Consumer spending is outpacing GDP growth in the UK and as such is acting as a significant driver for media growth, according to ABN Amro. The broker says that consumer expenditure accounts for almost 50% of industry revenues and its current resilient growth is providing a significant secular driver for media.
In a sector note on what it terms ‘consumedia’, ABN says that the recent volatility of the advertising market has led to little attention being placed on the role of consumer expenditure as a secular growth driver for the media sector. It expects this change in the near-future.
Consumer expenditure important for media Consumer spending has become increasingly important to the media sector, with expenditure on media outpacing GDP growth for the last 15 years, averaging 7% real growth annually, according to ABN Amro. Media has accordingly increased its share of household income from 4% to 7%.
Subscription-based media models have not only helped boost this share, but they have also reduced the degree to which consumer media spend is cyclical.
Technology drives consumer spend The broker says that there is a strong correlation between technological innovation and growth. Industries which have embraced digital technology – pay-TV and the internet, for example – are cannibalising older media such as print and music.
The report says that looking ahead there are only limited demand constraints to sustained increases in consumer media spend, with the industry’s ability to develop innovative new products key to garnering greater expenditure from households.
BSkyB particularly is set to benefit from such developments, says ABN.
