Global Entertainment & Media Outlook 2018 2022 www.pwc.com/outlook
Perspectives: 2018 Outlook report summary Trending now: convergence, connections and trust PwC 2
Perspectives report So what s trending now? Convergence, connections and trust 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 3
Perspectives report Convergence 3.0: A handful of factors combine, creating the momentum behind this new wave of convergence Drivers of convergence Ubiquitous connectivity Data analytics and technology that can support better decision- Personalization making are critical to success Platforms rather than publishers are the primary beneficiaries of users growth in time and spending Value shift to platforms Consumers and their devices are always connected, always on The mobile consumer Mobile devices are becoming the primary means of accessing E&M content and services Convergence 3.0 Need for new sources of growth Revenue streams that nourished companies in the past will not be flowing with the same force 4
Overview: Global E&M macro trends Global summary and macro trends PwC 5
Global summary and macro trends The Global E&M industry is growing at a pace close to its historical rates - even amid significant disruption. Global E&M revenue and nominal growth forecast for next 5 years* 2.5 Revenue $tr USD [VALUE] 2.0 1.5 1.0 0.5 0.0 2013 Historical 2014 2015 2016 2017 2018 2019 2020 2021 2022 Forecast and a dizzying array of different trends at the segment and territory levels, an accumulation of near-infinite micro stories Source: PwC 2018-2022, www.pwc.com/outlook Note: All figures are reported in nominal terms reflecting actual spending transactions and therefore include the effects of inflation 6
Global summary and macro trends And final pieces fall into place for a mobile-first world, with the symbolic tipping point occurring in 2020 Global fixed broadband vs. smartphone data consumption (billion MB) Fixed broadband data consumption 700,000 2017--22 CAGR 2017--22 CAGR 18.8% 600,000 33.3% 500,000 400,000 300,000 Smartphone data consumption Smartphone data consumption overtakes fixed 200,000 100,000-2013 2014 2015 2016 2017 Fixed broadband data consumption 2018 2019 2020 2021 2022 Smartphone data consumption India achieved this tipping point in 2016 itself; Smartphone data consumption growing at a CAGR of 90.4% for 2017-2022 Source: PwC 2018-2022, www.pwc.com/outlook 7
Global summary and macro trends: segments Looking across segments, the fastest growth will be in digitally driven segments, with virtual reality leading the way Segment CAGR 2017-2022 VR OTT VR revenue includes consumer spending on VR video, games and apps. Internet advertising Video games and e-sports Internet access Cinema Out-of-home Music, radio and podcasts Business-to-business TV advertising Books Traditional TV and home video Magazines Newspaper -5 0 5 10 15 20 25 2017-2022 CAGR % 30 35 40 45 Source: PwC 2018-2022, www.pwc.com/outlook 8
Global summary and macro trends: segments In terms of individual segment market size, Internet access again tops the chart with the largest % of global E&M revenue Share of E&M 2017 revenue by segment Segment 2016 2017 2018 forecast Internet access 25.5% 26.2% 26.8% Traditional TV and home video 13.6% 13.0% 12.3% Internet advertising 9.9% 11.1% 11.9% Business-to-business 9.6% 9.4% 9.1% TV advertising 8.8% 8.3% 8.1% Newspaper 6.4% 5.9% 5.5% Books 6.0% 5.8% 5.6% Video games and e-sports 4.9% 5.2% 5.5% Music, radio and podcasts 4.8% 4.7% 4.7% Magazines 4.8% 4.6% 4.3% Cinema 2.1% 2.1% 2.1% Out-of-home 1.9% 1.8% 1.8% OTT 1.6% 1.8% 1.9% VR 0.0% 0.2% 0.4% Note: 2017 is the latest available data. 2018-2022 values are forecast projections Source: PwC 2018-2022, www.pwc.com/outlook 9
Global summary and macro trends: territories Looking across territories, there are relatively few markets that are both large and fast growing Quadrant of total E&M revenue (excluding Internet access) India is the fastest growing market (excluding internet access) 1000 USA The distribution of markets is indicative of the increasing difficulty of finding lucrative investment opportunities in the global media market Total E&M revenue 2022 ($bn USD) China Japan Germany 100 UK France Canada Italy South Korea India Brazil Australia Russia Spain Mexico Netherlands Sweden Thailand Belgium Norway TaiwanPoland 10 Turkey South Africa Austria Denmark Rest of0.04 MENA 0 0.02 Hong Kong 0.06 Malaysia Finland New Zealand Colombia Portugal Ireland Chile Israel Singapore Peru Czech Republic Vietnam Pakistan Greece UAE Hungary Indonesia Switzerland Romania Nigeria 1 Key takeaways Argentina 0.08 Philippines 0.1 0.12 Conditions in territories like China, India, Russia and Indonesia create unique challenges for investors Saudi Arabia Kenya CAGR 2017-22 (%) The effect of Internet access revenue is more apparent in the fastest growing E&M territories Source: PwC 2018-2022, www.pwc.com/outlook 10
