Press pack pwc media outlook 2013
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  • 1. www.pwc.co.uk Global entertainment and media outlook 2013 2017 Press pack Outlook material for press contacts May 2013 www.pwc.co.uk Global entertainment and media outlook 2013 2017 Press pack www.pwc.com/outlook entertainment outlook 2013-
  • 2. PwC Page 2 of 45 Content to support the Outlook 2013-2017 press release Summary of the key global themes highlighted in this year’s Outlook Entertainment and media businesses raise their game in agility and customer understandingas constant digital innovation becomes the new licence to operate Overview: the democratisation of digital access and media drives growth In countries across the world, consumers’ access to entertainment and media (E&M) content and experiences is being democratised by an ongoing expansion in access to the Internet and explosive growth in smart devices. Even though traditional, non-digital media will continue to dominate overall E&M spending throughout the coming five years, the growth will be concentrated in digital media platforms and consumption. To harness this growth and compete effectively in the future, E&M companies of all types must evaluate their competitive advantages and seize their positions in the evolving ecosystem—which has the connected consumer at its core. To achieve this successfully, every industry participant will need to invest in constant innovation that encompasses its products and services, its operating and business models, and—most importantly—its customer experience, understanding and engagement. An ongoing seismic shift in E&M spending: digital migration continues… Trends in digital innovation are shaped largely by consumer and advertising spending, as the global balance of these shifts from print to digital formats, from fixed to mobile consumption, from developed to developing markets. To investigate, analyse and assess these trends, Outlook Insights draws on consumer and advertising spend data taken from PwC’s annual Global entertainment and media online outlook, a comprehensive online source of analysis of global consumer and advertising spending. …across industry segments and participants Each year, PwC’s global team of entertainment and media experts generate unbiased and in-depth market data, spending forecasts and commentary for 13 industry segments and 50 countries around the world. Analysing the online Outlook’s five-year consumer and advertising spend forecasts for 2013-2017, Outlook Insights examines how shifts in spending are fundamentally reshaping the E&M industry. It also explores the macro factors driving growth at both the industry level and the individual segment level for the 13 industry segments covered in the online Outlook: 1. TV subscriptions and licence fees 2. TV advertising 3. Internet access 4. Radio
  • 3. PwC Page 3 of 45 5. Out-of-home advertising 6. Video games 7. Filmed entertainment 8. Newspaper publishing 9. Consumer magazine publishing 10. Business-to-business 11. Internet advertising 12. Consumer and educational book publishing 13. Music We’ll now summarise our top-line points of view on how industry trends are affecting four key groups of participants in the E&M value chain—consumers, advertisers, content creators and distributorsand then look at the macro and segment trends underlying these impacts. 1. Connected consumers are driving companies to apply innovation and agility in order to understand and meet their needs Consumers are increasingly in control…. In the past five years, consumers have seen an explosion in their media choices, propelled by the rise of the Internet and growing take-up of connected—and, increasingly, mobile—devices. Indeed, in many sectors and territories it is the connected consumer who is now really in control. In response, companies across the E&M industry are having to revisit their business and operating models to establish positions in the emerging digital media ecosystem around the connected consumer. By innovating in agile ways and harnessing technologies to gain deep insight into consumers’ tastes and behaviours, E&M companies are starting to define a profitable, consumer-centric, multiplatform future. …but also increasingly confused While consumers are increasingly calling the shots, they’re also increasingly confused by the blizzard of consumption choices. This confusion extends to the legitimacy of the content they access: a recent study in Singapore found that some consumers were paying for pirated TV content when the same content was available legally at no cost. From ‘mass media’ to ‘my media’ As media consumption fragments across devices, consumers increasingly want personalised experiences: their content on their chosen devices when they want it. This move to ‘my media’ can be seen in ‘cord- cutting’where consumers abandon their pay TV subscriptions and instead access the content they want via cheaper, Internet-based content services. The cord-cutters are now being joined the ‘cord-nevers’, a younger generation who would never think of paying for TV. A further manifestation of ‘my media’ is consumers’ growing use of the ’second screen’smartphones and tabletsto comment on and share the experience of TV content with friends, often via social media. Understanding new consumers is key…. Over the next five years and beyond, all E&M businesses will increasingly engage with a new and more diverse global customer base, with different needs and expectations. According to the OECD, by 2030 two-thirds of the world’s population will be ‘middle class’, with a daily expenditure of US$10 to US$100. This new middle class will appear primarily in Asia Pacific—and the E&M industry needs to understand its needs and motivations to capture its spending power. …because economic growth + new middle class + mobile = ongoing digital growth Economic studies in emerging markets show consistently that rising mobile and broadband penetration boost economic growth. But fibre networks and next-generation mobile broadband services demands heavy
  • 4. PwC Page 4 of 45 investment. So telcos will have to partner with one another to reduce network costs, and collaborate with ‘over- the-top’ content players to roll out new services. Going forward, the E&M companies that seize a profitable position in the new digital ecosystem will be those with the speed, flexibility and insight to engage and monetise an ever more diverse global base of connected consumersby delivering personalised, relevant, and ultimately indispensable content experiences. 2. Advertisers need analytics-driven insights into connected consumers’ behaviour, expectations and buying intentions Advertisers will increasingly harness data to target individuals… To keep pace with consumers’ ongoing migration to digital behaviours, the advertising industry must think innovatively about how it uses media. Advertising spend is slowly migrating to new digital platformsbut the traditional tendency to separate digital from other forms of advertising is arguably part of the problem. As audiences increasingly consume media across multiple screens, devices and platforms, advertising must also become platform-agnostic. …while using new measurements focused on engagement to show relevance This change also affects the way the outcomes of advertising spend are measured. Publishers and broadcasters are working hard to establish new formats and tools that will both create and demonstrate value for advertisers. But advertisers first need compelling evidence that migrating their spend to new platforms will boost their bottom lines. So the ability to attract advertising revenues in the future will be depend on offering advertisers credible, cross-platform metrics that define and measure audience reach, engagement and relevance. ‘Big Data’ is a hot topic… There’s much talk in the E&M industry about the value of the ‘big data’ generated by users accessing content via Internet-connected platforms and devices. But there’s been little agreement or insight to date into how to harness that value. In an effort to do this, many E&M companiesranging from newspapers to OTT video aggregatorsare making it a priority to build direct relationships with consumers. …but small data will be key to consumer engagement and transactions However, the real opportunity lies not in the abstract notion of big data, but in the granular, small data— derived through analytics—that gives insights into customers’ actual and likely behaviour in response to a particular message or experience. One of the most exciting areas is the emerging opportunity around the second screen, which has huge potential for building not just consumer engagement, but alsoespecially in combination with mobile walletseCommerce transactions. Overcoming the privacy challenge But there is a major hurdle. Generating value from increasingly deep knowledge about consumers’ habits and preferences will require the industry to overcome new challenges around privacy. Regulators and content providers are trying to establish a level of information-sharing that benefits consumers without intruding into their personal space. Positively, experience shows that many consumers are happy sharing their information if they can see a tangible benefit for them. Traditional markets will dominate global digital ad growth While growth in E&M revenues in emerging regions is a recurrent theme, in the digital advertising arena it is the mature markets of North America and EMEA where most growth will take place in the next five years.
  • 5. PwC Page 5 of 45 3. To stay relevant, content creators will have to innovate both in their products and the ways they deliver them Engaging customers demands better insight into of what content they’ll pay for Like other industry participants, content creators need to adapt to the demands of connected consumers. This means getting closer to the behaviours and needs of those consumers than ever before, including harvesting data from social media, adapting the way products are created and distributed, and embracing new business models  including partnerships. As they pursue these strategies, the good news for content creators is that content’s central role in attracting, engaging and retaining consumers has, if anything, been positively strengthened by the fragmentation of media choices. The race for content The rising value of content has fired the starting-gun on an industry-wide race to acquire it. Recent months and years have seen several major acquisitions of content assets, as consumers’ rising expectation of ubiquitous access to premium and library content drives companies to focus on licensing and/or acquiring content, and also on developing deeper customer engagement and insights. One way of engaging directly with customers is through social mediaand PwC’s 2013 CEO Survey shows that E&M CEOs are keener than their counterparts in most others sectors to harness the power of social media to garner better insight. However, executives need to be careful not to over-cater to the customers most active on social media at the expense of those who are less likely to volunteer feedback in this way. Social media insights need to be blended with traditional editorial and curating skills. Rising to the talent challenge: empowerment and mobility A particular challenge for content creators is the need to empower young talent to boost effectiveness, innovation and agility in the connected era. To understand what motivates younger audiences, business leaders need to harness the insights of employees from across the company, including those closest to the younger demographic. The promotion and use of social tools in the workplace alongside regular internal forums for testing products and ideas will become a basic component of an E&M businessalong with talent mobility to let employees follow their own agenda and opportunities. Characteristic of new business models to engage connected consumers To ensure their content remains relevant and valuable to their audiences, content companies must build new business models around five imperatives:  Broadcasters must harness the power of second screens exploiting connected portable devices to deepen engagement with, and access to, the primary content.  The windowing of video content must continue to evolvenew windowing models are emerging rapidly to meet the needs of connected consumers, and this will continue.  Bundling can add value for content providers, operators and consumersPeople still love a bargain, including a bundle of services for a ‘discounted’ rate.  Content creators must overcome the challenges of personalisationby understanding consumers while respecting their privacy  Content discovery and recommendation will be major areas of opportunity  confused, connected consumers need help navigating to the content they want.
