Due to a global recession, 2020 will see the sharpest fall in global entertainment and media revenue in the 21-year history of PwC’s research, with a decline of 5.6% from 2019 – more than US$120 billion in absolute terms.
According to PwC’s Global Entertainment & Media Outlook 2020–2024, the Covid-19 pandemic has accelerated and amplified ongoing shifts in consumers’ behavior, pulling forward digital disruption and forging industry tipping points that wouldn’t have been reached for many years. Digitalization, one of the major forces shaping all industries, has been intensified by social distancing and mobility restrictions. As a result, the entertainment and media (E&M) world in 2020 has become more remote, more virtual, more streamed, more personal, and – for now at least – more centered on the home than anyone anticipated at the start of the year.
The pandemic afflicting the world brought the global E&M industry’s growth to a shuddering halt. Amid a global recession, 2020 will see the sharpest fall in global E&M revenue in the 21-year history of PwC’s research, with a decline of 5.6% from 2019 – more than US$120 billion in absolute terms. In 2009, last year the global economy shrank, total global E&M spending fell by just 3.0%. However, while the shockwaves from 2020 will continue to ripple through the global economy, the forecast shows the industry’s fundamental growth trajectory remains strong. In recent years, as media experiences have become ever more central to our lives, global E&M growth has typically outpaced GDP. Just so, after the challenges of 2020, PwC expects E&M to reassume its outperformance.
In fact, its projections show that in 2021, E&M spending will grow by 6.4%. Looking across the five-year forecast period, from 2019 to 2024, the company is forecasting overall revenue growth running at a 2.8% compound annual growth rate (CAGR).
● TIPPING POINT TIMELINES ACCELERATE
As is the case in the economy at large, the current pain in E&M is not evenly shared around the industry. It’s most acute in segments that Covid-19 literally shut down, such as events: live music, cinema, and trade shows. Spending on advertising likewise will fall by 13.4%. At the same time, the long-running transition in newspapers from print to digital has been fast-forwarded several years, cutting into papers’ print revenues, for example.
One result is that E&M segments are being transformed much earlier than was originally projected. Take the cinema box office versus subscription video on demand (SVOD). As recently as 2015, box office revenue was three times SVOD. However, SVOD revenue will overtake box office in 2020 and is projected to surge away in the coming five years, reaching more than twice the size of box office in 2024. The same goes for the amount of data consumed on smartphones versus fixed broadband. Having taken a small lead in 2019, the smartphone is now set to pull away as the leading individual device used by consumers to access the Internet globally.
● WINNERS AND LOSERS EMERGE
With people staying at home, over-the-top (OTT) video has seen global revenue surge by 26.0% in 2020. And it will keep rising strongly in the coming years, almost doubling in size from US$46.4 billion in 2019 to US$86.8 billion in 2024. The launch of the Disney+ streaming service in late 2019 could hardly have been better timed: having projected between 60mn and 90mn paying subscribers by 2024, Disney+ reached 60.5mn in early August 2020. It will jump by 33.8% in 2020, and will more than double from 1.9 quadrillion megabytes (MB) in 2019 to 4.9 quadrillion MB in 2024.
“It’s clear that Covid-19 has accelerated consumers’ transition to digital consumption and triggered disruptive change – both positive and negative – across many forms of media. Yet it’s equally evident that the E&M industry’s underlying strengths and appeal to consumers remain as strong as ever. While there will still be challenges for E&M companies as we move beyond the pandemic, the digital migration that it has pulled forward will also generate opportunities in all segments – not only those that have benefited from its impacts to date,” said Werner Ballhaus, Global Entertainment & Media Industry Leader at PwC.
While there will still be challenges for E&M companies as we move beyond the pandemic, the digital migration that it has pulled forward will also generate opportunities in all segments” Werner Ballhaus Global Entertainment & Media Industry Leader at PwC