Over the next five years, digital technologies will become increasingly widespread across all segments of entertainment & media (E&M) as the digital migration continues to expand according to the PricewaterhouseCoopers Global Entertainment & Media Outlook 2009-2013. Though the current economic downturn has, without doubt, impacted virtually every sector of the E&M marketplace it has also accelerated and intensified the digital migration among both providers and consumers of content.

The global entertainment & media market as a whole, including both consumer and advertising spending will grow by 2.7% compounded annually for the entire forecast period to $1.6 trillion in 2013. Initially the analyst expects to see a 3.9% drop in 2009 and a mere 0.4% advance in 2010, with a period of much faster growth during the remaining period to 7.1% in 2013.

With this recession lasting longer than previous, E&M is not immune to that trend - consumer spending in E&M will fall by a projected 1.2% in 2009, remaining weak in 2010 and seeing only relatively low growth at 3.2% in 2011.

Responses to the recession will vary from country to country and region to region with some territories showing little ill effects while others experience steep declines. Latin America and Asia Pacific remain the fastest growing regions increasing at an annual compound rate of 5.1% and 4.5% through to 2013 reaching $73 billion and $413 billion respectively.

Excluding Japan, the dominant country in the Asia Pacific region which accounted for 45% of total spending in 2008, E&M spending in Asia Pacific will increase at a projected 7.1% compound annual rate over the period of the Forecast.

The accelerated migration to digital technologies has reinforced and proliferated new consumption habits and “digital behaviours” as consumers seek more control over where, when and how they consume content while, more than ever, watching the pennies and seeking the best value from the choices they make. The advances in digital are enabling this with ease.

End-user spending through digital/ mobile platforms accounted for 23.4% of the overall consumer/end-user/ access market in 2008 and the analyst expects this to account for 78% of total growth during the next five years.”

Over the next five years, as consumers receive an increasing proportion of their E&M through digital/mobile platforms, advertisers will shift their resources to reflect the increasingly fragmented ad market. In the mobile arena, opportunities across the advertising continuum will enable the growth between brands and consumers, ranging from click-through banner ads and pre-roll ads on video clips through coupons and online subscriptions.

Video game ads are expected to outpace the rest of the advertising industry (albeit from a low base) at 13.8% CAGR compared to an overall industry decline at a compound rate of 0.6% during the forecast period. The growing proportion of Internet and mobile advertising in the overall global advertising mix will rise from around 12% in 2008 to 19% in 2013.

Accelerated digitisation coupled with growing divergence between the revenue performance of different segments and markets will create an E&M landscape characterised by a myriad of business models and a far more tailored approach. An approach which works with one particular type of consumer, form of content or national marketplace may not work in others.

The current decline in revenues is not because of declining demand. In fact, demand for E&M appears to be increasing. The challenge is to identify ad models that are able to withstand the downward pressure on ad rates in the digital environment and on subscription models that capture the consumers’ preferences for premium content.

Story filed 14.07.09