Entertainment & Media
Global Entertainment and Media Outlook: 2007–2011* Global Overview
Entertainment & Media
Global Entertainment and Media Outlook: 2007–2011* Forecasts and economic analyses of 14 industry segments
Global Entertainment and Media Outlook is a forecast for the 2007–2011 period of spending in 14 entertainment and media segments. For ordering instructions, please refer to the next page of this book.
Reprinted from the Global Entertainment and Media Outlook: 2007–2011
Global Entertainment and Media Outlook: 2007–2011
ISBN 1-931684-15-4, Global Entertainment and Media Outlook: 2007–2011
Prepared and edited by:
ISBN 1-931684-16-2, Global Entertainment and Media Outlook: 2007–2011, Global Overview
PricewaterhouseCoopers LLP (www.pwc.com/e&m), the world’s largest professional services organization. Drawing on the knowledge and skills of more than 140,000 people in 149 countries, we build relationships by providing services based on quality and integrity.
Authored by: Wilkofsky Gruen Associates Inc. (www.wilkofskygruen.com), a provider of global research and analysis of the media, entertainment, and telecommunications industries.
Outlook editors: PricewaterhouseCoopers Entertainment & Media Practice: Laura Bobrik, Marketing Manager Ronald Cushey, Director James M. DePonte, Partner Marcel R. Fenez, Partner Wayne Jackson, Partner Stefanie Kane, Partner Nikolai Larchenko, Senior Associate Alexandra Maclean, Marketing Manager Thomas C. Nardozzi, Managing Director Pauline Orchard, Global E&M Marketing Director James O’Shaughnessy, Partner Laura Schooler, Marketing Manager Denise Shapiro, Managing Director Phil Stokes, Partner Many other professionals from the PricewaterhouseCoopers Entertainment & Media Practice reviewed and contributed to this publication. For Wilkofsky Gruen Associates Inc.: David Wilkofsky, Partner Arthur Gruen, Partner Norman D. Eisenberg, Vice President
Copyright © 2007 PricewaterhouseCoopers. PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. All rights reserved. *connectedthinking is a trademark of PricewaterhouseCoopers LLP (US).
This document is provided by PricewaterhouseCoopers for general guidance only and does not constitute the provision of legal advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. The information is provided as is, with no assurance or guarantee of completeness, accuracy, or timeliness of the information and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose. No part of this publication may be excerpted, reproduced, stored in a retrieval system, distributed or transmitted in any form or by any means—including electronic, mechanical, photocopying, recording, or scanning—without the prior written permission of PricewaterhouseCoopers. Without limiting the foregoing, you may not use excerpts from the publication in financial prospectus documents, public offerings, private placement memoranda, filings with the Securities and Exchange Commission, annual reports, or similar financial, investment, or regulatory documents. Requests to PricewaterhouseCoopers for permission should be addressed in writing to Laura Bobrik, PricewaterhouseCoopers, 401 Broad Hollow Road, Melville, NY 11747. The papers, paper mills, and printer utilized in the production of this document are all certified to Forest Stewardship Council (FSC) standards, which promote environmentally appropriate, socially beneficial, and economically viable management of the world’s forests. The book was printed with 100% green renewable energy.
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For additional information and to order this publication, visit www.pwc.com/outlook.
Book design:
The publication is available for sale as follows:
Book editorial:
Adam West, PricewaterhouseCoopers Marketing Center for Design
Book production: Bowne Business Communications
Copy editing and proofreading: Paula Plantier, Principal, EditAmerica
• The full global forecast, which includes the Global Overview, is sold in both print and electronic formats. • The Global Overview is available separately in either print or electronic format. • Individual industry segments are sold in electronic format.
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| PricewaterhouseCoopers
Table of Contents 4 Introduction Letter 5 PricewaterhouseCoopers Entertainment & Media Practice Global Contacts
Global Entertainment and Media Outlook: 2007–2011, Global Overview 6 8 9 10 11 23 31 31 32 33 34 35 36 38 39 40 41 42 43 44 45 46 46 52 63 72 79 83
Introduction Methodology Region/Countries Covered Exchange Rates Global Entertainment and Media Market Principal Industry Drivers Global Entertainment and Media Market by Segment Filmed Entertainment Television Networks: Broadcast and Cable Television Distribution Recorded Music Radio and Out-of-Home Advertising Internet Advertising and Access Spending Video Games Business Information Magazine Publishing Newspaper Publishing Book Publishing Theme Parks and Amusement Parks Casino and Other Regulated Gaming Sports Global Entertainment and Media Market by Region United States Europe, Middle East, Africa (EMEA) Asia Pacific Latin America Canada Summary of Tables and Charts†
Totals in tables and charts may not total arithmetically due to rounding. †
Key to Symbols Used in the Tables and Charts p = preliminary NA = not available — = no spending that year
European Union Status
Members: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Netherlands, Poland, Portugal, Romania, Spain, Sweden, United Kingdom Applicant: Turkey
Global Entertainment and Media Outlook: 2007–2011 |
PricewaterhouseCoopers LLP PricewaterhouseCoopers Center 300 Madison Avenue New York, NY 10017
June 2007 To our clients and friends both in and beyond the Entertainment and Media industry: As leaders of PwC’s Global E&M Practice, we are pleased to welcome you to the eighth annual edition of PricewaterhouseCoopers’ Global Entertainment and Media Outlook, covering the forecast period 2007–2011. This edition adopts a familiar format and includes in-depth forecasts and analyses of 14 major industry segments across five regions of the world: the United States, EMEA (Europe, Middle East, Africa), Asia Pacific, Latin America, and Canada. Overall, we see that the entertainment and media (E&M) industry will continue to enjoy strong growth around the world. Such growth does not come without challenges, and most sectors are experiencing profound change, whether from the opportunities of digital distribution and new delivery platforms, or from the threats of piracy in its many—and seemingly increasing—forms, or just from managing global expansion. Physical media formats are still important but are growing more slowly as the availability of licensed digital distribution services provides consumers with authorized alternatives to piracy. Continued expansion in the broadband household universe and the rollout of next-generation wireless handsets and high-speed wireless networks will stimulate the market. Overall advertising growth is strong. Internet advertising will remain the fastest-growing ad medium and will constitute 14 percent of global advertising in 2011 compared with less than 3 percent in 2002. The E&M market is also seeing considerable merger activity as well as interest from the private equity sector as players seek to take advantage of the profound changes and strong fundamentals that the sector is demonstrating. Asia Pacific, led by India and China, is joined by Latin America as the fastest-growing regions, with double-digit percentage spending increases in the Internet, TV Distribution, and Casino and Other Regulated Gaming segments. The U.S. will remain the largest E&M market but will grow more slowly than the other regions. It is clear that the E&M industry is now more than ever a truly global industry, taking influences from developments in the many local markets and applying learning and experience to other markets worldwide. It is clearly an exciting time to be part of the ever-expanding entertainment and media industry. All of us at PwC continue to stay on top of new trends and developments that may impact your business now and in the future, and we look forward to working with you and sharing our thoughts with you further. We appreciate your feedback and ask that you continue to tell us what we can do to make the Outlook more useful to you. If we can be of service to your business in any way, please contact the PricewaterhouseCoopers Entertainment & Media regional professional nearest you (see facing page) or visit our Web site (pwc.com) for details of the contact in your territory. Finally, we thank you for your support and wish you an exciting and rewarding year ahead. Sincerely,
James O’Shaughnessy
Marcel R. Fenez
Chairman
Managing Partner
Global E&M Practice
Global E&M Practice
4 | PricewaterhouseCoopers
PricewaterhouseCoopers Entertainment & Media Practice—Global Contacts Provided below is a listing of key contacts for the PricewaterhouseCoopers Entertainment & Media Practice. If there is no listing for your location, please contact the PricewaterhouseCoopers office nearest you to be directed to the appropriate professional.
