Dubai: Digital-generated revenues will be in a position to go head-to-head with traditional platforms by the end of the decade, and generating $1.06 trillion (Dh3.89 trillion). This is based on estimates put out by the consultancy PwC on the global entertainment industry.
The fastest-growing category globally over these five years will be internet advertising, which is expected to see a compounded annual growth rate (CAGR) of 11.1 per cent — well ahead of that put out by revenues generated for internet-access at a 6.8 per cent CAGR.
Total web-based ads will surge at an 11.1 per cent CAGR to $260.4 billion by 2020. But the “full potential of the sector will remain unfulfilled, as consumers turn to ad-blocking to overcome their frustrations over ads’ impact on their loading times and data consumption,” the PwC report notes.
“More positively, programmatic advertising has grown rapidly, with more than half of digital ads in mature markets now traded automatically — opening the way to better targeting of premium ads.”
Digital revenues — defined as those generated through the web, including internet access fees — will then be “fractionally behind non-digital revenue at $1.07 trillion”, the ‘Global entertainment and media outlook 2016—2020’ report notes.
“Different countries are approaching this tipping-point at different speeds: In 2015, nine countries — including China and Kenya — had already seen digital revenue overtake non-digital. And by 2020, 26 of the 54 countries covered in the outlook will have made the transition, including the UK, Chile and Vietnam. By contrast, Germany will still be a 61 per cent non-digital market even in 2020.”
According to Deborah Bothun, PwC’s Global Entertainment and Media Leader, “Entertainment and media companies are facing an ever more complex global environment — one in which every market has its own unique growth dynamics, shaped by local factors ranging from demographics to content tastes to infrastructure to regulation. To see through the apparent chaos and pinpoint value opportunities, companies need a more intimate understanding than ever before of the forces at play at a local level.”
According to PwC, the fastest-growing consumer revenue models are based on digital subscriptions.
Last year, global subscription video-on-demand revenues were up a sizeable 32.3 per cent to $10.9 billion, while in music, “streaming is starting to cannibalise downloads,” PwC reports.
“However, this type of model is unlikely to succeed without compelling content — witness how an inability to secure rights to key content has hampered subscription services for books. Free alternatives are a further inhibitor of subscription growth, especially for the likes of newspapers and magazines.”
