PwC’s 2013 Global Entertainment and Media Outlook

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PwC’s 2013 Global Entertainment and Media Outlook

Global industry trends are having profound effects on key stakeholders

PwC’s 14th annual update of the Global Entertainment and Media Outlook 2013-2017, is a comprehensive online source of global analysis for consumer and advertising spend. With like-for-like, five-year historical and forecast data across 13 industry segments in 50 countries – including New Zealand - the Outlook makes it easy to compare and contrast regional growth rates and consumer and advertising spend. And new this year, it also contains individual country commentary for all segments.

PwC’s Outlook aims to help companies harness growth and turn it into rising digital revenues by evaluating their competitive advantages and redefining their positions in the evolving ecosystem—with the connected consumer at its core.

PwC’s Outlook findings showcase how current industry trends are impacting consumers, advertisers, content creators and digital distributors.

• Understanding new consumers is key
Over the next five years and beyond, all E&M businesses will increasingly engage with a new and more diverse global customer base, with different needs and expectations. According to this year’s Outlook, a new middle class is emerging that increasingly accesses the Internet via mobile devices. Outlook predicts that Brazil, China, India and Russia alone will account for 45% of fixed-broadband subscriptions and 50% of mobile-Internet users by the end of 2017. Going forward, the E&M companies that seize a profitable position will be those with the speed, flexibility and insight to engage and monetise an ever more diverse global base of connected consumersby delivering personalised, relevant, and ultimately indispensable content experiences.

• Consumers are increasingly in control but also increasingly confused
Over the past five years, consumers have seen an explosion in their media choices. This year’s Outlook highlights that this blizzard of consumption choices is creating confusion in the minds of the consumer and this extends to the legitimacy of the content they access.

In response, PwC believes companies across the E&M industry are having to revisit their business and operating models. By innovating in agile ways and harnessing technologies to gain deep insight into consumers’ tastes and behaviours, E&M companies are starting to define a profitable, consumer-centric, multiplatform future. Smart and flexible distribution strategies based on consumer understanding will also help to deter piracy.

• From ‘mass media’ to ‘my media’
As media consumption fragments across devices, consumers increasingly want personalised experiences: their content on their chosen devices when they want it. This move to ‘my media’ can be seen in ‘cord-cutting’where consumers abandon their pay TV subscriptions and instead access the content they want via cheaper, Internet-based content services. Although by 2017, revenues from OTT services are forecast to reach just 6% of overall pay-TV revenues, operators must adapt their services to changing consumer expectations for more on-demand content. A further manifestation of ‘my

media’ is consumers’ growing use of the ‘second screen’smart phones and tabletsto comment on and share the experience of TV and other companion content with friends, often via social media.

• Multi-platform analytics drive advertiser insights into the connected consumer
Outlook shows how advertising spending is continuing to migrate to new digital platformsglobally digital media will account for 37% of advertising revenues by 2017, up from 26% in 2012. But the traditional tendency to separate digital from other forms of advertising is arguably questionable. As audiences increasingly consume media across multiple screens, devices and platforms, advertising must also become platform-agnostic. The ability to attract advertising revenues in the future will depend on offering advertisers credible, cross-platform metrics that define and measure audience reach, engagement and relevance.

• Content creators must have better insight into what content customers will pay for in order to engage
Like other industry participants, content creators need to adapt to the demands of connected consumers. This means getting closer to the behaviours and needs of those consumers than ever before. This includes harvesting data from social media, adapting the way products are created and distributed, and embracing new business modelsincluding partnerships. As they pursue these strategies, the good news for content creators is that content’s central role in attracting, engaging and retaining consumers has, if anything, been positively strengthened by the fragmentation of media choices.

• The race for content
The rising value of content has fired the starting-gun on an industry-wide race to acquire it. Recent years have seen several major acquisitions of content assets, as consumers’ rising expectation of ubiquitous access to premium and library content drives companies to focus on licensing and/or acquiring content, as well as on developing deeper customer engagement and insights.

• Characteristics of new business models for content creators to engage connected consumers
To ensure their content remains relevant and valuable to their audiences, content companies must build new business models around five imperatives:
1. Harnessing the power of second screens( exploiting connected portable devices to deepen engagement with, and access to, the primary content.
2. Continuing evolvement of the windowing of video contentto meet the needs of connected consumers.
3. Bundling, in order to add value for content providers, operators and consumerspeople still love a bargain, including a bundle of services for a ‘discounted’ rate.
4. Overcoming the challenges of personalisationby understanding consumers while respecting their privacy.
5. Encouraging and facilitating content discovery and recommendationconfused, connected consumers need help navigating to the content they want.

• Digital distributors must deliver a differentiated experience to help deter piracy
Tackling piracy in the connected era cannot rely just on consumer education and tighter regulation and enforcement, important as those are. It means understanding consumers in order to deliver the right content to the right people, at the right time, place and price - via the right experience. It’s also vital to sign-post where the legitimate content is available.

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