PwC Global Entertainment & Media Outlook

Transcription

1 PwC Global Entertainment & Media Outlook Global, Mainland China and Hong Kong findings

2 Contents Perspectives: 2018 Outlook report summary Key trends Local stories Closing thoughts & Key contacts Global Entertainment & Media Outlook 2

3 Trending now: convergence, connections and trust Convergence E&M Outlook Report summary Connections Trust PwC Global Entertainment & Media Outlook 3

4 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 Global Entertainment & Media Outlook 4

5 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 Global Entertainment & Media Outlook 7

6 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 Global Entertainment & Media Outlook 6

7 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 Global Entertainment & Media Outlook 7

8 Growth rates remain steady even as the industry is being transformed Global, China & Hong Kong E&M CAGRs Hong Kong 7.2% China 2.1% Projected industry Projected industry growth growth : 3.0% 2017: 8.3% Global 4.4% Projected industry growth : 4.2% A new wave of convergence Source: PwC Global Entertainment & Media Outlook , Global Entertainment & Media Outlook 8

9 Global summary and macro trends Consumer driven revenue remains the largest share through 2022 and consumers are willing to pay for access 2022 E&M revenue share: primary categories E&M CAGR: primary categories 40% 35% 30% 25% 20% 15% 10% 5% 0% Advertising Access Consumer Global Asia Pacific* Mainland China * Asia Pacific excluding Mainland China, Japan and Korea Consumer revenue includes: Read: books, magazines, newspapers Listen: music, radio, podcasts Watch: TV, OTT, cinema Play: games, e-sports, virtual reality 10% 8% 6% 4% 2% 0% Advertising Access Consumer Global Asia Pacific* Mainland China Access revenue includes: Mobile Internet, fixed broadband revenue Advertising revenue includes: B2B, Internet advertising OOH, TV advertising Source: PwC Global Entertainment & Media Outlook , Global Entertainment & Media Outlook 9

10 Global summary and macro trends Digital revenue will continue to make up more and more of the industry s income, accounting for more than 50% in 2018 Digital revenue as % of total revenue Digital revenue as % of total revenue 70% 65% 60% 55% 50% 45% 40% 35% 30% Projected revenue for China in 2022: US$224bn, 65% of total revenue Projected revenue for Global in 2022: US$1,366bn, 57% of total revenue Digital revenue % in 2022: India: 34% Indonesia: 43% Vietnam: 63% Thailand: 53% Global Mainland China By 2020, total global data consumption through smartphones overtakes fixed broadband data consumption Source: PwC Global Entertainment & Media Outlook , Global Entertainment & Media Outlook 10

11 Segment overview: Global summary The global E&M market topped $2tr USD in 2017 E&M market share by segment: Global, Asia Pacific* OTT Internet advertising Video games and e-sports Internet access Cinema Out-of-home advertising Music, radio and podcasts Business-to-business TV advertising Books Traditional TV and home video Magazines Newspaper Global Asia Pacific* CAGR * Asia Pacific excluding Mainland China, Japan and Korea In 2017, Global total E&M spend of US$2T Asia Pacific s* 6.8% CAGR exceeds Global CAGR of 4.4% and reaching USD179bn by 2022 By 2022, the total Global E&M market will add US$486bn Source: PwC Global Entertainment & Media Outlook , Global Entertainment & Media Outlook 11

12 Segment overview: Hong Kong summary Mainland China outperforms Global in various segments. OTT of Mainland China and Hong Kong exhibit highest growth E&M segment CAGR : Global, Mainland China, Hong Kong OTT Internet advertising Video games and e-sports Internet access Cinema Out-of-home advertising Music, radio and podcasts Business-to-business TV advertising Books Traditional TV and home video Magazines Newspaper Key takeaways OTT continues to drive the growth in the E&M market Internet advertising tops revenue across advertising segments Cinema in Mainland China still show strong growth potential Mainland China Global Hong Kong CAGR Source: PwC Global Entertainment & Media Outlook , Global Entertainment & Media Outlook 12

