www.pwc.com/outlook                      Global entertainment                      and media outlook                      ...
Global entertainment                      and media outlook                      2012–2016                      Industry o...
Global entertainment and media outlook: 2012–2016Prepared and edited by:PwC firms help organizations and individuals      ...
Contents: Industry overviewLetter from Global Leader, Entertainment & Media .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  ....
Letter from Global Leader, Entertainment & Media                                          June 2012                       ...
PwC Entertainment & Media Practice—country contactsGlobal                                                   Marcel Fenez  ...
Asia PacificAustralia                                    David Wiadrowski                   david.wiadrowski@au.pwc.comChi...
Scope and methodology          Scope	8          Methodology	9
Scope                                                        The Outlook reflects the collective wisdom of our large team ...
MethodologyHow we derive the data                       Forecast information                                        How we...
Exchange rates                                  are not distorted by fluctuations in                                      ...
Because all figures are shown as actual   and media spending. The followingspending, with the effects of inflation   table...
Nominal GDP growth by country in EMEA (%)                                                                                 ...
Nominal GDP growth by country in Asia Pacific (%)                                                                         ...
Global nominal GDP growth (%)                                                                                             ...
Consumer price inflation by country in EMEA (%)                                                                           ...
Consumer price inflation by country in Asia Pacific (%)                                                                   ...
Viewpoint            Preface and economic context	        18            The end of the digital beginning:            E&M c...
Preface and economic context                                            We are pleased to present the 13th edition of PwC’...
Projected and actual global 2011 E&M growth by category (%)    Category                                              Proje...
In the 2011–15 Outlook, we pre-                      On a segment basis, in addition to          floor may exist in terms ...
Looking forward                             Over the longer run, we expect the         E&M spending is affected by the    ...
The end of the digital beginning:E&M companies reshape andretool for life in the new normal                               ...
Looking beyond the                             …to map out the industry’s                 •	 For the industry: Development...
1. Understanding the connected consumerAny discussion or analysis of what’s             2011, which will rise to 55 percen...
Online gaming: the connected shape of things to comeA useful historical parallel for the connected and socialized future m...
The medium formerly                          …and turning the second                      analog TV in the living room put...
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
Global Media and Entertainment 2012 - 2016 Industry Overview by PwC
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Global Media and Entertainment 2012 - 2016 Industry Overview by PwC

  1. 1. www.pwc.com/outlook Global entertainment and media outlook 2012–2016 Industry overview13th annual editionJune 2012
  2. 2. Global entertainment and media outlook 2012–2016 Industry overview13th annual edition Each year, PwC’s global team of entertainment and media experts generates unbiased, in-depth forecasts for 13 industry segments.June 2012 Incorporating data from 4 principal regions comprising 48 countries and areas around the world, Global entertainment and media outlook: 2012–2016 combines deep knowledge of local markets with a truly global perspective—a powerful tool for understanding critical business issues. To learn more about the challenges and opportunities ahead for the entertainment and media industry, please visit pwc.com/e&m
  3. 3. Global entertainment and media outlook: 2012–2016Prepared and edited by:PwC firms help organizations and individuals Use of Outlook data Permission to citecreate the value they are looking for. We are a This document is provided by PwC for general No part of this publication may be excerpted,network of firms in 158 countries with close to guidance only and does not constitute the reproduced, stored in a retrieval system, or169,000 people who are committed to delivering provision of legal advice, accounting services, distributed or transmitted in any form or byquality in assurance, tax and advisory services. investment advice, or professional consulting any means—including electronic, mechanical, of any kind. The information provided photocopying, recording, or scanning—without300 Madison Avenue herein should not be used as a substitute for the prior written permission of PwC.New York, NY 10017 consultation with professional tax, accounting,+1-646-471-4000 Requests should be submitted in writing to legal, or other competent advisers. Beforewww.pwc.com Radhika Nanda at radhika.nanda@uk.pwc.com making any decision or taking any action, you outlining the excerpts you wish to use, along should consult a professional adviser who has with a draft copy of the full report that theAuthored by: been provided with all pertinent facts relevant excerpts will appear in. Provision of this to your particular situation.Wilkofsky Gruen Associates Inc., a provider of global information is necessary for every citationresearch and analysis of the media, entertainment, The information is provided as is, with no request to enable PwC to assess the context inand telecommunications industries. assurance or guarantee of completeness, which the excerpts are being presented.www.wilkofskygruen.com accuracy, or timeliness of the information Without limiting the foregoing, and without warranty of any kind, express excerpts from the publication may or implied, including but not limited toOutlook editorial board: warranties of performance, merchantability, be used only for background market illustration, should not be the soleFor the PwC Entertainment & and fitness for a particular purpose. source of 2012-2016 information,Media Practice: Outlook content must not be excerpted, used, and must not form the majority of or presented in any portion that would render sourced information.Deborah Bothun, Principal it misleading in any manner or that fails toJames DePonte, Partner provide sufficient context.Sean DeWinter, PartnerMarcel Fenez, Global Leader, Entertainment & MediaNick George, PartnerStefanie Kane, Partner © 2012 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its memberAlexandra Maclean, Global E&M Marketing Manager firms, each of which is also a separate legal entity. Please see www.pwc.com/structure for furtherRadhika Nanda, Global E&M Marketing Executive details. AT-12-0120Pauline Orchard, Global E&M Marketing LeaderKenneth Sharkey, Partner Global entertainment and media outlook is a trademark owned by PricewaterhouseCoopers LLP.Phil Stokes, Partner ISBN 978-1-931684-27-9Many other professionals from the PwC Global entertainment and media outlook: 2012–2016, Industry overviewEntertainment & Media Practice reviewedand added local expertise to this publication. ISBN 978-1-931684-25-5 Global entertainment and media outlook: 2012–2016For Wilkofsky Gruen Associates Inc.:David Wilkofsky, PartnerArthur Gruen, PartnerNorman D. Eisenberg, Vice President2 PwC | Global entertainment and media outlook: 2012–2016
