The entertainment and media industry reconfigures

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The pandemic afflicting the world brought the global E&M industry’s growth to a shuddering halt. According to PwC’s Global Entertainment & Media Outlook 2020–2024, the COVID-19 pandemic has accelerated and amplified ongoing shifts in consumers’ behaviour, pulling forward digital disruption and forging industry tipping points.

Industry growth contracts
Amid a global recession, 2020 will see the sharpest fall in global E&M revenue in the 21-year history of this research, with a decline of 5.6% from 2019 – more than US$120bn in absolute terms. In 2009, the last year the global economy shrank, total global E&M spending fell by just 3.0%. However the forecast shows the industry’s fundamental growth trajectory remains strong and after the challenges of 2020, E&M is expected to reassume its outperformance. Projections show that in 2021, E&M spending will grow by 6.4%. Looking across the five-year forecast period, from 2019 to 2024, we’re forecasting overall revenue growth running at a 2.8% compound annual growth rate (CAGR).

Tipping point
The current pain in E&M is not evenly shared around the industry. It’s most acute in segments that COVID-19 literally shut down, such as events: live music, cinema and trade shows. One result is that E&M segments are being transformed much earlier than was originally projected. As recently as 2015, box office revenue was three times that of subscription video on demand (SVOD). SVOD revenue will overtake box office in 2020 and is projected to surge reaching more than twice the size of box office in 2024.

Winners and losers emerge…
With people staying at home, over-the-top (OTT) video has seen global revenue surge by 26.0% in 2020. And it will keep rising strongly in the coming years, almost doubling in size from US$46.4bn in 2019 to US$86.8bn in 2024.  At the other end the forecast is that in 2024, cinema revenues for 2024 will be below their 2019 level. A further COVID-related impact is that the ongoing decline in global newspapers and consumer magazines has accelerated sharply in 2020, with overall revenues slumping by more than 14%. Other important sectors will struggle to claw back the growth they lost in 2019. For example, the global advertising sector – which will fall by 13.4% in 2020 to US$559.5bn – is not expected to return to its 2019 level until 2022.

Reconfiguration
Yet – perhaps counterintuitively – some “traditional” media has held its own despite the effects of COVID-19 and digital acceleration. Amid reports of book sales booming during lockdowns, total global consumer books revenue is projected to continue its upward trajectory, rising at 1.4% compounded annually between 2019 and 2024 to reach US$64.7bn. Live physical events is another long-standing segment looking to adapt to the reality of an accelerated digital world. With concert halls, exhibition centres and stadiums closed for much of the year, some live events are using digital platforms to stay connected to their audiences.

A year that stands apart
Although 2020 has been a challenging and disruptive year for most industries – including many segments of E&M, the longer-term outlook for the E&M industry as a whole remains bright. That said, it’s also clear that as normality slowly returns, there will continue to be winners and losers.

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Konstantina Logotheti

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