Strong Growth For Entertainment Industry Led By Online Games
The global entertainment industry is forecast to rise at a compound annual growth rate (CAGR) of 7.3%, reaching $1.8 trillion in 2009, due to improved economic conditions and an advertising upswing, according to a new report from PricewaterhouseCoopers (PwC).
Commenting on the report, Wayne Jackson, global leader of PwCs Entertainment & Media Practice said: “The entertainment and media industry continues to display an extraordinary ability to reinvent itself and create new revenues streams through innovative offerings that barely existed as recently as 2000.”
Jackson continued: “Online and wireless video games, online film rental subscriptions, licensed digital distribution of music, and the rapid adoption of ring tones and mobile music downloads are becoming critical components of the industry and driving significant revenues across all regions.”
A new report by Kagan Research predicts US video game sales to rise to $16 billion by 2007, up from $10 billion in 2004, a growth of 61%. The report also estimates that, by 2010, 54 million US households will own at least one portable video game console (see Advertisers Devise Ways To Cash In On Games Industry).
Asia-Pacific is forecast to remain the fastest growing region within the next five years, led by strong growth in China. PwC projects spending growth in China to be the highest in the world, at 25.2%, lead by double-digit increases in the internet, video games, casino gaming, TV distribution and recorded music segments.
Marcel Fenez, leader of PwC’s Entertainment and Media Practice for Asia-Pacific, attributes the region’s growth to the aggressive rollout of broadband infrastructure, enabling the country to generate a significant increase in media penetration.
Fenez does point out the increasing threat of piracy to the areas growth, however, saying: “The only cloud on the horizon is the on-going threat of piracy, which continues to hinder growth throughout Asia/Pacific, where efforts to stem the tide have had only limited success.”
In terms of the total market, PwC, forecasts global advertising spend to increase at a robust 5.9% during the 2005-2009 advertising period, rising to $477 billion in 2009 from $358 billion in 2004. Television advertising is projected to expand by 6.4% during this period, boosted by new channels and an expanding multi-channel household universe.
PwC confirms industry predictions in forecasting online advertising to be the fastest growing medium, with a projected 15.8% increase to $32 billion globally in 2009. JupiterResearch predict online adspend in the US to reach $16.1 billion by 2009 (see US Online Adspend To Reach $16.1 Billion By 2009).
The US is shown to expected the largest Entertainment and Media Market reaching $690 billion in 2009, despite being the slowest growing region at 5.6%.
John Middelweed, European leader of PWC Entertainment and Media said: “We’re forecasting healthy growth in EMEA with double digit increases in video games, as well as internet advertising and access spending, and TV distribution.”
According to PwC, Asia-Pacific will remain the world’s third largest region, projected to average 11.6% CAGR and reaching $432 billion in 2009.