Global James O’Shaughnessy Chairman New York phone: 1.646.471.5878 james.oshaughnessy@us.pwc.com
Marcel R. Fenez Managing Partner Hong Kong phone: 852.22892628 marcel.fenez@hk.pwc.com
Regional Asia Pacific
Canada
Europe
South and Central Americas
United Kingdom
United States
Marcel R. Fenez Hong Kong phone: 852.22892628 marcel.fenez@hk.pwc.com
Timothy Leonard São Paulo phone: 55.11.3674.3786 timothy.leonard@br.pwc.com
Tracey L. Jennings Toronto phone: 1.416.869.8737 tracey.l.jennings@ca.pwc.com
Phil Stokes London phone: 44.20.7804.4072 phil.stokes@uk.pwc.com
John W. Middelweerd Utrecht, Netherlands phone: 31.30.2191.656 john.middelweerd@nl.pwc.com
James J. O’Shaughnessy New York phone: 1.646.471.5878 james.oshaughnessy@us.pwc.com
Functional Tax
Christ H. Economos New York phone: 1.646.471.0612 christ.h.economos@us.pwc.com
Convergence
Deborah K. Bothun Los Angeles phone: 1.213.217.3302 deborah.k.bothun@us.pwc.com
Global Entertainment and Media Outlook: 2007–2011 |
Global Overview Introduction We are pleased to present the PricewaterhouseCoopers Entertainment and Media Outlook: Global Overview. The objective of the Global Overview is to identify key trends and developments affecting the industry and relate them to spending forecasts across 14 entertainment and media (E&M) segments for the 2007–2011 period. The Global Overview is only a summary of the full range of data and information provided in Global Entertainment and Media Outlook: 2007–2011 as a whole. The Outlook covers a wide array of issues in depth and provides detailed industry and country data for the various components of each segment. The entertainment and media industry has moved beyond its recovery cycle and is now in a steady expansion mode. The market is also in transition as digital distribution is growing rapidly and not only playing a more important role in the overall market but also in effect creating new medium. Computers and wireless telephones are now sophisticated multimedia devices, and spending related to entertainment and media content distribution through those devices is growing at double-digit rates. During the next five years, the broadband household universe will grow by 300 million, and the number of wireless subscribers will increase
PricewaterhouseCoopers | Global Entertainment and Media Outlook: 2007–2011
from 2.3 billion in 2006 to 3.4 billion in 2011. In addition to new subscribers, mobile distribution will be enhanced by the introduction of new handsets specifically designed to play music, to provide video games, and to receive television broadcasts. More than 40 percent of total entertainment and media growth during the next five years will be generated through online and wireless technologies facilitated by the expansion of these universes. At the same time, revenue streams vulnerable to digital substitution will be adversely affected, with slow growth or declines in those segments. In addition to technology, growth will be fueled by the expansion of maturing economies in Brazil, Russia, India, and the People’s Republic of China (PRC), or BRIC, which are experiencing rapid growth in entertainment and media spending and are attracting international interest. Collectively, E&M spending in those four countries will grow at double-digit annual rates and will account for nearly a quarter of total global growth during the next five years. A relatively stable economic environment will support E&M expansion in all facets of the industry. As the economy moves beyond its recovery phase, growth will moderate but should remain on a stable upward trend. Stability provides a climate suitable for growth, as consumers are more willing to spend on entertainment and media when they are not worried about swings in the economy. The Global Overview takes into account these and other developments and addresses the underlying factors affecting forecast spending. It begins on page 11 with the facing page showing the Global Entertainment and Media Market chart, showing a forecast for spending and growth through 2011 across each of the five regions covered—United States, EMEA (Europe, Middle East, Africa), Asia Pacific, Latin America, and Canada—in the following 14 entertainment and media segments: Filmed Entertainment Television Networks: Broadcast and Cable Television Distribution Recorded Music Radio and Out-of-Home Advertising Internet Advertising and Access Spending Video Games
Business Information Magazine Publishing Newspaper Publishing Book Publishing Theme Parks and Amusement Parks Casino and Other Regulated Gaming Sports
The chart is followed by a discussion of global advertising and consumer/end-user spending. The Global Overview is then divided into four main sections of forecasts: • A discussion of Key Themes that will characterize the top trends in the global entertainment and media marketplace during the next five years, pages 17 to 22 • The Principal Industry Drivers, which discusses what we believe will fuel—or thwart—the aforementioned Key Themes, pages 23 to 30 • Analysis and forecasts for global spending by individual industry segment across all regions, pages 31 to 45 • Analysis and forecasts for spending by region across all industry segments, pages 46 to 82
Introduction Overview |
Methodology Historical information is obtained principally from confidential and proprietary sources. In instances where third-party sources are used, their information is used either indirectly, as part of our calculus for the historical data, or directly, from government agencies, trade associations, or related entities that seek to have their data disseminated in the public domain. The sources of such information are explicitly cited. Recent trends in industry performance are analyzed, and the factors underlying those trends are identified. The factors considered include economic, demographic, technological, institutional, behavioral, competitive, and other drivers that may affect each of the entertainment and media markets. Models are then developed to quantify the impact of each factor on industry spending. A forecast scenario for each causative factor is created, and the contribution of each factor on a prospective basis is identified. Proprietary mathematical models and analytic algorithms are used in the process to provide an initial array of prospective values. Our professional expertise and institutional knowledge are then applied to review and adjust those values if required. The entire process is then examined for internal consistency and transparency vis-à-vis prevailing industry wisdom. Forecasts for 2007–2011 are based on an analysis of the dynamics of each segment in each region and on the factors that affect those dynamics. We recognize that cataclysmic events, such as the September 11, 2001, terrorist attacks, can occur at any time and can affect the outlook, but due to their unpredictable nature, such events are not contemplated in this forecast. We provide annual growth rates for 2002–11 and a compound annual growth rate (CAGR) that covers the 2007–2011 forecast period. In calculations of the CAGR, 2006 is the beginning year, with five growth years during the forecast period: 2007, 2008, 2009, 2010, and 2011. The year 2011 is the end year. The formula is: CAGR = 100*((Value in 2011/Value in 2006)^(1/5)–1). All figures are reported in nominal terms reflecting actual spending transactions and therefore include the effects of inflation. Segment spending consists of advertising and end-user spending related directly to entertainment and media content. We do not include spending on hardware or on services that may be needed to access content; we count only the content itself. In the television, radio, recorded music, filmed entertainment, and video games segments, for example, we do not include spending on equipment or hardware—meaning, television sets, radio sets, CD players or portable listening devices, DVD players, or video game consoles. We include only spending by advertisers and end users that is related directly to television and radio programs, music, videos, and video games themselves. Similarly, in calculations addressing the Internet segment, we do not include spending on computers or ordinary telephone lines—only spending specifically for accessing the Internet through an Internet service provider or through a cable modem or high-speed telephone line. In the box office component of filmed entertainment and in the gate revenue component of sports, we do not include the purchase of food or other concessionary items, because we do not view such items as entertainment content. In theme parks, by contrast, we count all purchases made at the park, because we view all services provided at the park as integral parts of the theme park experience. Spending is counted at the consumer or end-user level—not at the wholesale level—and includes retail markups where applicable. Advertising is measured “net of agency commissions” in all territories except the United States and Russia, where gross advertising is measured to be consistent with the way advertising is generally reported. Each chapter introduction begins with a definition of which spending streams are included in the segment.
PricewaterhouseCoopers | Global Entertainment and Media Outlook: 2007–2011
The regions comprise the countries listed below.
Regions/Countries Covered
United States EMEA Western Europe Austria† Belgium† Denmark† Finland† France† Germany†
Central and Eastern Europe
Middle East/Africa
Greece† Ireland† Italy† Netherlands† Norway Portugal†
Spain† Sweden† Switzerland United Kingdom†
Czech Republic† Hungary† Poland† Romania† Russia Turkey‡
Israel Saudi Arabia/Pan Arab‡‡ South Africa
Indonesia Japan Malaysia New Zealand
Pakistan Philippines Singapore South Korea
Taiwan Thailand
Asia Pacific Australia China Hong Kong India
Latin America Argentina Brazil Chile
Colombia Mexico Venezuela
Canada †European Union members. ‡European Union applicants. ‡‡Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates.
Introduction Overview |
Figures for EMEA, Asia Pacific, Latin America, and Canada are presented in U.S. dollars by using the average 2006 exchange rate held constant for each historical year and forecast year. In this way, the data reflect industry trends and are not distorted by fluctuations in international exchange rates.
The following exchange rates were used for the individual countries in Asia Pacific.
Exchange Rates per US$ (2006 Average) Asia Pacific
Currency
Exchange Rate
Australia
Dollar
1.32851
The following exchange rates were used for the individual countries in EMEA.
China
Yuan (renminbi)
7.98189
Hong Kong
Dollar
7.76895
Exchange Rates per US$ (2006 Average)
India
Rupee
45.31880
Indonesia
Rupiah
9,183.77255
Japan
Yen
116.33664
Malaysia
Ringgit
3.67834
EMEA Western Europe
Currency
Exchange Rate
Austria
Euro
0.79703
Belgium
Euro
0.79703
New Zealand
Dollar
1.54282
Rupee
60.24505
Denmark
Krone
5.94473
Pakistan
Finland
Euro
0.79703
Philippines
Peso
51.40865
France
Euro
0.79703
Singapore
Dollar
1.58942
Germany
Euro
0.79703
South Korea
Won
969.90155
Greece
Euro
0.79703
Taiwan
Dollar
32.55646
Thailand
Baht
37.98621
Ireland
Euro
0.79703
Italy
Euro
0.79703
Netherlands
Euro
0.79703
Norway
Krone
6.41557
Portugal
Euro
0.79703
Spain
Euro
0.79703
Sweden
Krona
7.37864
Switzerland
Franc
1.25364
United Kingdom
Pound sterling
0.54354
Central and Eastern Europe Czech Republic
Koruna
22.62525
Hungary
Forint
210.83024
Poland
Zloty
3.10768
Romania
New leu
2.81809
Russia
Ruble
27.18950
Turkey
New lira
1.44367
Middle East/Africa
Israel
New shekel
4.46685
Saudi Arabia/Pan Arab† U.S. dollar
1.00000
South Africa
6.78812
Rand
†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. Note: Figures are estimated in U.S. dollars.
PricewaterhouseCoopers 10 | Global Entertainment and Media Outlook: 2007–2011
The following exchange rates were used for the individual countries in Latin America.
Exchange Rates per US$ (2006 Average) Latin America
Currency
Exchange Rate
Argentina
Peso
3.09139
Brazil
Real
2.17995
Chile
Peso
539.39322
Colombia
Peso
2,424.14490
Mexico
Peso
10.91549
Venezuela
Bolivar
2,149.03540
The following exchange rate was used for Canada.
Exchange Rate per US$ (2006 Average) Canada
Currency
Exchange Rate
Canada
Dollar
1.13461
Global Entertainment and Media Market This forecast assesses the entertainment and media industry as 14 individual segments spanning five regions of the world. Together these segments constituted a $1.4-trillion industry in 2006. In addition to analyzing economic data, the forecast also considers numerous strategic, operational, technological, demographic, political, and cultural factors affecting the industry’s growth and evolution. Review of 2006 Total global E&M spending grew by 7.2 percent in 2006, up from a 6.2 percent increase in 2005. Doubledigit growth in Internet, video games, and sports, as well as high-single-digit increases in TV distribution and casino and other regulated gaming contributed to the improvement. Rising broadband penetration fueled the Internet market; the introduction of new video game platforms boosted spending on video game software; spending associated with major international events contributed to growth in sports; increased subscription household penetration expanded TV distribution; and new resort casinos propelled casino and other regulated gaming. These five segments accounted for 70 percent of global entertainment and media growth in 2006. Business information rose 6.9 percent, in part reflecting demand for information related to investment opportunities in BRIC and to increased merger and acquisition activity. Television benefited from advertising associated with the Winter Olympics and the FIFA World Cup, posting a 6.2 percent gain. The remaining segments rose by less than 5 percent.