  4. 4. Contents: Industry overviewLetter from Global Leader, Entertainment & Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4PwC Entertainment & Media Practice—country contacts . . . . . . . . . . . . . . . . . . . . . . . . . . 5Scope and methodologyScope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9ViewpointPreface and economic context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18The end of the digital beginning:E&M companies reshape andretool for life in the new normal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Summaries by segment and regionGlobal industry summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48Global market by segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57Global market by region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63Index of tables and charts . . . . . . . . . . . . . . . . . . . . 91 This Industry Overview contains a top-line summary of industry data, along with PwC’s viewpoint about industry trends. It does not approach the depth or granularity of the full Outlook content, which provides more than 100,000 data points and in-depth commentary for the 13 segments and 48 countries and areas covered. For access to full data sets and commentary, visit the online Outlook at www.pwc.com/outlook Industry overview 3
  5. 5. Letter from Global Leader, Entertainment & Media June 2012 To our clients and friends both in and beyond the entertainment and media industry: Welcome to the 13th annual edition of PwC’s Global entertainment and media outlook, covering the forecast period 2012–2016. Our forecasts and analyses for this edition focus on 13 major entertainment and media (E&M) industry segments. To reflect the ever-changing nature of the industry, as well as the continuing growth of digital revenue streams, we continue seeking out new data sources and have again increased the depth of data across the 48 countries and areas covered in the Outlook. Given those increases in the depth and breadth of our content, you will now find certain of the data sets in the online Outlook only. I encourage you to get to know the online edition of the Outlook, which offers significant additional functionality and flexibility for the user of the underlying data and which includes additional territory-specific content. During 2011, both advertising spending and, to a lesser extent, consumer/end-user spending grew as overall economic activity and demand for high-quality content increased. Proliferation in the usage of smart mobile devices has enabled the convenience of consumption of content anywhere and anytime to become a reality. In the near term, economic prospects are mixed but should improve and lead to growth in the sector. However, we anticipate that overall growth in the E&M industry will lag nominal GDP growth due to an ongoing consumption shift to lower-priced digital distribution. Although rates of growth in China and India show some signs of moderating, those markets—as well as other fast-growing markets in Asia and Latin America—are the engines of global growth. The initial uncertainty of digital migration is giving way to a sharper focus on identifying and executing the business models, organizational structures, and skill sets that will deliver rising future value in the changed environment. Put simply, digital is now established as the new normal. The relative availability and affordability of fixed and mobile broadband in different markets set the pace of consumer adoption of digital. And as a consequence, some markets will continue to see differing growth patterns. Understanding how consumer behavior is changing and interpreting the mass of data that is being gathered about consumer preferences are becoming core skills and are providing the basis for monetization either directly or through collaboration and partnering with others. This is just one example of the areas where sources of value are changing. All of us at PwC continue to stay on top of trends and developments that may impact your business now and in the future, and we look forward to further sharing our thoughts with you. We appreciate your feedback and ask that you in turn continue telling us what we can do to make the Outlook more useful to you. For additional clarification on any matters included in the Outlook or if we can be of service to your business in any way, either contact one of the PwC E&M professionals listed on pages 5 and 6 or visit our Web site (www.pwc.com/e&m) for details of the contact in your territory. Finally, we thank you for your support and wish you an exciting and rewarding year ahead. Sincerely, Marcel Fenez Global Leader Entertainment & Media 4 PwC | Global entertainment and media outlook: 2012–2016
  6. 6. PwC Entertainment & Media Practice—country contactsGlobal Marcel Fenez marcel.fenez@hk.pwc.comNorth AmericaCanada Tracey Jennings tracey.l.jennings@ca.pwc.comUnited States Kenneth Sharkey kenneth.j.sharkey@us.pwc.comEMEAWestern EuropeAustria Bernd Hoffman bernd.hoffman@at.pwc.comBelgium Eddy Dams eddy.dams@be.pwc.comDenmark John Gabriel Sørensen john.gabriel.sorensen@dk.pwc.comFinland Harri Valkonen harri.valkonen@fi.pwc.comFrance Matthieu Aubusson de Cavarlay matthieu.aubusson@fr.pwc.comGermany Werner Ballhaus werner.ballhaus@de.pwc.comGreece Dinos Michalatos dinos.michalatos@gr.pwc.comIreland Paul O’Connor paul.w.oconnor@ie.pwc.comItaly Andrea Samaja andrea.samaja@it.pwc.comNetherlands Ennel van Eeden ennel.van.eeden@nl.pwc.comNorway Eivind Nilsen eivind.nilsen@no.pwc.comPortugal José Vitorino jose.vitorino@pt.pwc.comSpain Virginia Arce virginia.arce@es.pwc.comSweden Nicklas Kullberg nicklas.kullberg@se.pwc.comSwitzerland Patrick Balkanyi patrick.balkanyi@ch.pwc.comUnited Kingdom Phil Stokes phil.stokes@uk.pwc.comCentral and Eastern EuropeCzech Republic Jiri Moser jiri.moser@cz.pwc.comHungary Manfred Krawietz manfred.h.krawietz@hu.pwc.comPoland Adam Krason adam.krason@pl.pwc.comRomania John Webster john.webster@ro.pwc.comRussia Natalia Yakovleva natalia.yakovleva@ru.pwc.comTurkey Murat Colakoglu murat.colakoglu@tr.pwc.comMiddle East/AfricaIsrael Eran Iohan eran.iohan@il.pwc.comMiddle East/North Africa † Fouad Alaeddin fouad.alaeddin@jo.pwc.comSouth Africa Vicky Myburgh vicky.myburgh@za.pwc.com†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, and the United Arab Emirates. Industry overview 5
