Global entertainment and media industry, spurred by advertising and digital, to hit $2.8 trillion market in 2027 even as growth rate decelerates: PwC Global Entertainment & Media Outlook
- Entertainment and media (E&M) revenues will grow every year through 2027 – creating a US$2.8 trillion industry – but the rate of growth will decline every year
- Advertising revenue to approach $1 trillion in 2027 and become the largest E&M sector, even as consumer spending loses steam and competitive landscape shifts
- Digital will account for nearly three quarters of E&M revenue by 2027, up from 55.2% in 2018
- Gaming sector remains a key driver of industry growth – particularly in Asia-Pacific – with global gaming revenues to hit $312B by 2027
- Live events to return to pre-pandemic highs in 2024 and outperform E&M industry at-large
- Global internet access to approach $1 trillion market as annual data consumption triples between 2022 and 2027
LONDON, June 27, 2023 /PRNewswire/ -- For the global entertainment & media (E&M) industry, 2022 marked an important inflection point. Total industry revenue rose 5.4% in 2022 to US$2.32 trillion – a sharp deceleration from the 10.6% growth rate in 2021 when economies and industries were recovering from the onset of the COVID-19 pandemic.
PwC's Global Entertainment & Media Outlook 2023-2027, which covers 13 sectors and 53 countries and territories, also finds that while the rate of revenue growth is expected to decline in each of the next five years through 2027 – in part due to weakening consumer spending – E&M will grow to become a US$2.8 trillion industry by 2027.
The Outlook paints a picture of an industry that is becoming more digital and increasingly dominated by advertising. By 2027, digital's share of E&M revenue will account for nearly three-quarters (70.8%) of total industry revenue, up from 55.2% in 2018. Meanwhile, global internet access is expected to approach a $1 trillion market as data consumption nearly triples between 2022 and 2027, from 3.4mn petabytes (PB) to 9.7mn PB.
Regionally, the US will continue to remain the largest global E&M market (growing from US$819 billion in 2022 to US$943 billion in 2027), followed by China (growing from $388 billion to $480 billion). China is forecast to grow at a 4.3% compounded annual growth rate (CAGR), compared with a 2.9% CAGR for the US.
Amid a broad-based resetting of expectations and flagging consumer strength, companies are seeking growth in sectoral hotspots (especially advertising and gaming), emerging technologies such as generative AI, and regions with outsized growth prospects like Asia.
Advertising revenues to approach $1 trillion as competitive landscape shifts
Advertising remains a key growth sector and is expected to approach US$1 trillion in 2027. At US$952.6 billion in 2027, it will be the largest of the three broad sectors the Outlook tracks: consumer, advertising, internet access. While advertising dollars are growing, they're getting spread more thinly as more market players – including e-commerce sites, video games and streaming platforms – take market share from large social media and search platform incumbents.
Werner Ballhaus, Global Entertainment & Media Industry Leader, PwC Germany, said:
"We have seen impressive growth in the entertainment and media industry over the past two years following a surge in demand for digital products during COVID-19. However, macroeconomic challenges, increased industry competition, and a reduction in production costs – particularly in digital services and experiences – have reduced revenues and consumers' willingness-to-pay. If companies in the EM industry are to successfully engage consumers and drive growth, they need to transform their service-offerings and tap into new and emerging markets and technologies, such as Asia and generative AI."
Macroeconomic pressures hit consumers, EM bottom-lines and M&A/VC deal-activity
Macroeconomic pressures, geopolitical instability and inflationary challenges hit consumers hard in 2022, pushing companies to reset expectations, refocus inward and seek new ways to drive growth in 2023 and beyond. Consumer spending on E&M products and services is expected to grow at just a 2.4% CAGR between 2022 and 2027. The declining growth rates were among the factors that have put an end to a long-term boom in deal activity in the E&M market globally, both for mergers and acquisitions (M&A) and venture capital (VC).
Gaming and emerging technology – such as generative AI – to lead industry growth
Gaming remains one of the powerhouses of the global E&M industry and will continue to remain a key driver of growth, particularly in the Asia-Pacific. Total gaming revenue is expected to rise from US$227 billion in 2023 to US$312 billion in 2027, representing a 7.9% CAGR. At the same time, industry players are embracing the convergence of emerging technologies such as generative AI – particularly in the areas of content creation, video games, and other entertainment categories – to drive industry innovation, scale and efficiency. Looking at industry growth rates, mobile augmented reality (AR) consumer revenue is expected to grow at the fastest rate, with a CAGR of 26%, followed by VR gaming revenue (with a CAGR of 19.5%).
Live sectors to outperform the E&M industry at-large
After a prolonged period of dormancy during the COVID-19 pandemic, live sectors have returned to growth and are poised to outperform the E&M industry at-large. Through 2027, live experience revenues are expected to grow at 9.6% CAGR, four times the 2.4% CAGR predicted for overall consumer revenue, highlighting the enduring appeal of live experiences. Cinema box office revenue will reach pre-pandemic levels by 2025, hitting US$43 billion (up from US$39.4 billion in 2019). China will again become the largest global box office market by 2024, after overtaking the US in 2020 and 2021. Global e-sports ticket sales revenue returned to pre-pandemic levels in 2022 after doubling in 2021 and growing by 147.8% in 2022. Live music and cultural event revenue is expected to surpass the 2019 pre-pandemic peak in 2024.
Werner Ballhaus, Global Entertainment & Media Industry Leader, PwC Germany, concluded:
"Increased reliance on mobile and digital technologies, heightened industry competition, an evolving regulatory environment, and disruptions posed by new and emerging technologies will create new tensions and possibilities in the years ahead for the sector. If companies are to retain market share and drive growth, industry leaders will have to be more creative about how they create, distribute and monetise products and services, while remaining cognisant of an evolving global regulatory and geopolitical environment increasingly conscious of data privacy."
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About the Outlook: PwC's Global Entertainment & Media Outlook, now in its 24th year, provides in-depth analysis of global entertainment & media consumer and advertising spending. The Outlook includes five-year historical and five-year forecast data and commentary for 13 industry segments across 53 territories. Segments include business-to-business; cinema; internet access and data consumption; internet advertising; music, radio and podcasts; newspapers, consumer magazines and books; Out-Of-Home advertising; Over-The-Top video; traditional TV and home video; video games and esports; virtual reality (VR) and augmented reality (AR). The full Outlook can be accessed at www.pwc.com/outlook.
Contact
Dave Faggard, Corporate Affairs and Communications, PwC US: david.faggard@pwc.com
Dan Barabas, Corporate Affairs and Communications, PwC UK: dan.barabas@pwc.com
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