Global Entertainment and Media Market Overview | 11
Global Entertainment and Media Market by Segment (US$ Millions) Segment Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change TV Distribution % Change Recorded Music % Change Radio/Out-of-Home Advertising % Change Internet Advertising and Access Spending % Change Video Games % Change Business Information % Change Magazine Publishing % Change Newspaper Publishing % Change Book Publishing % Change Theme Parks and Amusement Parks % Change Casino and Other Regulated Gaming % Change Sports % Change Total % Change
2007–11 CAGR
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
70,689
75,486
81,009
78,923
81,239
84,291
88,110
92,645
97,810
103,263
11.6
6.8
7.3
–2.6
2.9
3.8
4.5
5.1
5.6
5.6
4.9
130,180
138,339
152,387
161,934
171,976
181,404
195,237
204,630
217,793
228,335
4.5
6.3
10.2
6.3
6.2
5.5
7.6
4.8
6.4
4.8
5.8
116,056
124,936
137,905
146,825
160,643
172,346
189,525
206,744
229,114
250,745
9.6
7.7
10.4
6.5
9.4
7.3
10.0
9.1
10.8
9.4
9.3
36,983
34,793
35,491
35,859
36,078
35,617
36,432
37,693
39,098
40,437
–4.9
–5.9
2.0
1.0
0.6
–1.3
2.3
3.5
3.7
3.4
2.3
58,301
59,892
62,994
66,242
69,217
72,589
76,522
80,696
84,964
89,211
2.7
2.7
5.2
5.2
4.5
4.9
5.4
5.5
5.3
5.0
5.2
76,405
94,121
119,850
145,420
177,076
210,071
242,156
272,580
301,585
331,578
19.5
23.2
27.3
21.3
21.8
18.6
15.3
12.6
10.6
9.9
13.4
21,881
23,304
26,334
27,665
31,629
37,468
41,458
44,226
46,720
48,877
8.1
6.5
13.0
5.1
14.3
18.5
10.6
6.7
5.6
4.6
9.1
70,417
70,700
73,892
78,153
83,519
89,093
94,688
100,175
105,580
110,962
–1.1
0.4
4.5
5.8
6.9
6.7
6.3
5.8
5.4
5.1
5.8
89,854
90,874
94,341
98,138
100,722
103,361
106,532
109,982
113,647
117,223
–2.5
1.1
3.8
4.0
2.6
2.6
3.1
3.2
3.3
3.1
3.1
164,318
167,540
173,398
177,852
181,043
183,207
187,191
191,141
195,888
200,722
–1.1
2.0
3.5
2.6
1.8
1.2
2.2
2.1
2.5
2.5
2.1
110,367
112,771
114,345
119,364
121,395
127,144
130,066
135,022
139,781
144,604
1.5
2.2
1.4
4.4
1.7
4.7
2.3
3.8
3.5
3.5
3.6
19,776
20,264
21,148
21,829
22,769
23,800
24,909
26,041
27,258
28,498
5.2
2.5
4.4
3.2
4.3
4.5
4.7
4.5
4.7
4.5
4.6
65,938
73,197
83,696
93,631
101,609
108,703
117,426
124,483
134,867
144,044
8.7
11.0
14.3
11.9
8.5
7.0
8.0
6.0
8.3
6.8
7.2
73,522
76,257
82,271
85,881
96,144
99,428
109,106
110,833
121,952
123,868
9.4
3.7
7.9
4.4
12.0
3.4
9.7
1.6
10.0
1.6
5.2
1,104,687 1,161,258 1,257,520 1,335,689 1,432,395 1,525,172 1,635,283 1,732,066 1,850,507 1,956,067
4.4
5.1
8.3
6.2
7.2
6.5
7.2
5.9
6.8
5.7
6.4
Note: Beginning in 2003, newspaper Web site advertising in the United States is included in both the newspaper and Internet segments but is counted only once in the overall total. Prior to 2003, newspaper Web site advertising in the U.S. is included only in the Internet segment. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
PricewaterhouseCoopers 12 | Global Entertainment and Media Outlook: 2007–2011
Industry size and expected growth We project the entertainment and media industry in the United States, EMEA, Asia Pacific, Latin America, and Canada will increase from $1.4 trillion in 2006 to $2 trillion in 2011, growing at a compound annual rate of 6.4 percent. The United States will expand at a 5.3 percent compound annual rate—slowest of the five regions, rising from $582 billion in 2006 to $754 billion in 2011. EMEA will increase from $473 billion in 2006 to $617 billion in 2011, growing at 5.5 percent compounded annually. Spending in Asia Pacific will average 9.6 percent annual growth—the highest of all of the regions, increasing from $297 billion in 2006 to $470 billion in 2011. Excluding Japan, which will experience relatively slower growth, Asia Pacific will grow at a 12.9 percent compound annual rate. The PRC will pass Japan in 2009 to become the largest territory in Asia Pacific. The market in Latin America will total $68 billion in 2011, up from $44 billion in 2006, advancing at a compound annual rate of 8.9 percent. In Canada, spending will increase from $36 billion in 2006 to $47 billion in 2011, for an average annual gain of 5.6 percent. In total, compared with the past five years—when growth averaged 6.2 percent compounded annually—the 6.4 percent projected advance will represent a modest improvement. The projected increase, however, will be slower than the 7.2 percent compound annual growth during 2004–06.
Global Entertainment and Media Market by Region (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
464,592
488,156
525,231
550,027
582,448
612,163
648,948
680,713
720,203
754,209
4.7
5.1
7.6
4.7
5.9
5.1
6.0
4.9
5.8
4.7
5.3
369,840
386,241
416,125
442,434
473,040
499,106
528,754
556,368
591,023
616,918
4.3
4.4
7.7
6.3
6.9
5.5
5.9
5.2
6.2
4.4
5.5
210,824
224,612
248,357
270,089
296,982
327,694
364,314
394,841
431,446
470,408
4.6
6.5
10.6
8.8
10.0
10.3
11.2
8.4
9.3
9.0
9.6
31,088
32,012
35,474
39,671
44,228
48,375
53,028
57,669
63,113
67,732
–3.4
3.0
10.8
11.8
11.5
9.4
9.6
8.8
9.4
7.3
8.9
28,343
30,237
32,333
33,468
35,697
37,834
40,239
42,475
44,722
46,800
6.7
6.7
6.9
3.5
6.7
6.0
6.4
5.6
5.3
4.6
5.6
1,104,687 1,161,258 1,257,520 1,335,689 1,432,395 1,525,172 1,635,283 1,732,066 1,850,507 1,956,067
4.4
5.1
8.3
6.2
7.2
6.5
7.2
5.9
6.8
5.7
6.4
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Global Entertainment and Media Market Overview | 13
Advertising We project global advertising will increase at a 5.4 percent compound annual rate during the 2007–2011 period, rising to $531 billion in 2011 from $407 billion in 2006. The market is characterized by spikes occurring during even years related to advertising associated with the Olympic Games and in 2010 with the FIFA World Cup. We do not expect growth in any of the forecast years to match the 8.3 percent increase during 2004. At the same time, in no forecast year will the market be as weak as it was during 2002–03. Internet advertising has grown at annual rates in excess of 30 percent during each of the past three years, and we expect the Internet to remain the fastest-growing advertising medium, with a projected 18.3 percent compound annual increase to $73 billion in 2011. The Internet will constitute 14 percent of global advertising in 2011 compared with less than 3 percent in 2002. Out-of-home will be the second-fastest-growing advertising medium, with a projected 6.5 percent compound annual increase. Digital billboards are expanding the effective inventory by allowing the same display to be sold to multiple advertisers. Television will expand at a 5.1 percent compound annual rate, boosted by advertising on new channels supported by expanding digital platforms. Advertising associated with the Beijing Summer Olympics in 2008 will generate an 8.8 percent increase that year. The 2010 FIFA World Cup in South Africa and the Winter Olympics in Vancouver, Canada, will also attract incremental advertising. Television is the largest advertising medium, at $154 billion in 2006, and will rise to a projected $197 billion in 2011. Radio, magazines, and newspapers will each grow by less than 4 percent annually, losing share during the next five years.
Global Advertising (US$ Millions) Segment Television % Change Internet % Change Magazines % Change Newspapers % Change Radio % Change Out-of-Home % Change Total % Change
2011
2007–11 CAGR
119,877 125,805 139,169 144,049 153,504 159,552 173,582 178,336 190,330 196,852
2002
2003
2004
2005
2006p
2007
2008
2009
2010
4.1
4.9
10.6
3.5
6.6
3.9
8.8
2.7
6.7
3.4
5.1
9,047
11,588
16,451
22,917
31,593
40,558
49,501
57,719
65,585
73,096
–8.3
28.1
42.0
39.3
37.9
28.4
22.0
16.6
13.6
11.5
18.3
46,007
46,697
48,999
51,377
53,066
54,748
56,784
59,048
61,531
63,939
–5.4
1.5
4.9
4.9
3.3
3.2
3.7
4.0
4.2
3.9
3.8
102,506 105,025 110,119 113,626 116,280 117,878 121,209 124,482 128,556 132,693
–2.6
2.5
4.9
3.2
2.3
1.4
2.8
2.7
3.3
3.2
2.7
29,023
29,671
31,001
31,711
32,382
33,262
34,355
35,643
37,177
38,815
3.9
2.2
4.5
2.3
2.1
2.7
3.3
3.7
4.3
4.4
3.7
18,565
19,270
20,508
21,912
23,296
24,825
26,658
28,381
30,099
31,871
0.7
3.8
6.4
6.8
6.3
6.6
7.4
6.5
6.1
5.9
6.5
325,025 336,840 364,706 383,565 407,457 427,473 458,014 478,784 507,728 530,966
–0.1
3.6
8.3
5.2
6.2
4.9
7.1
4.5
6.0
4.6
5.4
Note: Beginning in 2003, newspaper Web site advertising in the United States is included in both the newspaper and Internet segments but is counted only once in the overall total. Prior to 2003, newspaper Web site advertising in the U.S. is included only in the Internet segment. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
PricewaterhouseCoopers 14 | Global Entertainment and Media Outlook: 2007–2011
Consumer/end-user spending Global consumer/end-user spending will increase from $1 trillion in 2006 to $1.4 trillion in 2011, growing by 6.8 percent compounded annually. The traditional electronic media and the newest digital media are still the fastest growers: Internet access and TV distribution will be the fastest-growing segments, with respective increases averaging 12.2 percent and 10.9 percent compounded annually. Internet access will be boosted by increases in broadband penetration. TV distribution will be fueled by growth in subscription households— buoyed by the entrance of telephone companies into TV distribution—and a surging video-on-demand market. Video games and casino and other regulated gaming will be the next-fastest-growing segments, at 9.1 percent and 7.2 percent, respectively. New games associated with next-generation console platforms and rapidly growing online and wireless universes will stimulate the video game market. New resort casinos will drive casino and other regulated gaming. Radio will grow at a 6.5 percent compound annual rate, boosted by new radio licenses in India and an expanding satellite radio subscription market in the United States, Canada, and, to a lesser degree, India, which will offset large but slow-growing public radio license fees in EMEA and Asia Pacific. Business information will increase at a 5.8 percent compound annual rate, helped by a generally healthy economic environment and growing demand for information related to rapidly growing territories in Asia Pacific, Central and Eastern Europe, and Latin America. TV networks will grow at a 5.6 percent annual rate, boosted by rising cable network license fees in North America. Sports will expand at a 5.2 percent annual rate, fueled by large increases in rights fees, including online and mobile rights. Major international sporting events in 2008 and 2010 will lead to high-single-digit or doubledigit increases in those years. The remaining six segments will each grow by less than 5 percent compounded annually.
