Global E&M revenues are expected to rise from $1.8 trillion in 2016 to $2.2 trillion in 2021 at a compound annual growth rate (CAGR) of 4.2 percent – down from the 4.4 percent CAGR the firm forecast last year. By comparison, PwC's 2017 Outlook expects U.S. E&M revenues to reach $759 billion by 2021, up from $635 billion in 2016, increasing at a CAGR of 3.6 percent – holding steady at the same CAGR as last year. While there are increases in revenue, E&M is approaching an industry plateau. Traditional, mature segments are in decline; the internet and digital E&M content is growing though at a slowing rate; and the next wave of content and entertainment is in areas, such as e-sports and virtual reality, which are just beginning to accelerate.
Key U.S. Entertainment & Media Highlights:
- A total of 68M Virtual Reality (NEW) headsets will be in use in the U.S. by 2021 with the installed base growing at a CAGR of 69.2 percent over the forecast period. In fact, the segment is projected to add nearly the same revenue as TV advertising between 2016 to 2021, a total of $4.6B. VR truly started to reach consumers in 2016 and has no legacy issues or false starts to look back on. The downside is a highly immature market with underdeveloped business models, flaky hardware, and lots of experimental or low-quality content. 2017 should at least see major advances in "inside out" movement tracking and lower cost headsets. It's worth noting VR's close relationship with the gaming market, yet many news and content organizations are pinning their hopes on VR to reinvigorate programming and recapture audiences lost to the internet.
- Video Gaming continues to be a paradox: at once a large, growing business and yet a market where firms can fail in record time and new business models arise seemingly from nothing. It is this dynamism that both fascinates and concerns financial markets and partners in media, telco and IT spaces. Video games revenue was $21.0B in 2016 and is forecast to grow by a 6.3 percent CAGR to reach $28.5B in 2021.
- The U.S. Internet Video (NEW) market is by far the largest and most established in the world, accounting for 47 percent of global revenue in 2016. This percentage is expected to fall to 43 percent by 2021 as internet video becomes more established in others regions, although international growth will be driven by U.S. companies' expansion overseas. Internet video will grow at a 9.6 percent CAGR – the fourth largest U.S. E&M segment CAGR, following Virtual Reality, E-sports and Internet Advertising, respectively – to produce revenues of $18.8B in 2021. Nearly 75 percent of revenue at this time will be attributable to subscription video-on-demand (VOD) services, with transactional VOD platforms accounting for the remainder.
- Internet Advertising revenue in the U.S. reached $72.5B in 2016, comfortably the largest market in the world. This figure is forecast to reach $116.2B in 2021, rising at a CAGR of 9.9 percent. While it was previously predicted that internet advertising would overtake TV advertising in 2017, the former actually surpassed the latter by the close of 2016. New tech innovations, especially around AI, will create both challenges and opportunities for incumbent players. The introduction of new screens, such as those in connected cars; the rollout of new content formats, like VR; and changes in the way we interact with technology, such as voice-activated search, create opportunities for new ways of engaging with and advertising to audiences. However, all require innovation and investment in order to meet their potential. Separately, the dominant force that is mobile advertising comprised 50.5 percent of total internet advertising revenue in 2016, rising from 34.7 percent the previous year and besting the contribution from wired internet advertising in the process. By 2021, PwC expects mobile to account for 74.4 percent of all U.S. internet advertising.
- The Music industry has continued to turn the corner on nearly two decades of decline. The market was worth $17.2B in 2016. Total music revenue is forecast to increase at a 5.6 percent CAGR to reach $22.6B in 2021. The ongoing growth of digital music streaming – up an astonishing 99.1 percent year-over-year in 2016 to total $3B – was THE music story of last year as consumers turned in huge numbers to on-demand services. Competition for new subscribers will likely be fierce in 2017. In addition to the uptick in streaming, the live music sector continues to deliver, with fans appearing to have a nearly insatiable appetite for music events and festival brands eager to franchise overseas.
- Book revenue is expected to go from $36.6B in 2016 to $38.3B in 2021 (1% CAGR)
- Business-to-Business revenue is expected to grow from $88.5B in 2016 to $103.0B in 2021 (3.1% CAGR)
- Internet Access revenue is expected to rise from $140.3B in 2016 to $189.8B in 2021 (6.2% CAGR)
- Magazine revenue is expected to go from $30.2B in 2016 to $30.5B in 2021 (0.2% CAGR)
- Newspaper revenue is expected to decline from $29.6B in 2016 to $23.9B in 2021 (-4.1% CAGR)
- Out-of-Home advertising revenue is expected to rise from $9.2B in 2016 to $11B by 2021 (3.7% CAGR)
- Radio revenue is expected to rise from $22B in 2016 to $24.1B in 2021 (1.9% CAGR)
- Traditional TV and Home Video revenue is expected to contract from $109B in 2016 to $105B in 2021 (-0.7% CAGR)
- TV Advertising revenue is expected to grow from $70.6B in 2016 to $75.2B in 2021 (1.3% CAGR)