  • 6. PwC Page 6 of 45 4. Digital distributors need the agility and insight to deliver the right content at the right time, on the right platform, at the right price A smart and flexible distribution strategy based on consumer understanding… The growing demand from connected consumers for contentdelivered across multiple devices whenever and wherever they chooseposes major challenges to content distributors’ traditional business and operating models. At the same time, they’re facing an array of disruptive trends, including competition from OTT providers and the threat of ‘cord-cutting’ by consumers. …will accelerate growth in digital revenues and deter piracy To ride out such challenges, they need to develop a smart and agile distribution strategy grounded in an understanding of consumers. While great content is the cornerstone, it’s not enough on its own. Also needed is a strong focus on the digital products through which consumers access that content: high-quality images, simple and clear navigation, and compatibility with a diverse devicesall aspects of a great content experience. This differentiated experience will also will remain a vital way of combatting piracy  which is still a major issue in certain sectors and certain territories. Tackling piracy in the connected era cannot rely just on consumer education and tighter regulation and enforcement, important as those are. It means using an understanding of consumers to deliver the right content to the right people, at the right time, place and pricevia the right experience. It’s also vital to sign-post where the legitimate content is available. Blurring boundaries: the division disappears between technology and E&M… E&M content distributors are also facing a blurring of the division between their own role and that of technology companies, which have now decisively entered the media space. However, this blurring also brings opportunities for E&M companies to expand the other wayand many are now experimenting with direct-to- consumer digital distribution models, microtransactions and other advertising opportunities. …as migrating populations present a rich vein of opportunity According to the World Bank there were more than 215 million migrants worldwide in 2010, which would make that ‘migrant nation’ the fourth largest in the world. As expatriate communities grow, distributors are increasingly crossing geographical borders to address them. Examples include iRoko, which targets the African diaspora in wealthier markets and has more customers in London than Lagos. Advertisers and telcos will focus on providing content In the coming years, consumer brands will increasingly develop their own content and services to offer directly via online channels, rather than providing ads that interrupt traditional media content. Advertiser-funded content is not new, but what brands have today is a direct route to customers, without the need to use a broadcaster. Meanwhile, telcos have long faced challenges in benefiting financially from the growth in digital content. To date, their investments in IPTV have had patchy success. However, the lesson for telcos in the pay TV space is that content is kingand that unless they manage to bring to the table the best content available, they will continue to struggle.
  • 7. PwC Page 7 of 45 5. Macro trends: digital services, mobile broadband, multiple screens and emerging markets are driving E&M growththough traditional media will still generate the majority of revenues in 2017 Consumer demand for E&M will keep growingfuelled by connectivity Internet access will remain a major force behind the growth in E&M revenues, reflecting the dramatic impact of broadband access and smart devices and on consumers’ lives. Household broadband penetration globally will rise from 40% in 2012 to 51% in 2017. In contrast, mobile broadband penetration will surge by 31 percentage points from its 2012 level to reach 54% in 2017. Regionally, Asia Pacific, driven by China and India, will lead the way in both numbers of households and growth rate, followed by Latin America, with slower growth in the more mature EMEA and North American markets. North America will remain the biggest E&M regionbut Latin America and Asia Pacific will be the fastest growing While entertainment and media revenues worldwide will grow during the forecast period, they will lag behind that of overall global GDP. The global E&M market will expand at a CAGR of 5.6% over the five years; nominal GDP will grow at an average of 7.2% compounded annually. North America will remain the largest E&M market overall, worth more than US$680bn in 2017, with ever more content consumed on mobile devices or purchased digitally. Latin America will be the fastest-growing region over the forecast period, with a 10.6% CAGR, followed by Asia Pacific with a CAGR of 6.5%. Consumer spending: growth will be concentrated in emerging markets… Looking specifically at consumer spending, the mature markets of North America and Western Europe will continue to dominate overall revenues. But Latin America will be the fastest-growing region for consumer E&M spend, with a 7.0% CAGR over the forecast period, followed by Asia Pacific with a CAGR of 4.1%, and then North America at 2.5% and EMEA at 1.6%. However, revenues from physical media will continue to dominate overall consumer spend on E&M, with the 9% of overall consumer E&M spending that was spent on digital content in 2012 rising only to 16% even by 2017. Segmenting global E&M markets by growth and scale Segmenting E&M markets globally by growth rate and scale reveals a ‘stellar’ group of eight markets that will combine higher growth with larger scale by 2017: China, Brazil, India, Russia, Middle East and North Africa (MENA), Mexico, Indonesia and Argentina. These territories will account for 22% of total global E&M revenues in 2017, up from 12% in 2008, and their average CAGR will be more than double that of the global E&M sector as a whole.
  • 8. PwC Page 8 of 45 6. Segment analysis: digital disruption across and within segments will continue—and accelerate The Internet will sustain E&M growth by acting as a platform for advertising, transactions andincreasinglypersonalised delivery of digital content Digital media will represent the clear driving force behind E&M revenues over the next five years. Internet advertising and Internet access will lead the way in overall E&M growth, with Internet advertising being the fastest-growing segment, at a 13.1% CAGR during the forecast period. Video gaming at a 6.5% CAGR and TV advertising at a 5.3% CAGR will also show strong growth. The slowest growth will be seen in segments traditionally related to print—newspapers, magazines and books—which will grow by an average of less than one percentage point compounded annually over the forecast period. Consumer E&M content spend will increasingly shift to digital formats Consumer spending on E&M content will rise in all segments, and will also continue to migrate away from items that would traditionally be physical purchases—such as boxed video games, DVDs and music CDs— towards digital media. By 2017, physical purchases will represent just 53% of consumer spending. Music is currently the most advanced digital purchasing segment, and global sales of digital music will exceed physical purchases in 2016. However, filmed entertainment will see digital purchases grow more quickly than any other segment, with digital revenues almost doubling their share over the forecast period from 13% of the total in 2012 to 25% in 2017. In contrast, the newspaper segment has the lowest digital adoption, with just 5% of newspapers’ consumer revenues being digital in 2012. Uptake will increase slowly, with digital revenues reaching only 11% of the total in 2017. Growth in advertising E&M spend: Internet and video gaming set the pace In terms of advertising revenues, video gaming will be the second-fastest-growing advertising segment after Internet advertising, growing at a CAGR of at 11.9%, albeit from a low base. Advertising spend on newspapers and business-to-business, traditionally print segments, will fall. The US will remain the largest E&M market, but China is closing the gap Taking consumer spend and advertising combined, the US will remains the largest E&M market globally through the next five years, followed by Japan, China, Germany, the UK and France. While this top six will remain unchanged, Brazil will overtake Italy and South Korea in 2013 to become the seventh-largest market. In consumer spend, China will rise from fifth in 2012 to third in 2017, surpassing the UK in 2013 and Germany in 2016, fuelled by rising TV subscription revenues. In advertising spend, China will surpass Japan to become the second-largest market in 2016, and Brazil will move above France into the number six spot in 2014.
