PwC Global Entertainment and Media Outlook 2012-2016 Says Canada Will Outpace The USA

^[1]The Canadian entertainment & media (E&M) market will grow faster than the U.S. to 2016 primarily because of higher spending on Internet access and TV subscriptions, says a new report from PwC ^[1]. The Global Entertainment and Media Outlook 2012-2016 ^[2]  shows Canada’s E&M market growing at a 6.5% compound annual growth rate (CAGR) compared to 5.2% in the U.S through 2016.

But growth of Internet advertising in both countries will continue to be significant and will be highlighted by the ability to capitalize on mobile advertising opportunities, says the report. In Canada, mobile advertising will grow at a 42.6% CAGR, followed by other internet advertising segments including video (31.9%), banner display (16.8%) and search (13.5%). Other fast growing segments will be Internet access at 11.8% and TV subscriptions and license fees at 8.6%.

“Mobile advertising is still a small market but it’s soaring in North America. Between 2010 and 2011 the segment grew by almost 149% in the U.S. and 109% in Canada,” says Michael Paterson, a partner in PwC’s Canadian Entertainment & Media practice. “Given the amount of time consumers are spending on their devices outside of making phone calls, it’s glaringly apparent how much of an opportunity this advertising medium is.”

Over the forecast period U.S. mobile advertising is expected to grow slightly slower at 42.4% CAGR. Paterson says there are challenges in monetizing the amount of time consumers spend on their mobile devices and Canadian and U.S. companies will need to act fast to capitalize on the opportunities. “As networks are upgraded, new location-based marketing services are developed, and the capability to mine customer data improves, mobile advertising dollars will begin to flow.”

The report also shows that the overall advertising market was healthier in Canada than the U.S. last year, growing by 5% compared to 2% in the U.S. Over the next five years it’s expected that U.S. and Canadian advertising spending on a combined basis will grow similarly at almost 6%, driven in part by mega-sporting and political events such as the Olympics and elections – from US$184 billion in 2011 to US$245 billion by 2016. Internet advertising (wired and mobile), in-video game advertising, TV and out-of-home are expected to be advertising’s winners.

“The challenge for entertainment & media companies rests not only in monetizing great content, but the growing fact that consumers are now “king” and their desire for customised experiences and getting content on their terms will require transformation on the part of companies to keep up,” says Paterson. “Location-based-marketing, mobile technology and social media are and will continue to be the driving forces behind revenue growth.”

In 2011 entertainment & media spending in North America grew by 3.3%, the largest increase since 2007. The Canadian market grew by 5.7% in 2011 due to higher spending in Internet advertising (22.8%) and Internet access (17.5%).  TV subscriptions, radio and out-of-home advertising were other big winners, each expanding more than 6%.

Faster growth is expected over the next five years with the overall North American market expected to reach US$658 billion by 2016 from US$508 billion in 2011. “We will see double digit growth from Internet advertising, and increases of 5% CAGR or more from segments that continue to be important to consumers and advertisers like Internet access, Internet Advertising, TV subscriptions, specialty TV advertising, music and out-of-home advertising,” says Paterson.

Consumer spending in Canada will increase at 5.3% CAGR to 2016, compared to 3.7% in the U.S.

Tipping points
This year’s Outlook shows some interesting Canadian tipping points that will occur over the next few years, especially for those segments which are taking advantage of digital revenue streams:

• Internet ads beat out TV ads by 2014: Canadian spending on internet advertising will overtake TV advertising by 2014 and be 23% larger by 2016.
• Video games overtake consumer books: spending on video games will overtake spending on consumer and educational books in Canada this year, to be almost 20% larger by 2016.
• Music: Canadian spending on music rose 2% in 2011, the first gain in many years, thanks to the growth in the concert and music festival market and a slower decline in recorded music spending. As a result, and due to increased spending on digital music, overall spending will increase from now through to 2016 at 4.1% CAGR.

Key global stats from PwC’s Global Entertainment and Media Outlook 2012 – 2016 also include:

• Total E&M spending: Latin America will be the fastest-growing region over the next five years, while Europe, Middle East and Africa (EMEA) will be the slowest-growing.
• Total advertising spending: of the world’s 13 advertising markets above US$7 billion in 2011, the fastest-growing through 2016 will be China (14.6% CAGR), Russia and Indonesia (both 13.1 %) and Brazil (9%).
• Total consumer/end-user E&M spending: of the countries above US$10 billion in 2011, the fastest-growing through 2016 will be China at a CAGR of 9.9%, followed by India and Brazil, both at 9%.
• Mobile Internet access: during the next five years, India’s mobile Internet subscribers will increase at a 50.8% CAGR and spending at a 42.4% CAGR, the fastest in the world.
• Internet advertising: China and South Africa will be the world’s fastest-growing countries during the next five years, with compound annual increases of 32.1%and 30.4%, respectively.

PwC’s Global Entertainment and Media Outlook: 2012-2016 was released worldwide yesterday and provides forecasts and analysis on 13 major E&M industry segments in 48 countries.