  7. 7. Asia PacificAustralia David Wiadrowski david.wiadrowski@au.pwc.comChina Marcel Fenez marcel.fenez@hk.pwc.comHong Kong Marcel Fenez marcel.fenez@hk.pwc.comIndia Timmy Kandhari timmy.s.kandhari@in.pwc.comIndonesia Chrisna Wardhana chrisna.wardhana@id.pwc.comJapan Akihiko Nakamura akihiko.nakamura@jp.pwc.comKorea Hum-Seok Park hum-seok.park@kr.pwc.comMalaysia Neil Proudlove neil.proudlove@my.pwc.comNew Zealand Keren Blakey keren.blakey@nz.pwc.comPakistan Sohail Hasan sohail.hasan@pk.pwc.comPhilippines Mary Jade T. Roxas jade.roxas@ph.pwc.comSingapore Charlotte Hsu charlotte.hsu@sg.pwc.comTaiwan Han Wu han.wu@tw.pwc.comThailand Kajornkiet Aroonpirodkul kajornkiet.aroonpirodkul@th.pwc.comVietnam Ian Lydall ian.lydall@vn.pwc.comLatin AmericaArgentina Jesús Estevéz jesus.estevez@ar.pwc.comBrazil Estela Vieira estela.vieira@br.pwc.comChile Rafael Ruano rafael.ruano@cl.pwc.comColombia Diego Henao diego.henao@co.pwc.comMexico Luis Roberto Martínez del Barrio luis.roberto.martinez@mx.pwc.comVenezuela Estela Vieira estela.vieira@br.pwc.com6 PwC | Global entertainment and media outlook: 2012–2016
  8. 8. Scope and methodology Scope 8 Methodology 9
  9. 9. Scope The Outlook reflects the collective wisdom of our large team of professionals who work with entertainment and media companies around the world. It is a unique resource for the industry, offering a five-year outlook for global consumer spending and advertising revenues, along with insights into the technology, government, political, and business trends driving those forecasts.New additions to the 2012 home distribution through pay TV Categories coveredOutlook providers and also for over-the-top content accessed via the Internet. • Internet access spending:There are a number of data breakouts wired and mobile Because video-on-demand and pay-per-included in this year’s Outlook that view are major components of electronic • Internet advertising:were not provided in the past. We have home video distribution, we are now wired and mobileadded trade shows to the “Business- including those revenue streams into-Business” chapter, and concerts and • Television subscriptions “Filmed Entertainment.” And becausemusic festivals to the “Recorded Music” and license fees “Television Subscriptions and Licensechapter, which we renamed “Music.” Fees” focuses principally on distribution, • Television advertisingAlso in “Music,” we are providing data we shifted to “Filmed Entertainment”for unit sales of both physical and • Music video-on-demand and pay-per-view todigital recorded music, available in the reflect payments for content. • Filmed entertainmentonline edition. In “Consumer MagazinePublishing,” we are providing per-issue • Video gamesunit sales for print circulation andpaid unit sales for digital circulation, • Radioalso available in the online edition. • Out-of-home advertisingIn “Filmed Entertainment,” we areproviding revenue data for electronic • Consumer magazine publishing • Newspaper publishing • Consumer and educational book  publishing • Business-to-businessRegions/countries coveredNorth America EMEA Asia Pacific Latin AmericaCanada Western Europe Central and Eastern Europe Australia ArgentinaUnited States Austria Czech Republic China Brazil Belgium Hungary Hong Kong Chile Denmark Poland India Colombia Finland Romania Indonesia Mexico France Russia Japan Venezuela Germany Turkey Malaysia Greece New Zealand Ireland Middle East/Africa Pakistan Italy Israel Philippines Netherlands Middle East/North Africa (MENA)† Singapore Norway South Africa South Korea Portugal Taiwan Spain Thailand Sweden Vietnam Switzerland United Kingdom†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, and the United Arab Emirates.8 PwC | Global entertainment and media outlook: 2012–2016
  10. 10. MethodologyHow we derive the data Forecast information How we report the data Recent trends in industry performance in each chapterHistorical information are analyzed, and the factors underlying Segment spending consists of those trends are identified. advertising and end-user spendingHistorical information is obtained The factors considered are economic, related directly to entertainmentprincipally from confidential and demographic, technological, and media content. Each chapterproprietary sources. In instances when institutional, behavioral, and introduction begins with a definition ofthird-party sources are consulted and competitive, as well as certain other the spending streams that are includedtheir information is used directly— drivers that may affect each of the in that segment. We do not includefrom such sources as government entertainment and media markets. spending on hardware or on servicesagencies, trade associations, or related that may be needed to access content.entities that seek to have their data Models are then developed to quantifydisseminated in the public domain— the impact of each factor on industry End-user spending is counted at thethe sources of such information are spending. Next, a forecast scenario for consumer or end-user level, not at theexplicitly cited. In instances when the each causative factor is created, and wholesale level, and includes retailinformation is used indirectly, as part of the contribution of each factor on a markups when applicable.the calculus for the historical data, the prospective basis is identified. Advertising spending is measured netsources are proprietary. Those proprietary mathematical models of agency commissions in all territoriesEach year, we look not only at data for and analytic algorithms are applied in except the United States and Russia,the most recent year but also at the the process to provide an initial array where gross advertising is measured tohistorical data to determine whether of prospective values. Our professional be consistent with the way advertisingthere have been any revisions and expertise and institutional knowledge is generally reported.whether new sources have emerged are then brought to bear in a review and In addition to annual-spending figures,that provide a more complete or more adjustment of those values if required. we also present data that are measuredaccurate picture of the market. In some The entire process is then examined for at a single point in time, such as TVcases, that exercise leads us to revise internal consistency and transparency subscriptions, Internet subscriptions,historical spending levels and growth vis-à-vis prevailing industry wisdom. mobile subscriptions, and