  • 9. PwC Page 9 of 45 Summary of key segment insights at a glance TV subscriptions and licence fees Key insights at a glance  The continued attraction of TV content and the demand from new consumers will ensure the global pay TV industry continues to grow despite concerns about over-the-top (OTT) services and piracy. Subscription revenues from pay TV providers will reach US$212bn by 2017, up from US$172bn in 2012 (at a CAGR of 4.3%), driven by rapid growth in the Asia Pacific and Latin American markets—notably in China and Brazil. China generates the second largest pay TV subscription revenues, after the US, with Brazil surpassing the UK, Canada and India in 2013 to become the third-largest market by 2017.  Indonesia will be the fastest-growing TV market, with 21% CAGR in revenues and a market set to be worth US$1.7bn in 2017; Kenya, Thailand and Vietnam also all show impressive growth (13%+ CAGR). In the mature markets of Europe, growth will generally be limited to 1 to 3%, with the exception of Russia.  The threat from OTT services should not be exaggerated. Even by 2017, revenues from OTT services will remain just 6% of overall pay TV revenues. But operators must adapt their services to changing consumer expectations for more on-demand content.  A greater proportion of viewing and interaction will take place on non-TV devices, beyond the TV set. Multiscreen TV Everywhere services will increase the appeal of TV, and the rise in social TV and second-screen activity will provide an opportunity for pay TV operators to deepen their engagement with viewers.  Cable will remain the dominant platform globally for delivering pay TV services, although its share will decline. Internet Protocol TV (IPTV) will be the fastest-growing platform—at a CAGR of 14%—but only in certain markets, such as China, the US, and South Korea.
  • 10. PwC Page 10 of 45 Country specific data and commentary available in the online Outlook for TV subscriptions and licence fees The insights for TV subscriptions and licence fees in this section are drawn from data found in the online Global entertainment and media outlook 2013-2017, which provides 5 year historic and 5 year forecast consumer and advertising spend data (spanning 2008 - 2017), for 13 industry segments across 50 countries. Get free access to the online Outlook 2013-2017 for individual country commentary and data for TV subscriptions and licence fees, covering:  Subscription spending (US$ m)  Public license fees (US$ m)  Total TV subscription and license fee spending (US$ m)  Subscription TV households (m)  Subscription TV penetration (%)  Cable TV households (m)  Cable TV penetration (%)  Digital cable TV households (m)  Analogue cable TV households (m)  IPTV households (m)  IPTV penetration (%)  Satellite TV households (m)  Satellite TV penetration (%)  Pay DTT households (m)  Pay DTT penetration (%) Segment definition This segment considers consumer spending on basic /premium subscriptions and licence fees. Revenues generated from cable TV, satellite TV, Internet Protocol Television (IPTV) and the paid element of Digital Terrestrial Television (DTT) are all included regardless of whether they are from a primary or secondary TV set. The subscription spend considers all fees paid including video-on-demand (VOD) and pay-per-view (PPV) accessed through cable operators, satellite providers, telephone companies and other multichannel distributors. Television programming delivered over the Internet (including over-the-top [OTT] services such as Netflix) is not included within this segment. These spending streams are incorporated in the Filmed Entertainment segment. Public TV licence fees are included where applicable (in EMEA and APAC) and cover the fee paid for both television and radio. For subscription-TV household estimates, only the primary TV subscription in each household is considered. The penetration is calculated against the total number of households and will not exceed 100%. All subscriber estimates are referred to as year-end.
  • 11. PwC Page 11 of 45 TV advertising Key insights at a glance  Over the next five years, the TV advertising sector will pass US$200bn in revenue—with a CAGR of 5.3%—with global revenues valued at US$209.4bn in 2017 compared with US$162.1bn in 2012. Despite a rise in pay TV subscriptions, terrestrial television will account for 69.6% of all TV advertising revenues in 2017.  The US will still dominate global TV advertising revenues, accounting for 39.0% of the global total in 2017, which is only a modest drop from 2012’s 39.4%. But the fastest rates of growth will be in other markets, including Kenya (16% CAGR), Indonesia (15%), India (12%), Nigeria (11%) and Brazil (10%).  New technology that changes the way consumers watch TV will create both challenges and opportunities for advertisers. Increased use of digital video recorders (DVRs), connected portable devices (including second screens such as smartphones and tablets) and connected TVs will threaten the traditional TV advertising models.  Online TV advertising revenues will treble from 2012 and 2017 but will remain a fraction of traditional TV revenues. In Japan and South Korea, online TV advertising will, on average, more than double every year until 2017. Such aggressive growth will see Japan become the third-largest market for online TV advertising globally, behind only the US and the UK. South Korea’s emergence will move it up to number eight.  The industry must react to changing consumer behaviour. The opportunity to provide targeted advertising, through the interrogation of consumers’ online habits, presents the TV industry with a new and potentially vital revenue stream.  Better measurement metrics are needed to reflect the new realities of TV consumption. Future revenues will be at serious risk without agreed models for what to measure and how to measure it.
  • 12. PwC Page 12 of 45 Country specific data and commentary available in the online Outlook for TV advertising The insights for TV advertising in this section are drawn from data found in the online Global entertainment and media outlook 2013-2017, which provides 5 year historic and 5 year forecast consumer and advertising spend data (spanning 2008 - 2017), for 13 industry segments across 50 countries. Get free access to the online Outlook 2013-2017 for individual country commentary and data for TV advertising, covering:  Broadcast TV advertising (US$ m) (broadcast TV = terrestrial + multi-channel)  Terrestrial TV advertising (US$ m)  Multi-channel TV advertising (US$ m)  Online TV advertising (US$m)  Total TV advertising spending (US$ m) (total = terrestrial + multi-channel + online) Segment definition This segment considers all advertising spend on broadcast and online television. Broadcast television is split by terrestrial and multichannel and covers all advertising revenues generated by free-to-air networks (terrestrial) and pay-TV operators (multichannel). Terrestrial covers advertising sold on traditional, over-the-air channels regardless of whether it is viewed via a subscription service or free digital TV. Multichannel includes network advertising revenue generated via pay-TV networks (cable, digital terrestrial television [DTT], Internet Protocol TV [IPTV] or satellite) including revenue from free-to-air spin-off digital channels launched by the terrestrial networks. Online TV advertising consists of in-stream adverts only combining a total of pre-roll and post-roll. Overlays (where advertisers use a video overlay layer to deliver an ad unit) are not included within this definition. All TV advertising revenues consist of net spending excluding agency commissions, production costs and discounts.
  • 13. PwC Page 13 of 45 Internet access Key insights at a glance  After years of home broadband being the most popular way to access the Internet, a fundamentally different form will come to dominate: access via mobile broadband, most often via mobile phones rather than PCs and laptops. Penetration of mobile-Internet services will reach 54% by year- end 2017 compared with 51% for fixed broadband.  The US is the largest territory in fixed broadband, with high penetration and high average revenue per user (ARPU). After exceeding the revenues of Japan in 2012, China is closing the gap on the US due to its aggressive double digit growth in subscribers despite considerably lower ARPU.  Mobile Internet revenues, worth US$259bn in 2014, will account for more than 50% of total Internet access spend, overtaking those from fixed broadband. By 2017, mobile Internet revenues will exceed US$385bn and account for 58% of total Internet access spend.  Growth will increasingly be driven by emerging markets. Brazil, China, India and Russia alone will account for 45% of fixed-broadband subscriptions and 50% of mobile Internet users by the end of 2017.  The underlying technologies will also change. Many of the developed markets get a head start with next-generation fibre and fourth-generation (4G) networks, but ambitious operators and governments in emerging markets will not be far behind, if not ahead. Getting spectrum policy right will be especially important in the advancement of mobile broadband services.  The right pricing and packaging will be essential to success. Pay-per-use or pay-per-app tariffs will open up mobile broadband to hundreds of millions of lower-income consumers, and increasingly generous bundles of digital media, Wi-Fi, over-the-top services and new connected devices will drive migration to superfast broadband services.
  • 14. PwC Page 14 of 45 Country specific data and commentary available in the online Outlook for Internet access The insights for Internet access in this section are drawn from data found in the online Global entertainment and media outlook 2013-2017, which provides 5 year historic and 5 year forecast consumer and advertising spend data (spanning 2008 - 2017), for 13 industry segments across 50 countries. Get free access to the online Outlook 2013-2017 for individual country commentary and data for Internet access covering:  Fixed broadband access spending (US$ m)  Mobile Internet access spending (US$ m)  Total Internet access spending (US$ m) (total = fixed + mobile)  Fixed broadband households (m)  Fixed broadband penetration (%)  Mobile Internet subscribers (m)  Mobile Internet penetration (%) Segment definition This segment considers consumer spend on accessing the Internet and is split into two categories; mobile Internet and fixed-broadband Internet. Fixed broadband includes both wired and wireless connections and is a subscription to a residential or small business. Internet-access services are delivered to a home, office or other fixed location provided by cable, MMDS, modem, xDSL, FTTx, WiMAX, proprietary wireless broadband, Ethernet, powerline communications and satellite-broadband technologies. Enterprise customers larger than SMEs are considered to have a leased line/dedicated cable and are not included within our coverage of residential fixed-line service. Mobile Internet considers Internet access over the medium of cellular air interfaces, generally via a 2.5G network or higher. This covers Internet access via mobile devices and for connected devices that use embedded modems, dongles and data cards. Mobile Internet subscribers are considered unique users. All fixed-broadband household and mobile Internet subscriber estimates are counted as year-end.