Global Entertainment and Media Market Overview | 15
Global Consumer/End-User Spending (US$ Millions) Segment Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change TV Distribution % Change Recorded Music % Change Radio % Change Internet Access % Change Video Games % Change Business Information % Change Magazines % Change Newspapers % Change Books % Change Theme Parks and Amusement Parks % Change Casino and Other Regulated Gaming % Change Sports % Change Total % Change
2003
2004
2005
2006p
2007
2008
2009
70,689
75,486
81,009
78,923
81,239
84,291
88,110
92,645
11.6
6.8
7.3
–2.6
2.9
3.8
4.5
5.1
5.6
5.6
4.9
38,919
41,220
44,552
47,899
50,715
53,408
56,030
59,677
63,090
66,583
10.3
5.9
8.1
7.5
5.9
5.3
4.9
6.5
5.7
5.5
5.6
96,250 106,571 116,811 128,400 140,790 155,150 173,361 193,487 215,645
87,440
2010
2011
2007–11 CAGR
2002
97,810 103,263
9.2
10.1
10.7
9.6
9.9
9.6
10.2
11.7
11.6
11.5
10.9
36,983
34,793
35,491
35,859
36,078
35,617
36,432
37,693
39,098
40,437
–4.9
–5.9
2.0
1.0
0.6
–1.3
2.3
3.5
3.7
3.4
2.3
10,713
10,951
11,485
12,619
13,539
14,502
15,509
16,672
17,688
18,525
2.2
4.9
9.9
7.3
7.1
6.9
7.5
6.1
4.7
6.5
82,533 103,399 122,503 145,483 169,513 192,655 214,861 236,000 258,482
3.2 67,358 24.5
22.5
25.3
18.5
18.8
16.5
13.7
11.5
9.8
9.5
12.2
21,881
23,304
26,334
27,665
31,629
37,468
41,458
44,226
46,720
48,877
8.1
6.5
13.0
5.1
14.3
18.5
10.6
6.7
5.6
4.6
9.1
70,417
70,700
73,892
78,153
83,519
89,093
94,688 100,175 105,580 110,962
–1.1
0.4
4.5
5.8
6.9
6.7
6.3
5.8
5.4
5.1
5.8
43,847
44,177
45,342
46,761
47,656
48,613
49,748
50,934
52,116
53,284
0.8
0.8
2.6
3.1
1.9
2.0
2.3
2.4
2.3
2.2
2.3
61,812
62,515
63,279
64,226
64,763
65,329
65,982
66,659
67,332
68,029
1.6
1.1
1.2
1.5
0.8
0.9
1.0
1.0
1.0
1.0
1.0
110,367 112,771 114,345 119,364 121,395 127,144 130,066 135,022 139,781 144,604
1.5
2.2
1.4
4.4
1.7
4.7
2.3
3.8
3.5
3.5
3.6
19,776
20,264
21,148
21,829
22,769
23,800
24,909
26,041
27,258
28,498
5.2
2.5
4.4
3.2
4.3
4.5
4.7
4.5
4.7
4.5
4.6
65,938
73,197
83,696
93,631 101,609 108,703 117,426 124,483 134,867 144,044
8.7
11.0
14.3
11.9
8.5
73,522
76,257
82,271
85,881
96,144
9.4
3.7
7.9
4.4
12.0
7.0
6.8
7.2
99,428 109,106 110,833 121,952 123,868
5.2
8.3
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
PricewaterhouseCoopers 16 | Global Entertainment and Media Outlook: 2007–2011
6.6
7.6
7.1
7.2
1.6
8.3
1.6
5.7
9.7
6.0
779,662 824,418 892,814 952,124 1,024,938 1,097,699 1,177,269 1,253,282 1,342,779 1,425,101 6.3
3.4
8.0
6.5
10.0 7.1
6.1
6.8
Key Themes: 2007–2011 The migration to digital formats is having an adverse impact on competing revenue streams. Brazil, Russia, India, and the PRC are emerging as major drivers of entertainment and media growth and are attracting international investment. Consumer-generated media is accelerating content fragmentation. Segments vulnerable to digital competition The migration to digital formats is accelerating. In 2006, entertainment and media content distributed over digital and mobile platforms—online digital streaming, digital movie/TV downloads, video-on-demand, music downloaded from the Internet, music downloaded to wireless phones, online advertising, online video games, wireless video games, electronic books, and online gaming—rose by 39 percent. We do not include Internet access itself in this discussion because our focus is on other entertainment and media segments distributed over digital platforms. Digital/mobile spending streams compete with physical home video sell-through and rental, physical recorded music sales, physical book sales, and purchases of magazines and newspapers. Additionally, traditional TV, radio, magazine, and newspaper advertising continues to compete with Internet advertising. In 2006, for the first time ever, digital/mobile spending streams contributed more to global entertainment and media spending growth than did directly competing spending streams. Digital/mobile spending increased by $16.4 billion in 2006 compared with an $11.4-billion gain for streams in direct competition. Global Spending Added Annually by Category (US$ Millions) 30,000 25,000 20,000 15,000 10,000
• Digital/Mobile Distribution • Competing Distribution Channels
5,000 0
2003
2004
2005
2006
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Revenue streams vulnerable to digital competition grew slowly during the past five years, averaging 2.4 percent compounded annually. Asia Pacific and Latin America recorded faster increases because they are growing rapidly, allowing for increases in these traditional revenue streams at the same time as digital and mobile are surging. In 2006, for example, the revenue streams subject to digital competition rose 8.9 percent in Latin America and 3.9 percent in Asia Pacific. By contrast, those same revenue streams rose by only 2.2 percent in EMEA and Canada and declined by 0.4 percent in the United States. During the next five years, revenue streams vulnerable to digital competition will continue to grow slowly, averaging 2.7 percent compounded annually. Latin America and Asia Pacific will have the fastest growth in
Key Themes Overview | 17
revenues vulnerable to digital competition. Latin America will expand at a 6.5 percent compound annual rate, and Asia Pacific by 3.8 percent compounded annually. EMEA will grow by 2.6 percent annually, Canada by 2.5 percent, and the United States by 1.6 percent.
Revenues Subject to Digital Competition† (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
201,389 207,248 216,523 220,321 219,468 220,140 223,387 226,266 232,048 238,122 1.1
1.6
212,954 215,858 223,757 229,329 234,350 240,524 246,229 252,715 260,263 266,841
1.4
4.5 3.7
1.8 2.5
–0.4 2.2
0.3 2.6
1.5 2.4
1.3 2.6
2.6
2.6
0.3
2.9
2007–11 CAGR
3.0
2.5
2.6
122,176 125,257 130,764 134,407 139,689 144,185 151,551 156,347 162,450 167,960
0.6
2.5
4.4
2.8
3.9
3.2
5.1
3.2
3.9
3.4
3.8
13,675
13,847
15,513
17,628
19,204
20,403
21,971
23,212
25,146
26,350
–4.6
1.3
12.0
13.6
8.9
6.2
7.7
5.6
8.3
4.8
6.5
12,914
13,827
14,795
15,058
15,388
15,753
16,158
16,584
17,014
17,445
8.1
7.1
7.0
1.8
2.2
2.4
2.6
2.6
2.6
2.5
2.5
563,108 576,037 601,352 616,743 628,099 641,005 659,296 675,124 696,921 716,718
0.7
2.3
4.4
2.6
1.8
2.1
2.9
2.4
3.2
2.8
2.7
†Includes physical home video sell-through and rental, TV advertising, physical recorded music, radio advertising, magazine publishing, newspaper publishing, and physical book publishing where applicable. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Revenues not subject to digital competition—which include the digital revenue streams described earlier (excluding Internet access) as well as revenue streams not directly affected by digital distribution, which
PricewaterhouseCoopers 18 | Global Entertainment and Media Outlook: 2007–2011
includes box office spending, TV subscriptions, console and PC video games, out-of-home advertising, business information, theme parks, sports, casino gaming, and legal sports wagering—averaged 9.4 percent growth compounded annually during the past three years. Growth during the next five years will average 8.3 percent compounded annually. These revenue streams will generate 61 percent of E&M growth during the next five years.
Revenues Not Subject to Digital Competition† (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2007–11 CAGR
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
244,394
259,082
284,703
303,070
332,545
358,645
389,655
415,978
447,248
473,136
6.8
6.0
9.9
6.5
9.7
7.8
8.6
6.8
7.5
5.8
7.3
131,862
139,540
153,145
167,798
185,312
197,849
214,733
229,791
251,852
266,698
7.5
5.8
9.7
9.6
10.4
6.8
8.5
7.0
9.6
5.9
7.6
68,483
73,470
82,411
91,222
103,244
117,119
134,077
147,491
165,542
184,379
6.9
7.3
12.2
10.7
13.2
13.4
14.5
10.0
12.2
11.4
12.3
15,275
15,502
16,475
17,640
19,244
20,938
22,880
25,135
27,571
29,792
–5.2
1.5
6.3
7.1
9.1
8.8
9.3
9.9
9.7
8.1
9.1
14,207
15,094
16,035
16,713
18,468
20,103
21,987
23,686
25,373
26,862
5.0
6.2
6.2
4.2
10.5
8.9
9.4
7.7
7.1
5.9
7.8
474,221
502,688
552,769
596,443
658,813
714,654
783,332
842,081
917,586
980,867
6.5
6.0
10.0
7.9
10.5
8.5
9.6
7.5
9.0
6.9
8.3
†Includes box office spending, online rental subscriptions, digital movie/TV downloads, cable network license fees, public TV and radio license fees, satellite radio, out-of-home advertising, TV subscription spending, pay-per-view, video-on-demand, digital music downloads, mobile music, online advertising, video games, business information, electronic books, theme parks, sports, and casino and other regulated gaming. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Consolidation and integration Consumer migration to digital formats is leading to change on the part of content providers. One change is the increased interest in consolidation. With content now being distributed on multiple platforms, content producers/providers, distributors, and technology companies are looking to expand their presence among the proliferating channels, resulting in an increase in merger and acquisition (M&A) activity. In 2006, M&A deals among entertainment and media companies surpassed $70 billion in total value. Companies are also forming alliances and joint ventures to better take advantage of and serve the needs of the changing environment. Broadcasters are creating strategic alliances with digital networking companies and teaming up with Internet companies and wireless providers to stream programming both over the Internet and to mobile devices. Publishers and search engine companies are working together to share content and sell advertising in both print and digital formats. Technology companies are creating alliances to support the expansion of digital and mobile distribution of content. After several years of relatively slow deal activity, the pace quickened during 2004–05 and accelerated in 2006. We expect that content, distribution, and technology companies will continue to pursue new relationships during the next five years to accommodate the growing role that digital distribution will play in the entertainment and media market.
