Who’s Spending, Who Isn’t - The Next 5 Years in Entertainment and Media


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In collaboration with PWC, Michael Paterson discusses the 2009- 2013 Global Entertainment and Media Outlook, PricewaterhouseCoopers' independent forecast of spending for the next five years in 12 entertainment and media industry segments. In this data rich presentation you’ll understand how unprecedented economic conditions and technological change will significantly impact prospects in the near term for media companies and may expose long term weaknesses in some traditional media sectors.

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  • Date FYI: This is the slide that is on the screen as people walk into the room pre-event. Introduction
  • Date The digital transformation is here. Nothing is safe. There’s no place to hide. There’s only pushing forward. Beyond the individual dynamics of your businesses, in our view, there are three primary external and inter-related dimensions driving change in our industry today. The first is economics . T he current downturn will accelerate and intensify the migration to digital technologies — for consumers and companies alike. The second is consumer behavior , which clearly relates to the economy and consumer’s quest for value …but also encompasses the longer term trend of consumers wanting greater control and flexibility in their entertainment and media experiences. (and the opportunity to experience at home) The third is advertising and the urgent need today for a new generation of revenue models to sustain this fast-expanding digital universe…models that will need to be diverse and innovative…providing greater accountability and advertising that is more targeted and relevant to specific audiences. -ad spend thinner -less money overall -monetization of content to sustain creators and distributors in an environment with declining money from consumers and advertisers
  • Date In partnership with Wilkosky Gruen Sources include CRTC data, industry canada PwC editors from each country adding views on trends and business developments Strips out currency impact Change in Outlook to these 12 segments where digital migration is at the heart of industry transformation. both consumer spending in these categories as well as — where applicable — advertising revenues. We are this year providing for the first time full country-by-country breakouts for mobile television, video-on-demand, online rental subscriptions, digital music downloads and vastly expanded coverage of video games (consoles, PCs, online and wireless video games as well as video game advertising).
  • Date Here are the categories with our projections Explain 2009-2010 vs 2011-2014 Faring best: Video games and Internet access. Doing relatively OK: Filmed entertainment. Treading water: Internet advertising. Feeling the squeeze of the digital migration and a down economy the most: Magazine and newspaper publishing, television advertising, recorded music. SEGUE: But the bigger story lies in the recovery period. [CLICK ONE: 2011-2013] Simply put: Some industry segments bounce back and some do not. Thus, our title: Fragmented road to recovery. Internet access we include because it’s a key underlying driver of our industry’s growth. So its robust double-digit expansion is encouraging. Mobile Internet access is the smaller category, but the fastest growing. One big breaking story: We are projecting that mobile Internet access revenues in Asia will overtake wired access next year--the first and only region to break that barrier during our forecast period. Internet advertising breaks stride for a couple of years as advertising stalls alongside the economy, and then it resumes the top spot, leading our industry’s growth. TV subscriptions and license fees also are doing well globally….6.3% CAGR. Roughly 80% of the market is subscriptions, which is showing near-term economic sensitivity, but overall continues to see robust growth, led by Asia. Video games This is the strongest and most recession-proof segment of the industry right now…6.6% near-term growth…surging to 8% in the recovery. INSERT QUESTION FOR VIKAS GUPTA HERE Vikas Gupta, CEO of Transgaming Why do you think gaming is proving to be “recession-proof”? Filmed entertainment , we see, holding up reasonably well, too. The box office is going strong. 3D is helping…as is the expansion of theaters in many fast-emerging markets. Box office is growing at roughly twice the rate of home video…5.9% CAGR compared to 3% CAGR. But both are in the black. In fact, film was the ONLY segment to experience faster growth in 2009—a 1.1% bump —than in 2008, when the market was flat. It’s very similar across the board. Internet adoption—very robust. 80 million broadband homes and counting…one-third of all broadband connections around the world. The same three industry segments on the medal stand: Internet advertising, TV subscriptions and video games…followed closely by movies. Publishing…music…TV advertising…radio…all struggling with their digital futures…not necessarily due to waning consumer interest…so much as the challenge they continue to face in monetizing their content in the digital environment. SEGUE: All of which, to varying degrees, illuminates a central yet counter-intuitive truth: At the other end of the spectrum, with the exception of books, no segment that goes into the red this year and next regains its footing. They all will end the forecast in 2013 behind where they were in 2008. In a few moments, my colleague Michael Paterson will talk about the consumer behaviors behind these forecasts and then advertising. But right now, we are looking at a much more fragmented marketplace in 2013…and a growing digital divide—between those segments that are finding success with their digital monetization strategies—and those that are still struggling to face this challenge and make this all-important transition in a sustainable way. SEGUE: How does the global picture compare to the Canadian picture?