  • 15. PwC Page 15 of 45 Radio Key insights at a glance  Emerging markets, including China and South Africa, will have a growing impact, with South Africa expected to surpass the UK in 2015 and Germany in 2017 to become the seventh-largest radio advertising market. There will be rapid growth in markets with lower TV penetration, where radio forms a more accessible media type: India, Argentina, Venezuela, China, South Africa Pakistan and the Philippines are all estimated to grow at a double-digit rates on average each year over the next five years.  North America will continue to account for almost 50% of all global radio revenues, however, generating US$24bn in 2017. But even though Europe and North America play leading roles in radio-technology and business- model innovation, their combined market share will decline to 74% of global radio revenues by 2017.  Thanks to persistent demand for radio content, accelerated by a rise in car ownership and traffic congestion in many markets, the global radio market is growing overall—at a CAGR of 3%. However, it must invest in a digital future to remain relevant. Media consumption is rapidly shifting online and onto mobile devices, yet the global radio market lacks a unified digital-transition strategy.  Satellite subscribers and subscription revenues continue to grow rapidly, with subscriptions taking 15% of all North American radio revenue in 2012 and rising to 20% of the region’s revenue in 2017.  Connected listeners want to access radio on a range of devices. Internet- based music-streaming services and the rising use of smartphones as media consumption devices threaten traditional radio models, but connected cars will provide a new opportunity.  Experience-led innovation will be the key to success for radio companies in the digital era. Traditional radio providers must capitalise on their core assets and deliver them into a digital channel via a great user interface.
  • 16. PwC Page 16 of 45 Country specific data and commentary available in the online Outlook for Radio The insights for Radio in this section are drawn from data found in the online Global entertainment and media outlook 2013-2017, which provides 5 year historic and 5 year forecast consumer and advertising spend data (spanning 2008 - 2017), for 13 industry segments across 50 countries. Get free access to the online Outlook 2013-2017 for individual country commentary and data for Radio covering:  Radio advertising (US$ m)  Public radio license fees (US$ m)  Terrestrial broadcast radio advertising (US$ m)  Terrestrial online radio advertising (US$ m)  Total terrestrial radio advertising (US$ m) (total = broadcast + online)  Satellite radio advertising (US$ m)  Satellite radio subscription spending (US$ m)  Total satellite radio (US$ m) (total = subscriptions + advertising)  Total radio revenue (US$ m) (total = radio advertising + license fees + satellite radio subscription) Segment definition The radio segment includes all advertising spend on radio stations and radio networks. In the US and Canada, advertising spend in both Internet radio and satellite radio are also considered and separated accordingly. Subscription revenue generated from satellite-delivered radio is considered in North America only. Advertising spend is tracked as net of agency commissions, production costs (in creating the ads) and discounts. Public radio licence fees are included where applicable (in EMEA and APAC) and cover the ‘radio only’ element of the total licence fees collected within the TV Subscriptions segment.
  • 17. PwC Page 17 of 45 Out-of-home Key insights at a glance  Following a fall in spend towards the end of the past decade, the out-of- home (OOH) advertising market will be entering a sustained period of growth as expenditure increases from US$33.8bn in 2012 to US$42.8bn in 2017, representing 5% CAGR.  Growth markets and the impact of digitisation will drive that rise in global OOH advertising spend. There will be double-digit CAGR growth in two countries: India (11%) and Brazil (10%).  The continued global drive of urbanisation will be a force for growth in the OOH advertising market. By 2017, 57% of the world’s population will live in cities and towns; and as a consequence, major infrastructure spend in urban areas is set to increase, especially in the areas of public transportation and roads. The trend will make OOH advertising more attractive.  The rise of digital out-of-home (DOOH) advertising will be another industry driver. Dynamic and innovative, digital signage enables advertisers to be relevant, up-to-the-minute and agile in their consumer engagements. Revolutionising the industry, the use of digital will ensure that OOH becomes a far more compelling route to the advertising market in 2013 and beyond.  The rise in smartphone and tablet adoption is encouraging the use of interactive advertising campaigns close to points of purchase, which facilitates contextual advertising, which is positive for consumers and brands alike. Global smartphone usage will spiral to 3.1bn connections by 2017—up from 1.1bn in 2012—which will encourage greater use of DOOH.  The measurement of audiences for OOH advertising must continue to improve. This means fulfilment of the need for more-comprehensive inventory management of billboards, better estimates of amount of traffic passing by panels and deeper insights into the movement patterns of people. Improved data analytics will continue to enhance the measurement techniques used in OOH advertising.
  • 18. PwC Page 18 of 45 Country specific data and commentary available in the online Outlook for Out-of-home The insights for Out-of-home in this section are drawn from data found in the online Global entertainment and media outlook 2013-2017, which provides 5 year historic and 5 year forecast consumer and advertising spend data (spanning 2008 - 2017), for 13 industry segments across 50 countries. Get free access to the online Outlook 2013-2017 for individual country commentary and data for Out-of-home covering:  Out-of home advertising (US$m) Segment definition The out-of-home (OOH) advertising market consists of advertiser spending on OOH media such as billboards, street furniture (bus shelters, kiosks), transit displays (bus sides, taxi toppers), sports arena displays and captive advertisement networks (in venues such as elevators, lobbies and theatres). The OOH market includes the so-called digital out-of-home (DOOH) advertising market, which has become a key growth area for the overall OOH market. OOH comprises hundreds of different formats but roadside billboards are the single most prevalent format of outdoor advertising. Advertising on bus shelters, news racks or telephone booths are types of street-furniture OOH. This can benefit local communities as the media owner often has contractual responsibility for construction and maintenance of the site. Transit advertising is advertising placed on vehicles such as buses, subway carriages and taxis. Adverts located at airports are also included in this category. Alternative formats for OOH advertising can include advertisements on petrol pumps, bike racks or inside rest rooms.
  • 19. PwC Page 19 of 45 Video games Key insights at a glance  Console gaming will see steady growth, as the eighth generation of game consoles hits the market. Consumer spend on console games will increase by a CAGR of 5% from US$24.9bn in 2012 to US$31.2bn in 2017 as Sony’s PlayStation 4 and Microsoft’s rumoured new Xbox console reignite interest in console gaming. That growth will lead to North America’s overtaking Western Europe to regain in 2014 its number one position in console sales.  In many entertainment and media segments, China will overtake Japan in terms of size by 2017; in some cases, it has already. This is not the case in video gaming, however, because Japan will retain its position as the world’s second-largest market, at US$13.7bn in 2017, behind the US at US$18.2bn but ahead of China at US$11.4bn.  Although PC revenues remain stagnant, consumers are not abandoning the platform. With online revenues set to reach US$30bn in 2017, consumers are merely shifting from pay to own to pay to play.  Online spending will increase by an average of 8% per year over the next five years. By 2017, the online platform will have almost reached parity with consoles; and US$97 will be spent on online games for every US$100 spent on console games.  Mobile will be the fastest-growing video games sector over the next five years, with revenues increasing from US$8.8bn in 2012 to US$14.4bn in 2017 by a CAGR of 10% as an increasing number of consumers turn to smartphones for entertainment.
  • 20. PwC Page 20 of 45 Country specific data and commentary available in the online Outlook for Video games The insights for Video games in this section are drawn from data found in the online Global entertainment and media outlook 2013-2017, which provides 5 year historic and 5 year forecast consumer and advertising spend data (spanning 2008 - 2017), for 13 industry segments across 50 countries. Get free access to the online Outlook 2013-2017 for individual country commentary and data for Video games covering:  Console physical spending (US$ m)  Console digital spending (US$ m)  Total console spending (US$ m) (total = physical + digital)  PC physical spending (US$ m)  PC digital spending (US$ m)  Total PC spending (US$ m) (total = physical + digital)  Online gaming spending (US$ m)  Mobile gaming spending (US$ m)  Video game advertising (US$ m)  Total end user spending (US$ m) (total = console total + PC total + online + mobile)  Total video game spending (US$ m) (total = total end user + video game advertising) Segment definition This segment breaks down advertising via video games and consumer spending on video games by component, including console, online, PC and mobile. It excludes spending on the hardware used to play the games. Revenues from console and PC are split by physical and digital. The Console category covers all revenues from playing games of any type on a games console (both in home and handheld). It includes game sales at retail, digital game sales, additional downloadable content (DLC) and subscription services. PC games covers revenues from traditional, more complex PC games sales. The category includes sales revenues from retail and digital-download stores (Steam and Origin) and additional downloadable content. Mobile gaming considers all revenues from playing games on a mobile device (tablet or mobile phone). It includes digital games sales, subscription services and associated virtual items. Online gaming includes games played on a PC that require an Internet connection. It covers subscription MMOs, free-to-play MMOs, casual games and social games. Video games advertising covers all revenues generated from advertising on any games platform and access type, including in-game and console-dashboard advertising.
