PwC: Media Markets To Fundamentally Change by 2016

Internet access, advertising spending and audience growth among demographic shifts.

By T.J. Raphael
Wednesday, June 13, 2012

Entertainment and media markets will undergo a shift by 2016, according to an in-depth five-year outlook on global consumer spending, advertising revenues, technology and b-to-b media sectors from Pricewaterhouse Coopers [PwC].

The report, entitled the Global Entertainment and Media Outlook 2012-2016, forecasts that entertainment and media [E&M] worldwide will continue to significantly outpace growth in non-digital spending during the next five years. In all, E&M spending is projected to go from $1.6 trillion in 2011 to $2.1 trillion by 2016. In the United States, the E&M market will have a compounded annual growth rate of $597 billion in 2016, up from $464 billion in 2011.

“Change in consumer behavior is pervasive and accelerating and the E&M industry is in the front line of this change,” says Ken Sharkey, entertainment, media & communications U.S. practice leader, PwC, according to a news release. “The past uncertainty triggered by the digital migration has given way to a sharper focus of E&M companies on executing their digital strategies. While experimentation will continue, the way forward is becoming clearer as companies focus on identifying, choosing and executing the right business models, organizational structures and developing the skill sets to understand consumer behaviors and motivations in their connected, multi-screen environments.”

B-to-B Media Outlook

In 2011, b-to-b spending rose globally by about 0.4 percent, partially reversing a 0.6 percent decline in 2010, the report found. PwC expects this market to grow at a 3.4 percent compound annual rate to $226.3 billion by 2016. Printed formats, like directories and magazines, will see ongoing negative impacts as the growing penetration of tablet and smartphones continue to push audiences from a physical to digital format.

Though print will be impacted negatively, the b-to-be segment will total $97.6 billion in 2016, a 4.3 percent increase on a compound annual basis. Digital circulation spending on online content and mobile downloads for trade magazines, the report says, will generate $1.5 billion in incremental revenue by 2016, raising total circulation spending to $9.2 billion on a compound annual basis—about 3.7 percent higher than 2011 figures.

Print directory advertising for the b-to-b sector will fall at an 8.9 percent compound annual rate to $13.5 billion in 2015 and digital directory advertising will overtake print in 2016, reaching $14.1 billion at a 20.7 percent compounded annual rate.

“By embracing digital as the engine of their business and using it to integrate and automate processes from content production to rights management, E&M companies are well positioned to meet the fast changing consumer demands through any channel and format more effectively and drive greater revenue growth than before,” says Sharkey in a statement.

Consumer Magazine Trends

Like b-to-b publications, consumer magazines will see a decline in print circulation. Additionally, there will be a loss in advertising share for printed products. However, PwC projects that consumer magazine spending will begin growing again in 2012, and will average 1.3 percent growth on a compound annual basis, reaching $80.2 billion in 2016.

“However, thanks to online access and the emergence of mobile access on tablets, the willingness to pay for mobile content will drive an emerging digital circulation spending market and a growing digital readership will fuel digital advertising from a low base,” the report says. “The digital component of consumer magazines will account for 10.4 percent of spending by 2016, up from 3.1 percent in 2011.”

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