triggered the sharpest contraction in overall E&M revenues in the history of this research. And it accelerated changes in consumer behaviour to pull forward digital disruption and industry tipping points by several years. In 2021, those tipping points morphed and coalesced into power shifts that are rapidly reshaping the industry.
One of the clearest trends is that players are realising they may be better served by figuring out how to meet consumers at their convenience. People prefer the ease and convenience of self-directed podcast listening to adhering to radio stations’ schedules. As a result, audio content providers are diversifying their offerings to become more of a destination where consumers will linger and browse. For example, although podcast platforms in many territories tend to specialise in particular topics—comedy, politics and so on—the leading providers in the mature Chinese market, such as Ximalaya and Nasdaq-listed Lizhi, aggregate many different subjects and types of podcasts into a single offering. Clubhouse and Spotify use live and recorded podcasts to re-create a personalised radio type experience.
Total global entertainment and media (E&M) revenue fell -3.8% year on year in 2020, by far the most significant drop in revenue — US$81.0bn, or more than the value of 2020’s entire music, radio and podcasts segment — in the history of the Global Entertainment and Media Outlook.
As more global regions emerge from lockdown and see increasing rates of vaccination, a forecast year-on-year rise of 6.5% in 2021 and a further 6.7% rise in 2022 will help drive total global E&M revenue to increase at a 5.0% five-year CAGR. However, this seemingly healthy growth comes from a greatly depressed base year — extending the CAGR period to six years provides a less optimistic picture with a rate of just 3.5%.
Sectors that meet digital and mobile consumers where they are find rapid growth. The projected CAGR for Virtual Reality from 2020-25 is the highest among all segments at 30 percent, while Music, Radio and Podcasts are projected to grow at 9 percent.
Important findings in this year’s Outlook include:
- The 3.8% decline in global E&M revenue, from US$2.1trn in 2019 to US$2.0trn in 2020, was the biggest year-on-year drop in the Outlook’s 22 years. But there were bright spots in a number of E&M segments created by shifting consumer demand.
- From 2021 to 2025, we project global E&M revenue to grow at a healthy compound annual growth rate (CAGR) of 5.0%, taking industry revenues to US$2.6trn in 2025.
- Traditional TV/home video remains the largest E&M consumer segment (US$219.0bn) but will continue to shrink (-1.2% CAGR) over the next five years.
- Video streaming boomed in 2020 and its growth trajectory will continue. Streaming video-on-demand (SVOD) is projected to grow at a CAGR of 10.6% to 2025, making it an US$81.3bn industry. Meanwhile, cinema revenues are projected to rebound in 2021 as lockdowns ease but will not recover to pre-pandemic levels until at least 2024.
- Video game and esports revenues continue their rapid ascent, reaching US$147.7bn in 2020, with a 5.7% CAGR projected to expand the segment to become an almost US$200bn business (US$194.4bn) by 2025.
- Virtual reality (VR) is the fastest-growing E&M segment, albeit from a small base. Its revenues surged by 31.7% in 2020 to US$1.8bn and are projected to sustain a CAGR of 30%+ over the next five years to reach US$6.9bn business in 2025.
- Music is poised for robust growth following a massive 74.4% slump in live music revenues in 2020. We expect total music revenues to grow at a 12.8% CAGR over the next five years, fueled by digital streaming, which will expand to become a US$29.3 bn business by 2025, along with a return to live performances.
- Spending on internet advertising rose by 9% to US$336bn in 2020, overtaking non-internet ad spending for the first time, and is projected for strong growth of 7.7% CAGR over the next five years.
- Internet access accounted for 34% of E&M spending in 2020 and will increase at a 4.9% CAGR, from 2020’s US$694bn to US$880bn in 2025. Mobile internet access will drive market growth, with revenues rising at a 6.1% CAGR from US$449bn in 2020 to US$605bn in 2025, underpinned by the spread of 5G, advances in handset technology, and premium content bundles.