  • 21. PwC Page 21 of 45 Filmed entertainment Key insights at a glance  Global filmed entertainment revenues overall will continue to grow, generating revenues of more than US$106bn by 2017. Within that, revenues from the worldwide physical-home-video market in the forms of sales and rentals of DVDs and Blu-ray will be worth less than box office for the first time in 2014.  Despite China’s overtaking Japan in 2012 to become the world’s second- largest theatrical market, Asia Pacific will continue to provide the greatest opportunities for growth in filmed entertainment over the next five years. Most countries in Asia Pacific and Latin America are still relatively underscreened when it comes to cinemas, but new cinemas, notably in China, will create new audiences and drive overall growth. As Hollywood targets young audiences outside the US, local industries will respond and coproduction activity will thrive.  Connected consumers are in control. They expect to access the content they want, on the screen they want to use and at the time of their choosing. In response, the studios have become more willing than ever to try different business models for delivering their content and, as an important extra, to experiment with price points and offerings.  Over-the-top (OTT) services that deliver video over the Internet will continue to grow rapidly, generating revenues of US$17.4bn in 2017, up from US$5.2bn in 2012, a CAGR of 27%. Subscription and rental models, rather than ownership models, will continue to be the dominant consumer preferences.  Piracy, of both physical and digital content, will remain the greatest threat to the future of filmed entertainment. Outside North America and Western Europe in particular, the future will depend on the industry’s ability to counter the appeal of pirated content with better services of their own. New and innovative services along with education, enforcement and regulation will enable the industry to counter piracy.
  • 22. PwC Page 22 of 45 Country specific data and commentary available in the online Outlook for Filmed entertainment The insights for Filmed entertainment in this section are drawn from data found in the online Global entertainment and media outlook 2013-2017, which provides 5 year historic and 5 year forecast consumer and advertising spend data (spanning 2008 - 2017), for 13 industry segments across 50 countries. Get free access to the online Outlook 2013-2017 for individual country commentary and data for Filmed entertainment covering:  Box office spending (US$ m)  Admissions (m)  Average admission price (US$)  Electronic home video spending – over-the-top / streaming (US$ m)  Electronic home video spending – through TV subscription (US$ m)  Total electronic home video spending (US$ m) (total = OTT / streaming + through TV subscription)  Physical home video spending - rentals (US$ m)  Physical home video spending – sell through (US$ m)  Total physical home video spending (US$ m) (total = rentals + sell through)  Total home video spending (US$ m) (total = rentals + sell through + OTT / streaming + through TV subscription)  Cinema advertising (US$ m)  Total out-of-home (US$ m) (total = box office + cinema advertising)  Total filmed entertainment (US$ m) (total = out-of-home + home video) Segment definition This segment consists of both out-of-home and in-home metrics. Out-of-home covers consumer expenditure at the box office for theatrical motion pictures and advertising spend at the cinema including on-screen advertisements before the movie. Concession sales of beverages and refreshments in the theatre are not included. In-home includes both electronic and physical home video of films, TV programming and other content. Physical is split between rentals and sell-through and covers consumer spending. Rentals consider spending on rentals of videos at video stores and other retail outlets along with DVD-by-mail services. The purchase of physical-home-video products is included in the sell-through split, with all spend considered including retail and online. The electronic-home-video sub-segment considers spending on over-the-top (OTT)/streaming services (such as Netflix) whose filmed-entertainment content is accessed via a broadband or wireless Internet connection and is viewable on a PC, TV or other device that bypasses TV-subscription providers. Video-on-demand (VOD) and pay-per-view (PPV) through a TV-subscription provider are also counted in this section. It should be noted that VOD and PPV through a TV-subscription provider is also considered within the “TV subscriptions” segment. These figures are removed at total level to avoid double counting.
  • 23. PwC Page 23 of 45 Newspaper publishing Key insights at a glance  Global newspaper publishing revenues from sales and advertising were US$164bn in 2012, down from US$187bn in 2008. However, after a period of decline revenues will stabilise and remain at 2012 levels for the forecast period. Globally, continued expansion in growth markets will offset the longer-term declines in mature markets.  The Indian newspaper market will be the only one to grow at a double- digit CAGR (10%) by 2017 and will emerge as the world’s sixth-largest newspaper market by the end of the forecast period. A new middle-class readership in growth markets generally will boost the newspaper industry.  Monetisation will remain the most urgent priority for newspaper brands in mature markets. Even though readers have embraced digital platforms to access newspaper content, new measurement tools will be needed to grow ad revenues as newspapers deliver content across multiple platforms.  A long-term decline in newspaper advertising revenues means that circulation will represent an increasingly significant proportion of overall revenues. Free ad-supported newspapers will remain an important part of the landscape, but in mature markets, digital paywalls will become mainstream.  Digital will account for 11% of global newspaper revenues by 2017, up from 5% in 2012. But digitisation’s influence is greater than that share of revenues suggests: it is changing the definition of a newspaper. With print just one among a number of distribution channels, newspapers are becoming newspaper brands.
  • 24. PwC Page 24 of 45 Country specific data and commentary available in the online Outlook for Newspaper publishing The insights for Newspaper publishing in this section are drawn from data found in the online Global entertainment and media outlook 2013-2017, which provides 5 year historic and 5 year forecast consumer and advertising spend data (spanning 2008 - 2017), for 13 industry segments across 50 countries. Get free access to the online Outlook 2013-2017 for individual country commentary and data for Newspaper publishing covering:  Print newspaper advertising (US$ m)  Digital newspaper advertising (US$ m)  Total newspaper advertising (US$ m) (total = print + digital)  Print newspaper circulation spending (US$ m)  Digital newspaper circulation spending (US$ m)  Total newspaper circulation spending (US$m) (total = print + digital)  Total newspaper spending (US$ m) (total = circulation + advertising)  Average daily unit circulation print (000)  Average daily unit circulation digital (000)  Average daily unit circulation total (000) (print + digital)  Total paid daily unit circulation (000) (total = print + digital)  Free dailies newspaper circulation (000) Segment definition This segment considers advertising spend split by print and digital, with digital covering all advertising on newspaper websites and mobile device apps. Consumer spend on circulation is also measured and split by print (newsstand purchases and subscriptions) and digital (subscriptions and payments for newspapers delivered direct to mobile devices, including fees to access online content). The segment considers all daily newspapers including weekend editions issued by publishers of daily papers. Advertising in free daily newspapers is included, although free weeklies and other weekly papers are not included.
  • 25. PwC Page 25 of 45 Consumer magazine publishing Key insights at a glance  The global consumer magazine market is proving resilient, and at a global level, it will even see a modest recovery, rising in value from US$81.9bn in 2012 to reach US$83.3bn in 2017, a CAGR of less than 1%. It has declined over the past few years, but publishers are now responding to changing consumer demands, especially around digital content.  Digital revenue from both circulation and advertising will account for 16% of total magazine industry revenues by 2017, up from less than 9% in 2013. Digital advertising revenue will reach US$8.1bn in 2017, having increased by a CAGR of 12% from US$4.5bn in 2012.  In 2012, digital circulation revenue accounted for just 2% of total magazine circulation revenue but will reach 12% by 2017 as digital revenues rise on the back of increased smartphone and tablet adoption. Creating effective pricing strategies for digital content will be the major challenge for magazine publishers.  Although the US will continue dominating global magazine revenues, China, Brazil and South Africa—each of them at a 7% CAGR—are the world’s most notable growth markets. Although starting from a lower base, the fastest-growing markets are Nigeria and Kenya—each of them at 9% CAGR.  Publishers must focus on multiplatform brands, not just magazines. And indeed, many are now harnessing social media and online video to extend the appeal of their core content and engage more deeply with their readers.