  • It’s very similar across the board. Internet adoption—very robust. XXmillion broadband homes The same three industry segments on the medal stand: Internet advertising, TV subscriptions and video games…followed closely by movies. Publishing…music…TV advertising…radio…all struggling with their digital futures…not necessarily due to waning consumer interest…so much as the challenge they continue to face in monetizing their content in the digital environment.
  • Globally, the television distribution market will increase from $191.8 billion in 2009 to $252 billion in 2013, a 6.3 percent CAGR. Television distribution market consists of revenues generated by distributors of television programming to viewers. It includes spending by consumers on subscriptions to basic and premium channels accessed from cable operators, satellite providers, telephone companies, and other multichannel distributors and on video on demand( In US, EMEA, and Canada it also includes pay-per-view). In Asia Pac also includes television programming distribution to mobile phone – not included in other areas as business models are in flux and not yet clear how business will evolve.. In Asia Pacific, wireless phones are well established as entertainment media – 3G technologies facilitating rapid take up in subscription based TV. -digital conversion -IP/Web TV
  • Globally, filmed entertainment spending will rise from $83 billion in 2008 to $102 billion in 2013 reaching a 4 percent CAGR. Acceleration in spending from 2009 from 2008 reflects the increase in box office spending from a larger array of 3D releases and a modest gain in rental spending. -3D enables price increases and reduces piracy - Potential change in release windows
  • The global newspaper segment will decline 2% percent compounded annually from $164.6 billion in 2008 to $182.4 billion in 2013. -paid daily urban papers
  • Global spending on radio will decline by 0.7 percent, from $48.7 billion in 2008, to $47.1 billion in 2013. Satelitte radio Out of home – unavoidable advertising
  • Globally, video game spending is expected to rise from $51.4 billion in 2008 to $73.5 billion in 2013, a 7.4% CAGR. -Continuing to drive innovation (e.g. controllers) -Game advertising
  • Date A slow economy is leading to a faster digital migration. Companies need the greater efficiencies and cost-savings that digital so often provides. And, consumers want the higher value and control that digital typically offers. The digital future is arriving in a blur, and we’ve got to pick up the pace or risk being passed by. SEGUE: Here’s how it plays out over the next few years.
  • [ 21% DIGITAL] Here you see current global revenues broken out traditional versus digital. Traditional being things like television subscriptions and advertising, physical magazine and newspaper subscriptions and advertising, music CDs, movie DVDs and theater tickets, for example. Digital encompasses Internet access and advertising, mobile and digital music, electronic books, online movie subscriptions and things of that nature. Here’s where we stood in 2008 … [CLICK ONE: 31% DIGITAL] And, here we are in 2013. Globally, digital grabs another 10% of the overall revenue pie Translation? For most of the world, digital spending will be the industry’s main engine of growth for the next five years. In the midst of a turbulent digital transformation, we all want to see two things happen: We want to see the size of this pie continue to grow in a healthy way, and we want to see the share of digital revenues continue to expand. One interesting point: If this marketshare is your benchmark, the country furthest along today in its digital transformation is South Korea. Globally, as you see, we stood at 31% digital revenues last year. South Korea stood at a 50-50 split ($17 billion digital/$17 billion non-digital). Why? In large part, we attribute this to the fact that South Korea is the only country on earth with 100% broadband access—and among the fastest broadband speeds in the world. This has aided the growth of the digital marketplace. It has also held back growth in certain areas, enabling high piracy rates, which are putting downward pressure on certain areas of the legitimate marketplace. So the trend is clearly toward digital…and will likely accelerate with expanding broadband adoption. But every country has its own unique story. For global players, this makes the challenge all the more complex due to the sometimes stark differences among markets…economic growth rates, local culture, lifestyles, consumer spending and communications infrastructure. SEGUE: Let’s quickly take a look at how GDP factors into the equation.