Key Themes Overview | 19
Intellectual property Digital distribution has dramatically changed the landscape for management of intellectual property. The cost of copying and distributing entertainment and media has plummeted, while the quality of copied product is now often indistinguishable from the original. The result is that consumers can more readily acquire quality product without paying for it. Such illegal copying affects virtually all segments of entertainment and media, with recorded music, filmed entertainment, and TV distribution affected the most. In recorded music, for example, piracy accounts for more than 80 percent of music consumption in Indonesia and the PRC and 50 percent or more in Russia, Mexico, and Greece. Piracy in these and other countries translates into billions of CDs and songs obtained annually through illegal or unauthorized channels. Legal technologies such as Slingbox, which allow TV programs to be viewed on computers and mobile phones, also have intellectual property implications because content licensed to one medium gets expanded to others without incremental compensation. Though content owners have been traditionally slow to adopt digital media commercial distribution, they have responded by introducing licensed digital services that give consumers the opportunity to acquire product in digital formats through legitimate channels. At the same time, prosecutions for copyright infringement have become more aggressive. While these developments may not eliminate or even reduce piracy, they are allowing consumers and end users to acquire content legitimately and the intellectual property owners to share in the increased demand by consumers for digital content. An issue for content providers and distributors is the degree to which they utilize digital rights management (DRM) software to control distribution. DRM restricts the ability of consumers to copy and distribute product. The benefit to content providers is that DRM limits unauthorized distribution. There is also a cost. Restrictions on usage, which include the inability of content downloaded on one device to play on another, can discourage some consumers from buying product through legitimate channels. Companies are grappling with this trade-off. In recorded music, for example, Apple has urged music companies to eliminate copy protection software that limits interoperability. Because of increasing pressure on the industry itself, major labels are considering releasing music over the Internet without copy protection, which would fuel Internet distribution and revenue growth by allowing music downloaded to be played on virtually any device. In April 2007, EMI made a deal with Apple to sell songs without DRM copy-protection software, with the expectation that an open standard would boost consumer spending on digital music. With physical distribution falling rapidly, labels are becoming more receptive to strategies that enhance digital distribution even as it reduces impediments to unauthorized distribution. Companies are experimenting with different approaches to intellectual property management. We expect that technologies, methodologies, and business models will continue to evolve during the next five years.
Growing markets The BRIC countries are generating excitement because of their expanding economies and surging E&M markets. Nominal growth in gross domestic product (GDP) in the each of the four BRIC countries rose at double-digit and high-single-digit rates during 2003–05 and continued to expand at double-digit rates in India and the PRC in 2006. Even though economic growth in Brazil and Russia is slowing, the large increases during the prior three years created an emerging and rapidly expanding middle class. In the process, discretionary income has grown, and pent-up demand for entertainment and media was unleashed, leading to large increases in spending. Consequently, even though GDP in both countries will grow more slowly during the next five years compared with the past few years, E&M spending will continue to post large gains in all four countries. India and the PRC had the fastest-growing economies of the BRIC countries in 2006. India rose 14.3 percent, and the PRC, 11.6 percent. We expect continued double-digit compound annual increases in these two countries during the next five years. For the BRIC countries as a group, growth will average 9.3 percent
PricewaterhouseCoopers 20 | Global Entertainment and Media Outlook: 2007–2011
compounded annually. That expansion will be nearly twice the 4.9 percent projected annual GDP increase in the rest of the world.
Nominal GDP Growth in BRIC (%) 2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
–9.4
9.7
19.5
31.8
3.7
4.2
4.1
4.5
4.3
4.1
4.2
12.7
24.9
36.5
29.7
6.5
6.5
6.5
6.5
6.4
6.2
6.4
India
7.4
12.7
13.1
13.1
14.3
13.1
12.6
12.0
11.1
10.3
11.8
China
9.7
12.9
17.7
14.0
11.6
12.5
11.3
10.2
9.9
9.2
10.6
BRIC Total
6.0
13.8
19.6
19.0
9.9
10.3
9.7
9.1
8.9
8.3
9.3
Rest of the World
2.6
3.8
5.8
5.4
5.6
5.1
5.2
4.9
4.7
4.6
4.9
Global Total
2.9
4.6
7.0
6.7
6.0
5.7
5.7
5.4
5.3
5.1
5.4
BRIC
2002
Brazil Russia
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates, World Bank
Economic expansion is generating large increases in E&M spending. During the past five years, E&M spending in the BRIC countries rose at double-digit annual rates. In 2006, BRIC E&M spending increased by 17.0 percent, while the rest of the world grew by 6.4 percent. Led by India and the PRC, E&M spending in BRIC will continue to grow at double-digit annual rates during the next five years. India is projected to increase at an 18.5 percent compound annual rate, and 16.8 percent annual growth is expected for the PRC, with mid- to high-single-digit gains in Brazil and Russia. Casino closings in Russia will lead to a $2-billion drop in spending in 2009. Excluding casinos, Russia will grow by 12.8 percent in 2009. BRIC as a group will increase at a 14.7 percent compound annual rate. That gain will be nearly three times the projected 5.5 percent compound annual increase for the rest of the world. BRIC will account for 24 percent of global E&M growth during the next five years.
E&M Market in BRIC (US$ Millions) BRIC Brazil % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
11,947
12,355
13,834
15,761
17,615
19,314
21,272
23,098
25,309
27,256
–1.6
3.4
12.0
13.9
11.8
9.6
10.1
8.6
9.6
7.7
9.1
7,978
10,644
14,999
18,629
19,958
21,114
22,890
23,408
25,723
27,851
30.5
33.4
40.9
24.2
7.1
5.8
8.4
2.3
9.9
8.3
6.9
7,425
8,104
8,969
10,107
11,590
13,616
16,218
19,324
23,213
27,089
10.2
9.1
10.7
12.7
14.7
17.5
19.1
19.2
20.1
16.7
18.5
31,426
38,805
50,616
63,953
77,776
95,529
115,187
131,961
149,836
169,309
% Change
22.9
23.5
30.4
26.3
21.6
22.8
20.6
14.6
13.5
13.0
16.8
BRIC Total
58,776
69,908
88,418
108,450
126,939
149,573
175,567
197,791
224,081
251,505
% Change
16.2
18.9
26.5
22.7
17.0
17.8
17.4
12.7
13.3
12.2
14.7
1,045,911 1,091,350 1,169,102 1,227,239 1,305,456 1,375,599 1,459,716 1,534,275 1,626,426 1,704,562
Russia % Change India % Change China
Rest of the World % Change Global Total % Change
4.8
5.5
1,104,687 1,161,258 1,257,520 1,335,689 1,432,395 1,525,172 1,635,283 1,732,066 1,850,507 1,956,067
3.8
4.4
4.3 5.1
7.1 8.3
5.0 6.2
6.4 7.2
5.4 6.5
6.1 7.2
5.1 5.9
6.0 6.8
5.7
6.4
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Key Themes Overview | 21
Continued content fragmentation A by-product of the growing digital media marketplace is that distribution costs are declining. Digital distribution does not require the manufacturing of physical product and packaging, or the cost of shipping that product to retailers or consumers, or the expense of managing inventory and dealing with returns. Lower costs reduce barriers to entry and make the market potentially more competitive. In fact, costs have been reduced so much that consumers themselves are creating and distributing content. New content communities such as MySpace and YouTube are creating a growing buzz among consumers— often with no money changing hands. The Internet is becoming an entertainment center for social networking and a distribution channel to access entertainment content, as well as a source of information and communication. As the Internet becomes a central aspect in more consumers’ lives, advertisers are following. Global Internet advertising rose at annual rates in excess of 30 percent during each of the past three years, including a 37.9 percent gain in 2006. User-generated content and social network sites will help drive online Internet advertising by 18.3 percent compounded annually during the next five years. One of the more striking developments in 2006 was the emergence of alternative video platforms such as YouTube. Web sites featuring user-generated content (UGC) are becoming enormously popular and further fragmenting the market. UGC sites are beginning to attract advertising and are competing with traditional television advertising. At the same time, UGC sites foster interest in television programs provided by the networks. Discussion of characters and plot lines, as well as leaks of future episodes, sustains interest in programs, as does fan fiction. New business models are emerging to deal with increased fragmentation. In some cases, networks are partnering with Web sites to provide content and share advertising. In other cases, networks are limiting access to content. As with DRM, traditional content providers are experimenting with different approaches in order to deal with this emerging phenomenon. The next section discusses the principal drivers, which are those influences that enable and fuel the key themes mentioned in this section, as well as the other topics discussed throughout the rest of the Outlook. That section is followed by a discussion of industry forecasts for each of the 14 segments covered in Global Entertainment and Media Outlook: 2007–2011 and the regional analysis of the five principal global regions.
PricewaterhouseCoopers 22 | Global Entertainment and Media Outlook: 2007–2011
Principal Industry Drivers As content becomes increasingly accessible over multiple platforms, consumption will continue to grow. Broadband availability—both wired and mobile—will drive spending. Sustained economic growth will support E&M spending. Convergent platforms/devices The consumption of entertainment and media is coalescing on three hardware platforms—the home computer, wireless mobile devices, and the television set—each of which now has multiple E&M uses. The computer has become a center for entertainment and media. The computer is used for accessing the Internet, and it has become a medium on which to play video games, purchase music, download movies and order movies online for delivery by mail, download TV shows, purchase books in physical formats, buy and read electronic books, place bets, and access business information. Wireless handsets are no longer simply voice communication devices. They are now used for listening to music, playing video games, watching television, accessing the Internet, and placing bets. They also have other, non-E&M functions, including taking pictures and videos, locating children through GPS technology, and sending text and instant messages. The use of the television set for multiple purposes is not new. In addition to watching television, TVs have long been used for watching movies that were separately purchased or rented in the home video market and for playing video games. The TV is now also being used to access programming on demand and to watch content that was downloaded from the Internet. Content consumed on these convergent platforms—which consist of home video, TV networks, TV distribution, digital music downloads, mobile music, Internet advertising and access spending, video games, business information, electronic books, and online gaming—represents a significant component of the global entertainment and media market. In 2006, these platforms generated $690 billion in global spending, or 48 percent of total entertainment and media spending, including Internet access spending. During the past five years, spending on these platforms expanded by double-digit rates and high-single-digit rates. We expect two additional years of double-digit growth, with high-single-digit gains anticipated during 2009–11. By 2011, spending on these platforms will reach $1.1 trillion, growing at a 9.1 percent compound annual rate. Asia Pacific will be the fastest-growing region, with a projected 13.5 percent compound annual increase. We also expect double-digit growth in Latin America as Internet and broadband penetration begins to gain momentum.