  • 26. PwC Page 26 of 45 Country specific data and commentary available in the online Outlook for Consumer magazine publishing The insights for Consumer magazine publishing in this section are drawn from data found in the online Global entertainment and media outlook 2013-2017, which provides 5 year historic and 5 year forecast consumer and advertising spend data (spanning 2008 - 2017), for 13 industry segments across 50 countries. Get free access to the online Outlook 2013-2017 for individual country commentary and data for Consumer magazine publishing covering:  Print consumer magazine advertising (US$ m)  Digital consumer magazine advertising (US$ m)  Total consumer magazine advertising (US$ m) (total = print + digital)  Print consumer magazine circulation spending (US$ m)  Digital consumer magazine circulation spending (US$ m)  Total consumer magazine circulation spending (US$ m) (total = print + digital)  Total consumer magazine spending (US$ m) (total = circulation + advertising) Segment definition This segment considers advertising spend in both traditional print and online magazines – either direct through magazine websites or via magazines distributed directly to a mobile device. Magazines published under contract (customer magazines/contract or custom publishing) are included in the print advertising section. Consumer spending includes the circulation revenues and is split as spending by readers direct from retail outlets or via subscriptions in print and via downloads of individual copies or subscriptions delivered digitally direct to a mobile device. Licensing of merchandise is not included in this segment, and trade magazines are covered in the Business to Business segment.
  • 27. PwC Page 27 of 45 Business-to-business Key insights at a glance  The top three business-to-business (B2B) markets at the end of the forecast period will be the US, Germany and France. Of the top 10 markets, China and Russia will grow the fastest—each of them at a CAGR of 8%.  In 2013, a revolution in data collection techniques will influence the business information segment as traditional forms of market research become threatened by behavioural research and analytics via social media platforms. Meanwhile, buyers of research will consider the do-it-yourself route for research through better use of business intelligence.  Advertising revenues are stabilising as B2B and business-to-business-to- consumer advertising move to digital formats. The growth of digital is a key factor within this segment, and digital is expected to surpass print in the directories category in 2015. Digital revenues—consisting of digital advertising in trade directories and magazines, digital subscriptions to trade magazines and digital sales of professional books—will grow from US$7.4bn in 2008 to US$28.9bn in 2017. But the combined revenues of print and digital will fall by more than US$8.2bn from 2008 to 2017.  China’s trade show market will become the largest in Asia Pacific, and government support for the trade show sector in the Middle East, Russia and Brazil will create more competition for venues in Europe. The global trade show business will be worth in excess of US$36bn in 2017, up from US$29.4bn in 2012. The US, Germany, France, the UK and Japan will again be the key markets. However, China can expect to surpass the UK and Japan in 2014 to reach number four.
  • 28. PwC Page 28 of 45 Country specific data and commentary available in the online Outlook for Business-to-business The insights for Business-to-business in this section are drawn from data found in the online Global entertainment and media outlook 2013-2017, which provides 5 year historic and 5 year forecast consumer and advertising spend data (spanning 2008 - 2017), for 13 industry segments across 50 countries. Get free access to the online Outlook 2013-2017 for individual country commentary and data for Business-to-business covering:  Business information spending (US$ m)  Business information spending - financial (US$ m)  Business information spending - marketing (US$ m)  Business information spending - industry (US$ m)  Print directory advertising (US$ m)  Digital directory advertising (US$ m)  Total directory advertising (US$ m) (total = print + digital)  Print professional books spending (US$ m)  Electronic professional books spending (US$m)  Total professional books spending (US$ m) (print + electronic)  Total professional books spending (US$ m) (total = print + electronic)  Trade magazine print advertising (US$ m)  Trade magazine digital advertising (US$ m)  Trade magazine total advertising (US$ m) (total = print + digital)  Trade magazine print circulation (US$ m)  Trade magazine digital circulation (US$ m)  Trade magazine total circulation (US$ m) (total = print + digital)  Trade shows spending (US$ m)  Total business-to-business spending (US$ m) (total = business information spending + total directory advertising + total professional book spending + total trade magazine advertising + total trade magazine circulation spending + trade show spending) Segment definition The business-to-business market (B2B) comprises five segments: business information; trade shows; trade directories; trade magazines and professional books. Business information comprises: financial information such as securities, credit and economic information; marketing information which is used for selling products of services or monitoring sales such as surveys and research databases; and industry information such as data relating to market share, competitive intelligence regarding a specific industry (e.g., FMCG, telecommunications, energy, healthcare) Trade shows comprises spending by companies on exhibition space at trades shows; trade directories comprises spending on print and online directory advertising; trade magazines comprises circulation spending and print and digital advertising (online content and distribution to tablets and other mobile devices); and professional books comprises publications bought by an employer to ensure that staff knowledge is up to date.
  • 29. PwC Page 29 of 45 Internet advertising Key insights at a glance  Set to be worth more than US$185bn in 2017, Internet advertising will constitute 29% of the world’s total advertising market, making it the world’s second-largest medium for advertising, after TV.  Search remains the dominant form of online advertising globally despite that its share dropped by two percentage points to 41% in 2017 (moving increasingly towards mobile and video advertising). Where Google is not the market leader—such as in Japan and South Korea—search tends not to be the dominant online advertising format.  The display market is set to grow at a CAGR of 10% over the forecast period, reaching US$49.9bn in 2017. Advertisers will have to consider new ways they can best use display advertising. Some of the new approaches will include new advertising formats for mobile browsing, as well as a more sophisticated approach that targets the user’s specific location, as well as demographic and behavioural traits.  Classifieds will grow at a CAGR of 7%, reaching US$20.2bn in 2017. Online classifieds are set to take over from their print equivalents in developing economies in the next five years. However, this segment’s share of the total online ad market will be lower in 2017 than in 2012.  The online video-advertising market boomed in 2012, with an increase in annual revenue of approximately US$1bn, representing year-on-year growth of 33%. That growth is set to continue over the forecast period, with revenues reaching US$12bn in 2017, boosted by a 26% CAGR. Video will benefit from better targetting, technological improvements and a more sophisticated approach to pricing.  Mobile advertising is finally set to take off properly, with growth forecast across all regions over the next five years: a 27% CAGR will ensure mobile advertising revenues will be in excess of US$27bn in 2017, constituting 15% of Internet advertising revenues. Despite the projected growth, though, mobile must still seek to overcome certain hurdles, especially device segmentation.
  • 30. PwC Page 30 of 45 Country specific data and commentary available in the online Outlook for Internet advertising The insights for Internet advertising in this section are drawn from data found in the online Global entertainment and media outlook 2013-2017, which provides 5 year historic and 5 year forecast consumer and advertising spend data (spanning 2008 - 2017), for 13 industry segments across 50 countries. Get free access to the online Outlook 2013-2017 for individual country commentary and data for Internet advertising covering:  Total Internet advertising (US$ m)  Paid search Internet advertising (US$ m)  Display Internet advertising (US$ m)  Classified Internet advertising (US$ m)  Video Internet advertising (US$ m)  Mobile Internet advertising (US$ m)  Total wired Internet advertising (US$ m) (total = search + display + classified + video) Segment definition This segment is split as spending by advertisers either through a fixed-line connection or via mobile devices. The fixed-line categories consist of advertising via paid search, display, classified and video advertising. Display includes all banner, rich media, sponsorship, lead generation and e-mail related advertising. The mobile category includes all advertising delivered direct to mobile devices via formats designed for the specific device. To maintain consistency across all segments, the advertising revenues are shown as net revenues which exclude agency commissions and production costs where applicable. The Internet advertising segment also includes online television, digital newspaper and magazine advertising, digital directory advertising and online radio. These are also included in their respective segments but are eliminated at total advertising level to avoid any double counting.
  • 31. PwC Page 31 of 45 Consumer and educational book publishing Key insights at a glance  The total value of the consumer and educational book sectors combined will grow from US$101.6bn in 2012 to US$104.3bn in 2017, a CAGR of 1%. By 2017, electronic books, or e-books, will account for 22% of all book revenues globally, at US$22.7bn, up from 9% in 2012 and driven by the increased adoption of e-reading devices, including tablets. This will help offset flat or declining growth in printed books.  The fastest-growing markets for books will include both traditional markets in Europe and North America and the growth markets in Asia Pacific.  Digitisation—fuelled by widespread adoption of tablets and other e- reading devices—will prove a mixed blessing for the book industry in the near term, because although e-book sales will rise, physical bookstores will continue to close. This will spur further growth for online retailers of both physical and digital books, including new entrants from adjacent industries such as supermarkets and telcos.  The consumer book publishing market is ready for further consolidation. Most publishers are too small to negotiate successfully with retailers, so, in the near term, further mergers and acquisitions will create new, bigger entities. Traditional publishers can harness and integrate new trends such as self-publishing as they adapt their roles in the value chain.  With the growth in e-books, the industry must prioritise strategies for countering piracy, especially in emerging markets. One of the strategies will be to ensure supply of the right content at the right price on the right platforms to encourage readers to pay for legitimate content rather than seek out the pirated copy.