  • Date Here we see the textbook definition of “discretionary spending.” When we have more money in our wallets, we tend to spend more of it on entertainment and media. When the going gets tough, with some notable current exceptions like going to the movies and playing video games, entertainment and media understandably takes a back seat to putting food on the table and paying the mortgage. As GDP flatlines in 2009, we get pushed into the red. But as you see with recovery, entertainment and media will leapfrog ahead and emerge back on top by the end of our forecast period. Now let’s separate out advertising and consumer spend… [CLICK: DARK BLUE BECOMES ORANGE AND YELLOW] Here you see that advertising is extremely sensitive to GDP. Consumer spending will lead our industry out of the recovery…and advertising will lag. SEGUE: Of course, not all GDPs are created equal.
  • Date Here we have a selection of established and emerging markets. You see countries in Europe, along with Canada, Japan and the U.S., flat or down in the near-term—and consumers in these countries tightening their belts. At the other end of the spectrum are those export countries that are barely breaking stride today. So that leapfrog effect we just talked about, you don’t see that in the outlying years in India and China. That’s because there’s no big rebound. Both GDP and E&M spend simply continue to grow in healthy double digits. Some other interested stories unfolding: Russia and Brazil GDP paints a rosier picture than you see on the ground in the near term. These early GDP numbers are driven largely by inflation. You see the result in the near-term entertainment and media spending. We expect things to pick up, as you see, later in our forecast. We also continue to encourage you to look beyond solely the BRIC nations—Brazil, Russia, India and China—taking a more expansive view of opportunities in emerging countries. Saudi Arabia, which you see here, is just one attractive example. I talked a moment ago about South Korea. By 2013, Saudi Arabia(/PA) will overtake South Korea and rise from 26% digital revenues in 2008 to 60% digital revenues in 2013 (South Korea will be just behind at 57%). Again we see Internet access as the primary driver. We are predicting substantial gains in broadband and mobile access, while the rest of the entertainment and media market will be growing at a relatively slow pace. SEGUE: But no matter where you are in the world, driving and shaping all of this growth is the consumer. Back by popular demand to talk about your customers and changing consumer behavior is Michael Paterson.
