Fault line and fractures will fill the media and entertainment landscape during the next few years according to analysts at PwC. Their just-released annual report that examines the state of the economic sector, not just in the U.S. but around the globe, says “the overall growth path is both clear and strong” despite a few potholes here and there.
“For consumers, this remains very much a golden age, in which a vast array of content, services and experiences is available at price points they can afford. For businesses, however, intense competition and continual disruption remain the order of the day,” says PwC. “That means strategy can’t remain static. The data clearly shows that the mix of revenues and spending is changing rapidly. And as the fault lines continue to proliferate and widen, it will be easy to end up on the wrong side of disruption.”
PwC says U.S. entertainment and media revenue will total $835 billion in 2022, a 7% increase compared to last year. And by 2026, analysts expect it to reach $955 billion.
As Inside Radio reported yesterday, PwC says total audio revenue – including radio, podcasts and music – will rise 17% to $49.4 billion as audio media companies adapt to changing consumer habits and new technology. PwC’s Global Entertainment & Media Outlook 2022-2026 points to growth for other media too.
It forecasts total U.S. television advertising revenue will grow 2.1% this year to $71.1 billion. Newspaper and magazine revenue will head in the other direction, however, with a forecasted 3% drop this year to $38.4 billion. Out of home advertising continues to be one of the fastest-growing segments, with PwC predicting its revenue will climb 15% to $9.8 billion. The U.S. cinema market is estimated to see a near-doubling of revenue this year, but PwC does not think it will recover to its pre-pandemic levels until 2023.
Internet spending now dwarfs all other media sectors. PwC forecasts total internet ad spending will grow 15% this year to $218 billion. And it is expected to reach $278 billion in 2026. While that is helping audio companies grow their digital revenue, other industries are also benefiting. PwC expects the OTT video market to expand 8% this year to $31.5 billion. The U.S. video game and eSports market is forecast to grow 10% to $57.1 billion. And the VR and mobile AR market is on track to increase 43% to $12.9 billion.
The good news for radio and other ad-supported media has to do with the trend lines PwC detects in how marketers are spending their dollars. PwC points to a “rising dominance” of advertising worldwide.
“Why is advertising growing so rapidly? At root, the answer is simple: more consumers are spending more of their time in environments where they can be reached by digital ads and where they can conduct transactions in real time,” PwC says.
The ad comeback was not assured. Global ad spending fell nearly 7% in 2020 when the pandemic hit, but then grew 22.6% last year according to PwC. It expects global ad spending to grow at an annual rate of 6.6% through 2026 when it foresees companies hitting the $1 trillion mark in total ad spending.
“The growth is fed largely by digital. Non-digital advertising, which is barely rising, is expected to decline after 2025,” the report says. “By 2026, we expect U.S. internet advertising revenue to be only $8.4 billion short of total global non-digital advertising revenue.”
Another of the themes in the hulking report that covers every region of the world and dozens of countries is how consumers now “call the shots” as its PwC authors put it. That is likely to play a role as what it labels the “next big thing” – the metaverse – becomes reality. It also sees opportunities for media companies.
“For businesses—especially entertainment and media organizations—the implications of this immersive, persistent and decentralized digital world are enormous,” it says. “Because the metaverse is an evolution that may profoundly change how businesses and consumers interact with products, services and each other, its potential financial and economic value goes far beyond VR. In time, many or all of the revenues associated with video games, live music performances, advertising and even e-commerce could migrate into the metaverse.”
PwC does not yet estimate the size of the metaverse revenue opportunity -- it only tallies the VR headset market -- but instead points to a Citibank forecast that predicts the metaverse represents an opportunity of between $8 and $13 trillion through 2030.