Internet Ads Poised to Top Television Wiin Seven Years
04/06/2014
PwCs 15th annual report, released June 4, reveals that TV advertising will generate $173.7 billion worldwide in 2014 and grow to $214.7 billion in 2018. During the same period, Internet advertising will grow from $133 billion to $194.5 billion. PwC does not prognosticate beyond five years, but its research indicates a 5.5 percent compound annual growth rate for TV advertising compared with 10.7 percent for the Internet, suggesting the latter will pass the former as early as 2020 -- marking a sea change that will come about fairly quickly. As recently as 2010, revenue from TV advertising was more than twice that from Web ads.
For the entire E&M industry -- including film, TV, music, Internet, video games, advertising, print and outdoor -- PwC predicts worldwide revenue of $1.87 trillion in 2014, growing to $2.27 trillion in 2018.
PwCs annual five-year forecast has been rather accurate -- though a year ago it predicted E&M would grow 5.6 percent worldwide in 2013, exceeding actual growth of 4.9 percent. In the U.S., the prediction was for 4.6 percent growth, but actual growth was 4.3 percent. Stefanie Kane, a partner at PwC, says the overestimations owed largely to greater-than-expected weakness in newspapers, magazines and billboards.
The U.S. will remain the worlds primary E&M market for the foreseeable future, according to the report, but China will overtake Japan for the No. 2 spot in 2018. PwC says the higher-growth, larger-scale markets are understood to be Brazil, Russia, India, China and Mexico. E&M companies also would be wise to look for growth in South Africa, Turkey, Argentina and Indonesia: Those markets of the future will account for 3.3 percent of worldwide E&M revenue in 2014, up from 2.7 percent in 2013.
On the film front, look for a milestone in 2017 when the industry generates more than $100 billion in revenue worldwide for the first time, with the fastest growth coming from VOD. A year ago, though, PwC was estimating the $100 billion milestone would occur in 2016.
Mature markets are still commanding much more for a trip to the cinema than are developing markets, notes Matt Lieberman, the director of PwCs entertainment and communications practice. Admission prices in the U.S. will grow 2 percent annually to $9.81 in 2018 while globally they will advance 2.2 percent to $5.15. Today, a family of four pays about $36 for a night at the movie theater, while in India it can cost as little as $2. In Nigeria, its $12 and in Thailand its $19. Europe has been a problem of late, according to PwC, in particular Spain, where piracy, a weak economy and a sales tax on movie tickets have caused box-office revenue to contract between 2010-13.
In the U.S. film industry, revenue from over-the-top streaming will surpass physical home video in 2017 ($10.9 billion compared with $9.3 billion for both rental and sell-through discs), and OTT will top the box office a year later ($14 billion compared to $12.5 billion).
As for TV, subscriptions and license fees will attract more revenue than advertising, though growth there will be slower (3.2 percent annually through 2018 compared with 5.5 percent), and Kane said that 6.2 percent annual growth for video games makes that industry a bright star for the next five years.
http://www.hollywoodreporter.com
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