  • Date Broadband is advancing at a furious pace …slowed but not stopped in the downturn…and recovering in robust fashion. Currently 2/3 of households have it but by end of the five year forecast will be 85% Mobile adoption and penetration – last year was launch of the Iphone – one year later $99 Iphone. Will enable huge uptake in internet usage on mobile - $120m in 2008 up to $1.3 billion on access in 2013. Technology enabling access Hulu is just one of the many compelling examples of our industry rising to the occasion. PVR - We are projecting that commercial-skipping will plateau as the DVR market matures, leading to improved broadcast network growth once the economy recovers. Impact of VOD – will replace PVR and stop advertising skipping Music will be the first segment to go ‘majority digital.’ I n 2012, digital distribution will overtake physical distribution. An interesting divergence underway: In North America and Europe, the market will be dominated by Internet distribution. In Asia and Latin America, mobile music will dominate…in Asia because mobile will be the dominant Internet platform Games and movies are connecting well with cash-strapped consumers today. Seen as affordable entertainment. For video games, the current generation of connected consoles and the rising number of broadband homes are a healthy combination—adding up to lots of bang-for-your-buck, quality, stay-at-home time. And, when consumers want to go out. They’re going to the movies and finding great value. Attendance is up about [ 10 %] from this time last year. Movies are also benefiting from premium prices for 3-D. Twitter, facebook – connected and informed – different ways of finding information – how does this impact advertising model
  • Date Dark blue is spending on digital & mobile - Internet access, online and wireless video games, video on demand, mobile TV, digital downloads of movies and music, online movie rental subscriptions, mobile music and electronic books. You can see on the light blue line – see impact on economic downturn on the more traditional aspects of our industry — print newspapers and magazines, television subscriptions and advertising, DVDs, music CDs — every aspect of your business that’s not connected. . These platforms will expand at nearly 10 times the rate of the non-digital/mobile marketplace. Your customers like the flexibility…the value…the choice that digital delivers…and when they stay home to save money, they often actually wind up spending money on many of your products. Usage increasing exponentially but where we fall short is in monetizing these dramatic shifts in consumer behavior. Traditional brands and digital work together – globe and mail, tsn
  • Date Global advertising is in broad decline. Here we see the familiar dip and recovery we’ve talked about all afternoon — with one quite meaningful exception: Advertising does not make its way back to renewed growth. Simply put, it will not be an easy few years for this industry, which is so heavily dependent on advertising. Global advertising will fall by 12.1% this year...by 2.7% next year …and slowly begin clawing its way back up in 2011. Nevertheless at the end of our forecast period, advertising still trails behind 2007 levels. These redistributions don’t necessarily mean that companies are advertising less. More likely they will find that they can achieve their objectives more cheaply because advertising will have grown much more effective. The cost of marketing—whether a movie, a car or a remarkable blanket with sleeves—will come down with the far greater inventory…the significant shift in supply and demand…that an expansive digital environment creates. More inventory, more competition – cheaper to advertise and different ways to connect
  • Date Here we see the forecast broken out by segment. Of course, it’s no coincidence that the story here mirrors what we’ve just heard about shifting consumer behaviors. As consumer behavior fragments across entertainment and media…advertising revenues are following suit. They are spreading out over the digital landscape…in order to meet up with consumers in all of these new areas of their connected lives…and not necessarily regrouping around television and other traditional media with the recovery. As a result, for example, the Internet will account for 19% of global advertising in 2013, compared with 12% last year and only 4% in 2004. Of course, to continue to win ad spend from traditional channels, new advertising models will need more accurate targeting and relevance to the consumers. They will have to prove to advertisers that the digital alternative truly is more effective. This will require greater transparency and accountability over audience metrics and cleer returns on ad investment.
  • Date Television advertising…one big story very closely watched…overall flat through our forecast. Underneath the surface: Broadcast television we expect to be down 16.1% this year…and overall 2.7% lower in 2013 than it was in 2008—just under $3.6 billion. Cable network advertising growth will see a more robust recovery—driven both by viewership gains and the introduction of addressable advertising later in our forecast. We will hear more about the future of the news later in our program. Without question, the Internet is creating tremendous demand for information. But consumer behavior is moving far more quickly than the revenue models. With regard to Internet advertising more broadly here in Canada., steep declines in display and classified will offset continued growth in search advertising, leading to a decline in wired advertising during 2009. We then expect growth to return in the single digits until 2012. Wired Internet advertising will expand by 5.7% CAGR to $31 billion. Mobile advertising is much smaller, rising to just $3 billion in 2013…but growing quite a lot faster at 14.8% CAGR. (to be updated with Canadian data) So we see overall here a very formidable picture. But also some rays of hope in the digital world. Internet advertising, for example, will end the forecast period the second largest generator of revenues in all advertising—over half the revenues of the dominant revenue provider—television.