Principal Industry Drivers Overview | 23
Convergent Platform Market† (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2007–11 CAGR
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
209,736
224,487
248,867
263,776
288,128
309,516
335,611
356,475
381,668
403,326
7.4
7.0
10.9
6.0
9.2
7.4
8.4
6.2
7.1
5.7
7.0
139,306
153,356
173,029
189,034
209,387
229,922
251,930
273,406
294,997
315,209
9.7
10.1
12.8
9.3
10.8
9.8
9.6
8.5
7.9
6.9
8.5
85,489
97,037
114,331
131,292
151,176
175,052
201,108
226,508
254,096
284,307
9.5
13.5
17.8
14.8
15.1
15.8
14.9
12.6
12.2
11.9
13.5
14,002
15,004
17,355
20,303
23,632
26,903
30,554
34,045
38,246
41,915
–3.7
7.2
15.7
17.0
16.4
13.8
13.6
11.4
12.3
9.6
12.1
13,411
14,559
16,019
17,007
17,991
19,101
20,257
21,415
22,524
23,653
12.9
8.6
10.0
6.2
5.8
6.2
6.1
5.7
5.2
5.0
5.6
461,944
504,443
569,601
621,412
690,314
760,494
839,460
911,849
991,531 1,068,410
8.2
9.2
12.9
9.1
11.1
10.2
10.4
8.6
8.7
7.8
9.1
†Includes home video, TV networks, TV distribution, digital music downloads, mobile music, Internet advertising and access spending, video games, business information, electronic books, and online gaming. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
To put these figures in context, the remaining components of the global E&M market—box office spending, physical recorded music, radio and out-of-home advertising, magazine publishing, newspaper publishing, physical books, theme parks, casino gaming and legal sports wagering, and sports—averaged only 3.3 percent compound annual growth during the past five years. During the next five years, they will grow at a 3.6 percent compound annual rate. In each region, spending on convergent platforms will grow faster than other E&M platforms will.
Other Entertainment and Media Platforms† (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2007–11 CAGR
254,856
263,669
276,364
286,251
294,320
302,647
313,337
324,238
338,535
350,883
2.7
3.5
4.8
3.6
2.8
2.8
3.5
3.5
4.4
3.6
3.6
230,534
232,885
243,096
253,400
263,653
269,184
276,824
282,962
296,026
301,709
1.3
1.0
4.4
4.2
4.0
2.1
2.8
2.2
4.6
1.9
2.7
125,335
127,575
134,026
138,797
145,806
152,642
163,206
168,333
177,350
186,101
1.4
1.8
5.1
3.6
5.0
4.7
6.9
3.1
5.4
4.9
5.0
17,086
17,008
18,119
19,368
20,596
21,472
22,474
23,624
24,867
25,817
–3.2
–0.5
6.5
6.9
6.3
4.3
4.7
5.1
5.3
3.8
4.6
14,932
15,678
16,314
16,461
17,706
18,733
19,982
21,060
22,198
23,147
1.7
5.0
4.1
0.9
7.6
5.8
6.7
5.4
5.4
4.3
5.5
642,743
656,815
687,919
714,277
742,081
764,678
795,823
820,217
858,976
887,657
1.7
2.2
4.7
3.8
3.9
3.0
4.1
3.1
4.7
3.3
3.6
†Includes box office spending, physical recorded music, radio and out-of-home advertising, magazine publishing, newspaper publishing, physical books, theme parks, casino gaming and legal sports wagering, and sports. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
The convergent platform market will overtake spending on other E&M platforms in 2008 and by 2011 will constitute 55 percent of the global E&M market. Convergent platforms constituted the majority of spending
PricewaterhouseCoopers 24 | Global Entertainment and Media Outlook: 2007–2011
in Asia Pacific, Latin America, and Canada in 2006 and will become the majority component of the market in the United States in 2007 and in EMEA in 2011. Convergent platforms will account for 72 percent of total E&M spending growth during the next five years. E&M Spending by Platform (US$ Millions) 1,200,000
• Convergent Platforms • Other Platforms
1,000,000 800,000 600,000 400,000 200,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Increasing availability of broadband Distribution is shifting from traditional channels to the Internet and to mobile devices. In addition to contributing directly to E&M growth, the Internet, along with wireless, is fueling growth in several segments. In filmed entertainment, online rental subscriptions and video streaming of movies and downloads of TV shows are emerging categories. Video-on-demand and mobile TV subscriptions are fueling growth in TV distribution. Digital downloads of music to computers and to wireless telephones are in the process of supplanting physical distribution. Online and wireless video games are propelling the video game market. Electronic books represent a small but rapidly expanding component of book publishing, and online and mobile gaming are contributing to the casino and other regulated gaming market. The increase in the number of broadband households and wireless subscribers is driving the industry. Broadband connectivity facilitates the transmission of high-volume entertainment applications, thereby facilitating Internet distribution. From 2002 to 2006, the global broadband household universe rose by nearly 200 million. In 2006, there were 240 million broadband households, an increase of 31.8 percent from 2005. During the next five years, the broadband household universe will rise by an incremental 300 million. Growth in the broadband universe will expand the scope of digital distribution and will contribute to overall E&M growth.
Broadband Households (Millions) 2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
14.00
20.60
30.10
38.60
50.30
59.80
68.00
75.80
83.00
89.00
79.5
47.1
46.1
28.2
30.3
18.9
13.7
11.5
9.5
7.2
12.1
EMEA
10.48
18.52
39.02
53.35
75.64
94.73
113.41
130.11
145.40
159.56
% Change
103.9
76.7
110.7
36.7
41.8
25.2
19.7
14.7
11.8
9.7
16.1
Asia Pacific
23.72
37.28
60.20
79.69
97.40
124.05
150.80
176.85
207.45
243.20
% Change
88.6
57.2
61.5
32.4
22.2
27.4
21.6
17.3
17.3
17.2
20.1
Region United States % Change
Latin America
0.38
0.95
2.35
4.02
9.45
14.57
19.59
24.77
29.90
36.15
280.0
150.0
147.4
71.1
135.1
54.2
34.5
26.4
20.7
20.9
30.8
Canada
2.80
3.90
5.20
6.60
7.50
8.50
9.40
10.20
11.00
11.90
% Change
64.7
39.3
33.3
26.9
13.6
13.3
10.6
8.5
7.8
8.2
9.7
51.38
81.25
136.87
182.26
240.29
301.65
361.20
417.73
476.75
539.81
88.1
58.1
68.5
33.2
31.8
25.5
19.7
15.7
14.1
13.2
17.6
% Change
Total % Change
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Principal Industry Drivers Overview | 25
The wireless telephone universe has also been growing at double-digit annual rates during the past five years. In 2006, the number of subscribers rose 15.3 percent to 2.3 billion. During the next five years, the wireless telephone universe will expand by more than 1.1 billion to 3.4 billion in 2011, an 8.4 percent compound annual increase. Two-thirds of that growth will be generated in Asia Pacific, where the wireless market will rise to 1.75 billion in 2011, representing 51 percent of the global total. In addition to new subscribers, mobile distribution will be enhanced by the introduction of new handsets specifically designed to play music, play video games, and receive television broadcasts. Latin America has a weak landline infrastructure. Telephone access is largely wireless, and most people have only wireless access available. With Latin America’s economic rebound, the wireless market soared during the past four years: in 2006, the number of wireless subscribers nearly tripled the 2002 total. The U.S., by contrast, has a well-established landline infrastructure, wherein wireless is an add-on, and growth has been much slower: 60 percent from 2002 to 2006. The U.S. has a much larger landline market, at 162 million subscribers in 2006 compared with 92 million in Latin America.
Wireless Subscribers (Millions) Region
2002
2003
United States
135
148
170
% Change
14.4
9.6
14.9
EMEA
425
493
593
% Change
14.9
16.0
Asia Pacific
438
% Change Latin America % Change
2004
2005
2007–11 CAGR
2006
2007
2008
2009
2010
2011
195
216
235
251
263
270
275
14.7
10.8
8.8
6.8
4.8
2.7
1.9
4.9
723
764
798
830
854
875
900
20.3
21.9
5.7
4.5
4.0
2.9
2.5
2.9
3.3
550
676
805
993
1,148
1,299
1,454
1,602
1,750
30.7
25.6
22.9
19.1
23.4
15.6
13.2
11.9
10.2
9.2
12.0
98
122
169
232
282
322
361
397
428
450
36.1
24.5
38.5
37.3
21.6
14.2
12.1
10.0
7.8
5.1
9.8
Canada
12
13
15
17
19
21
24
26
28
29
% Change
9.1
8.3
15.4
13.3
11.8
10.5
14.3
8.3
7.7
3.6
8.8
1,108
1,326
1,623
1,972
2,274
2,524
2,765
2,994
3,203
3,404
22.3
19.7
22.4
21.5
15.3
11.0
9.5
8.3
7.0
6.3
8.4
Total % Change
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Broadband growth is leading to a surge in online advertising because broadband users spend more time online than dial-up users do, they visit more Web sites, and they buy more products, all of which make them attractive to advertisers. Broadband, along with wireless, also is generating revenues in the filmed entertainment, TV distribution, recorded music, video game, book publishing, and online gaming segments. Global digital/mobile revenue in 2006 totaled $58 billion, an increase of 39.0 percent from 2005. During the past five years, the digital/mobile market rose at a 37.3 percent compound annual rate. We expect continued double-digit annual growth in digital/mobile spending in each region during the next five years. The overall global market will rise to $153 billion in 2011, a 21.3 percent compound annual increase. Growth in spending through digital/mobile platforms, excluding Internet access, will account for 18 percent of total global E&M spending growth during the next five years.
PricewaterhouseCoopers 26 | Global Entertainment and Media Outlook: 2007–2011
Digital/Mobile Revenues† (US$ Millions) Region
2007–11 CAGR
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
United States
6,778
9,230
13,269
17,814
24,188
31,132
38,081
44,605
50,932
56,944
% Change
–10.0
36.2
43.8
34.3
35.8
28.7
22.3
17.1
14.2
11.8
18.7
EMEA
2,939
4,754
7,376
10,922
15,309
19,513
24,747
30,210
35,583
40,503
% Change
22.9
61.8
55.2
48.1
40.2
27.5
26.8
22.1
17.8
13.8
21.5
Asia Pacific
2,476
4,151
6,762
11,378
16,291
21,622
27,617
34,120
41,304
49,260
% Change
45.8
67.6
62.9
68.3
43.2
32.7
27.7
23.5
21.1
19.3
24.8
Latin America
104
137
276
466
656
863
1,088
1,340
1,588
1,815
% Change
30.0
31.7
101.5
68.8
40.8
31.6
26.1
23.2
18.5
14.3
22.6
Canada
416
581
882
1,365
1,864
2,428
3,057
3,695
4,292
4,905
% Change
70.5
39.7
51.8
54.8
36.6
30.3
25.9
20.9
16.2
14.3
21.3
12,713
18,853
28,565
41,945
58,308
75,558
94,590
113,970
133,699
153,427
6.4
48.3
51.5
46.8
39.0
29.6
25.2
20.5
17.3
14.8
21.3
Total % Change
†Includes online subscription rentals, digital movie/TV downloads, video-on-demand, digital music downloads, mobile music, online advertising, online video games, wireless video games, electronic books, and online gaming. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Principal Industry Drivers Overview | 27
Economic activity In addition to other trends, the economy plays a significant role in the entertainment and media industry because most segments are cyclically sensitive. When economic conditions were weak during the early part of the decade, the entertainment and media industry grew slowly. During the past three years, faster economic growth contributed to faster entertainment and media growth. The global economy in 2006 expanded by 6.0 percent, the third consecutive year of increases of 6 percent or higher. The global economy appears to have moved beyond the recovery phase and is now in a steady-state mode where moderate but sustainable expansion can be maintained. We expect global GDP during the next five years to expand at somewhat slower rates compared with 2004–06 but to grow faster compared with the early part of the decade. Growth will average an estimated 5.4 percent compounded annually. Asia Pacific and the United States will have the fastest-growing economies, with projected increases of 6.6 percent and 5.6 percent, respectively. EMEA will grow at a 4.7 percent compound annual rate, Canada by 4.6 percent, and Latin America by 4.2 percent.
