Entertainment & media outlook: an African perspective.

Transcription

1 Entertainment & media outlook: an African perspective

2 2 Consumer/end-user & advertising spending 5 year historic & 5 year forecast data 5 Countries 14 segments Access Read Watch Listen Play Internet access Books Cinema Music esports Apps Podcast Data consumption B2B Television and video Radio Video games Magazines Virtual reality Newspapers OOH Follow us on Twitter: #PwCOutlook

3 Perspectives: 2018 Outlook report summary Trending now: convergence, connections and trust Global Entertainment & Media Outlook PwC 3

4 Perspectives report So what s trending now? Convergence, connections and trust Global Entertainment & Media Outlook perspectives The media system is experiencing a third wave of convergence. Call it Convergence 3.0. Companies that hail from different starting points are aiming at business models that revolve around comprehensive direct-to-consumer relationships As they transform, E&M players are building up and leveraging their connections with users, partners and other stakeholders to develop new revenue streams The growing power of technology and importance of data is pushing trust to an even more central focus. Strong capabilities to build trust with users, improve value exchange and drive transparency while ensuring safeguards and protection are vital differentiators for E&M businesses 4

5 Perspectives report Convergence 3.0: A handful of factors combine, creating the momentum behind this new wave of convergence Drivers of convergence Ubiquitous connectivity Consumers and their devices are always connected, always on Data analytics and technology that can support better decisionmaking are critical to success Personalization Convergence 3.0 The mobile consumer Mobile devices are becoming the primary means of accessing E&M content and services Platforms rather than publishers are the primary beneficiaries of users growth in time and spending Value shift to platforms Need for new sources of growth Revenue streams that nourished companies in the past will not be flowing with the same force 5

6 Perspectives report Convergence 3.0: Strategic efforts from participants of every size and geography give rise to supercompetitors Four types of convergence Convergence gives rise to supercompetitors Media convergence Access convergence Business model convergence Geographic convergence Examples of supercompetitors: Alibaba, Amazon, Apple, Disney, Facebook, Google, Tencent, etc. A handful of global players that converge towards similar business models will. unite content, commerce, advertising, communications and deep financial resources under a single corporate roof Each will try to secure exclusive control of every aspect of its own customer relationships, consumption and activity 7

7 Perspectives report Connections: With the rise of supercompetitors, more specialized brands need to build businesses of relevant scale Building relevance at scale Create a sense of identity and community with customers by delivering high-quality experience Text Be a powerhouse of quality and engagement Target content and experiences at highvalue audiences that others find challenging to attract, and turn them into loyal fans Aim at high-value, hard-to-reach audiences Scale relevance: reach, intensity sufficient to matter to users, advertisers, Partners Deliver brand consistent content and advertising Address fans interests and preferences in content and advertisements 7

8 Perspectives report Trust: Trust will be a vital determinant of the sector s ability to forge connections and succeed in an age of convergence Five vital dimensions of trust Is your content trustworthy? Is your audience who you say it is? Are you taking proper care of the data? Are your investments paying off? Is your company good for society? Advertisers are raising questions about the quality, safety and appropriateness of the content they advertise against Media and academic reports have suggested that many social media accounts are bots or have misrepresentative information E&M companies are assuming more responsibility for protecting customer information- what they like, look at, their interests, profiles, financial information, etc. Direct measurement of audience engagement whether an agency is delivering the promised audience to a client has not been sufficiently answered The sheer size, reach and utility of today's media platforms cause them to be evaluated on their contributions to society 8

9 Overview: E&M summary and macro trends Global Entertainment & Media Outlook PwC 9

10 E&M summary and macro trends The mobile story continues CAGR 6.5% 21.5% 11.6% 14.2% 18.3% R177bn $9.9bn $2.9bn $1.5bn $1.2bn Mobile Internet penetration 10

11 E&M summary and macro trends In emerging markets, a much larger share of overall E&M spending goes to Internet access Internet access as a share of total E&M spending by region, 2017 (%) 50% 36% 63% 57% 64% 52% 37% 32% 31% 25% 22% Key takeaways Spending patterns differ between emerging and developed markets Emerging markets spend more on Internet access and less on content, both digital and nondigital Internet access is expensive in emerging markets by local standards, leaving consumers with less disposable income to spend on digital media 11

12 E&M summary and macro trends Looking across territories, there are relatively few markets that are both large and fast growing Total E&M revenue 2022 (US$bn) Quadrant of total E&M revenue (excluding Internet access) Austria Canada Rest of MENA USA UK Hungary 1, Australia SOUTH AFRICA 10 South Korea Brazil Mexico The effect of Internet access revenue is more apparent in the fastest growing E&M territories Turkey Vietnam Romania Egypt China Russia Indonesia Nigeria Kenya Ghana Tanzania India 0% 2% 4% 6% 8% 10% 12% 1 0 CAGR (%) Key takeaways India and Indonesia are the fastest growing markets No market in Western Europe or North America will exceed 3.0% CAGR growth through 2022 The distribution of markets is indicative of the increasing difficulty of finding lucrative investment opportunities in the maturing global media market The challenge in emerging markets remains monetizing the content that the access is delivering 12

