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Democratization of Digital Access Drives Media Growth

Digital services, mobile broadband, multiple screens boost segment spending

Market research, accounting and business services firm Pricewaterhouse Cooper has updated its annual and continuing study of consumer access to media and entertainment in “Global Entertainment and Media Outlook 2013–2017.”

It found consumer access to content and experiences is being improved by Internet access and growth in smart device ownership. According to PwC, even though traditional media will continue to dominate category spending during the period, growth will be concentrated in digital.

The Outlook predicts global entertainment and media spending will rise from $1.6 trillion in 2012 to $2.2 trillion by 2017, growing at a compound annual growth rate of 5.6%. The U.S. remains the largest market, reaching $632 billion.

Digital entertainment and media spending, driven by smart devices, is expected to account for 44% of spending in mature markets by 2017, up from 34% in 2012.

Businesses will increasingly engage with a global customer base and should focus on “speed, flexibility and insight” to engage and monetize connected consumers by delivering personalized, relevant content experiences.

 As media consumption fragments across devices, consumers increasingly demand their content on their chosen devices, when they want it, as evidenced by “cord-cutting.” Operators must adapt to consumer expectations for more on-demand content and use of the second screen.

Outlook shows, in the U.S., digital advertising is expected to account for 34% of advertising revenues by 2017, up from 22% in 2012. It also recommends advertising become platform-agnostic.

For content creators to adapt to consumer demands, they will need to harvest data, adapt product creation and distribution, along with embracing new business models.

To ensure content relevance and value, companies must build new business models. The study suggests: harnessing the power of second screens; optimizing the windowing of video content; bundling, in order to add value for content providers, operators and consumers; overcome the challenges of personalization by understanding consumers, while respecting their privacy; encouraging and facilitating content discovery and recommendation; delivering a differentiated experience to help deter piracy.

 Overall, U.S. advertising is expected to increase at a 4.1% compound annual growth rate from $167 billion in 2012 to $204 billion in 2017. Internet advertising is expected to average 13.7% CAGR followed by video games at 11.6%. TV advertising is expected to grow at 5.1%. Radio advertising is expected to grow at a 1.4% CAGR. Consumer magazine, business-to-business and newspaper advertising are all expected to decline.

In the U.S., Internet advertising is expected to continue to outperform all other entertainment and media segments, with gains of 13.7% compound annual growth rate expected. Filmed entertainment, business-to-business publishing, radio, TV subscriptions, music and consumer and educational book publishing are expected to generate growth, while consumer magazine publishing and newspaper publishing is expected to decline.

Overall, U.S. consumer/end-user spending is expected to grow by a 2.6% compound annual growth rate.