Global Media Spending Expected to Rise Through 201712 Jun, 2013 By: Doug McPherson
NEW YORK – PricewaterhouseCoopers says global spending for media and entertainment will reach $2.2 trillion in 2017, compared with $1.6 trillion in 2012.
The consulting firm also predicts worldwide spending for entertainment will rise over the next five years as smartphone and tablet usage continues to grow and as Brazil, China and India further develop as media markets. Latin America is expected to become the fastest-growing region during the next five years, with 10.6 percent annual spending growth. Asia Pacific countries are expected to notch annual growth of 6.5 percent.
But the U.S. is expected to remain the largest media market, with spending increasing 4.8 percent annually to reach $632 billion in 2017, up from the nearly $500 billion spent last year.
Digital media will account for 43 percent of all media spending in the U.S. by 2017. That's up from 31 percent of the total in 2012.
Joe Atkinson, a principal with PricewaterhouseCoopers' entertainment and media practice, says the growth is going to be concentrated on digital media platforms and associated consumption.
The report, released last week, says digital media is disrupting traditional television and movie companies, which are struggling to preserve their profit margins as Internet distribution splinters the audience and threatens to unravel the industry's core business model: selling bundles of TV channels to paid subscribers.
"We are really seeing a shift in control from the media companies to the consumers," Atkinson said. "The consumers have more choices, but we are seeing that they also are more confused by all of this choice."
Ad revenue in the U.S. is expected to grow at an annual rate of 4.1 percent and reach $204 billion in 2017. Last year, U.S. ad revenue totaled $167 billion.
Internet advertising is expected to continue to outperform traditional outlets, with annual gains of nearly 14 percent. Spending for Internet access will climb about 11 percent each year. Major companies such as Time Warner and Comcast have been adding high-speed Internet subscribers to offset customer losses for their video packages.
Media analyst Craig Moffett says pay TV penetration is shrinking and programming costs are rising at an unsustainable growth rate. “To support revenue growth in the face of declining distribution, programmers are compelled to raise prices even faster. This further squeezes pay TV subscribership,” Moffett says.