The global entertainment & media (E&M) industry surged ahead last year, strongly outpacing overall global economic growth. Following a pandemic-related 2.3% decline in 2020, E&M revenue rose a strong 10.4% in 2021, from US$2.12trn to US$2.34trn . With the industry becoming more digital, more mobile and more youth-oriented, virtual reality (VR) and gaming are powerful growth drivers, while digital advertising permeates all of the industry. These are findings from PwC's Global Entertainment & Media Outlook 2022-2026 the 23 rd annual analysis and forecast of E&M spending by consumers and advertisers across 52 countries and territories.
Findings in this year's Outlook include:
- Global video games and esports revenue totaled US$215.6bn in 2021 and is forecast to grow at a 8.5% CAGR to US$323.5bn in 2026. Asia Pacific generated the lion's share of revenues in 2021 with US$109.4bn , almost double North America , the second highest region. Gaming is now the third-largest data-consuming E&M content category, behind video and communications.
- VR continues to be the fastest-growing E&M segment, albeit from a relatively small base. Global VR spend rose by 36% y-o-y in 2021 to US$2.6bn , following on the hot 39% growth in 2020. Growth between 2021 and 2026 is expected at 24% CAGR, bringing the segment to US$7.6bn . Gaming content is the primary contributor to VR revenue, taking in US$1.9bn in 2021. This should increase to US$6.5bn in 2026, 85% of total VR revenue.
- Advertising's spread throughout the digital world has made it a dominant industry category. After a decline of nearly 7% in 2020, advertising grew an impressive 22.6% in 2021 to US$747.2bn . Driven almost entirely by digital, advertising is set to grow at a 6.6% CAGR through 2026. Internet advertising revenue is seen growing even faster, expanding at 9.1% CAGR. In 2026, advertising is projected to be a $1tn market and the largest E&M revenue stream, having surpassed consumer spending and internet access.
- After growing by 35.4% in 2020, Over-the-top (OTT) video surged another 22.8% in 2021, pushing revenues to US$79.1bn . The pace of OTT revenue growth will moderate somewhat; it is expected to grow at a 7.6% CAGR through 2026, pushing revenues to US$114.1bn .
- Traditional TV, beset by competition from OTT streaming services, still generates considerable revenues, but its inexorable decline will continue, with global revenues projected to shrink at a -0.8% CAGR from US$231bn in 2021 to US$222.1bn in 2026.
- Global cinema revenue is bouncing back, reversing its pandemic-driven losses, and is expected to reach a new high of US$46.4bn in 2023. Box office revenue is projected to reach US$49.4bn in 2026 from US$20.8bn in 2021, an 18.9% CAGR. China surpassed the US to become the world's biggest cinema market in 2020, and is expected to retain this leadership through 2026.
- Live music revenue is projected to exceed pre-pandemic levels in 2024. Digital music- streaming subscriptions are driving growth in the recorded music sector where revenues are forecast to rise from US$36.1bn in 2021 to US$45.8bn in 2026
- The growth of content is fueling massive data consumption – 2.6mn petabytes (PB) of data were consumed in 2021, and it is expected to rise at a 26% CAGR to reach 8.1mn PB by 2026. Gaming will be the fastest-growing data consumer over the forecast period, with a 29.6% CAGR expected. Mobile handsets will be the fastest-growing device category between 2021 and 2026, increasing at a 28.8% CAGR and expected to push mobile data consumption up from 1.1mn PB to 3.8mn PB.
Werner Ballhaus , Global Entertainment & Media Industry Leader, PwC Germany, said: "Industry press tends to focus on the companies that have dominated the E&M industry. But it is the choices that billions of consumers make about where they will invest their time, attention and money that are fueling the industry's transformation and driving the trends. We are seeing the emergence of a global E&M consumer base for the coming years that is younger, more digital and more into streaming and gaming than the current consumer population. This is shaping the future of the industry."
North America dominates per capita E&M, but faster growth resides elsewhere
At a regional level, North America commands by far the highest E&M spend per capita, at US$2,229 , nearly double Western Europe's US$1,158 . By contrast, Asia Pacific , which was the largest E&M region by revenue in 2021 at US$844.7bn , has per capita spend of US$224 . The Middle East and Africa have the lowest per capita E&M spend of any region globally, at US$82 .
The top ten growth markets by CAGR, meanwhile, are focused in Latin America , Middle East , Africa and Asia , with OTT video and gaming providing the majority of revenue growth, and esports and cinema seeing fast growth as well. Turkey (estimated 14.2% CAGR), Argentina (10.4%), India (9.1%) and Nigeria (8.8%) are top-ranked for E&M consumer spend growth prospects over the five year forecast period.
The metaverse awaits
In the not-too-distant future the metaverse could become a stunningly realistic world where individuals access immersive virtual experiences, through a VR headset or other connecting device. Because the metaverse is an evolution that may profoundly change how businesses and consumers interact with products, services and each other, its potential financial and economic value goes far beyond VR. In time, much of the revenues associated with video games, music performances, advertising and even e-commerce could migrate into the metaverse.
How big is the E&M opportunity in the metaverse? The fast-growing market for VR is a starting point to consider. It is currently one of the smaller segments tracked, but the 36% rise in global spending over the past year is a hint of its long-term potential. The global installed base of stand-alone and tethered VR headsets is projected to grow from 21.6m in 2021 to 65.9m in 2026.
CJ Bangah, Technology, Media and Telecommunications Principal, PwC United States, said : "Coming out of the pandemic, we've seen a strong recovery across key sectors. This has set a new growth platform for Entertainment and Media heading into a turbulent future with fault lines, fractures, and new monetization opportunities dotting the landscape. As we enter FY23 and beyond, expect to see continued growth in digital-only and digital-enabled content and media experiences, gaming becoming the new battleground for consumer entertainment, and content and streaming being transformed by market and consumer dynamics."
The PwC Global Entertainment & Media Outlook, with the accompanying publication, "Fault Lines and Fractures: Innovation and Growth in a New Competitive Landscape," provides in-depth analysis of global E&M consumer and advertising spending. The Outlook includes five-year historical and five-year forecast data and commentary for 16 industry segments across 52 territories. Segments include advertising (TV, internet, out-of-home); books; business-to-business; cinema; data consumption; internet access; music, radio and podcasts; newspapers and consumer magazines; OTT video; TV and home video; as well as Metaverse and NFT included for the first time this year.
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