New Entertainment and Media Industry Emerges From Global Recession

It's the golden age of the empowered consumer, with the demand for digital experiences increasing and becoming the norm, according to the latest Global Entertainment and Media Outlook: 2011-2015 from PwC.  In many markets the entertainment & media (E&M) industry emerging from the global recession has been profoundly changed as the ongoing consumer migration to digital has accelerated due largely to the device revolution.


2010 saw the global economy begin to recover from its steep decline in 2009 and these improved economic conditions have played a major role in the recovery of overall E&M spending which rose by 4.6 percent.  Some countries, notably mainland China and India, were largely unscathed by the global recession and experienced significantly higher growth rates in E&M spending, but others who were, and are still burdened with high government debt or political unease, are struggling to grow at similar rates.


Over the next five years PwC forecasts that aggregate E&M global spending will rise from US$1.4 trillion in 2010 to $1.9 trillion in 2015, a 5.7 percent compound annual advance driven by economic growth, but masking the accelerating shift of spending from traditional to digital platforms.  Currently digital accounts for 26 percent of all spending but by 2015 we expect digital's share to rise to 33.9 percent.  In Hong Kong, E&M spending grew 10.4 percent in 2010 and is projected to grow 7.4 percent compound annual growth rate (CAGR) between now and 2015.


Advertising, the most cyclically sensitive of the three E&M spending streams, recorded the largest year-on-year swing, rebounding at 5.8 percent in 2010 from an 11 percent slump in 2009. 


Overall global advertising will increase at a 5.5 percent compound annual rate from $442 billion in 2010 to $578 billion in 2015.  In comparison, overall advertising in Hong Kong is forecast to grow at 15.3 percent in 2010, and is projected to grow at a compound annual rate of 8.1 percent to 2015.


Global consumer/end-user spending also improved, rising 2.2 percent in 2010 after a fall of 0.4 percent in 2009.  In Hong Kong, consumer/end-user spending increased by 4.5 percent in 2010. 


Hong Kong's overall entertainment and media market is experiencing a shift to digital platforms facilitated by an explosion in broadband households and mobile access.


Hong Kong E&M Market Rebounds


Hong Kong's E&M market strongly rebounded in 2010 with advertising spending a key driver behind the recovery.  In particular, advertising spend for brand building of consumer products was notably high, aimed at targeting both local consumers and mainland tourists.  Hong Kong's 2010 advertising market is still dominated by the traditional media, predominately TV and newspapers and this domination is expected to continue between 2011 and 2015.


"There is no doubt digitization is happening in Hong Kong.  We have seen high adoption of smartphones and mobile devices.  Similar to other regions, there has been an increasing trend for traditional media to digitize their content via mobile applications and digital platforms.  However, the rapid digitization has yet to translate into higher digital advertising as traditional media is seen as the preferred and proven platform for advertisers due to theavailability of historical viewership data and the loyalty of consumers on these platforms," says Cecilia Yau, PwC Hong Kong Entertainment and Media Practice Partner.


"The digital platform is still viewed as a complementary media instead of a substitute which illustrates the slow shift of the entertainment and media spend to digital in Hong Kong," she adds. 


Mainland China Shifting to Digital Platforms


Overall E&M spending in mainland China grew 13.9 percent in 2010 and will continue to be among the faster-growing countries during the next five years, with a projected 11.6 percent compound annual increase. 


China's overall E&M market is experiencing a shift to digital platforms facilitated by an explosion in broadband households and mobile access such that by 2015 26.3 percent of total E&M spending will be digital in nature. 


Growth in 2010 was led by filmed entertainment, which soared by 53.1 percent; video games and TV subscriptions, which each rose by more than 30 per cent; and internet advertising, which increased by 28.2 percent.  Double-digit annual gains during the next five years are projected for each segment except internet access, print media, and business-to-business. 


Through to 2015, overall advertising in mainland China is projected to grow by 14.1 percent compounded annually to 2015, and spending in China will grow at a CAGR of 2.4 percent to $12 billion.


Television will remain the biggest advertising segment throughout the forecast period and Internet advertising will be the fastest-growing advertising category during the next five years.  The digital advertising element as a whole is set to increase sharply of all advertising during the next five years, and TV is doing well to integrate with digital media and collaborating with social networking sites to generate new digital ad revenues.




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