Media and entertainment companies are facing sharp changes in their global customer base over the next four years as a growing middle class in Bric countries and other fast-growing markets narrow the gap between digital media “haves” and “have-nots”, a new forecast cautions.
PwC, the audit and consultancy firm, sees Brazil, Russia, India, China and the once small media markets of the Middle East, north Africa, Mexico, Indonesia and Argentina doubling their share of global entertainment and media revenues to 22 per cent by 2017, even as digital “tipping points” transform larger western markets.
China, now the fifth-largest media market, will overtake the UK and Germany to become the third largest after the US and Japan by 2017. Brazil will pass Canada, South Korea and Italy to become the seventh largest and India will pass Australia to be just outside the top 10, PwC forecasts.
On a global basis, mobile internet revenues will surpass those from fixed broadband by 2014, PwC predicts, and the spread of smartphones and tablets enabled by mobile broadband will take digital entertainment and media spending to 44 per cent of the total in mature markets by 2017.
This growth in smart devices is “democratising” access to media, said Marcel Fenez, head of PwC’s global entertainment and media practice. “Two to three years ago, penetration of smart devices was low.
“They were expensive and only available in certain markets, and the infrastructure wasn’t there to support them,” he noted, adding that the challenge for media companies would be to understand and serve their new, more international customer base.
Even as consumers shift their consumption to digital media, however, they are still proving reluctant to shift spending proportionately, suggesting that the media industry’s concerns about exchanging traditional dollars for “digital dimes” will persist.
Consumer spending on digital content, which accounts for just 9 per cent of entertainment and media revenues, will grow to only 16 per cent by 2017, forcing media companies to rely more on advertising, business-to-business revenues and other digital income.
Digital advertising revenues will continue their rapid growth, PwC predicts, but gaps will persist between the percentage of advertising spent online and the time consumers spend on digital platforms.
This was because advertisers still needed better cross-media measurement tools, Mr Fenez said, noting that “measurement standards have generally tended to lag the developments in the media”.
PwC, which forecasts a tipping point where home video revenues overtake box office takings in the US in 2017, predicts a blurring of the lines between technology and media companies as groups from Google’s YouTube to Netflix, the streaming video platform, invest in producing their own content. There is “a race for content,” Mr Fenez said