newspapertrends from one edition to the next. Forecasts for 2012–2016 are also unit circulation. In those instances, based on analysis of the dynamics of we show annual averages rather than each segment in each region and on year-end totals because annual averages factors that affect those dynamics. We more accurately connect the impact of provide compound annual growth rates these figures to annual spending. (CAGRs) that cover the 2012–2016 forecast period. In the calculation of Inflation CAGRs, 2011 is the beginning year, with five growth years during the forecast Across all chapters, figures are reported period: 2012, 2013, 2014, 2015, in nominal terms reflecting actual and 2016. The end year is 2016. The spending transactions and therefore formula is: include the effects of inflation. CAGR = 100 * [(Value in 2016/Value in 2011)1/5 – 1] Key to symbols used in the tables and charts p = preliminary NA = not available — = no spending that year Totals in tables and charts may not total arithmetically due to rounding. Industry overview | Methodology 9
  11. 11. Exchange rates are not distorted by fluctuations in international exchange rates.All figures are presented in US dollarsby using the average 2011 exchange The exchange rates used for therate held constant for each historical individual countries in each region areyear and forecast year. This means outlined in the following tables.the figures reflect industry trends andExchange rates per US$ (2011 average) Exchange rates per US$ (2011 average)North America Currency Exchange rate EMEA Currency Exchange rateUnited States Dollar 1.0000 Western EuropeCanada Dollar 0.9888 Austria Euro 0.7188 Belgium Euro 0.7188Exchange rates per US$ (2011 average) Denmark Krone 5.3552 Finland Euro 0.7188Asia Pacific Currency Exchange rate France Euro 0.7188Australia Dollar 0.9687 Germany Euro 0.7188China Yuan (renminbi) 6.4544 Greece Euro 0.7188Hong Kong Dollar 7.7839 Ireland Euro 0.7188India Rupee 46.8466 Italy Euro 0.7188Indonesia Rupiah 8,779.0000 Netherlands Euro 0.7188Japan Yen 79.7000 Norway Kroner 5.6008Malaysia Ringgit 3.0528 Portugal Euro 0.7188New Zealand Dollar 1.2629 Spain Euro 0.7188Pakistan Rupee 85.6576 Sweden Krona 6.4873Philippines Peso 43.1844 Switzerland Franc 0.8866Singapore Dollar 1.2567 United Kingdom Pound sterling 0.6235South Korea Won 1,105.7300 Central and Eastern EuropeTaiwan Dollar 29.2632 Czech Republic Koruna 17.6870Thailand Baht 30.4944 Hungary Forint 200.6790Vietnam Dong 20,453.6000 Poland Zloty 2.9585 Romania New lei 3.0446Exchange rates per US$ (2011 average) Russia Ruble 29.3303 Turkey New lira 1.6774Latin America Currency Exchange rate Middle East/AfricaArgentina Peso 4.1213 Israel New shekel 3.5603Brazil Real 1.6698 Middle East/NorthChile Peso 481.5800 Africa (MENA)† US dollar 1.0000Colombia Peso 1,827.4900 South Africa Rand 7.2313Mexico Peso 12.4183 †Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, and the United Arab Emirates.Venezuela Bolivar fuerte 4.2897 Figures are estimated in US dollars. 10 PwC | Global entertainment and media outlook: 2012–2016
  12. 12. Because all figures are shown as actual and media spending. The followingspending, with the effects of inflation tables show historical and projectedincluded, nominal GDP growth has an growth rates for nominal GDP for theimportant influence on entertainment individual countries in each region.Nominal GDP growth by country in North America (%) 2012–16North America 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016 CAGRUnited States 4.9 2.2 –1.7 3.8 4.5 4.0 4.4 5.1 5.2 5.1 4.8Canada 6.4 4.6 –4.7 4.9 5.0 4.1 4.3 4.7 4.5 4.4 4.4Total 5.1 2.4 –2.0 3.9 4.6 4.0 4.4 5.1 5.1 5.0 4.7 View data in your local currency. Visit the online Outlook at www.pwc.com/outlook Industry overview | Methodology 11
  13. 13. Nominal GDP growth by country in EMEA (%) 2012–16EMEA 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016 CAGRWestern EuropeAustria 5.8 4.1 –3.1 3.5 6.0 3.0 2.9 3.4 3.5 3.8 3.3Belgium 5.3 2.9 –1.6 3.9 5.4 1.7 2.7 3.0 3.2 3.5 2.8Denmark 3.9 2.7 –4.9 4.4 4.0 2.8 4.0 4.2 4.5 4.3 3.9Finland 8.5 2.8 –7.3 4.4 6.2 3.6 4.4 4.6 4.8 5.0 4.5France 4.9 2.7 –2.0 2.0 3.9 1.4 2.6 3.0 2.9 3.5 2.7Germany 4.6 2.0 –3.4 4.7 4.9 3.7 4.0 3.9 3.5 2.7 3.6Greece 7.5 4.3 –0.8 –2.0 –2.7 –3.6 –0.4 0.6 1.6 2.7 0.2Ireland 6.8 –5.0 –11.3 –3.6 2.0 1.3 2.2 2.6 3.2 3.5 2.6Italy 4.0 1.4 –3.0 2.3 3.3 –0.6 0.9 2.1 2.8 3.1 1.6Netherlands 5.3 4.8 –4.3 3.1 4.1 2.9 3.4 3.7 3.0 2.5 3.1Norway 5.2 10.8 –5.4 5.2 3.4 4.0 4.3 4.6 4.8 5.1 4.5Portugal 5.3 1.9 –2.3 2.7 1.1 –2.1 0.4 1.2 1.7 2.6 0.7Spain 7.1 3.2 –3.1 1.8 3.7 2.1 2.2 2.3 3.1 3.8 2.7Sweden 6.2 2.5 –3.6 6.9 7.2 2.9 3.5 4.4 4.2 4.3 3.8Switzerland 6.2 4.4 –1.6 2.0 2.5 0.7 2.9 3.1 2.9 3.4 2.6United Kingdom 5.8 2.9 –3.5 4.4 5.8 3.5 4.2 4.2 4.5 4.4 4.2Western Europe total 5.3 2.7 –3.3 3.2 4.3 2.1 3.0 3.3 3.4 3.5 3.1Central and Eastern EuropeCzech Republic 9.7 4.3 –1.7 1.2 4.1 3.7 4.5 4.8 5.7 5.2 4.8Hungary 6.7 5.7 –2.6 4.1 5.6 5.1 4.6 5.1 5.8 6.3 5.4Poland 11.0 8.4 5.3 5.1 8.0 5.2 5.8 5.9 6.2 6.1 5.8Romania 39.1 19.7 –20.1 –1.0 7.8 5.0 5.6 7.0 7.1 7.0 6.3Russia 22.0 27.0 –5.7 11.1 12.7 9.9 10.1 10.7 10.4 9.8 10.2Turkey 11.2 12.7 0.2 18.3 12.9 10.2 8.7 9.0 8.7 9.1 9.1Central and EasternEurope total 16.9 17.7 –3.4 10.1 11.0 8.5 8.4 8.9 8.9 8.7 8.7Middle East/AfricaIsrael 6.0 5.2 5.9 5.8 8.4 5.3 5.8 5.8 6.0 5.9 5.7Middle East/NorthAfrica (MENA)† 14.7 22.0 –11.1 10.4 11.5 9.2 9.5 9.7 10.0 9.8 9.6South Africa 14.1 13.2 6.1 8.8 8.7 11.6 9.2 9.0 9.2 9.3 9.7Middle East/Africa total 13.4 18.2 –6.1 9.5 10.5 9.2 9.0 9.1 9.4 9.3 9.2EMEA total 7.2 5.8 –3.5 4.7 5.8 3.7 4.4 4.8 5.0 5.0 4.6†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, and the United Arab Emirates.12 PwC | Global entertainment and media outlook: 2012–2016
  14. 14. Nominal GDP growth by country in Asia Pacific (%) 2012–16Asia Pacific 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016 CAGRAustralia 9.2 9.1 0.6 5.5 4.7 6.2 6.2 6.1 5.7 6.0 6.0China 19.6 18.1 8.6 16.7 14.9 12.3 12.5 12.8 12.6 12.7 12.6Hong Kong 9.6 3.8 –3.3 7.8 11.8 8.9 8.4 7.6 8.0 8.3 8.2India 16.1 12.0 17.3 20.3 16.4 14.2 13.8 14.0 13.8 12.7 13.7Indonesia 18.3 25.3 13.2 14.6 12.5 13.2 12.5 12.7 13.0 13.2 12.9Japan 1.6 –2.0 –6.1 3.2 –0.9 2.0 1.5 1.7 2.1 2.1 1.9Malaysia 11.8 15.4 –8.3 12.7 8.6 7.7 7.7 7.5 7.5 7.7 7.6New Zealand 7.9 1.7 1.2 4.0 6.5 6.6 5.7 5.2 5.3 5.6 5.7Pakistan 13.8 18.1 24.4 15.1 16.9 18.3 17.0 16.2 16.5 16.7 16.9Philippines 10.2 11.4 3.6 10.9 9.4 9.2 9.1 9.3 9.5 9.7 9.4Singapore 15.6 2.7 –3.1 17.7 9.2 7.3 6.7 6.5 6.7 6.8 6.8South Korea 7.3 5.3 3.6 9.3 8.0 6.7 6.6 7.1 7.2 6.8 6.9Taiwan 1.8 10.5 –2.8 11.9 7.1 6.9 7.0 7.1 7.3 7.6 7.2Thailand 8.7 6.4 –0.4 11.7 7.6 9.1 9.2 8.6 8.7 8.8 8.9Vietnam 17.4 29.8 11.7 16.6 25.7 19.2 13.2 13.1 12.9 13.2 14.3Total 9.1 7.6 2.3 10.8 8.5 8.6 8.6 9.0 9.2 9.4 9.0Nominal GDP growth by country in Latin America (%)  2012–16Latin America 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016 CAGRArgentina 24.1 27.8 10.3 25.9 17.8 15.2 14.7 15.0 12.9 12.6 14.1Brazil 12.3 13.9 5.1 15.4 9.8 9.3 9.4 9.1 8.8 8.7 9.1Chile 10.3 3.9 2.3 13.8 9.8 7.9 7.7 7.7 7.9 8.0 7.8Colombia 27.5 17.3 –4.5 24.0 8.4 7.5 7.7 7.7 7.8 7.9 7.7Mexico 9.2 7.8 –2.3 10.5 7.3 6.6 6.5 6.9 6.7 6.6 6.7Venezuela 23.5 37.3 4.8 26.3 29.3 28.7 26.5 26.0 24.9 25.1 26.2Total 13.6 14.5 2.7 16.4 11.6 11.1 11.2 11.5 11.3 11.6 11.3 Industry overview | Methodology 13
