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After COVID Pushed Industry Revenue Down 3.8% in 2020, Biz Poised to Rebound: PwC

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Cheyne Gateley/Variety Intelligence Platform

Media and entertainment revenue globally dropped 3.8% in 2020 as the coronavirus pandemic led to an overall $81 billion drop, according to PwC’s “Global Entertainment & Media Outlook 2021-2025″ report.

It’s no surprise that COVID ravaged certain sectors of the business. Movie theaters saw a 71% decline in box-office revenue and live music plunged 74% last year.

“It’s the first time we saw such a stark decline in the market,” CJ Bangah, principal at PwC U.S., who serves on the report’s editorial board. “What happened during the pandemic was not surprising — the segments that faced massive declines in revenue made sense.”

The good news, per PwC projections, is that the overall biz is projected to bounce back this year and continue growing, with a 3.5% compound annual growth rate from 2019-25, the firm predicts. The industry’s two hardest-hit sectors will also have the biggest gains in 2021, according to PwC: Cinema and live music will both see revenue increases of more than 90% this year, to $25.37 billion and $14.15 billion, respectively. However, it will take concerts until 2023 to return to pre-pandemic levels and movie theaters until 2024.

One of the few areas that saw growth in 2020 — also unsurprisingly — was over-the-top video. Subscription-streaming service revenue surged 29.4% last year as people were stuck at home (and continued to drop pay-TV services). The SVOD market added more than $11 billion in revenue, to reach about $49.3 billion worldwide in 2020, according to PwC. The firm expects subscription VOD growth in 2021 to be softer but still increase 13.2% (to $55.8 billion) with a projected 10% CAGR from 2020-25.

Global Entertainment and Media Revenue (in Trillions of Dollars)
PwC Global Entertainment & Media Outlook 2021-2025
Source: PwC’s “Global Entertainment & Media Outlook 2021-2025″

To Bangah, the most surprising finding from PwC’s research was how fast consumers shifted media-consumption patterns amid the COVID crisis. “Consumers have been taking control of their entertainment experience for several years,” she said, “but the pandemic showed how quickly they can change their behavior.”

Over the next few years, the biggest growth constraint on individual categories will be consumer time, Bangah said — there are, after all, only 24 hours in a day. That will boost competitive pressure on players across all segments. In addition, she expects to see increasing “multigenerational differences in how consumers are choosing to be entertained.” For example, Gen Z consumers have expressed far greater affinity for playing video games than watching TV and movies than their elders.

Other details from this year’s PwC entertainment and media outlook report, now in its 22nd year:

  • There were 410 M&A deals announced in the six months ended May 15, worth $83 billion — up from 61 deals in the second half of 2020 and just 32 in the first half of 2020. (The tally doesn’t include AT&T’s plans to spin off WarnerMedia and combine it with Discovery, a deal PwC ascribed a value of $93 billion.)
  • Global data consumption in 2020 increased 30.4% over the previous year, and is expected to rise at a 26.9% CAGR between 2020-25. Video remains the largest content category by far, accounting for 78.3% of global data consumption in 2020. Spending on internet access increased $14 billion, up 2.1%, accounting for 34.1% of all spending.
  • Overall advertising revenue is expected to rise from $582.5 billion in 2020 to $797.8 billion in 2025. That will be driven by digital growth, as traditional advertising categories such as TV and print stagnate or decline.
  • In 2020, consumer spending on entertainment and media fell 5.5%. By 2025, the total is projected to rise to $914.9 billion, representing a 3.9% CAGR from 2021-25.