  • Date … Into the digital future with its far greater range of opportunities to connect with consumers, target your ads and make them more accountable and effective. Advertising will become much more interactive —engaging consumers in genuine, high-value ways. Creative, interactive campaigns will prevail, particularly in social media, in video games and on interactive television. Clicking on a billboard as you commit Grand Theft Auto or getting a closer view of that sports car on your favorite show will be increasingly appealing options—for advertisers and consumers. Mobile advertising will continue to grow…alongside broad understanding that these ads must be carefully targeted, respectful of consumer’s privacy and highly relevant with consumers indicating precisely what brands they will allow into this highly personal space. The cross-platform future is here. Priority #1 for virtually every entertainment and media company is monetizing their library, their intellectual property in as robust a fashion as possible. This means fully leveraging traditional distribution, mobile distribution, Internet distribution—every opportunity to deliver the seamless cross-platform content experience that consumers want today and will expect tomorrow. Audiences will be fragmented, effective advertising will have to aggregate the opportunity across platforms…understanding that the consumer is likely multi-tasking through several media all at once throughout their day, and it will take a variety of impressions to deliver one cohesive message that gets their attention and delivers the desired result Another way to reach consumers is to embed right into the content they love. From product placement in reality shows to brands sponsoring whole online and television broadcasts or even series, we see this more and more today. So long as it’s a good fit, and it’s done in a creative and relatively seamless way, it’s showing some encouraging results. And, around the world, these strategies will be different. Beyond cultural differences, a major factor will be the state of online and mobile infrastructure development and consumer adoption. For example, there remain many parts of the developing world where print magazines and newspapers continue to do quite well …as does traditional television and radio advertising. In these places, too forward an online or mobile strategy might be too far ahead of the curve. So we need to leverage all of these trends—and continue the innovation-in order to deliver new advertising models and successfully adapt existing models withstand the current downward pressure. It is a tall order. There will be no silver-bullet solution. But I do believe, at the end of the day, the outcome will be advertising that is far more effective and relevant—increasing its value to both consumers and advertisers.
  • Globally, Internet advertising is expected to grow from $60 billion in 2008 to $87 billion in 2013, a 7.7% CAGR. Companies are beginning to think long and hard about how they’re going to be able to monetize their content and capitalize on their brands. A lot of consumers already know –and are now expecting – free content. Over the coming years are clients will need to create new business models that will support the monetization of content – that is, how they generate profits from the information they’re making available online. Consumers welcome well thought out rich content advertising when they are interested in products. The internet can effectively serve that need.
  • Television network market consists of advertiser spending on conventional and specialty networks, plus other sources of revenue that vary by region. NA includes license fees paid by TV distributors to basic and premium cable networks. EMEA ad Asia Pacific includes public TV license fees. Net advertising figures – spending less agency commissions and discounts.
