Digital to account for 65% of media spend

Total entertainment and media spending on digital services is forecast to grow at a 12.2 per cent compound annual growth rate (CAGR) between 2013 and 2018 and account for 65 per cent of global entertainment and media spending growth, excluding spending on Internet access, according to global advisory firm PwC’s Global entertainment and media outlook 2014-2018.

Advertising is leading the way; in 2018, 33 per cent of total advertising revenue is forecast to be digital, compared to 17 per cent of consumer revenue.

However, profiting from the migration by increasing revenue from digital consumers will not just be about the application of digital technology. It will be about applying a ‘digital mindset’ to build the right behaviours, advancing from a digital strategy to a business strategy fit for a digital age, suggests PwC.

According to Marcel Fenez, PwC’s Global leader, entertainment and media, the bedrock of a strategy fit for the digital age is the digital mindset: getting ever closer to the customer – across the entire organisation, and in everything it does. “We now see that mindset embedded in many entertainment and media companies. But the industry needs to get even closer to the consumer and adopt more flexible business models. To do this, companies must exhibit three behaviours: forging trust with consumers; creating the confidence to move with speed and agility; and empowering innovation. This will be an important step in monetising the digital consumer,” he advises.

Approaching a significant advertising tipping point

Mobile Internet penetration will reach 55 per cent in 2018, which will help drive digital advertising to increase its share of total advertising revenue to 33 per cent by 2018, up from 14 per cent in 2009. With Internet advertising growing at a 10.7 per cent CAGR (compared to a total advertising CAGR of 4.4 per cent), the industry is approaching a significant tipping point: in 2018, Internet advertising will be poised to surpass TV advertising. In 2009, TV advertising was double that of Internet advertising; in 2018, Internet advertising will trail TV advertising by just $20 billion. Mobile Internet advertising is forecast to grow at a CAGR of 21.5 per cent.

Monetising the digital consumer: challenge and opportunity

Spending on digitally delivered content will account for only 17 per cent of total consumer spending in 2018 (excluding spending on Internet access), compared to 33 per cent of total advertising spending. However, the growth of ‘24/7 access’ and micro-transactions suggest that the key to monetising the digital consumer is to adopt flexible business models that offer more choices and better experiences. Electronic home video over-the-top (OTT)/streaming and digital music streaming are two of the fastest-growing consumer sub-segments cited in the Outlook, set to rise at annual rates of 28.1 per cent and 13.4 per cent respectively.

Nine markets driving growth

Nine high-growth markets are powering global entertainment and media revenue. China, Brazil, Russia, India, Mexico, South Africa, Turkey, Argentina and Indonesia collectively are forecast to account for 21.7 per cent of global entertainment and media revenue in 2018, up from just 12.4 per cent in 2009.

http://www.asi.eu.com/2014/06/04/digital-to-account-for-65-of-media-spend/print/