The following is a full account of Marcel Fenex’s (Global Managing Partner, Entertainment and Media Practice, PricewaterhouseCoopers) report of the current state of the media world and, considering projected information, an extrapolation of where to the media world is going.
Over the next 5 yrs global spending on entertainment and media is projected to rise at a compound annual growth rate of 6.6% from $1.6 trillion in 2007 to $2.2 trillion dollars in 2012. Entertainment and media advertising is projected as $634 billion dollars in 2012 which is a 6.1% compound annual growth rate; TV is 5.9%; Internet advertising 19.5%; Newspapers 2.9%; Video Games, the fastest growing, at 16.7%.
People are spending more time at home due to credit crunch. Consequently, pay TV is rapidly growing. Entertainment and media consumer spending is seen as $1.2 trillion in 2012 which is a 5.6% compound annual growth rate. Except for emerging markets (Asia predominantly), music is still the ‘loser’ and dropping by 0.6%.
Growth in Emerging Markets is quick and steady as well. BRIC nations will have a collective compound annual growth rate of 13.6% over the next five years. The breakdown is as follows: Saudi Arabia growing 20%; India (18%); Indonesia (18%); Vietnam (17.3%); Turkey, Pakistan, China, Colombia, The Philippines, South Africa, Venezuela, Romania, Argentina, Russia, and Mexico are all charted at 11% growth. In the end there is considerable room for growth in these markets
The Net Generation is also a major concern and factor for future markets. In India there are 568 million people under 25 years of age; in China 497 million; in the U.S. 104 million under 25; in Brazil 82 million under 25. An important thing to understand about this particular demographic is these people were born digital, they don’t think about it, they just use it. Perhaps most surprising is that the fastest growing demographic are actually people over 50, growing from 1.1 billion to 1.25 billion due to influence from younger generations.
Fenex had comments to make on multiple technology tipping points as well. First, technology is at the heart of all of this growth. Global internet access (wired and mobile) is set to rise at a 12.1% compound annual growth rate to $341 billion in 2012. Global digital mobile revenue will grow at a 22% compound annual growth rate from $87 billion in 2007 to $234 billion in 2012 – mobile is leading the way to be certain, but all other digital is growing as well. Global revenue from digital distribution of music will overtake physical distribution. Revenue projections for 2011 are showing that more digital than physical sales will happen over time. Still, it’s not all about small screens, it’s also about big screens. The larger format industry mustn’t be discredited. All of what we do must be available anytime, anywhere, anyhow – this is the game we are playing these days – it’s driving revenues because people are apparently willing to accept ad-supported content and will only continue to do so. Lastly, 24% growth of the industry will be digital. At one-fourth of the industry digital must be thought about now, in a very progressive and active way.
His last big point is that collaboration is the key to success. Competition is giving away to collaboration, and the age of teamwork and information exchange is upon us. Change and convergence is forcing this – there is a shift in value change – between brands, content, old and new media. Twenty-five percent of entertainment CEOs strongly agree that collaborative networks will be a defining organizational principle for their business. Collaboration wins over outright mergers and acquisitions.
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October 16th, 2008 at 1:03 pm
[...] into common life, is heading. (for a account of his report see the preceding flypaper.tv headline, “Marcel Fenex & PricewaterhouseCoopers Examine Today’s Market” [...]