  • Date Consumers on t he move …advertising revenues in hot pursuit. It all adds up to an inarguable case for digital migration. Where do we go from here? We get in the best position we possible can for the coming upswing. This is the first cyclical slump to take place in an environment where consumers and businesses have the option to respond with new buying, spending and investment decisions. We believe that both will seize the opportunity …one group in a quest for value and out of enthusiasm around all the new ways to enjoy entertainment and media…the other—that’s all of us—largely out of necessity . The race is on. B y 2013, the result will be a more fragmented landscape characterized by diverse business models, each specifically tailored to work with particular types of consumers, forms of content and/or national marketplaces. What will it take to be successful. We’ve identified six common success factors in our forecast. 1-You need to have a unique offering. Whether the model is ad-funded, subscription or a combination of the two, you need to provide a content experience that cannot be readily duplicated elsewhere. Maybe you allow mobile micro-payments via an iPhone or you provide on-demand access to TV shows ON your TV to help fans catch-up with their favourite shows. It’s got to be unique …and exciting. 2- Jerry touched on this already. Be cognizant of where you’re doing business. The Outlook can be extremely helpful here. You want to know how many folks have a cell phone in Argentina? How many households have broadband in Russia? We have the answers — and projections moving forward. Jerry mentioned that mobile broadband access will overtake wired broadband access in Asia next year. Jerry mentioned that many parts of the developing world are behind on their Internet infrastructure. These are essential pieces of knowledge as you build your global strategies. [CLICK TO DISPLAY NEXT TWO BULLETS] These next two we know … and are all very hard at work executing on today” Listen to your customers . Engage with them. Follow their lead. They are some of the most import an t partners you have today — with a make or break role in the ultimate success of your digital transformation. Bring them into your decision making. Next: Know what you can and cannot do. Focus on your core capabilities and make sure you have the right alliances and partnerships and acquisitions to fully and effectively exploit the digital opportunity. Entertainment and media companies ….technology companies…local partners around the world. Everyone has a stake in working much more closely together. You need to be where your customers are. Innovative relationships help you get there fast. SEGUE: Last but hardly least … [CLICK TO FINAL TWO BULLETS] If you follow your customers …and build up your relationships and alliances…then you are well-positioned to exploit the heck out of your intellectual property. We know what consumers want? Mobility. Convenience. Quality. So deliver it. Invest NOW for the future environment, and you will be well-positioned to exploit the coming economic upturn. Today most companies derive the majority of their revenues from a limited number of channels. That has to change. Your customers are moving on. Take your brands…your characters…your titles…and you patents and get them out to consumers across the digital/mobile landscape. Does this present often extraordinary tactical and operational challenges? You bet. Release windows. Platform-specific rights. Piracy. Privacy. We know. We’ll help you work through it, but the change has got to come. There is no place to hide. This has to be a very active, robust and vigorous piece of your day-to-day life not in 2013, not next year, but right now. T he industry that emerges from this recession will not be the industry that went into it. I t will be a transformed industry. As you lead this transformation, we hope that the Outlook will be a tremendous resource helping you make informed decisions. SEGUE: And, because we are all going through this together, I’d like to turn to the part of this event that I look forward to the most each year, and that’s our conversations with all of you. [TRANSITION TO REST OF PROGRAM]
  • Date
