As someone who has spent the better part of my career in the entertainment and media industry, I can confidently say that the landscape has undergone a radical transformation in recent years. The growing importance of ad revenue is a testament to this shift, with internet advertising leading the charge.
Based on my experience working in the film industry and observing the trends in media consumption, I firmly believe that global box office revenue and total cinema earnings will surpass their pre-pandemic levels by 2026. However, admissions may not follow this trend within the next five years due to the continued impact of COVID-19 and the rise of streaming services.
Based on my experience working in the media industry and following market trends closely, I’ve come to highly anticipate PwC’s annual “Global Entertainment & Media Outlook.” Released every summer, this comprehensive report provides valuable insights into the latest predictions and projections for the entertainment and media sector. As a professional, I find it essential to stay informed about these trends to make strategic decisions and adapt to the ever-evolving industry landscape.
Based on my experience working as a business analyst, I can tell you that the annual report I’ve come across is quite comprehensive, encompassing 13 sectors and spanning over 53 countries and territories. The fact that total revenue reached an impressive $2.8 trillion in 2023, marking a 5 percent increase, is truly noteworthy. This growth occurred amidst significant challenges such as economic headwinds, technological disruption, and intensified competition across various geographies and industries.
Over the next five years, the industry’s growth rate is predicted to decelerate to 3.9%, contributing approximately $597 billion to the existing revenue pool, escalating it to an impressive $3.4 trillion. However, PwC issues a cautionary note with the phrase “widespread uncertainty,” indicating that the key to securing a piece of this revenue expansion lies in transforming business models. This transformation, once considered a strategic advantage, has now become a necessity for survival in the industry.
In terms of movie theater earnings, the pattern has been varied. According to PwC, the significant release of blockbuster films in 2023 led to a notable 30.4% surge in box office spending compared to the previous year.
As someone who has worked in the film industry for over a decade, I have seen my fair share of ups and downs. The COVID-19 pandemic was undoubtedly one of the biggest challenges we’ve faced as an industry. But based on the latest forecast from PwC, I am encouraged by the news that box office revenue is expected to surpass pre-pandemic levels in 2026 instead of 2025. This is a testament to the resilience and adaptability of the industry.
By the year 2025, the company’s box office revenue from 2019, amounting to $38.55 billion, is projected to be almost reached, with an estimated earnings of $37.68 billion. The revenue is then expected to surpass this figure and touch $40.23 billion in the year 2026.
According to Spiegel’s latest analysis, global cinema revenue will keep rising due to increasing ticket prices and advertising gains. However, the return to pre-pandemic income levels is now predicted to take place in 2026 instead of 2025 as previously anticipated. This shift suggests a more cautious perspective. The reason for this delay is largely due to an enhanced lineup of expensive productions scheduled for release in 2026. It’s important to mention that some significant studio plans were announced towards the end of 2023.
Based on PwC’s projections, global cinema revenue is expected to reach approximately $41.34 billion by the end of 2025, and then increase close to $44.00 billion by the end of 2026.
I, as an avid moviegoer, have to admit that the landscape for cinema admissions has undergone a significant shift. According to Spiegel’s analysis, we won’t be seeing admissions bounce back to their pre-pandemic numbers anytime soon. In fact, by the year 2028, the final year of his forecast, he projects a shortfall of approximately 1.5 billion admissions compared to those glorious days before the health crisis. This translates into an estimated 6.45 billion cinema visits predicted for 2028, which is quite a drop from the 7.92 billion admissions we enjoyed back in 2019.
In North America, the number of movie theater admissions is projected to fall short of pre-pandemic numbers by 2028, according to PwC’s forecast of 953 million admissions. Spiegel notes that this represents a substantial decrease from the 1.3 billion admissions recorded in 2019. Various factors are contributing to this downturn: shifts in viewer behavior due to the pandemic, growing preferences for streaming services, mounting inflation pressures, and waning interest in superhero films.
In the realm of streaming media, PwC identifies a deceleration in revenue growth as businesses reach maturity. The reason behind this revenue stagnation is believed to be the increasing number of streaming services available to consumers, leaving them feeling overwhelmed with choices. To combat this issue, companies are adopting strategies such as reducing subscription fees and incorporating advertisements.
The number of people using streaming services and signing up for subscriptions is on the rise, although the growth rate has slowed down due to heightened competition among providers trying to get consumers to pay more for digital content. By 2028, it’s predicted that there will be approximately 2.1 billion global subscriptions to over-the-top (OTT) video services – a 5% annual increase from the current 1.6 billion in 2023. However, the average revenue generated per streaming video subscription is only expected to see a slight rise, going from $65.21 in 2023 to $67.66 in 2028.