Nominal GDP Growth by Region (%) 2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
United States
3.4
4.7
6.9
6.3
6.4
5.5
6.2
5.5
5.4
5.3
5.6
EMEA
4.3
4.6
6.5
5.7
5.2
5.0
4.9
4.7
4.5
4.3
4.7
Asia Pacific
3.0
4.5
6.9
6.3
7.3
7.2
6.8
6.5
6.3
6.0
6.6
–12.7
4.1
14.5
20.5
4.8
4.5
4.2
4.3
4.1
4.0
4.2
Canada
4.3
5.2
6.2
6.1
5.4
5.0
4.8
4.6
4.4
4.2
4.6
Total
2.9
4.6
7.0
6.7
6.0
5.7
5.7
5.4
5.3
5.1
5.4
Region
Latin America
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates, World Bank
Regional averages can mask substantial differences among countries. In EMEA, Middle East/Africa and Central and Eastern Europe will grow much faster than Western Europe. Western Europe will maintain a relatively steady 4.3 percent increase on a compound annual basis. Central and Eastern Europe had generated double-digit increases during 2002–05, principally because of large increases in Russia and Turkey. Those two countries suffered severe economic downturns during the late 1990s and early years of the current decade and were rebounding nearly as rapidly during the ensuing years. Now that those territories have largely regained their footing, growth dropped to mid-single-digit gains. We project Central and Eastern Europe to expand at a 6.0 percent compound annual rate during the next five years. In Middle East/Africa, South Africa will be the fastest-growing territory, at 8.9 percent on a compound annual basis, with Saudi Arabia/Pan Arab at 6.8 percent and Israel projected at 6.4 percent. Middle East/Africa as a whole will grow at a 7.2 percent compound annual rate.
PricewaterhouseCoopers 28 | Global Entertainment and Media Outlook: 2007–2011
Nominal GDP Growth by Country in EMEA (%) 2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
Austria
2.2
2.8
4.4
4.0
4.6
4.4
4.5
4.3
4.1
3.9
4.2
Belgium
3.5
2.6
4.7
3.5
5.2
4.1
4.2
4.0
3.9
3.7
4.0
Denmark
2.8
2.7
4.1
5.7
4.8
4.4
4.2
4.4
3.9
3.8
4.1
Finland
3.2
2.1
4.1
3.8
5.1
4.4
4.2
4.1
3.9
3.8
4.1
France
3.4
3.0
4.0
3.1
4.5
4.2
4.1
3.9
3.8
3.7
3.9
Germany
1.5
0.9
2.4
1.4
4.0
3.9
4.0
4.0
3.8
3.7
3.9
Greece
7.9
8.3
8.3
7.5
7.5
7.0
6.9
6.5
6.1
5.8
6.5
Ireland
11.4
6.6
6.8
7.9
8.8
8.3
7.7
6.7
6.3
5.9
7.0
Italy
3.7
3.1
4.0
2.0
3.9
3.6
3.5
3.3
3.2
3.1
3.3
Netherlands
3.9
2.4
2.6
2.7
4.6
4.7
5.0
4.9
4.6
4.4
4.7
Norway
–0.5
3.8
8.9
10.9
4.9
4.8
4.6
4.4
4.2
4.1
4.4
Portugal
4.8
1.5
4.0
3.0
3.9
3.9
3.5
3.4
3.3
3.2
3.5
Spain
7.2
7.1
7.2
8.0
7.2
6.6
6.2
6.2
5.9
5.5
6.1
Sweden
3.7
3.7
4.6
3.9
5.7
4.5
3.8
3.7
3.5
3.4
3.8
Switzerland
1.9
1.0
2.6
2.5
3.8
3.7
3.5
3.4
3.3
3.2
3.4
United Kingdom
5.2
5.9
6.0
4.1
5.0
5.3
4.9
4.6
4.4
4.2
4.7
Western Europe Total
3.6
3.3
4.4
3.5
4.8
4.6
4.5
4.3
4.1
4.0
4.3
4.8
4.6
7.9
7.1
8.6
7.4
6.9
6.5
6.1
5.7
6.5
Hungary
12.9
10.1
9.5
6.7
8.1
9.3
9.3
9.2
8.4
7.8
8.8
Poland
3.7
4.2
9.5
6.2
6.1
6.5
7.0
6.8
6.4
6.0
6.6
Romania
13.9
29.9
26.9
28.6
0.9
2.0
1.0
1.0
1.0
1.0
1.2
Russia
12.7
24.9
36.5
29.7
6.5
6.5
6.5
6.5
6.4
6.2
6.4
Turkey
26.5
30.1
26.0
20.1
5.1
5.0
5.0
4.8
4.5
4.3
4.7
Central and Eastern Europe Total
11.7
17.7
23.3
19.7
6.1
6.2
6.2
6.1
5.9
5.7
6.0
EMEA Western Europe
Central and Eastern Europe Czech Republic
Middle East/Africa Israel
–8.4
5.9
6.0
5.6
7.0
6.1
7.1
6.7
6.3
5.9
6.4
4.9
9.0
17.1
17.6
8.9
7.7
7.2
6.7
6.3
5.9
6.8
14.6
7.6
10.3
9.8
9.0
9.2
9.1
9.3
8.8
8.1
8.9
Middle East/Africa Total
5.0
8.2
13.8
14.1
8.7
7.9
7.6
7.3
6.9
6.5
7.2
Total
4.3
4.6
6.5
5.7
5.2
5.0
4.9
4.7
4.5
4.3
4.7
Saudi Arabia/Pan Arab
†
South Africa
†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Principal Industry Drivers Overview | 29
Similarly in Asia Pacific, there are wide disparities in growth. Japan, the dominant territory in E&M spending, rose by 3.0 percent in 2006, while the PRC, India, Indonesia, and the Philippines expanded at double-digit rates. We expect continued double-digit average annual increases compounded annually in the PRC, India, Indonesia, and the Philippines. Excluding Japan, nominal GDP growth in Asia Pacific will average 9.1 percent compounded annually.
Nominal GDP Growth by Country in Asia Pacific (%) Asia Pacific
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
Australia
6.8
6.3
7.1
7.1
6.8
6.5
5.8
5.6
5.6
5.3
5.8
China
9.7
12.9
17.7
14.0
11.6
12.5
11.3
10.2
9.9
9.2
10.6
–1.7
–3.3
4.7
7.0
8.6
8.3
7.7
6.7
6.3
5.9
6.9
7.4
12.7
13.1
13.1
14.3
13.1
12.6
12.0
11.1
10.3
11.8
Indonesia
10.6
9.3
11.6
20.1
18.7
12.3
12.0
11.9
10.6
9.6
11.3
Japan
–1.4
0.2
1.1
1.3
3.0
2.9
2.5
2.4
2.4
2.3
2.5
Malaysia
8.3
9.1
13.8
10.0
9.5
9.1
9.0
8.8
8.1
7.5
8.5
New Zealand
4.3
6.7
7.2
3.4
5.3
4.9
4.7
5.1
4.9
4.7
4.9
Pakistan
5.6
9.7
15.1
12.0
9.5
8.4
7.9
7.4
6.8
6.4
7.4
Philippines
9.3
8.9
12.5
11.6
11.8
10.9
10.7
10.4
9.4
8.6
10.0
Singapore
3.3
2.0
12.5
7.0
8.7
6.3
5.9
5.6
5.3
5.0
5.6
10.0
5.9
7.5
3.5
7.7
7.1
6.8
6.7
6.3
5.9
6.6
Taiwan
3.4
1.2
4.4
3.3
5.8
5.7
5.4
5.4
5.1
4.9
5.3
Thailand
6.2
8.8
9.7
9.2
9.3
8.3
7.7
7.6
7.0
6.9
7.5
Total
3.0
4.5
6.9
6.3
7.3
7.2
6.8
6.5
6.3
6.0
6.6
Hong Kong India
South Korea
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Latin America is moving to a postrecovery phase characterized by sustained mid-single-digit growth. In 2002, nominal GDP fell by double-digit rates, and during 2004–05 it rose at double-digit rates, including a 20.5 percent increase in 2005. In 2006, nominal GDP expanded by 4.8 percent. Although nominal GDP growth in 2006 was lower than during the prior two years, the region is on a firmer footing. Inflation has come down, which accounts for part of the slowdown, and the economy is operating at closer to its potential, which limits its ability to expand. The stable outlook is making the region attractive to investors and is fostering large increases in E&M spending. In a stable environment, consumers are more willing to spend on entertainment and media than when there is economic upheaval.
Nominal GDP Growth by Country in Latin America (%) Latin America Argentina
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
–62.0
26.9
18.1
20.5
7.9
6.0
5.2
5.0
4.7
4.5
5.1
Brazil
–9.4
9.7
19.5
31.8
3.7
4.2
4.1
4.5
4.3
4.1
4.2
Chile
6.4
10.0
13.6
8.0
8.8
8.6
8.3
8.4
8.4
7.7
8.3
–1.0
–2.2
21.9
26.3
5.1
5.1
3.7
3.6
3.4
3.3
3.8
4.3
–1.5
7.0
12.4
4.1
3.8
3.6
3.5
3.4
3.3
3.5
Venezuela
–24.4
–10.1
30.5
14.7
8.0
3.7
3.6
3.4
3.3
3.2
3.5
Total
–12.7
4.1
14.5
20.5
4.8
4.5
4.2
4.3
4.1
4.0
4.2
Colombia Mexico
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
PricewaterhouseCoopers 30 | Global Entertainment and Media Outlook: 2007–2011
Global Entertainment and Media Market by Segment We have provided historical results and spending forecasts for each of the 14 entertainment and media segments covered in Global Entertainment and Media Outlook: 2007–2011. This section discusses overall market spending by segment and summarizes the principal factors driving growth or contraction. Filmed entertainment Filmed entertainment rebounded in 2006 with a 2.9 percent advance following a 2.6 percent decline in 2005. A strong slate of films boosted the box office market in each region while supporting the home video market. A key factor affecting the market in any given year is the quality of releases and their appeal to consumers, a development we cannot predict. The underlying box office market will be enhanced by digital cinemas in the United States, EMEA, and Asia Pacific and by the construction of modern theaters and more screens in Central and Eastern Europe, Asia Pacific, and Latin America. The introduction of high-definition DVDs will stimulate home video sell-through in the United States, EMEA, Asia Pacific, and Canada. Digital download-to-own streaming services will generate incremental revenue in the United States and EMEA, and online DVD rental services will augment rental spending. Piracy will continue to impede growth in Asia Pacific and Latin America. We expect the market to expand at a 4.9 percent compound annual rate, rising to $103 billion in 2011.