13 Key trends Global Entertainment & Media Outlook

14 1. OTT Video Global Entertainment & Media Outlook

15 Segment overview: OTT video OTT video global revenue of $36bn USD in 2017 is projected to grow at 10.1% CAGR Regional revenue and growth: total global 2017 revenue $36bn USD CAGR 18% 16% 14% 12% 10% 8% Size proportional to revenue LA EMEA NA APAC China OTT Video revenue in China US$2,443mn, 16.3% CAGR 2 Japan US$2,401mn, 10.1% CAGR 3 South Korea US$547mn, 21.5% CAGR 4 Australia US$465mn, 12.2% CAGR 5 India US$297mn, 22.6% CAGR 6 Taiwan US$214mn, 15.5% CAGR 6% 10% 15% 20% 25% 30% 35% 2017 Growth The growth of the OTT video sector has been supported by improving broadband coverage and a wide range of OTT video launches Growth will continue in the forecast period with more launches and platforms worldwide Asia Pacific leads growth due to faster broadband connections and increasing OTT video service offerings mostly focused on local content China CAGR of +16.3% will outpace global growth Source: PwC Global Entertainment & Media Outlook , Global Entertainment & Media Outlook 15

16 Segment overview: OTT video The OTT video market is being propelled by consumer content demand, lower prices and portability preferences OTT video sharing of TV subscription market by 2022 Global Mainland China Asia Pacific (excluding Mainland China) 26% 17% 25% OTT video Pay TV subscription 74% 83% 75% Mobile Internet penetration by 2022: 69% 79% 60% Despite strong growth, OTT will account for 26% of the global TV subscription market by 2022 Japan, New Zealand and Singapore have the highest OTT share of OTT and Pay-TV revenue. Pakistan, Vietnam and India have the lowest OTT penetration OTT revenues rise with mobile access, connections Source: PwC Global Entertainment & Media Outlook , Global Entertainment & Media Outlook 16

17 2. Internet advertising Global Entertainment & Media Outlook

18 Segment overview: Internet advertising Internet advertising is growing rapidly in Asia Pacific and is projected to reach US$123bn by 2022 Internet revenue in 2017 and growth in Asia Pacific 25% Indonesia, USD1,480mn CAGR 20% 15% 10% Japan, USD12.1bn India, USD958mn Mainland China, USD46bn 5% South Korea, USD5.4bn Size proportional to revenue 0% 0% 10% 20% 30% 40% 50% 2017 Growth Indonesia and India are expected to have a rapid growth through 2022, with 20.2% and 16.2% CAGR respectively. Source: PwC Global Entertainment & Media Outlook , Global Entertainment & Media Outlook 18

19 Segment overview: Internet advertising Data consumption will be driven by mobile platform Data consumption by platform: Fixed broadband vs. Mobile 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 36% 64% Mainland China 77% 23% % 8% 71% 29% 36% 64% India Indonesia Japan South Korea 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 46% 54% Mainland China % 95% 75% 43% 57% 25% 9% 5% India Indonesia Japan South Korea Fixed broadband Mobile Fixed broadband Mobile Digital activities % 4% 1% 3% 10% 3% Communications Games Music 73% Source: PwC Global Entertainment & Media Outlook , Other digital content Social networking Video Global Entertainment & Media Outlook 19

20 Segment overview: Internet advertising Mobile internet advertising will dominate Internet advertising Mobile internet advertising revenue in 2022 Revenue $bn USD 70,000 60,000 50,000 40,000 30,000 20,000 10,000 Mainland China: US$57.7bn, 20.1% CAGR Revenue $bn USD 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 Japan: US$8.5bn, 8.7% CAGR South Korea: US$2.9bn, 6.1% CAGR Indonesia: US$2.5bn, 25.8% CAGR Mainland China 0 India: US$0.8bn, 21.7% CAGR India Indonesia Japan South Korea Mobile internet advertising continue to grow rapidly in Asia Pacific, with Indonesia and India having the fastest growth in the region Source: PwC Global Entertainment & Media Outlook , Global Entertainment & Media Outlook 20

21 3. New growth engines for Global E&M market e-sports Projected industry growth : 20.6% Virtual reality Projected industry growth : 40.4% *VR & e-sports data are available for the following 10 key markets: USA, Japan, China, South Korea, UK, France, Germany, Russia, Italy, Spain Global Entertainment & Media Outlook

22 Segment overview: video games and e-sports The US, China, Japan and South Korea dominate the video games market and will represent 59% market share by 2022 Video game top countries by 2022 revenue and growth Top 10 video game countries by revenue 2022 Germany China France US Russia Japan Italy South Korea India UK Top 10 countries with highest CAGR Thailand India Argentina Turkey Saudi Arabia Pakistan Russia UAE Romania Indonesia Countries on both lists India Russia Top 10 countries by revenue 2017 Top 10 countries by CAGR Countries on both lists Source: PwC Global Entertainment & Media Outlook , Global Entertainment & Media Outlook 22