  15. 15. Global nominal GDP growth (%)  2012–16 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016 CAGRGlobal 7.5 5.8 –1.0 7.1 6.7 5.9 6.3 6.8 7.0 7.1 6.6The following tables show historical andprojected growth rates for consumerprice inflation for the individualcountries in each region.Consumer price inflation by country in North America (%) 2012–16North America 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016 CAGRUnited States 2.9 3.8 –0.4 1.6 2.9 2.0 1.9 2.2 2.3 2.3 2.1Canada 2.2 2.4 0.3 1.8 2.8 2.1 2.0 2.1 2.0 2.0 2.0Total 2.8 3.7 –0.3 1.6 2.9 2.0 1.9 2.2 2.3 2.2 2.1 View year-on-year growth for every data line. Visit the online Outlook at www.pwc.com/outlook14 PwC | Global entertainment and media outlook: 2012–2016
  16. 16. Consumer price inflation by country in EMEA (%) 2012–16EMEA 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016 CAGRWestern EuropeAustria 2.2 3.1 0.5 1.7 3.1 2.8 2.4 2.3 2.1 2.2 2.4Belgium 1.8 4.5 –0.1 2.2 3.2 2.0 2.0 2.0 2.1 2.1 2.0Denmark 1.7 3.4 1.4 2.3 2.5 1.7 2.3 2.2 2.0 1.9 2.0Finland 2.5 4.1 0.0 1.3 3.4 3.0 2.5 2.3 2.1 2.1 2.4France 1.5 2.8 0.1 1.7 2.2 1.8 1.6 1.9 1.3 1.9 1.7Germany 2.3 2.6 0.4 1.2 2.3 2.8 2.5 2.3 1.7 1.3 2.1Greece 2.9 4.1 1.2 4.7 2.8 1.3 1.2 1.1 1.3 1.4 1.3Ireland 4.9 4.0 –4.5 –1.6 1.1 2.3 2.5 2.1 2.0 2.1 2.2Italy 1.7 3.4 0.7 1.6 2.7 0.8 1.5 1.7 1.9 2.0 1.6Netherlands 1.6 2.4 1.2 0.9 2.3 2.6 2.2 2.1 1.4 0.7 1.8Norway 0.8 3.7 2.2 2.3 1.6 2.0 2.1 2.3 2.5 2.5 2.3Portugal 2.8 2.6 –0.8 1.4 3.3 1.3 1.4 1.5 1.6 1.7 1.5Spain 2.8 4.0 –0.4 2.0 3.1 2.8 2.0 1.4 1.6 1.8 1.9Sweden 2.2 3.4 –0.3 1.9 2.9 1.8 1.8 2.0 1.9 2.0 1.9Switzerland 2.6 3.3 –3.9 0.7 0.5 0.1 1.3 1.3 1.4 1.7 1.1United Kingdom 4.3 4.0 –0.5 3.3 4.8 2.5 2.1 2.0 2.1 2.1 2.2Western Europe total 2.4 3.3 0.0 1.8 2.8 2.0 2.0 2.0 1.7 1.8 1.9Central and Eastern EuropeCzech Republic 3.0 6.4 1.1 1.4 2.0 3.0 2.5 2.4 2.3 2.2 2.5Hungary 7.9 6.1 4.2 4.9 4.0 4.8 3.4 3.2 3.3 3.0 3.5Poland 2.3 4.4 3.9 2.7 4.1 2.7 2.6 2.5 2.6 2.6 2.6Romania 4.9 7.8 5.6 6.1 6.3 3.5 3.2 3.1 3.1 3.5 3.3Russia 9.0 14.1 11.7 6.9 8.3 6.5 6.4 6.6 6.2 5.7 6.3Turkey 8.7 10.4 6.3 8.6 5.9 8.3 5.5 5.2 4.6 4.9 5.7Central and EasternEurope total 6.4 9.7 7.9 6.0 6.5 6.0 5.3 5.4 5.0 4.9 5.3Middle East/Africa  Israel 0.4 4.7 3.3 2.7 3.4 1.5 1.9 2.0 2.2 2.5 2.0Middle East/NorthAfrica (MENA)† 5.7 10.0 3.6 4.6 5.6 5.7 5.5 5.5 5.7 5.9 5.7South Africa 7.2 11.5 7.1 4.3 5.0 5.5 5.4 5.3 5.4 5.7 5.5Middle East/Africa total 5.0 9.5 4.2 4.3 5.2 5.2 5.1 5.2 5.4 5.6 5.3EMEA total 2.7 4.2 1.4 2.6 3.6 3.1 3.0 3.1 2.9 3.2 3.1†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, and the United Arab Emirates. Industry overview | Methodology 15
  17. 17. Consumer price inflation by country in Asia Pacific (%)  2012–16Asia Pacific 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016 CAGRAustralia 2.3 4.4 1.8 2.8 3.2 2.8 3.0 2.8 2.6 2.7 2.8China 4.8 5.9 –0.7 3.3 5.6 3.9 3.9 3.7 3.6 3.8 3.8Hong Kong 1.9 4.3 0.6 2.4 5.5 4.5 3.5 3.0 2.6 2.7 3.3India 6.3 8.4 10.9 9.6 9.0 6.5 6.0 5.8 5.5 5.2 5.8Indonesia 9.1 11.0 2.8 6.9 5.7 6.5 5.4 5.3 5.2 5.0 5.5Japan 0.1 1.4 –1.4 –0.7 –0.4 –0.1 0.2 0.5 0.6 0.8 0.4Malaysia 2.0 5.5 0.6 1.7 3.2 2.5 2.4 2.4 2.3 2.2 2.4New Zealand 2.6 3.8 1.9 1.8 4.4 2.7 2.4 2.4 2.3 2.3 2.4Pakistan 7.6 20.3 13.6 13.9 13.9 14.0 12.0 10.5 10.0 10.0 11.3Philippines 2.8 9.3 3.3 4.5 4.5 4.1 4.0 4.0 4.0 4.0 4.0Singapore 2.1 6.6 0.5 2.8 3.7 2.9 2.4 2.1 2.0 2.0 2.3South Korea 2.6 4.6 2.8 3.0 4.2 3.2 3.0 2.9 2.9 3.0 3.0Taiwan 2.3 3.5 –0.9 1.0 1.8 1.8 2.0 2.0 2.1 2.1 2.0Thailand 2.2 5.4 –0.9 3.3 4.0 4.1 4.2 3.5 3.5 3.4 3.7Vietnam 8.3 23.1 7.1 8.9 18.8 12.1 6.0 5.5 5.4 5.7 6.9Total 1.9 3.9 0.2 2.6 4.0 3.4 3.5 3.7 3.6 3.9 3.6Consumer price inflation by country in Latin America (%) 2012–16Latin America 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016 CAGRArgentina 8.8 8.6 6.3 10.4 10.8 11.8 12.7 11.0 9.0 8.5 10.6Brazil 3.6 5.6 4.9 5.0 6.4 5.6 5.2 4.7 4.5 4.4 4.9Chile 4.3 8.8 1.7 1.2 3.1 3.1 3.0 3.0 3.0 3.1 3.0Colombia 5.6 6.9 4.2 2.3 3.3 2.9 3.1 3.0 3.0 3.0 3.0Mexico 4.0 5.2 5.3 4.2 3.3 3.4 3.2 3.4 3.3 3.1 3.3Venezuela 18.8 31.4 28.6 29.1 25.8 24.3 23.9 23.5 22.9 21.1 23.1Total 4.3 6.4 6.2 6.5 7.8 8.6 9.6 10.9 12.1 13.3 10.9Global consumer price inflation (%) 2012–16 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016 CAGRGlobal 2.5 4.0 0.8 2.6 3.8 3.5 3.5 4.0 4.2 4.7 4.016 PwC | Global entertainment and media outlook: 2012–2016
  18. 18. Viewpoint Preface and economic context 18 The end of the digital beginning: E&M companies reshape and retool for life in the new normal 23
  19. 19. Preface and economic context We are pleased to present the 13th edition of PwC’s Global entertainment and media outlook. The purpose of this Industry Overview is to provide a brief overview of the data presented in the 2012–2016 Outlook and to present a thought piece on our insights related to the trends that drive the industry and the growth forecasts.2011:The recovery progressesThe global economy began to recover in2010 from its steep decline in 2009 andcontinued to advance in 2011, althoughthe hoped-for pickup in momentum didnot materialize consistently around theglobe. Global entertainment and media(E&M) spending rose 4.9 percent in2011—a bit faster than the 4.5 percentincrease in 2010 but still below gainsin prior expansion years. Advertisingincreased 3.6 percent, down fromthe 7.0 percent gain in 2010 that wasaugmented by advertising associatedwith the FIFA World Cup and WinterOlympics and by the rebound from asluggish 2009. Consumer/end-userspending rose 2.0 percent, up from the1.3 percent rise in 2010. Internet accessrecorded the largest improvement, risingby 15.1 percent from the 10.0 percentgain in 2010.18 PwC | Global entertainment and media outlook: 2012–2016
  20. 20. Projected and actual global 2011 E&M growth by category (%) Category Projected Actual Advertising 3.1 3.6 Consumer/end user 3.4 2.0 Internet access: wired and mobile 8.8 15.1 Total 4.3 4.9 Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates Projected and actual global 2011 E&M growth by segment (%) Segment Projected Actual Internet access: wired and mobile 8.8 15.1 Internet advertising: wired and mobile 13.6 18.7 TV subscriptions and license fees† 7.0 7.2 TV advertising 3.3 3.1 Recorded music‡ –5.7 –2.4 Filmed entertainment †† 5.1 0.1 Video games 6.8 2.2 Consumer magazine publishing 0.6 –0.8 Newspaper publishing –0.1 –0.7 Radio 3.1 1.5 Out-of-home advertising 2.0 5.0 Consumer and educational book publishing 0.7 –1.3 Business-to-business‡‡ 0.9 0.6 Total 4.3 4.9 †Excludes video-on-demand, pay-per-view, and over-the-top. ‡Excludes concerts and music festivals. ††Excludes video-on-demand and pay-per-view. ‡‡Excludes trade shows. Industry overview | Preface and economic context 19