  • 32. PwC Page 32 of 45 Country specific data and commentary available in the online Outlook for Consumer and educational book publishing The insights for Consumer and educational book publishing in this section are drawn from data found in the online Global entertainment and media outlook 2013-2017, which provides 5 year historic and 5 year forecast consumer and advertising spend data (spanning 2008 - 2017), for 13 industry segments across 50 countries. Get free access to the online Outlook 2013-2017 for individual country commentary and data for Consumer and educational book publishing covering:  Consumer books print spending (US$ m)  Consumer books electronic spending (US$ m)  Total consumer books spending (US$ m) (total = print + electronic)  Educational books print spending (US$ m)  Educational books electronic spending (US$ m)  Total educational books spending (US$ m) (total = print + electronic)  Total consumer and educational books spending (US$ m) (total = print + electronic) Segment definition This segment is split between consumer and educational books and considers consumer spend in both electronic and print formats. Audio books are included under print books. The consumer books category covers spending by consumers for personal use. The educational books category considers spending by schools, government agencies and students. The US splits the market by elementary, high-school and college textbooks (including post-graduate textbooks), the only territory to do so. Books in electronic format, including library and institutional subscriptions to electronic book databases, are also included. Educational books do not include supplemental educational spending, administrative software or testing materials. Professional books are not included in this segment but are covered in the ‘Business to Business’ segment.
  • 33. PwC Page 33 of 45 Music Key insights at a glance  Globally, the music industry is getting back on track: total consumer spending on music in 2012 was US$49.9bn, a slight fall from 2011. However, annual revenue will start to grow again in 2013, reaching US$53.8mn in 2017, a CAGR of 2% over the forecast period.  The fastest growth will come from countries not traditionally the largest music markets, including Russia, Sweden, China and Brazil. India, with a CAGR of 14%, will be the fastest growing. The expansion of music- streaming services will drive growth among smartphone users.  Digital-music revenues will exceed physical revenues by 2016, demonstrating the importance of digital to the industry. Widespread access to broadband and smartphones will encourage further growth in music subscription services, although there will be no uniformity in the way digital markets will evolve.  The challenges of the licensing of content for multiple territories will hinder the growth of services across multiple territories, notably in Europe. Active intervention will be required to ensure new and flexible licensing deals can be struck.  Live music is continuing to grow, with sales of tickets and sponsorship forecast to generate revenues of US$30.9bn in 2017, up from US$26.5bn in 2012, a CAGR of 3%. That growth will more than offset the continued decline in recorded music revenues.
  • 34. PwC Page 34 of 45 Country specific data and commentary available in the online Outlook for Music The insights for Music in this section are drawn from data found in the online Global entertainment and media outlook 2013-2017, which provides 5 year historic and 5 year forecast consumer and advertising spend data (spanning 2008 - 2017), for 13 industry segments across 50 countries. Get free access to the online Outlook 2013-2017 for individual country commentary and data for Music covering:  Physical recorded music spending (US$ m)  Digital recorded music spending (US$ m)  Total recorded music spending (US$ m) (total = physical + digital)  Concerts / music festival spending (US$ m)  Total music spending (US$ m) (total = physical recorded music + digital recorded music + concerts / music festivals)  Physical music unit sales (m)  Digital music unit sales (m)  Total music unit sales (m) (physical recorded unit sales + digital recorded unit sales) Segment definition This segment is split as recorded music vs. live music played at concerts and considers consumer spend on music. The recorded-music component is split into physical and digital elements. Physical will cover any retail or online purchase of albums, single sound recordings and music videos. Digital consists of any music distributed digitally to mobile devices and computers and includes any music downloaded via app stores or licensed services. Revenue from subscription and advertiser-supported streaming services is also included. All consumer spend is measured at retail level, which can be substantially higher than the wholesale or trade value revenue often reported. The recorded-music market does not consider subscription fees paid to satellite radio providers in North America or any advertising generated by Internet radio services / music publishing. For concerts, consumer spend on tickets is included along with sponsorship revenue. Merchandise is not included within this estimate
  • 35. Social Media Messaging Twitter  Launches today: PwC's Global Entertainment & Media Outlook: 2013-2017 http://pwc.to/19CMLtO #pwcoutlook  Constant digital #innovation: the new licence to operate for entertainment & media businesses http://pwc.to/134kt6u #pwcoutlook  Entertainment and media businesses: raising their game in agility and customer insight http://pwc.to/134kt6u #pwcoutlook  #Consumers are increasingly in control, but increasingly confused http://pwc.to/134kt6u #pwcoutlook  Multi-platform analytics drive advertiser insights into the connected #consumer http://pwc.to/134kt6u #pwcoutlook  Digital distributors must deliver right content at right time, on right platform & at right price http://pwc.to/134kt6u #pwcoutlook  To stay relevant, #content creators must innovate in their products & the ways they deliver them http://pwc.to/134kt6u #pwcoutlook  #Mobile will overtake fixed Internet access spend in 2014 http://pwc.to/134kMhJ #pwcoutlook  #Mobile Internet spend expected to exceed fixed spend in US in 2013 and UK in 2015 http://pwc.to/134kMhJ #pwcoutlook  #Digital entertainment & media revenues to account for 47% of total in 2017, up from 35% in 2012 http://pwc.to/134kMhJ #pwcoutlook  #Share of consumer entertainment & media spend will shift from content to Internet access http://pwc.to/134kMhJ #pwcoutlook  #Consumer spend on physical e&m purchases to drop from 73% of total spend today to 53% in 2017 http://pwc.to/134kMhJ #pwcoutlook PwC Page 35 of 45  Brazil to surpass UK, Canada and India in 2013 to become the third-largest #TV market by 2017 http://pwc.to/19FrXlD #pwcoutlook  Online TV #advertising revenues will treble from 2012 to 2017. Find out more. http://pwc.to/134lSKm #pwcoutlook  Penetration of #mobile-Internet will reach 54% by 2017 compared with 51% for fixed-broadband http://pwc.to/19FsnIB #pwcoutlook
  • 36. PwC Page 36 of 45  #Digital will account for 11% of global newspaper revenues by 2017, up from 5% in 2012 http://pwc.to/134npzP #pwcoutlook  After period of decline, the #consumer magazine market will see a modest recovery http://pwc.to/134nJyP #pwcoutlook  In B2B market #digital revenues are expected to surpass print in the directories category in 2015 http://pwc.to/134o3NZ #pwcoutlook  Mobile advertising takes off and will account for 15% total internet advertising revenues in 2017 http://pwc.to/19FtSqh #pwcoutlook  By 2017 #e-books will account for 22% of all book revenues globally up from 9% in 2012 http://pwc.to/19Fu2hm #pwcoutlook  Global music #revenues will start to grow again in 2013, reaching US$53.8mn in 2017 http://pwc.to/134oYhk #pwcoutlook Facebbook/Linked In  Launches today: PwC's Global Entertainment & Media Outlook: 2013-2017. Find out more in PwC’s Global E&M Outlook http://pwc.to/19CMLtO  Constant digital innovation: the new licence to operate for entertainment & media businesses. Find out more in PwC’s Global E&M Outlook http://pwc.to/134kt6u  Entertainment and media businesses: raising their game in agility & customer insight. Find out more in PwC’s Global E&M Outlook http://pwc.to/134kt6u  Consumers are increasingly in control, but increasingly confused. Find out more in PwC’s Global E&M Outlook http://pwc.to/134kt6u  Multi-platform analytics drive advertiser insights into the connected consumer. Find out more in PwC’s Global E&M Outlook http://pwc.to/134kt6u  Digital distributors must deliver the right content at the right time, on the right platform & at the right price. Find out more in PwC’s Global E&M Outlook http://pwc.to/134kt6u  What must content creators do to stay relevant? Innovate their products & how they deliver them. Find out more in PwC’s Global E&M Outlook http://pwc.to/134kt6u  How is spend shifting in consumer entertainment & media? From content to Internet access. Find out more in PwC’s Global E&M Outlook http://pwc.to/134kMhJ  South Africa will overtake UK in 2015 to become 7th largest radio advertising market http://pwc.to/19FsxzR #pwcoutlook  After period of decline out-of-home #advertising spend will grow from US$33.8bn (2012) to US$42.8bn (2017) http://pwc.to/134mzDp #pwcoutlook  #Mobile will be the fastest-growing video games sector over next five years. Find out more. http://pwc.to/134mUFX #pwcoutlook  #Revenues from physical-home-video will be worth less than box office for first time in 2014 http://pwc.to/134n9B7 #pwcoutlook
