A lack of broad diversity in the Australian media, advertising and entertainment sector is limiting our ability to take advantage of the digital growth opportunities with our neighbours to the near north, writes PwC’s technology, entertainment and media industry leader David Wiadrowski.

It’s clear that we need to get better at finding new opportunities overseas. In fact, this needs to be considered a strategic imperative in the search for growth.

However, this broad lack of diversity in the Australian media, advertising and entertainment sector workforce means the Asia opportunity is passing us by and the industry is not as well equipped for growth as it could be.

Digital’s
domestic growth

Our annual Australian Entertainment and Media Outlook, released this week, shows that across Australia’s media and entertainment landscape there is only overall moderate growth.

But there are pockets of high growth in digital. In particular, online video technologies, advertising on mobile platforms, and digital out-of-home advertising all show signs of strong growth through to 2020.

As a whole, the industry is projected to grow by 4.1% over the next five years.

Asia’s
box-office boom

In contrast, the markets to our near north are projected to deliver high growth, many at more than double the rate of the Australian market. There are high growth markets in Asian countries like Indonesia (13.2%), India (10.4%) and China (8.8%).

In China, for example, the film industry is soon to become the biggest in the world. PwC predicts China’s box office will overtake the US in 2017. At the same time the funding for Australian content is under pressure.

entertainment and media outlook 2016

The GDP growth rates in Asia far outstripped Australia in 2015, suggesting room for digital players in a range of geographically close markets.

A lack
of diversity

This year the Australian Entertainment and Media Outlook included geospatial economic modelling to identify who epitomises an entertainment and media industry employee in Australia.

The modelling revealed that the average employee in our media and entertainment sector is 27, male, Caucasian and lives in Sydney’s eastern suburbs or the inner west. He is also more likely than the average Australian to be monolingual, speaking only English at home.

It’s no wonder we’re selling off our entertainment businesses rather than buying into these exciting growth markets or putting boots on the ground. There has been a lot of consolidation of Australian businesses and overseas companies coming in for market share, a lot of which are from the US.

Our industry does not reflect an Australia that is becoming more diverse by the day, or an international market where economic power is shifting away from advanced economies and toward Asia and a block of faster-growing emerging economies.

 

entertainment and media outlook 2016

PwC’s geospatial economic modelling revealed a concentration of media industry workers in Sydney’s central and inner western suburbs. These workers are predominantly white, male and in their mid-to-late twenties — the ‘Bondi Hipster’ effect.

China’s
digital dominance

Australian entertainment and media businesses are also not immune to digital innovators tearing their business models apart. Whilst to date, China’s biggest internet players have been occupied at home, this is changing and Australian businesses cannot afford to be complacent.

Technology is smashing down centuries old barriers, like geography, that have protected Australian businesses from competition. The new players in this game are well capitalised, they bring enormous scale and they are customer focussed and fast moving.

Chinese companies have been innovating at the intersection of mobile, social and commerce to create some of the most valuable businesses on our planet. The biggest players are worth over US$400 billion. To put this into context that is nearly 50% of the market capitalisation of the entire ASX50.

entertainment and media outlook 2016

A range of innovative, digital-ready business models could be deployed to Asia.

A cultural pivot
to Asia

To capitalise on the Asia opportunity we need to get better at taking risks, making long-term bets, and we need to see ourselves differently. Culturally, we have quite a way to go before we are integrated with the thinking of the region, but this is essential if we are to survive and thrive.

Most Asians consider Australia to be part of Asia; we would definitely benefit if we adopted that way of thinking.


A digital download of the report will be available Thursday 9 June from 5pm. To purchase a copy of the Australian Entertainment and Media Outlook, click here.

The official Sydney launch will be broadcast live from Mumbrella360 on Thursday 9 June at 4pm. To view the Entertainment and Media Outlook launch webcast, please visit this link.

 

Contributor

David Wiadrowski

David Wiadrowski is PwC’s Technology, Infocoms, Communications and Entertainment (TICE) Leader.

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