23 Segment overview: video games and e-sports e-sports revenue is growing rapidly in Global e-sports revenue for key countries and their CAGR Revenue $mn USD US: US$467mn, 20.5% CAGR China: US$338mn, 23.7% CAGR South Korea: US$306mn, 14.4% CAGR Japan: US$42mn, 31.2% CAGR China US Japan South Korea The e-sports revenue is increasing gradually in Asia Pacific Specially for China and South Korea, they are expected to have a rapid growth through 2022 and dominate in Asia Market. Source: PwC Global Entertainment & Media Outlook , Global Entertainment & Media Outlook 23

24 Segment overview: video games and e-sports e-sports total global revenues of USD $1.6bn in Sponsorship remains largest by revenue in 2022 Sub-segment e-sports revenue 2022: Global, $1.6bn Revenue $mn USD Media rights Sponsorship Streaming advertising Consumer contribution Consumer ticket sales Sponsorship remains the largest sub-segment through 2022 with media rights approaching a tipping point e-sports represents another face-off in growing convergence of TV and Internet companies vying for content exclusivity Media rights revenue in e-sports is still comparatively small As the scramble for attractive intellectual property intensifies, an increase at a 30% CAGR is anticipated to 2022 Source: PwC Global Entertainment & Media Outlook , Global Entertainment & Media Outlook 24

25 Segment overview: e-sports Current development in e-sports in Hong Kong and Asia Hong Kong According to the latest financial budget, the HKSAR government will allocate HK$100 million to Cyberport to boost the local e-sports and game development sector through building a competition venue dedicated to e-sports. Asia e-sports will be a demonstration sports at the Asian Games in Jakarta this August In 2022 Hangzhou Asian Games, e- Sports will become the official medal event. Recent and upcoming e-sports tournaments in Asia: 2017 LOL World Championship Beijing, Mainland China WESG Haikou City, Mainland China Dota 2 Asia Championships 2018 Shanghai, Mainland China ZOTAC Cup Master 2018 Hong Kong Global Entertainment & Media Outlook 25

26 Segment overview: virtual reality Virtual reality global revenue of $3.9bn USD in 2017 is projected to grow at 40.4% CAGR Revenue and growth: total global 2017 revenue $3.9bn USD 55% CAGR 50% 45% 40% 35% Japan, USD407mn South Korea, USD279mn USA, USD1,451mn UK, USD349mn Mainland China, USD728mn Size proportional to revenue 30% 0% 200% 400% 600% 800% 1000% 1200% 2017 Growth Global Entertainment & Media Outlook 26 S P C Gl b l E t t i t & M di O tl k / tl k

27 Segment overview: virtual reality With VR entering a long-term growth phase, firms turn to opportunities in VR apps and venue-based experiences Sub-segment revenue 2017: Global, $3.9bn USD Video 38% App 5% Gaming 57% After two plus years in the market, the new raft of consumer VR headsets have reached a steady growth curve Video and gaming will continue to be the dominant formats driving total VR revenue to $21bn USD by Social VR apps will be key to popularising VR. Advertising revenues will play a significant role in revenue through 2022 Source: PwC Global Entertainment & Media Outlook , Global Entertainment & Media Outlook 27

28 Local stories PwC Global Entertainment Global Entertainment & Media Outlook & Media Outlook 28

29 Local stories: Traditional advertising Traditional market is still dominating in HK market while Internet advertising is growing rapidly in Asia Pacific 2017 Hong Kong % 28% Print TV 23% 21% 20% 16% 15% Internet advertising Out-of-home Others 19% 23% 14% Asia Pacific* 6% 10% 21% Print TV 6% 9% 15% 25% 38% Internet advertising Out-of-home Others 31% 38% * Asia Pacific excluding Mainland China, Japan and Korea In Hong Kong, traditional advertising through print still contribute a significant portion of advertising revenue when compared to other segment, however, internet advertising will experience significant growth in the coming years. Source: PwC Global Entertainment & Media Outlook , Global Entertainment & Media Outlook 29

30 Local stories: Traditional advertising Internet advertising will continue to dominate the market and reaching 69% of market share in % % 6% 17% China Print 8% % 3% 12% TV Internet advertising Out-of-home 59% Others 69% China s Internet advertising market was the second-largest market globally in 2017, after the US, with total revenue of US$45.7bn Over the next five years revenue will increase at an 11.8% CAGR, reaching US$80.0bn in 2022 Source: PwC Global Entertainment & Media Outlook , Global Entertainment & Media Outlook 30

31 Your PwC contacts Wilson Chow Global Technology, Media and Telecommunications Leader Cecilia Yau Hong Kong Entertainment & Media Leader 31 Global Entertainment & Media Outlook

32 Thank you This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors PricewaterhouseCoopers Limited. All rights reserved. PwC refers to the Hong Kong member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see for further details.