Cinema in recovery, TV in decline but resisting, Ott in expansion. Pwc’s annual report explains industry trends
- Global entertainment and media revenue rises to $ 2.3 trillion
- Virtual reality marks the highest growth in 2021 (+ 36%)
- Games and e-sports will become a $ 324 billion business by 2026
- China leads the world film market: the US box office surpassed 2020 for the first time
In 2021, the global entertainment and media market returned to growth, rising sharply, far exceeding global economic growth. After a 2.3% decline related to the impacts of the pandemic in 2020, revenue rose 10.4% from $ 2.12 trillion to $ 2.34 trillion.
This was reported by PwC’s Global Entertainment & Media Outlook 2022-2026, the 23rd annual report on E&M spending forecasts for consumers and advertisers in 52 countries and territories.
Electronic games and sports at $ 324 billion in 2026
With the increasingly digital, mobile, and new-generation-oriented industry, virtual reality and gaming are powerful engines of growth, while digital advertising permeates the entire industry.
Global gaming and e-sports component revenue is $ 215.6 billion in 2021 and is expected to grow 8.5% in 2026 to $ 323.5 billion. The Asia-Pacific region generated the most revenue in 2021 with $ 109.4 billion, almost double that of North America, the second largest revenue region.
Games are the third category of E&M content that consumes the most data, after video and communications.
+ 36% of global virtual reality spending in 2021
Virtual reality remains the fastest growing E&M segment, although it has a relatively small consumer base. Global virtual reality spending rose 36% year-on-year to a total of $ 2.6 billion, after an exciting 39% growth in 2020.
PwC estimates CAGR growth of 24% between 2021 and 2026, bringing the segment to $ 7.6 billion. Game content is the main contributor to virtual reality revenue: after reaching $ 1.9 billion in 2021, it is estimated that its value will reach $ 6.5 billion in 2026, equivalent to 85% of total revenue of virtual reality.
In 2026 advertising for $ 1 trillion
Penetration into the digital world makes advertising a dominant category in the industry. After a 7% drop in 2020, the segment grew 22.6% in 2021 and earned $ 747.2 billion. Driven almost entirely by digital, advertising will grow at a CAGR of + 6.6% by 2026.
The increase in Internet advertising revenue is even faster, with a CAGR of + 9.1%. In 2026, PwC expects advertising market value to reach $ 1 trillion, making it the largest revenue stream for E&M and outpacing consumer spending and Internet access.
Excessive content (OTT) will grow by 22.8% in 2021
After growing 35.4% in 2020, Over-the-top (OTT) content increased 22.8% in 2021 with revenue of $ 79.1 billion. According to PwC, the growth rate of revenue in the sector will moderate slightly over the next few years, with an estimated CAGR of + 7.6% by 2026 and revenue of $ 114.1 billion.
Traditional television in continuous decline
Despite being doubled by competition from OTT streaming services and aside from a slow downward trend, traditional television still manages to generate considerable revenue. PwC estimates that the global revenue of the sector will increase from $ 231 billion generated in 2021 to $ 222.1 billion in 2026 (CAGR -0.8%).
Signs of recovery of box office receipts
After the pandemic crisis, global cinema revenues are rising: compared to the $ 20.8 billion generated in 2021, box office sales are expected to reach 46.4 billion in 2023 and 49.4 billion in 2026 (CAGR + 18, 9% in 2021). In 2020, China surpassed the United States, becoming the world’s largest film market, and is expected to maintain its lead until 2026.
Live music at pre-pandemic levels in 2024
Live music revenue will surpass pre-pandemic levels in 2024. Subscriptions to digital music playback services are driving industry growth with revenue, according to PwC estimates, rising from $ 36.1 billion in 2021 to $ 45.8 billion in 2026.
Data consumption is growing strongly
The increase in the amount of content available is significantly fueling data consumption. In 2021, 2.6 million petabytes (PB) of data were consumed and an increase to 8.1 million PB in 2026 is expected (CAGR + 26%).
The game will be the sector that will consume more data with a CAGR of + 29.6%. Mobile devices will grow between 2021 and 2026 with a CAGR of + 28.8% and a consumption of mobile data that is expected to increase from PB 1.1 million to PB 3.8 million.
North America dominates spending
Regionally, North America has the highest per capita spending on E&M at $ 2,229, almost double the $ 1,158 in Western Europe. In contrast, APAC, which in 2021 was the largest E&M region in terms of revenue with $ 844.7 billion, has a per capita expenditure of $ 224. The Middle East and Africa have the lowest per capita spending in the world at $ 82.
CAGR’s top ten growth markets are concentrated in Latin America, the Middle East, Africa and Asia, with OTT content and games driving revenue growth, followed by e-sports and film. Turkey (CAGR estimated at + 14.2%), Argentina (+ 10.4%), India (+ 9.1%) and Nigeria (+ 8.8%) are at the forefront of the growth prospects of consumer. E&M consumers in the five-year forecast.
The metavers and the opportunity for the sector
In the not-too-distant future, metavers could become an extraordinarily realistic world in which individuals access immersive virtual experiences, using headphones or other connecting devices. Because metavers is an evolution that can profoundly change the way businesses and consumers interact with products and services, the economic potential goes far beyond virtual reality. Over time, much of the revenue associated with gaming, music performance, advertising, and even e-commerce could migrate to the metaverse.
What is the opportunity for E&M? The fast-growing virtual reality market is a place to start. Virtual reality is currently one of the most closely monitored segments, but the 36% increase in global spending over the past year is an indication of its long-term potential. According to PwC’s analysis, the number of headphones will increase from 21.6 million in 2021 to 65.9 million in 2026.
Capobianco: new type of consumer
“The choices that billions of consumers are taking on where to invest their time, attention and money that fuel the transformation of the industry and drive trends,” explained Maria Teresa Capobianco, leader of TMT, PwC Italy. We are seeing the emergence of a younger, more digital, and more interested E&M consumer base in streaming and gaming than the current consumer population. These trends are shaping the future of the industry. ”
Capobianco adds: “Online models place the content and quality of services that platforms are able to offer at the heart of the challenge. Data is central and one of the big questions is the ability to manage information to lead the winning organizations. Conquering and maintaining the shares of a global market that we expect to reach almost $ 3 trillion worldwide (CAGR + 4.6%) means offering quality through content and operating models capable of managing the needs of a market eclectic global “.
“The impressive growth of the E&M sector and its potential, he added, will lead to enormous volatility that could lead to tough competition between companies from different sectors, between geographies and generations. For companies, intense competition and the continuous search for the disruptive element will remain on the agenda. Our data shows that the combination of investment in advertising and consumer spending is changing rapidly. All activity within the E&M sector is destined to undergo major changes. The challenge and goal must be to understand your consumer to take advantage of market opportunities. “