  21. 21. In the 2011–15 Outlook, we pre- On a segment basis, in addition to floor may exist in terms of spendingdicted a 3.1 percent increase in global Internet access, Internet advertising, on physical music. In filmed entertain-advertising, which was a bit lower recorded music, and out-of-home ment, box office spending in a numberthan the 3.6 percent actual increase. advertising substantially outperformed of countries was disappointing, reflect-Consumer/end-user spending rose our expectations in 2011, while filmed ing less-appealing movies. In home2.0 percent, a somewhat smaller gain entertainment, video games, and video, Blu-ray gains were smaller thanthan our 3.4 percent projection. We consumer and educational books grew expected, while DVDs were pretty muchexpected Internet access spending to less than we expected. TV subscrip- as anticipated, with the result thatincrease by 8.8 percent in 2011, but tions and license fees, TV advertising, overall physical spending declined. Inactual growth was nearly twice as fast, and business-to-business materially video games, growth in online gamingwith a 15.1 percent increase. A jump matched our forecasts, while consumer cut into the console market, leading toin infrastructure spending combined magazine and newspaper publishing slower growth in overall spending thanwith a surge in smart-device pene- and radio were within two percentage we expected. In consumer and educa-tration fueled large gains in mobile points of our projections. tional books, lower-priced electronicaccess and propelled the overall access books surged in 2011, cutting into print In recorded music, declines in physicalmarket. Overall global E&M growth of sales. Overall spending declined even spending moderated in a number of4.9 percent was marginally ahead of as reading picked up. countries, most notably in the Unitedthe 4.3 percent increase we projected States, leading to a smaller decline thanlast year. we expected and hinting that a naturalGlobal E&M spending and nominal GDP growth (%) 10 5 0 –5–10–15 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Global nominal GDP Global advertising Global consumer/end user Global E&M spendingSources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates20 PwC | Global entertainment and media outlook: 2012–2016
  22. 22. Looking forward Over the longer run, we expect the E&M spending is affected by the economic climate to improve, which economy, and countries experiencingThe economic prospects in the short healthy economic growth will see will lead to faster growth in E&Mterm are mixed. Europe’s economy large gains in E&M spending. By spending during the next five yearsremains weak, North America appears contrast, weak economies will dampen compared with the 2008–11 period.to be improving, Latin America is growth in other countries. We expect Nevertheless, we expect E&M growthrelatively healthy, and the People’s gains averaging less than 3 percent to continue to lag nominal GDP growth,Republic of China (PRC) and India annually in Japan, Germany, Ireland, principally because of the ongoing shiftcontinue to record strong, if moder- Denmark, Spain, and Greece and from higher-priced physical distributionating, growth. We expect the varied gains averaging less than 3.5 percent to lower-priced digital distribution. Aseconomic prospects to be reflected in compounded annually in the UK, Italy, the experience of the book publishingE&M spending growth in 2012. We France, Austria, the Netherlands, industry in 2011 reveals, the shift inproject Europe, Middle East, Africa and Switzerland. Full data on E&M usage from traditional media to digital(EMEA) to be the slowest-growing spending by country and major media limits growth because end-userregion, with a 3.5 percent increase, category can be found in the sections prices for digital content are generallywhich will be less than the 5.2 percent on regional spending. lower than prices for physical content.advance in 2011. Latin America will During the next five years, we projectbe the fastest-growing region, with a that E&M spending will grow at a9.2 percent gain, nearly matching the 5.7 percent compound annual rate—9.5 percent gain in 2011. Asia Pacific below the projected 6.6 percent com-will increase by 6.6 percent. Excluding pound annual increase in nominal GDP.the relatively sluggish Japanese market,the remainder of Asia Pacific is expected The average growth rate masks wideto grow by 9.0 percent. North America disparities in growth, resulting fromwill grow by a projected 5.7 percent in economic disparities around the world.2012, helped by an inflow of election- A number of countries in Asia andrelated advertising in the United States Latin America along with Middle East/as well as advertising associated with North Africa (MENA), South Africa,the Summer Olympics. and Russia will average double-digit increases during the next five years. Create customized bar charts and line graphs instantly. Visit the online Outlook at www.pwc.com/outlook Industry overview | Preface and economic context 21
  23. 23. The end of the digital beginning:E&M companies reshape andretool for life in the new normal Despite ongoing economic uncertainty, the past year has seen global sales of tablets and smartphones reach record levels once again—thus underlining the growing revenue opportunities in the digital delivery of entertainment and media (E&M) content and advertising to increasingly connected and, particularly, mobile customers.However, behind the headlines, an Digital migration has two main impli- The Outlook also confirms that theeven more important milestone for the cations for E&M companies: One is parallel global shifts we’ve highlightedE&M industry is upcoming: the onset of the need to make clear and commit- in recent years will continue to playthe digital new normal. Digital is now ted choices about the role or roles out and strengthen through 2016, withembedded in business as usual. And companies should play in the digital value shifting as follows.as digital moves to the heart of many value chain. The other is that behaviors • From print to digital: For example,media companies and begins to present are changing rapidly and irreversibly electronic books’ share of total globalthe greatest opportunities for growth, within organizations and organizations’ spending on consumer and educa-what previously looked like a wide gap customer bases—and leaders need to tional books will rise from 5 percentbetween old media models and new understand and harness those behav- in 2011 to 18 percent in 2016.ones is being bridged. ioral changes to grow future revenues. • From fixed to