Segment overview: India v/s Global summary All segments in India are growing faster than Global; India one of the fastest growing territories at a CAGR of 11.7% through 2022 E&M segment CAGR 2017-2022: Global, India Key takeaways Data consumption (in bn MB) OTT Fastest growing segments in India are Data Consumption (nonrevenue), OTT and Internet Advertising Internet advertising Video games and e-sports Internet access Cinema Newspapers in India continue to showcase positive growth over the Outlook period as opposed to Global OOH Music, radio and podcasts B2B TV advertising E-sports is a promising sub-segment with a high CAGR of 56.6% over the Outlook period Books Traditional TV and home video Magazines Newspaper -5 Global India 5 15 25 35 45 55 65 75 2017-2022 CAGR Source: PwC 2018-2022, www.pwc.com/outlook 11
Segment overview: India v/s Global summary Traditional TV and video continues to hold the largest share in Indian E&M market in terms of revenue 2017 E&M market share by segment: Global, India (%, USD mn) Books 2382 Key takeaways 258 Magazines 3893 Newspaper Music, radio and podcasts 775 Traditional TV and home video 9281 OTT 297 Cinema 1785 Video games and e-sports VR 609 0 Internet advertising 958 TV advertising OOH B2B Internet access 4033 While OTT happens to be one of the fastest growing segments, Traditional TV and home video will still hold the largest share of the Indian E&M market throughout the Outlook period India will be amongst top 10 Video games countries with respect to revenue by 2022 416 1245 4901 0% 5% 10% 15% 20% 25% 30% 35% Global India Source: PwC 2018-2022, www.pwc.com/outlook 12
Segment Insights PwC 13
Deep dive: OTT video OTT video comprises consumer spending on video accessed via an over-the-top /streaming service SVOD Stand-alone subscription video on demand (SVOD) services delivered over the open Internet, such as Netflix OTT video Transactional video on demand (TVOD) services (such as itunes), that deliver filmed entertainment content via the open Internet and which do not require a subscription TVOD 14
Deep dive: OTT video India will be amongst Top 10 highest CAGR SVOD countries SVOD top countries by 2017 revenue and growth 2017-2022 Top 10 SVOD countries 2017 US Germany China Sweden Japan South Korea UK Brazil Canada Mexico Top 10 countries with highest SVOD CAGR 2017-2022 Indonesia Malaysia Philippines Egypt India South Africa Kenya Portugal South Korea Spain Countries on both lists South Korea Top 10 SVOD countries by revenue 2017 Top 10 SVOD countries by CAGR 2017-2022 Countries on both lists Source: PwC 2018-2022, www.pwc.com/outlook 15
Segment overview: newspapers While global newspaper revenue will continue to decline at 2.4% CAGR through 2022, India showcases positive growth Segment revenue 2013-2022: Global, India Regional revenue and growth: 2017 global revenue $119bn USD 150 2017-2022 CAGR Revenue $bn USD 125 100 75 50 25 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 India RoW The global news industry continues to respond to the ongoing product devaluation, despite overall consumption growth Globally, future shrinkage is expected to improve slightly, as digital monetization improves, resulting in -2.4% CAGR 6% 5% [CELLRAN 4% GE] 3% 2% 1% 0% [CELLRAN [CELLRAN GE] -1%[CELLRAN -2% GE] GE] -3% -4% [CELLRAN Size proportional to revenue -5% GE] -5% -3% -1% 1% 3% 5% 2017 Growth Indian newspaper revenue to grow at 4.4% CAGR Expanding literacy rates, rural economic growth, successful coverage in regional news titles and ongoing low cover prices are all driving the popularity of print in India Source: PwC 2018-2022, www.pwc.com/outlook 16
Deep dive: video games and e-sports India in Top 10 video games territories with respect to CAGR as well as revenue by 2022 Video games top countries by 2022 revenue and growth 2017-2022 Top 10 video game countries by revenue 2022 China Germany US France Japan Russia South Korea Italy UK India Top 10 countries with highest video game CAGR 2017-2022 India Thailand Turkey Argentina Pakistan Saudi Arabia Russia UAE Indonesia Romania Countries on both lists India Russia Top 10 video games countries by revenue 2017 Top 10 video games countries by CAGR 2017-2022 Countries on both lists Source: PwC 2018-2022, www.pwc.com/outlook 17
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