Leading streaming services are responding to a plateauing effect by revamping their business models and exploring alternative revenue sources beyond subscriptions. According to PwC, this includes offering ad-supported versions with lower subscription fees and ad-filled content, limiting password sharing, adding live sports, and merging with other subscription providers in mature markets.
The Global Outlook report predicts that the trend of people cancelling cable or satellite TV subscriptions, known as cord-cutting, will persist and affect the media industry in the near future. Spiegel adds, “We expect a consistent decrease in the number of viewers relying on traditional TV channels as an increasing number of users shift to digital platforms.” Despite some large traditional media firms providing digital alternatives, they encounter hurdles in keeping customers engaged, controlling escalating content costs (particularly for sports), and presenting a persuasive value proposition to their subscribers.
Based on my own observation and experiences as a long-term user of various streaming services, I strongly believe that advertising is increasingly becoming a significant revenue source for these platforms. In just a few short years, its presence has grown substantially. Back when I first started using these services around 2018, ads were almost non-existent. But now, in 2023, they make up roughly 20 percent of the total income for streaming providers.
As a gamer, I’ve noticed an exciting trend in the world of advertising. According to industry forecasts, global ad revenue is projected to expand at a remarkable annual growth rate of around 6.7%, outpacing both connectivity and consumer spending. Connectivity is predicted to advance at a more modest pace of 2.9%, while consumer spending is anticipated to grow at a relatively slow rate of 2.2%.
According to the prediction made by the accounting firm, the total advertising revenue is expected to reach an astounding $1 trillion by the year 2026. Notably, the revenue in the year 2028 is projected to be twice as much as that of 2020. The entertainment and media industry’s growth over the next five years will largely be driven by advertising, which is estimated to contribute approximately 55 percent. Among all advertising sectors, internet advertising stands out as the largest and fastest-growing segment. In fact, it saw a growth rate of 10.1 percent in 2023 alone, resulting in an addition of $52.5 billion to the industry’s revenue. The report further projects that the internet advertising sector will expand at a compound annual growth rate (CAGR) of 9.5 percent between 2023 and 2028, accounting for 77.1 percent of the total ad spending by then.
What is behind the growing importance of ad revenue? “Advertisers are now willing to invest more in reaching consumers through different platforms, including phones, games, and e-commerce sites,” Spiegel tells THR. “The growing significance of advertising in the entertainment and media industry can be attributed to factors such as the ability to monetize data, the closer relationship between product discovery and purchase, and the influence of global privacy regulations.”
The expert explains how rising consumer prices have influenced the media sector: “Media companies are adjusting to consumers’ reduced spending power due to inflation by providing more advertising-friendly or subscription-based services at more affordable rates.”
In the meantime, the gaming industry, encompassing e-sports, has been identified by PwC as a rapidly expanding segment within the entertainment and media realm. By 2023, this sector’s revenue had reached an impressive $227.6 billion, marking a 4.6% growth rate. According to PwC’s predictions, gaming revenue is expected to surpass $300 billion by 2027, nearly doubling its value from 2019.
Fans of Taylor Swift, both old and new, flocking to stadiums have significantly contributed to growth in the music industry. According to PwC, major events like musician world tours have driven a 26% increase in live music revenues, making up over half of the entire music market.
In the most recent PwC report, AI is given significant focus. The industry as a whole, including entertainment and media, sees generative AI as a means to generate fresh income sources and revolutionize business structures.
“Consumer trends are changing rapidly, and the influence of digital advancements and innovative technologies like generative AI is uncertain. To tap into the expanding revenue streams we’ve identified, businesses must adapt their value creation, delivery, and capture strategies. This means embracing advertising growth while also utilizing AI’s potential.”
Generative AI has made a significant entrance into the world in recent years, bringing about significant implications. According to PwC’s Global Outlook report, “this technology carries risks and demands consideration – opportunities as well as challenges.” In the United States CEO Survey conducted by PwC, almost half of the CEOs anticipate increased profits this year due to Generative AI, while 61% believe it will enhance product and service quality.
As an assistant or fan, I’d put it this way: “During the past year’s labor negotiations, AI became a significant issue. In the 2023 Hollywood writers’ strike and subsequent agreement with the Writers Guild of America, controlling AI tools and AI-generated content to safeguard creators’ rights and payments was pivotal. Moving forward, the production speed of top-tier content is expected to accelerate while costs decrease. However, it remains unclear exactly how GenAI will lead to increased revenues and help companies expand their profit sources.”
According to the Global Outlook, a promising field is the advertising industry. They mention that GenAI is being incorporated more frequently into content generation and advertising platforms. At present, its use has primarily been for extracting specific details and producing summaries in sectors like sports media. However, if GenAI can be utilized to provide novel experiences and generate new income sources, the possibilities are even more significant.
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2024-07-16 10:02