2002 may not seem like the distant past, but for the entertainment and media industry, the early 21st century is practically a long-forgotten golden age. Over the past decade-and-a-half, the sector has seen unprecedented levels of industry upheaval – most of it caused by digital disruption.
In this latest Digital Pulse podcast, David Wiadrowski discusses PwC’s Australian Entertainment and Media Outlook report, now in its fifteenth edition. David looks back at how much digital has changed the entertainment and media landscape over the past 15 years – from the disruptive power of streaming to the rise of new internet-enabled industries such as social media.
While digital technology has done much to reshape the worlds of media and entertainment, it has also paved the way for growth. Australia’s entertainment and media industries are particularly well placed to take the digital leap to leverage opportunities from Asia’s 4.4 billion consumers.
You can listen to the podcast using the player below or subscribe to the Digital Pulse Podcast on iTunes. A full transcript of the audio is included below.
Val Watkins: For the past 15 years, the Entertainment and Media Outlook has provided a vital roadmap for Australia’s entertainment and media industries, forecasting trends and emerging digital technologies for sectors such as broadcasting, publishing, advertising and video game development.
Now in its fifteenth edition, the 2016 Outlook was launched earlier this month at the Mumbrella 360 conference in Sydney. On the eve of the report’s launch, I caught up with PwC Australia’s technology, entertainment and media industry leader David Wiadrowski to discuss the digital trends and opportunities in the latest outlook. David begins by noting just how much has changed in the 15 years since the first edition of the Outlook was published.
David Wiadrowski: When we look back over the last 15 years to our first edition of Outlook, which was done in 2002, it’s very interesting to see what’s changed and what hasn’t changed. A number of sectors that we followed in the past 15 years have been struck out of the park by major technological change. So if you look at newspapers and publishing, very much affected by digital. Video and audio affected by streaming. Advertising affected by data analytics. Marketing affected by new marketing opportunities. Interactive games, well that’s a story in itself, and obviously the mobile phone and the smartphone has been very pervasive over the last 15 years as everything has gone mobile.
You know if we look back at some of the particular things that have changed over that last 15 years, in 2002, newspapers had 41% share of the ad market, they have nothing like that now. In the consumer entertainment space, in 2002, physical music was growing at 12%, which really was reflective was all of those CDs that that generation was buying at that point in time, building those large collections of CDs. I think if you were a music executive in the music industry now, you’d be salivating at a 12% growth rate.
Val Watkins: Another key difference between 2002 and 2016 has been the resurgence of online businesses, in the wake of the bursting dotcom bubble at the end of the 1990s. In fact, the Entertainment and Media Outlook did not even have a section covering the internet in 2002, although as David notes, the report did predict a resurgence for the digital economy.
David Wiadrowski: If you look at the Australian community, about 55% of us were connected to the internet in 2002, albeit largely by dialup. And that was pretty good when you compare that about 10% of the world was connected at that point in time so as a country we were, even in 2002, quite digitally enabled, albeit in more traditional spaces. Everything in terms of phones, mobile phones – we didn’t have smartphones in 2002 – and the main brands in 2002 were Motorola and Nokia. Nokia had 35% market share of handsets at that time.
So, when you look back to 2002, it was a lot less complex world, we only followed eight sectors at that time whereas we now follow twelve, but one of the most pleasing aspects of our first edition of Outlook in 2002 was our prediction that PwC forecasts a highly digitised future which will be dominated by customised and niche content. So we’re pretty proud that we got that prediction right.
Val Watkins: Turning to specific industry sectors, I asked David about the out-of-home (OOH) advertising market – a sector previously defined by billboards, bus shelter posters and advertising on public transport. As David noted, the sector has done much to embrace digital innovation – and is enjoying robust growth because of it.
David Wiadrowski: The out-of-home advertising sector is probably a fantastic example and role model for a traditional platform that has actually embraced digital very successfully in a very short period of time. Now going from the environment of large, static billboards that whilst they might’ve been placed in strategic locations, getting that engagement from the consumer was getting harder and harder but certainly a number of the operators in Australia have embraced and rolled out the digital billboards, so that in itself provides a number of advantages: one is the ability to create a more engaging experience, two, the ability to turn the ads more quickly, and three, through innovation – through those digital billboards, to create actual engagement, whether it be through beacons or other technology, to then create an experience for the consumer as they view that digital billboard.
So we’re seeing significant growth in 2015 and that’s been double digit growth across the whole industry. And the digital element of that has been growing sort of 19-20 per cent and we see that growth rate continuing in digital through to 2020. So, the OOH advertising sector is a really good example of a traditional advertising business migrating successfully to this ever-disruptive digital world.
Val Watkins: Finally, I asked David about the key theme of this year’s Outlook report: achieving growth through diversity and inclusion. How did these themes intersect with digital technology? For David, the answer could be found in two key areas: the tech-savvy younger generations, and Australia’s proximity to the growth powerhouse of Asia.
David Wiadrowski: I think the overall theme of growth through diversity, particularly if you look at a number of the pillars behind that – particularly the talent one and the geography and markets one – so a lot of the digital disruption is being driven by the younger generation.
The younger generations tend to be the early adopters of new technology. The high level of smartphone use by the younger generation and the way they use that pretty much throughout their daily lives is really a key platform. And so, therefore, understanding their needs and their goals and what they want to use it for is important to the future success of business models.
And then as we look at some of the emerging markets to the north of us, we’ve got a very large population and a growing middle class, who again are quite technology savvy, having a good understanding of digital and what the consumer wants. You know I think it’s very important to businesses both here in Australia and those wanting to go into Asia. In reality, we operate in a global environment now, so in some ways, the Australian market of some 24 million consumers is quite small when you’ve got 4.4 billion consumers to the north of Australia. And really, purely from a scale perspective, accessing that market, understanding that growing middle class, understanding how they use technology, and then monetising that in the various businesses is going be the key to their success in the future.