Key takeaways

  • The entertainment and media market is set to post 3% compound annual growth over the next five years.
  • A growing trust deficit between companies and consumers means certain segments must innovate in where and how they build that trust in order to compete.
  • Areas with phenomenal growth prospects will need to capitalise on their existing audiences to increase longevity.

With the release of PwC Australia’s Entertainment & Media Outlook 2018-2022 the entertainment industry gains new insights into its future.

While the forecast shows the industry increasing at a 3% compound annual growth rate (CAGR) from 2018 to 2022, there are many nuances when it comes to growth within the 12 segments that the report covers – from free-to-air TV to interactive games and everything in between. Depending on where in the digital journey each medium sits, they are faced with different approaches to achieving success.

All of them, however, involve building and maintaining trust with their customers amid an increasingly fragile environment where consumers vote with their feet when breaches of trust occur. Starting with content and the brand, companies need to focus on the key drivers of trust: advocacy, consistency, transparency and success.

Digital propelling
growth

While the overall Outlook forecasts broad-based growth, it will be unevenly distributed, with the fastest growth seen in the digital segments. Internet advertising is set to overtake the internet access market as the largest segment in the entertainment and media industry, totalling $1.27 billion, or 65% of the total advertising market in 2022.

Digital music is also an area buoying the overall music market. While the broader segment is set to post a 5% CAGR, digital music is expected to rise at a CAGR of 10.2%. The engagement of audiences will prove critical for supplementing revenue streams as the sale of CDs decline. Building engagement in this segment also pays some unexpected dividends: according to a Sonos study, families that play music out loud at home benefit from a 23% increased chance of kids helping out in household chores.

The radio market, which includes streaming, digital and podcasting, is seeing strong growth, with an estimated 4.1% growth expected over the forecast period. Podcasting in particular, which is tipped to record astronomical growth of over 85%, shows the success of combining trusted talent with engagement. Podcasts offer an uncluttered, intimate experience. Advertisers too are seizing on this opportunity, with 14% of advertising agencies using podcasts regularly in 2017, a three-fold increase on the previous year.

The increased competition from global video providers and faster, cheaper internet speeds is forcing free-to-air television to innovate to stay relevant, particularly with a forecast -3.9% CAGR. Those that will stand the best chance will be those that can successfully monetise their online catch-up services, utilising the data on their audiences to be gained from online options to better market content. Offering content across diversified platforms continues to be the trend to follow.

Improving trust in
digital

Consumer magazines and newspapers both are exploring diversified platforms, allowing consumers to access content in print and digital, but at the same time adjusting content to core expertise. For news publications, (whose estimated CAGR 2018-2022 is negative 5.9%) this means quality journalism, commentary and analysis – particularly when it comes to improving trust in digital publications. For consumer magazines, it is in leveraging their brand beyond the pages of the publication into value-adds, such as branded events, physical store promotions and social media.

Filmed entertainment faces a decrease in home entertainment rental and DVD buying but is being balanced by increases in box office spend and cinema advertising. The challenge for distributors, however, with a 65% increase in films, more cinema screens (up 11%) but less viewers (down 8%), is in finding new audiences that are global, but niche. Diversity in film making will go a long way to attracting these audiences.

Subscription television continues to rise in Australia, with an estimated 10.1% total market growth for the five year forecast period, with Netflix topping the subscription video-on- demand (SVOD) market and Amazon entering the fray with Amazon Prime. SVOD alone is predicted to grow by 30.1%. The introduction of the 5G wireless network will go a long way to enabling the growth of SVOD. The unprecedented speeds and low latency mean that consumers will be be able to readily access these services on-the-go.

Accessibility and
speed a focus

For books, games, and music, audiences are benefitting from the competitive landscape with an increased focus not on finding new audiences, but in capitalising on existing ones with better, more innovative, engagement.

“Changing customer expectations around convenience and experience are challenging book publishers to market products and authors in new and even more engaging ways,” the report says. Convenience is seeing accessibility and speed-to-consumer become a focus of book publishers, facing near flat growth over the next five years (0.4%), and the need for ‘experiences’ across channels to provide value to customers. The addition of online videos, blogs, conversational series, and tie-in podcasts is reducing the distance between author and reader while increasing discovery and engagement.

Interactive games have continued to outperform other consumer-funded entertainment sectors, with growth of 5.1% into 2022. Smartphone penetration and increased data speeds continues to aid in gaming expansion, and future growth alongside technological improvements seems likely. Much of this growth is coming from in-game purchases, over the actual sale of games themselves, emphasising that to keep relevant, the sector will need to build highly engaged online users via content and features.

Unlocking
growth

No matter the segment, the industry must maintain a focus on fostering customer trust, although the approach will be different for different areas of the entertainment and media market.

For those facing the need to increase market share, such as filmed entertainment and the consumer magazine market, that will mean growing new niche audiences. Diversifying audiences, by exploring new interests or successfully marketing to untapped groups will be key.

Others operating in areas of increasing competition, such as book publishing, gaming and music will instead need to focus on increasing the engagement of existing users. These areas have solid audiences but, albeit in different ways, will need to provide extra value to increase profit.

And finally, those being confronted by newer ways of viewing, such as free-to-air TV, print newspapers and consumer magazines will need to expand their hold in the entertainment and media sector through digital and physical innovation, be that via platforms, such as podcasting, online television/digital publishing or partnerships with physical stores and events.

 


For the full insight into the entertainment landscape over the next five years, view the Entertainment & Media Outlook 2018-2022 online.