  • 37. PwC Page 37 of 45  Online TV advertising revenues set to treble from 2012 to 2017. Find out more in PwC’s Global E&M Outlook. http://pwc.to/134lSKm  Penetration of mobile-Internet will reach 54% by 2017 compared with 51% for fixed-broadband. Find out more in PwC’s Global E&M Outlook http://pwc.to/19FsnIB  Who will South Africa overtake in 2015 to become 7th largest radio advertising market? The UK. Find out more in PwC’s Global E&M Outlook http://pwc.to/19FsxzR  After a period of decline out-of-home advertising spend will grow from US$33.8bn (2012) to US$42.8bn (2017). Find out more in PwC’s Global E&M Outlook http://pwc.to/134mzDp  Mobile will be the fastest-growing video games sector over the next five years. Find out more in PwC’s Global E&M Outlook http://pwc.to/134mUFX  For the first time ever, revenues from physical-home-video will be worth less than box office in 2014. Find out more in PwC’s Global E&M Outlook http://pwc.to/134n9B7  Digital will account for 11% of global newspaper revenues by 2017, up from 5% in 2012. Find out more in PwC’s Global E&M Outlook http://pwc.to/134npzP  PwC's Global E&M Outlook reveals that, after a period of decline, the consumer magazine market will see a modest recovery http://pwc.to/134nJyP  In the B2B market digital revenues are expected to surpass print in the directories category in 2015. Find out more in PwC’s Global E&M Outlook http://pwc.to/134o3NZ  Mobile advertising is taking off and will account for 15% of total Internet advertising revenues in 2017. Find out more in PwC’s Global E&M Outlook http://pwc.to/19FtSqh  By 2017 e-books will account for 22% of all book revenues globally. Find out more in PwC’s Global E&M Outlook http://pwc.to/19Fu2hm  Global music revenues will start to grow again in 2013, reaching US$53.8mn in 2017. Find out more in PwC’s Global E&M Outlook http://pwc.to/134oYhk  Mobile Internet spend expected to exceed fixed spend in US in 2013 and UK in 2015. Find out more in PwC’s Global E&M Outlook http://pwc.to/134kMhJ  Digital entertainment & media revenues to account for 47% total revenues in 2017, up from 35% in 2012. Find out more in PwC’s Global E&M Outlook http://pwc.to/134kMhJ  Who’s set to surpass UK, Canada and India to become 3rd largest TV market by 2017? Brazil. Find out more in PwC’s Global E&M Outlook http://pwc.to/19FrXlD  Mobile or fixed? Mobile will overtake fixed Internet access spend in 2014. Find out more in PwC’s E&M Outlook http://pwc.to/134kMhJ
  • 38. PwC Page 38 of 45 Access to the Global entertainment and media outlook 2013-2017 Instant online access to comprehensive consumer and advertising spend data Each year, PwC’s global team of entertainment and media experts generate unbiased and in-depth 5 year historic and 5 year forecast consumer and advertising spend data and commentary for 13 industry segments and 50 countries around the world. It also provides analysis and commentary at an individual country level. Explore the industry  Consumer and advertising data for 13 segments across 50 countries  5 year forecast and 5 year historical data  Individual segments commentary for 50 countries  Drill down and compare data across segments, components and countries  View year-on-year growth for every data line  Filter data by digital and nondigital spend  Filter data by consumer and advertising spend  Touch-enabled interface for tablets and smart phones Customise your datasets  Build bespoke data selections, save for future use, and export to Excel and pdf  Create customised bar charts, pie charts and line graphs instantly, and export charts for use in reports and presentations  View data in local currency Free access to journalists For journalists wanting industry data for articles you can gain free access to the online Outlook. Please contact Katrina Jahnke at katrina.e.jahnke@uk.pwc.com Or for more information visit www.pwc.com/outlook
  • 39. Online Global entertainment and media outlook 2013–2017: A guided tour The online Outlook provides 5 year historic and 5 year forecast consumer and advertising spend data for 13 industry segments across 50 countries. It combines comprehensive spending data with intuitive online functionality, allowing data to be easily manipulated and presented to support business decisions. And the enhanced search and charting functionality makes it easy to compare and contrast spend data and growth rates across all countries and segments. For a snapshot of the data and commentary available online and how they can be searched, manipulated and presented, take the tour! www.pwc.com/outlook Browse consumer and advertising spend data for 13 segments... Online Outlook allows subscribers to access comprehensive advertising and consumer data for 13 industry segments: TV subscriptions and licence fees, TV advertising, Internet access, Radio, Out-of-home advertising, Video games, Filmed entertainment, Newspaper publishing, Consumer magazine publishing, Business-to-business, Internet advertising, Consumer and educational book publishing and Music. ...and filter data by individual subcomponents for each segment For each of the 13 segments it is also possible to break down the spend data into revenue and nonrevenue subcomponents. Consumer magazine publishing, for example, can be broken down by print advertising spend, digital advertising spend, print circulation and digital circulation. Explore and compare industry data PwC Page 39 of 45
  • 40. Browse consumer and advertising spend data for 50 countries Advertising and consumer spend data is available for every segment at an individual country level. There is data for 50 countries including many emerging and developed markets in the entertainment and media industry. Calculate year-on-year growth for all 13 segments across 50 countries... Alongside the consumer and advertising spend data, annual year-on-year growth rates and compound annual growth rates (CAGR) are also calculated for all segments across all countries. Filter spend data by digital and nondigital Consumer and advertising data can be broken down by digital and nondigital spend for all 13 segments (where applicable) in order to understand to what extent spend is shifting from one to the other. PwC Page 40 of 45
  • 41. ...with 5 year historic and 5 year forecast spend data All historic and forecast data is presented covering a 10 year period from 2008 to 2017; 5 year historic and 5 year forecast. ...and by region or country Compare spend by geography—at a regional and country level—for each of the segments and individual-segment subcomponents, thereby creating simple or complex searches and data sets by using the create-your-own-data- set tool. Create bespoke searches comparing spending data by segment... The intuitive search functionality means it is easy to compare and contrast consumer and advertising spending across countries and segments and drill down into the detail, searching by individual revenue and nonrevenue . Customise data by using the enhanced functionality PwC Page 41 of 45
  • 42. ...and export to include in presentations and reports All data tables, bar graphs, line graphs and pie charts can be exported to PDF or Excel, making it simple to create tailored charts and graphs to drop into presentations. Create bespoke bar charts, line graphs and pie charts instantly... As well as creating bespoke data sets, subscribers can create professional-looking charts and graphs on-screen at the click of a button. Convert spending data into local currency To ensure relevance at the local level, data can be viewed in 37 different local currencies. PwC Page 42 of 45
  • 43. Save bespoke searches and data sets for future reference The my-saved-data tool saves all bespoke data sets for future use so the data is not lost. Read segment commentary for 50 countries, not available in Outlook insights For 50 countries there is individual commentary on each of the 13 segments. For the US, for example, there are 2,000 words of of commentary for every segment. The only place to find country commentary for every segment across 50 countries is the online Outlook. Read commentary for every segment at global, regional and country levels As well as spend data for every segment there is also commentary, which talks to the numbers. For every segment there is commentary on global and regional drivers of growth and forecast growth and individual-country commentary for 50 countries. Read segment and country commentary PwC Page 43 of 45
  • 44. Individual and corporate level access to the online Global entertainment and media outlook 2013–2017 Whether you are looking to access the full data and commentary for 13 industry segments or prefer to subscribe to individual segments and need access across either your organisation or for a single- user only, there are tailored subscription options available. • Single-user licence with full access to all data and commentary for 13 industry segments and 50 countries • Single-user licence with access to all data and commentary for 50 countries for individually selected industry segments • Multi-user licence company wide access to all data and commentary for 13 segments and 50 countries Subscribe to the online Outlook at www.pwc.com/outlook Access data and commentary via smart devices with touch- enabled interface Online Outlook is touch-screen enabled, meaning all data, commentary and functionality can be accessed using smart devices such as tablets and smartphones. PwC Page 44 of 45
  • 45. PwC Page 45 of 45 www.pwc.com/outlook