In 2017, box-office revenue in China is seen eclipsing that of the United States, while advertising earmarked for digital venues will surpass that given to TV – both for the first time, according to an analysis of the next five years in the media and entertainment sector prepared by PwC.
The shifts are two of the latest signs of a media and entertainment industry in significant flux. The consultant said it anticipated a somewhat slower growth projection for the industry at large, though it forecasts U.S. entertainment and media spending would reach $720 billion by 2020, compared with $603 billion in 2015. Meanwhile, revenue from entertainment and media is expected to rise at a compound annual growth rate of 4.4% over the next five years, rising to $2.1 trillion in 2020 from $1.7 trillion in 2015.
“Today’s entertainment and media reality is one of companies intensely competing for dollars with the increasing proliferation of free online media alternatives. This global multi-speed media landscape has created unprecedented challenges for companies in the battle for customers and value,” said Deborah Bothun, leader of PwC’s global and U.S. entertainment and media practice, in a prepared statement. “The acceleration of digital and technology innovation is expected to continue to force companies to innovate and reimagine the industry as we know it.”
The largest growth rates are projected for digital advertising overall, and one of its components, mobile advertising. PwC said “Internet advertising” would reach $93.5 billion by 2020, compared with $59.6 billion in revenue for 2015. By 2017, Internet advertising ($75.3 billion) is poised to overtake broadcast TV advertising for the first time in the U.S., totaling $75.3 billion, compared with $70.4 billion. Mobile advertising will account for 49.4% of digital advertising by 2020, the consultant said, compared with 34.7% in 2015. The rollout of 5G networks is seen accelerating a shift toward mobile consumption of video, leading to a rise in mobile video Internet revenue to $13.3 billion in 2020, compared with a mere $3.5 billion in 2015.
In cinema, PwC expects China to overtake the U.S. in box office revenue in 2017, marking he first time the U.S. has not held the leading position in its analysis. By 2020, China box office revenues are expected to reach $15.1 billion. compared with $11 billion in the U.S. “Studios are facing increasing international competition with foreign governments,” said PwC’s Bothun. The consultant said the continued growth of video on demand and over-the-top services is putting pressure on the “theatrical window” period traditionally enjoyed by cinemas -with electronic home video sales eclipsing box office sales in 2015 – two years earlier than PwC projected in 2015.
Two sectors are not primed for growth. Newspaper publishing is expected to decline at a 2.9 percent compound annual growth rates in the years leading to 2020, as social networks supplant traditional news outlets as consumer “destinations.” PwC said it expected “further industry consolidation” as traditional publishers seek out new, efficient ways to reach their consumer bases. Magazine publishing revenue, meanwhile, is seen trending as flat, predicted to grow to $30.7 billion in 2020, compared with $30.5 billion in 2015.