Has the Entertainment & Media industry resumed its growth path after 2020?

In 2021, the Entertainment & Media industry bounced back from the contraction of 2020 to resume its growth path, with revenues rising a strong 10.4%, according to this year’s “Global Entertainment & Media Outlook Perspectives” by PwC, which now forecasts that by 2026, this industry will approach US$3 trillion in revenues.

In detail, after falling 2.3% in 2020, total global entertainment and media (E&M) revenue rose a strong 10.4% in 2021, resuming its trend of outpacing international growth. In 2022, the US$2.5 trillion global industry is expected to grow 7.3%, and it should notch a 4.6% CAGR through 2026.

“The stable overall growth pattern masks an underlying volatility: it is clear that the pandemic accelerated changes in consumer behaviour and digital adoption in ways that will affect future growth trajectories. Some of the sectors that saw immense gains amid the pandemic will not be able to sustain that growth, while others will continue to build from their higher bases,”  the report says.

According to PwC data, after surging in 2020, over-the-top video grew an additional 22.8% in 2021, pushing revenue to US$79.1 billion. However, the study says the pace of OTT revenue growth will moderate, as it is expected to increase at a 7.6% CAGR through 2026, when revenue will be US$114.1 billion.

Traditional TV, beset by competition from OTT streaming services, will see global revenue shrink at a -0.8% CAGR, from US$231 billionn in 2021 to US$222.1 billion in 2026. Meanwhile, video games revenue, which rose 32% between 2019 and 2021, will rise at an 8.4% CAGR through 2026, creating a US$321 billion industry. Cinemas, which are slowly reviving from the COVID shutdowns, will not regain their 2019 revenue total of US$45.2 billion until 2023.

The two big themes newly evident in PwC’s forecast are the increasing digitization of E&M and the rising dominance of advertising. Advertising, which fell nearly 7% in 2020, grew a stunning 22.6% in 2021 - and represented 32.2% of total entertainment and media industry revenues. It is set to grow at a 6.6% CAGR through 2026 on the way to becoming a US$1 trillion market.

The growth in advertising is fed largely by digital. Non-digital advertising, which is barely rising, is expected to decline after 2025. Over the five-year forecast period, global internet advertising revenue will expand at an impressive 9.1% CAGR to reach US$723.6 billion in 2026, at which point 74% of revenue will be mobile. By 2026, PwC expects US internet advertising revenue to be only US$8.4 billion short of total global non-digital advertising revenue.