  • Who’s Spending, Who Isn’t - The Next 5 Years in Entertainment and Media

    1. 1. Michael Paterson Partner, Entertainment and Media Practice  Global entertainment and media outlook 2009-2013 
    2. 2. No place to hide from the digital transformation Slide PricewaterhouseCoopers
    3. 3. <ul><li>Internet Access Spending: Wired and Mobile </li></ul><ul><li>Internet Advertising: Wired and Mobile </li></ul><ul><li>TV Subscriptions and License Fees </li></ul><ul><li>Television Advertising </li></ul><ul><li>Recorded Music </li></ul><ul><li>Filmed Entertainment </li></ul><ul><li>Video Games </li></ul><ul><li>Consumer Magazine Publishing </li></ul><ul><li>Newspaper Publishing </li></ul><ul><li>Radio and Out-of-Home Advertising </li></ul><ul><li>Consumer and Educational Book Publishing </li></ul><ul><li>Business-to-Business Publishing </li></ul>Slide Outlook coverage Slide PricewaterhouseCoopers
    4. 4. -10.0 -5.0 Slide Global Outlook - A fragmented road to recovery 2009-10 CAGR 2011-13 CAGR % % % % % 0.0 5.0 10.0 15.0 B2B Publishing Cons. & Edu. Book Pub. Radio/Out-of-Home Newspaper Pub. Consumer Mag. Pub. Video Games Filmed Entertainment Recorded Music TV Advertising TV Sub. and Lic. Fees Internet Ad: Wired & Mobile Internet Access 2.4 2.0 3.1 1.5 2.8 8.0 5.4 -0.2 4.0 8.3 12.9 11.8 -8.8 -1.6 -4.4 -7.1 -6.2 6.6 1.9 -5.9 -5.8 3.4 0.3 5.4
    5. 5. Canadian E&M Outlook 2009-2013: $37 billion (2.2% CAGR)
    6. 6. Television subscriptions <ul><ul><li>Reaching $252 billion in 2013, 6.3% CAGR </li></ul></ul><ul><ul><li>North America and EMEA are virtually equal in size as the largest markets at more than $74 billion in 2008 </li></ul></ul><ul><ul><li>Asia Pacific is fastest-growing, 10.5% CAGR to $45.4 billion in 2013 </li></ul></ul><ul><ul><li>Canada relatively slow growth, 3.8% CAGR to $5.4 billion </li></ul></ul><ul><ul><li>Canada’s bright lights are growth in video on demand forecasted at 14.9% CAGR to $163 million in 2013 </li></ul></ul>Market trends
    7. 7. Filmed entertainment <ul><ul><li>Reaching $102.1 billion in 2013, 4% CAGR </li></ul></ul><ul><ul><li>Asia Pacific will be the fastest growing, rising by 5.7% CAGR to $23.3 billion in 2013 </li></ul></ul><ul><ul><li>U.S. remains largest region growing at 3.3% CAGR to $41 billion </li></ul></ul><ul><ul><li>Canada </li></ul></ul><ul><ul><li>Forecasted to grow 4.2% CAGR from $3.4 billion to $4.2 billion </li></ul></ul>Market trends
    8. 8. Newspaper publishing <ul><ul><li>Decline of 10.2% in 2009, followed by compound annual decrease of 2% to 164.6 billion in 2013 </li></ul></ul><ul><ul><li>Print remains largest component of newspaper market, despite being the most severely impacted by economic downturn </li></ul></ul><ul><ul><li>Proportion of total revenues accounted for by print advertising will from 57% to 51% in 2013 </li></ul></ul><ul><ul><li>Canada </li></ul></ul><ul><ul><li>Community and “free” papers continue to perform relatively well </li></ul></ul>Market trends
    9. 9. Radio and Out-of-Home <ul><ul><li>Radio declining over next two years and then rebounding rising to near 2008 levels in 2013 </li></ul></ul><ul><ul><li>Satellite radio subscriptions will be fastest growing component, averaging 9.4 % CAGR to $5.1 billion from $3.3 billion in 2008 </li></ul></ul><ul><ul><li>Canada </li></ul></ul><ul><ul><li>Advertising market declining 2.1% over the forecast period, leveling off in 2013 at just above 2008 level of $1.2 billion </li></ul></ul><ul><ul><li>Growth of satellite radio will be hampered by poor automotive sales, but will still average 21.5% CAGR </li></ul></ul><ul><ul><li>Out-of-Home below 2008 level of $490 million until 2012 </li></ul></ul>Market trends
    10. 10. Video games <ul><ul><li>Will reach $73.5 billion in 2013, 7.4% CAGR </li></ul></ul><ul><ul><li>Consoles continuing to drive market, representing 54% of overall spending </li></ul></ul><ul><ul><li>Online and wireless game market – fastest growing segments </li></ul></ul><ul><ul><li>Asia-Pacific has fastest growth at 9.4% CAGR </li></ul></ul><ul><ul><li>Canada </li></ul></ul><ul><ul><li>6.2% CAGR to $2 billion in 2013 </li></ul></ul><ul><ul><li>Canada is 3 rd largest developer of video games in the world </li></ul></ul>Market trends