mobile-driven con-Companies are planning out and execut- sumption: Mobile Internet accessing their strategies to cross to the new Three global shifts increased from 26 percent of totalnormal, and with that, we’re hearing Changing consumer behavior is driving Internet access spending in 2007clearer and more-consistent language both of the implications. Consumers’ to 40 percent in 2011—and willfrom industry CEOs as they articulate ongoing migration to digital modes of account for 45 percent in 2016.the new landscape. That clearer lan-guage signals that the initial uncertainty consumption got accelerated by the eco- • From West to East, North to South:triggered by digital migration is giving nomic downturn. And it is now continu- During the next five years, totalway to a sharper focus on identifying, ing to gain pace during the recovery, E&M revenue growth in the Eastchoosing, and executing the business fueled by three forces now commonly (Central and Eastern Europe/Asiamodels, organizational structures, and summarized as “social, mobile, and Pacific) will average 7.2 percentskill sets that will harness new consumer local,” to which others add, variously, compounded annually, comparedbehaviors to deliver rising future value “global” and “commercial.” Together with a 4.3 percent CAGR for thein the changed environment. those forces will help companies tap West (North America/Western into an expanding pool of value: this Europe). And growth in the South edition of Global entertainment and (Latin America/Middle East/Africa) media outlook projects that total global will average 10.0 percent com- E&M revenues will rise from $1.6 trillion pounded annually—more than twice in 2011 to $2.1 trillion by 2016. the 4.5 percent CAGR in the North (North America/Europe). Industry overview | The end of the digital beginning 23
  24. 24. Looking beyond the …to map out the industry’s • For the industry: Development ofimpact of digital… future topography the right organizational and opera- tional models to understand andIn last year’s Industry Overview, we Against this background, we believe harness new behaviors inside andnoted that those shifts—spearheaded the reshaping of the industry will take outside organizations in order toby digital migration—were driving place based on the perspectives of three grow their revenues and/or marginschange in three dimensions: the main groups: in the new normal.empowered consumer, the involved • For consumers: The creation of We’ll examine each of those perspec-advertiser, and transformation of more-compelling, more-immersive, tives in turn.the business for digital. The outcome and increasingly shared experiencesof that transformation was a new by understanding what connectedtype of organization we termed the consumers want—by finding theCollaborative Digital Enterprise (CDE), right little data amid the big data.heralding a wider shift to a collabora-tive ecosystem-based economy. • For advertisers and value chain partners: The design of newThe developments of the past year rein- business models that reinventforce that view while also underlining and expand the value proposi-the fact that talking specifically about tion of advertising and content“digital” increasingly misses the point. through innovation.Digital marketing, for example, nowmeans marketing in a digital world. Andas digital becomes the new normal, itsrising penetration ceases to be a topic fordiscussion. What matters is how compa-nies capitalize on it and operate within it.24 PwC | Global entertainment and media outlook: 2012–2016
  25. 25. 1. Understanding the connected consumerAny discussion or analysis of what’s 2011, which will rise to 55 percent content. But today’s younger gener­happening in entertainment and media in 2016. In contrast, other segments ations expect consuming media tomust begin with consumers. Why? are at the start of the journey: in the involve multifaceted, personalizedBecause change in today’s consumer consumer magazine circulation mar- experiences that they can touch andbehavior is both pervasive and acceler- ket, digital paid circulation accounted influence—meaning, they feel not justating—and E&M is in the front line of for only 0.4 percent of total circulation engaged but also immersed.that change. spending in 2011. But during the next Those ideas aren’t new for consum- five years, digital spending will surge,PwC’s 15th Annual Global CEO Survey ers who were early adopters of digital at a 76.1 percent CAGR, accounting forfinds that some 74 percent of CEOs in behaviors. But the difference today— 6.5 percent of total circulation spendingE&M are “somewhat concerned” or and the challenge for E&M companies— by 2016.“extremely concerned” about a perma- is that the expectation of an immersivenent shift in consumer spending and content experience has now extendedbehavior—the highest level of concern Demanding immersive and across the mass market, meaning thatin any sector. Other PwC research bears socialized experiences providers not only have to deliver on thisout the scale of the shifts under way: promise; they also must do so at ever-more than 80 percent of respondents So, what kinds of media experiences are greater scale.to PwC’s multichannel shopper survey1 these increasingly digital and connected consumers seeking? They’re often The drive for immersion is increasinglynow research their purchases online characterized as more demanding. In evident in the growth of such behaviorsbefore buying electronics, computers, practice, this encompasses three specific as personal marathoning and socialbooks, music, and movies. shifts. Today’s consumers want to: marathoning—consuming an entireAs the Outlook highlights, those changes series end-to-end either alone or socially.reflect an underlying and ongoing • Watch, read, or listen to what they With smart devices now enabling easiermigration in consumer behavior and want and when they want to— and fuller social interaction around suchspending toward digital consump- ranging from “now” to “in my own content as newspapers and magazines,tion and digital experiences. Growth good time.” that same sense of socialized immersionin digital spending—defined here as • Access and consume content simul- is emerging in other media and is drivingspending over Internet protocol plat- taneously via multiple devices and spending choices.forms in such segments as broadband connections: TV, smartphone, tabletand mobile Internet access, mobile TV app, social media.subscriptions, music, home video, videogames, newspapers, magazines, and • Find and engage with provocativebooks—will continue to outpace growth and relevant media experiences thatin nondigital spending during the next cross the traditional boundaries offive years. genre and immediacy—and ones they can share, shape, and control.Different segments are at differentstages of this industry-wide journey. These characteristics add up to a searchRecorded music—which already has for immersive experiences that unitea well-developed digital market—saw the personal with the social. Past gen-digital formats increase from 16 percent erations could feel engaged through theof spending in 2007 to 33 percent in passive consumption of mass-market1 “Customers take control,” PwC, December 2011; http://download.pwc.com/ie/pubs/2011_ customers_take_control.pdf. Industry overview | The end of the digital beginning 25
