The most rapid growth rates in E&M revenues over the coming five years will be in less-developed markets and economies, where entertainment and media spending on a per capita basis is generally quite low. This is according to PwC’s Global entertainment and media outlook 2017 -2021. The report provides PwC's most recent and up-to-date forecast of consumer and advertising spend data as well as related commentary for 17 entertainment and media segments, across 54 countries including Nigeria. It is a powerful online tool that provides deep knowledge and actionable insights about the trends that are shaping the E&M industry.
According to the latest report, Nigeria with a 12.1% CAGR (albeit strongly influenced by surging spending on mobile Internet access), will be the world’s fastest-growing E&M market over the coming five years while the slowest-growing will be Japan, growing at a 1.7% CAGR. While consumers in mature markets such as North America and Europe, and wealthier Asia-Pacific markets, spend a lot — more than US$500 per capita annually — on entertainment and media, growth rates are relatively slow in these areas. In contrast, less developed economies feature much lower per capita spending and faster growth albeit from a very low base – less than US$50 a year in many cases.
The report noted that dramatic shifts are underway in how entertainment and media companies compete and generate value, as the quality of the experience they deliver to consumers becomes their primary basis for strategic differentiation and revenue growth. To thrive in a marketplace that is increasingly competitive, crowded, and slower-growth, therefore, companies are developing strategies and building capabilities to engage and monetize their most loyal and passionate users — their fans. This means they must combine compelling content with breadth and depth of distribution, and then connect it all to a great user experience, where content is discoverable easily on an array of screens and at an attractive price.
Femi Osinubi, Technology, Information, Communications and Entertainment (TICE) Industry Leader at PwC Nigeria, comments: “A raft of changes in technology, user behaviour and business models have opened up a gap between how consumers want to experience and pay for E&M offerings, and how companies produce and distribute them. The right user experience bridges this gap. To deliver it, companies must pursue two related strategies. First, build businesses and brands anchored by active, high-value communities of fans, united by shared passions, values, and interests. And second, capitalize on emerging technologies to delight users in new ways and provide superior user experiences.”
Rapid advances in technology drive direct-to-consumer strategies
As companies compete to create the most desired user experiences, advances in technology are at the heart of their strategies. Combined with a great user experience, companies can harness technology and data to create a virtuous circle – one in which increasing consumer engagement and attention lead to the capture of more data and more insights into what users want. This understanding enables companies to further target and engage their core audiences, opening up new opportunities to generate revenue. Increasingly the models used to achieve this monetization are founded on direct-to-consumer (D2C) strategies, which are enabled by technology and characterized by greater choice and user control: over the next five years, Internet video will grow at an 11.6% CAGR, and music streaming at a 20.7% CAGR.
The growth of Internet advertising is being powered by mobile advertising, which grew by 58.7% in the past year, and will continue to expand at an 18.5% CAGR through 2021. But despite this growth, wired Internet advertising still accounted for 61.6% of total Internet advertising in 2016. Also, the robust growth of Internet advertising actually masks an embedded form of inertia. Without accepted measurement practices that can provide transparency on the efficacy and efficiency of the major platforms, premium brands are reluctant to take on the perceived risks inherent in concentrating more of their advertising in digital mediums, resulting in larger agencies and their clients holding back their ad dollars.
Osere Alakhume, Partner and TICE Industry leader for PwC West Africa adds: “The steady march of digital technology has ushered in a more direct-to-consumer environment characterized by greater choice and user control. Amid an ever greater supply of media, businesses that are fan-centric will find themselves with audiences that are more engaged, more loyal, and spend more per capita. To thrive in the experience-driven marketplace characterized by this year’s Outlook, companies need to attract and harness the economic, social, and emotional power of fans. ”
Global newspaper circulation revenue overtook global advertising revenue in 2016. While newspaper circulation revenue has been on a downward trajectory since 2015, publishers have had the useful lever of cover price rises to partly offset the rapid fall in units. However, the year-on-year falls in newspaper advertising revenue have been more pronounced, with advertisers deserting print editions in large numbers, and publishers increasingly being squeezed out of the digital ad space by Google and Facebook. The upshot is a historic shift in the dominant revenue streams, as newspaper circulation eclipses advertising. By 2021, global total newspaper circulation revenue will account for 54.0% of total newspaper revenue.
In 2016, total digital recorded music revenue overtook physical – and streamed music overtook downloads. The digital recorded music segment was worth US$10.7bn in 2016, surpassing that for physical recorded music, at US$8.5bn, for the first time. Music streaming services grew apace during 2016, pushing global digital revenues up by US$1.8bn year-on-year, or 20.3%, as the physical segment declined 9.6%. While digital recorded music accounted for 55.7% of overall recorded music revenues in 2016, that proportion is set to rise to 80.3% in 2021. Digital music streaming revenue also overtook its download counterpart in 2016, with streaming revenues rising 65.3% to US$6.6bn, and downloading revenue slumping 18.4% to US$3.5bn. Downloaded music is expected to fall from 32.5% of digital revenue in 2016 to just 6.4% in 2021.
Smartphone traffic will exceed fixed broadband data traffic in 2020. Although mobile usage is a key driver of growth in overall data traffic, fixed broadband will continue to account for the majority of data traffic in the 19 markets for which we have developed detailed forecasts. Many consumers still prefer to access data-heavy content – notably high-quality video – via fixed broadband rather than their mobile device. But the shift towards the smartphone will continue, especially in developing markets such as India and Indonesia, so that by 2020, overall smartphone data traffic across our 19 markets will exceed fixed broadband data traffic for the first time.
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