13 E&M summary and macro trends Finally, music and box office revenue are examples of the dizzying array of divergences at the segment and territory levels Recorded music select sub-segments revenue CAGR Box office Year over year growth Digital download Physical Ringtones/ringbacks Streaming -24% -18% -10% -34% -6% -27% 18% 28% -60% -40% -20% 0% 20% 40% Global South Africa Australia US France South Africa China Global -4.8% -2.3% -0.9% 1.8% 22% 4.3% -7% -2% 3% 8% 13% 18% 23% Recorded music is projected to rise at a robust 6.1% CAGR globally and streaming at 18.2% CAGR, but three of its sub-component will see significant declines Overall growth is driven by significant increase in streaming revenue Global box office revenue rose 4.3% year-onyear in 2017, but fell in several markets South Africa managed to reflect marginal growth in 2017, which from a Hollywood perspective, was far from a vintage year for releases 13

14 Segment review: Spotlight on South Africa Key insights on selected segments Global Entertainment & Media Outlook PwC 14

15 Segment overview: South Africa The South African E&M industry is growing at a pace close to its historical rates - even amid significant disruption. South African E&M revenue and nominal growth forecast for next 5 years 200 Revenue (R billions) Historical Forecast and an array of different trends at the segment levels, an accumulation of near-infinite micro stories Note: All figures are reported in nominal terms reflecting actual spending transactions and therefore include the effects of inflation 15

16 Segment overview: South Africa The South African E&M market topped R129 billion in 2017 with Internet access dominating revenue share 2017 E&M market share by segment (%): Global, South Africa Key takeaways Internet access will grow at 10.7% CAGR, adding 11 million new Internet subscribers over next 5 years Books Magazines Newspaper Radio Music Fastest growth in the play space Traditional TV and home video Cinema Traditional TV and home video will experience moderate growth as OTT video continues to supplement vs replace CAGR 29% CAGR 15% CAGR 55% E-sports Video games VR Internet advertising TV advertising OOH B2B Global Internet access South Africa 0% 10% 20% 30% 40% Internet advertising at a CAGR of 13% will emerge as the largest advertising segment in

17 Segment overview: South Africa Access moves ahead of consumer revenue and becomes the largest share through 2022, while advertising loses share 2022 E&M revenue share: primary categories, South Africa Consumer 33.0% Access Consumer 43.6% Advertising 23.4% 0% E&M CAGR: primary categories, South Africa 10% 20% 30% 4.3% Access 10.7% Advertising 40% Consumer revenue includes: Read: books, magazines, newspapers Listen: music, podcasts Watch: TV, OTT, cinema Play: video games, e-sports, VR 50% 3.3% 0% 2% 4% 6% 8% 10% 12% Access revenue includes: Mobile Internet, fixed broadband revenue Advertising revenue includes: B2B, Internet, cinema OOH, TV, radio, newspapers, magazines 17

18 Segment overview: South Africa And final pieces fall into place for a mobile-first world, with the symbolic tipping point occurring in 2017 South Africa fixed broadband vs. smartphone data consumption (GB millions) Fixed broadband data consumption 3, CAGR CAGR 22.5% 3, % 2,500 2,000 Smartphone data consumption overtakes fixed Smartphone data consumption 1,500 1, Fixed broadband data consumption Smartphone data consumption In 2017, data consumption through smartphones overtook fixed broadband data consumption 18

19 Segment overview: South Africa Smartphones the device of choice and necessity 19

20 Segment overview: South Africa Digital revenue will continue to make up more and more of the industry s income, moving past 50% in 2020 South Africa digital revenue as % of total revenue % % % % SA digital revenue % (historic) % % % % % % Digital % of total is accelerating vs. last year s forecasts SA digital revenue (projected data) 20

21 Segment overview: South Africa Digital driving towards domination 21

22 Segment overview: South Africa Newspapers have missed out on the Internet advertising boom as ad revenues fail to match the growth trajectory Newspaper digital ad and Internet ad revenue: Global and SA Key takeaways For news publishers, the digital growth engine is sputtering Revenue Globally digital newspaper advertising revenue growth has fallen from 7.1% in 2014 to 5.4% in 2017, with further decline expected. SA was 26.8% in 2014 and only 10.5% in Newspaper digital advertising (Global) Internet advertising (Global) Newspaper digital advertising (SA) Internet advertising (SA) 2022 Publishers are at a cross roads some choosing to follow consumer preference and deliver more content through partner platforms, placing greater control with competitors 22

23 Segment overview: video games Video games revenue of R3.1 billion in 2017 is projected to grow at 15.0% CAGR to reach R6.2 billion 23

24 Segment overview: E-sports E-sports revenue of R29 million in 2017 is projected to grow at 29.0% CAGR to reach R104 million 24

25 Segment overview: virtual reality Virtual reality revenue of R75 million in 2017 is projected to grow at 55.0% CAGR to reach R671 million 25

26 Segment overview: physical Physical books are performing far better than other physical media 26

27 Segment overview: music Music revenue of R2.3 billion in 2017 is projected to grow at 7.7% CAGR to reach R3.3 billion 27

28 Segment overview: traditional TV and home video TV revenue of R32.2 billion in 2017 is projected to grow at 4.8% CAGR to reach R40.8 billion 28

29 Segment overview: Internet advertising Internet advertising of R5.1 billion in 2017 is projected to grow at 13.0% CAGR to reach R9.4 billion 29

30 Segment overview: Internet advertising Internet advertising s 13.0% CAGR will see it surpass TV advertising spend in

31 Convergence 3.0 What does it take to succeed? Global Entertainment & Media Outlook PwC 31

32 Perspectives: 2018 Outlook report summary Trending now: convergence, connections and trust Questions? Follow us on Twitter: #PwCOutlook Global Entertainment & Media Outlook PwC 32