  26. 26. Online gaming: the connected shape of things to comeA useful historical parallel for the connected and socialized future may be the riseof online video games in Asia, where spending on online games overtook console/handheld games in 2010. Such online games—especially advanced casual gamesand massive multiplayer online games—were providing consumers with connectedsocial media experiences before people were even talking about social networks.As the chart below shows, Asian countries—which also have huge cultures of socialmedia, such as China, which leads the way—have maintained their lead in termsof growth in online/mobile gaming revenues. And outside Asia Pacific, suchmarkets as the US and Russia are also seeing healthy growth.Many reasons have been suggested for Asian populations’ eager embrace of onlineand social gaming, ranging from Asians’ relatively low participation in physicalsports to a simply game-friendly culture. But what’s clear is that online and mobilegaming acted as a precursor of the socialization of other media in Asia and couldplay the same role in other territories where online gaming takes off quickly whenthe necessary connectivity becomes available.In addition, as we’ll highlight later, online gaming has led the way in creatingflexible and sophisticated revenue models. To see the future of socialized media,online gaming is a good place to start.2007–11 growth in online/mobile video games (US$ millions) Russia 687 United States 1,286 Japan 1,376 South Korea 1,750 China 4,7070 1,000 2,000 3,000 4,000 5,00026 PwC | Global entertainment and media outlook: 2012–2016
  27. 27. The medium formerly …and turning the second analog TV in the living room put theknown as TV: toward the screen into the consumer’s family circle at the center of the sharedmedia hub… social nexus content experience, the media hub will shift the center of gravity toward a moreAmid these developments, one clear With the advent of smart devices, the geographically spread community oftrend is the continued strength of the concept of the media hub has now friends with shared interests, often ofmedium formerly known as televi- gained a so-called second screen for similar ages. This extended circle ofsion—or, more accurately today, video. sharing and enjoying these experiences friends could become the media hub’sThe consumption of professional video anywhere. And with formerly print- killer application, glued together by thecontent has never been more popular, based media such as magazines and shared content experience.partly reflecting the explosion in the newspapers launching smart-deviceways people can access it. apps, these forms of content could alsoThe growing number of ways and become part of the overall media pack- Smart devicescontexts in which people can experi- age—as part of a multisegment media spearheading change…ence video content is creating a blend bundle accessed via the media hub and The first signs of the socialized mul-of confusion, excitement, and choice for its connected screens. tiscreen future are already emerging.consumers. It’s also raising questions Some companies are already making But how is the consumer experiencingaround the value proposition and pricing the early running in this direction, such them? The answer lies in the rocketingof TV-only content bundles—especially as Technicolor, with its MediaNavi and take-up of smart devices.given the advent of a rising generation M-GO multiscreen content platform,of savvy and increasingly urbanized Since the launch of the original iPad in whereby MediaNavi serves as theconsumers who still love television but April 2010, tablets have brought home socialized and personalized hub forwant more flexibility: first, in the ways to consumers—like no other device navigating and accessing the universethey access and pay for content and has—what the future of media might of content, and the M-GO app expandssecond, what content they get. look like. For the first time, consumers that access across a range of connected became willing to watch premium videoLike previous generations, the new con- devices. With social media incorporated content on the go. And in addition tosumers are passionate about other media into the media hub concept, consum- cutting into PC sales, the tablet providesexperiences as well as television: live ers can take the logical next step from a metaphor for the feel of a future withconcerts, radio, magazines, books, and watching “everything whenever and ever-available mobile video and non-so on. But unlike previous generations, wherever I want” to having friends and video content.they demand, consume, and function family log in to share the experience inin a world of globally connected social real time. As soon as consumers held tablets, theymedia. And they’re increasingly adept could imagine a large one fixed on the liv- This could lead to an environmentat incorporating the various elements ing room wall for “big” content and fam- where all content is streamed as aof content and connectivity into their ily viewing; a handy-size one for a decent cheap, easily available, cloud-basedmedia consumption mix. All of this personal or social content experience on utility-style service, with the streamedpoints toward the multichannel, multi- the move; and a small one in the form of and shared live experience becomingcontent, multiexperience future: a con- a smartphone, for times when connec- the premium form of content. The digi-cept we’ve termed here the media hub, tivity, information, and immediacy are tal locker may also play a role, enablingwherein a mass of content is available for the priorities. Each device suits differ- consumers to store recorded contentan agreed price on all devices and where ent content and contexts. But the key is remotely and access it from anywherethe live experience—be it US basketball that portability, accessibility to content, on any device.or FIFA World Cup football or Lady Gaga on-demand capability, high resolution,in concert—comes at a premium. In such a world, the multicontent, and acceptable screen size—all of those multidevice media hub could regain the formerly conflicting goals—have finally role that TV held as the nexus of the col- been reconciled. lective social experience from the 1950s through the 1990s. However, while the Industry overview | The end of the digital beginning 27

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