    11. 11. Slow economy, faster digital migration Slide Slide PricewaterhouseCoopers
    12. 12. Digital grabs revenue share – Canada Global digital vs non-digital spend 2008 13 Slide Non-digital Canada digital vs non-digital spend 2008 13 Non-digital Digital 21% Digital 31% Digital 20% Digital 32%
    13. 13. 2009 Slide Global nominal GDP Global E&M spending Global E&M will leapfrog GDP with recovery (% Growth) Global consumer/user-end spending Global advertising -15 -10 -5 0 5 10 2004 2005 2006 2007 2008 2010 2011 2012 2013
    14. 14. Slide Established v. Emerging Markets Slide PricewaterhouseCoopers Established v. emerging markets Country/region GDP 2009-2010 E&M spending growth 2009-2010 GDP 2011-2013 E&M spending growth 2011-2013 United States 0.1% -4.3% 4.6% 5.1% Canada 1.0% -2.9% 4.8% 5.8% UK -0.4% -3.7% 4.1% 4.7% Japan -3.9% -2.2% 2.8% 3.2% Germany 0.0% -2.7% 3.8% 3.2% Saudi Arabia/Pan Arab 4.7% 10.2% 9.3% 18.5% India 10.9% 9.3% 12.6% 11.6% China 9.7% 7.5% 12.2% 10.9% Russia 4.5% -5.9% 8.3% 10.7% Brazil 6.4% -0.1% 7.7% 7.9%
    15. 15. Consumer Behaviour - Digital life Slide Slide PricewaterhouseCoopers <ul><li>Always connected </li></ul><ul><li>Multi-tasking </li></ul><ul><li>Our time vs. prime time </li></ul><ul><li>Music crosses the threshold </li></ul><ul><li>Games & movies </li></ul><ul><li>Interactive & social </li></ul><ul><li>Informed </li></ul>
    16. 16. Digital/mobile to account for 78% of all E&M growth Slide Total spending on digital/mobile platforms Other consumer/end-user/access spending 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 2004 2005 2006 2007 2008p 2009 2010 2011 2012 2013 ($ Millions)
    17. 17. Slide 2013 global ad spend still trails 2007 levels Global advertising market (US$ Millions) 400,000 425,000 450,000 475,000 500,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 8.1% 6.6% 5.5% 4.7% 1.4% 5.9% 6.1% -1.1% -12.1% -2.7%
    18. 18. Slide Global advertising by segment % % % % 2009-10 CAGR 2011-13 CAGR
    19. 19. Slide Canada advertising by segment % % % % 2009-10 CAGR 2011-13 CAGR
    20. 20. Changing face of advertising Slide Slide PricewaterhouseCoopers <ul><li>Fragmentation </li></ul><ul><li>Connected </li></ul><ul><li>Targeted </li></ul><ul><li>Interactive </li></ul><ul><li>Mobile </li></ul><ul><li>Cross-platform </li></ul><ul><li>Branded content </li></ul><ul><li>Cognizant of regional differences </li></ul>
    21. 21. Internet advertising <ul><ul><li>Fastest-growing segment reaching $86.7 billion in 2013, 7.7% CAGR </li></ul></ul><ul><ul><li>Asia Pacific largest and fastest growing region at 18.1% CAGR, to $21.2 billion in 2013 Canada </li></ul></ul><ul><ul><li>Canada forecasted to grow faster than the US at 8.6% CAGR to $2.1 billion </li></ul></ul><ul><ul><li>Mobile advertising will continue to grow throughout forecast period, driven by expansion in mobile access subscriber base </li></ul></ul>Market trends
    22. 22. Television advertising <ul><ul><li>Reaching $168 billion in 2013, flat during forecast period and returning to 2008 levels in 2013 </li></ul></ul><ul><ul><li>North America remains largest market, despite declining 0.6% compounded annually over the five years since 2008 </li></ul></ul><ul><ul><li>Latin America fastest-growing, averaging 1.4% growth Canada </li></ul></ul><ul><ul><li>Sharp decline in 2009 of 11.2%, followed by rebound in 2010-2013 reaching $3.1 billion in 2013 </li></ul></ul>Market trends
    23. 23. Slide PricewaterhouseCoopers E&M Outlook 2009-2013: Positioning for the upturn <ul><li>Unique offering </li></ul><ul><li>Global opportunities </li></ul><ul><li>Leveraging brand to generate interest in new platforms </li></ul><ul><li>Responsive to your customers </li></ul><ul><li>Innovative capabilities & relationships </li></ul><ul><li>Cross-platform exploitation </li></ul><ul><li>Face tactical & operational challenges </li></ul>
    24. 24.  www.pwc.com/outlook