Global Filmed Entertainment Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
31,703
33,297
34,971
34,235
35,185
36,731
38,257
39,889
41,877
44,000
9.5
5.0
5.0
–2.1
2.8
4.4
4.2
4.3
5.0
5.1
4.6
19,769
21,278
23,228
21,944
21,874
22,136
22,895
23,992
25,318
26,677
16.9
7.6
9.2
–5.5
–0.3
1.2
3.4
4.8
5.5
5.4
4.0
13,614
14,537
15,526
15,496
16,664
17,604
18,765
20,167
21,608
23,145
4.7
6.8
6.8
–0.2
7.5
5.6
6.6
7.5
7.1
7.1
6.8
1,443
1,549
1,765
1,741
1,871
1,994
2,125
2,271
2,420
2,574
9.7
7.3
13.9
–1.4
7.5
6.6
6.6
6.9
6.6
6.4
6.6
4,160
4,825
5,519
5,507
5,645
5,826
6,068
6,326
6,587
6,867
33.3
16.0
14.4
–0.2
2.5
3.2
4.2
4.3
4.1
4.3
4.0
70,689
75,486
81,009
78,923
81,239
84,291
88,110
92,645
97,810
103,263
11.6
6.8
7.3
–2.6
2.9
3.8
4.5
5.1
5.6
5.6
4.9
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Global Entertainment and Media Market by Segment Overview | 31
Television networks The TV network market rose 6.2 percent in 2006—comparable to the 6.3 percent gains in 2003 and 2005 but significantly less than the growth in 2004, which had been driven by the Summer Olympics. Advertising associated with the Winter Olympics and the FIFA World Cup did not lead to improved growth compared with 2005, because large increases in online advertising cut into TV advertising growth. Large increases in the number of digital TV households will boost multichannel advertising, while the free-toair market will benefit from high-definition television (HDTV), new channels, and a generally healthy economic environment—particularly in Central and Eastern Europe, the PRC, India, and Latin America. Mandated switch offs of analog broadcasting will accelerate the migration to digital platforms in Western Europe, while the U.S. is already rapidly shifting to digital platforms. Digital video recorders will add more to program and commercial viewing than they take away and will prove to have a net positive impact on advertising. Public TV license fees in EMEA and Asia Pacific will continue to be slow-growing components of the market. We project spending to increase at a 5.8 percent rate compounded annually to $228 billion in 2011 from $172 billion in 2006.
Global Television Network Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
43,286
47,224
54,399
58,096
62,229
66,105
71,920
75,520
80,645
85,410
9.3
9.1
15.2
6.8
7.1
6.2
8.8
5.0
6.8
5.9
6.5
49,927
52,049
55,416
58,536
61,573
64,563
67,723
70,822
74,552
77,253
1.8
4.3
6.5
5.6
5.2
4.9
4.9
4.6
5.3
3.6
4.6
29,504
30,966
33,309
34,758
36,550
38,363
42,047
43,908
46,693
48,967
3.4
5.0
7.6
4.4
5.2
5.0
9.6
4.4
6.3
4.9
6.0
4,505
4,866
5,841
7,019
7,905
8,517
9,502
10,150
11,473
12,073
–3.8
8.0
20.0
20.2
12.6
7.7
11.6
6.8
13.0
5.2
8.8
2,958
3,234
3,422
3,525
3,719
3,856
4,045
4,230
4,430
4,632
6.9
9.3
5.8
3.0
5.5
3.7
4.9
4.6
4.7
4.6
4.5
130,180
138,339
152,387
161,934
171,976
181,404
195,237
204,630
217,793
228,335
4.5
6.3
10.2
6.3
6.2
5.5
7.6
4.8
6.4
4.8
5.8
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
PricewaterhouseCoopers 32 | Global Entertainment and Media Outlook: 2007–2011
Television distribution The global television distribution market increased by 9.4 percent in 2006, an improvement compared with the 6.5 percent increase in 2005. The entrance of telephone companies into the TV distribution market is stimulating competition and fueling subscriber growth. Cable operators are migrating their subscribers to digital platforms that not only boost monthly subscription revenues but also expand the market for videoon-demand. Mandated shutdowns of analog broadcasts in EMEA and the United States will boost the subscription household universe. Large increases in subscription household penetration will drive subscription spending in Asia Pacific, Latin America, and EMEA. We expect more than 120 million additional subscription households in Asia Pacific during the next five years, mostly from the PRC and India. Even with that increase, less than half of all TV households will subscribe to a multichannel service, meaning that growth will not be constrained by approaching saturation. Growth in Asia Pacific will also be enhanced by mobile phone TV subscriptions. We expect the market to reach $251 billion in 2011 from $161 billion in 2006, a 9.3 percent compound annual increase.
Global Television Distribution Market (US$ Millions) 2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
73,812
77,869
85,447
87,988
94,673
98,125
105,305
110,192
118,026
123,261
10.0
5.5
9.7
3.0
7.6
3.6
7.3
4.6
7.1
4.4
5.4
22,619
24,975
27,767
31,099
35,069
39,457
44,642
50,097
56,075
62,722
14.0
10.4
11.2
12.0
12.8
12.5
13.1
12.2
11.9
11.9
12.3
11,494
13,718
15,822
17,977
20,187
22,847
26,268
31,539
38,403
46,363
13.9
19.3
15.3
13.6
12.3
13.2
15.0
20.1
21.8
20.7
18.1
Latin America
4,877
4,880
5,200
5,810
6,539
7,508
8,632
9,942
11,362
12,883
% Change
–14.8
0.1
6.6
11.7
12.5
14.8
15.0
15.2
14.3
13.4
14.5
Canada
3,254
3,494
3,669
3,951
4,175
4,409
4,678
4,974
5,248
5,516
4.2
7.4
5.0
7.7
5.7
5.6
6.1
6.3
5.5
5.1
5.7
116,056
124,936
137,905
146,825
160,643
172,346
189,525
206,744
229,114
250,745
9.6
7.7
10.4
6.5
9.4
7.3
10.0
9.1
10.8
9.4
9.3
Region United States % Change EMEA % Change Asia Pacific % Change
% Change Total % Change
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Global Entertainment and Media Market by Segment Overview | 33
Recorded music The global recorded music market rose by 0.6 percent in 2006, principally the result of double-digit growth in Asia Pacific that offset declines in the United States, EMEA, and Canada. The composition of the market is rapidly migrating from physical to digital formats. Distribution of music in physical formats fell 8.5 percent in 2006, and we expect declines to average 9.6 percent on a compound annual basis through 2011 to $18 billion from $29 billion in 2006. Music distributed in digital formats—to mobile phones and licensed Internet downloads—rose 72.2 percent in 2006. We expect digital distribution of music to expand at a 26.8 percent compound annual rate, more than tripling to $23 billion in 2011 from $7 billion in 2006. An expanding wireless universe, upgrades to next-generation wireless networks, and the introduction of wireless handsets designed to play music will propel mobile phone distribution. Growth in the number of broadband services and the introduction of licensed download services in some territories will fuel Internet distribution. In 2009, digital distribution will surpass physical distribution in Asia Pacific and Latin America, and in 2010 it will become the principal distribution channel in the United States. Globally, digital distribution will become the largest distribution stream in 2010. As digital distribution expands, it will contribute more to overall growth, while a declining physical market will have less of an impact. Piracy remains a significant problem and will continue to cut into the physical and Internet distribution markets. We project spending to rise at a 2.3 percent compound annual rate to $40 billion in 2011 from $36 billion in 2006.
Global Recorded Music Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
12,643 –8.0 14,750 –2.6 7,614 –3.3 1,116 –5.3 860 –8.3 36,983 –4.9
12,025 –4.9 13,729 –6.9 7,212 –5.3 988 –11.5 839 –2.4 34,793 –5.9
12,762 6.1 13,319 –3.0 7,387 2.4 1,203 21.8 820 –2.3 35,491 2.0
12,270 –3.9 13,338 0.1 8,077 9.3 1,360 13.1 814 –0.7 35,859 1.0
11,511 –6.2 13,065 –2.0 9,341 15.6 1,409 3.6 752 –7.6 36,078 0.6
10,482 –8.9 12,927 –1.1 10,023 7.3 1,456 3.3 729 –3.1 35,617 –1.3
10,427 –0.5 13,087 1.2 10,650 6.3 1,532 5.2 736 1.0 36,432 2.3
10,603 1.7 13,457 2.8 11,248 5.6 1,634 6.7 751 2.0 37,693 3.5
10,926 3.0 13,901 3.3 11,760 4.6 1,741 6.5 770 2.5 39,098 3.7
11,308 3.5 14,330 3.1 12,177 3.5 1,831 5.2 791 2.7 40,437 3.4
–0.4 1.9 5.4 5.4 1.0 2.3
Sources: PricewaterhouseCoopers LLP, Recording Industry Association of America, Wilkofsky Gruen Associates
Global Recorded Music Digital Distribution Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
29 — 38 — 97 — 18 — 1 — 183 —
171 489.7 198 421.1 268 176.3 46 155.6 4 300.0 687 275.4
608 255.6 488 146.5 613 128.7 140 204.3 25 525.0 1,874 172.8
1,075 76.8 1,096 124.6 1,569 156.0 261 86.4 48 92.0 4,049 116.1
1,860 73.0 1,786 63.0 2,855 82.0 394 51.0 77 60.4 6,972 72.2
2,680 44.1 2,502 40.1 4,123 44.4 520 32.0 127 64.9 9,952 42.7
3,771 40.7 3,450 37.9 5,321 29.1 668 28.5 189 48.8 13,399 34.6
4,793 27.1 4,516 30.9 6,425 20.7 837 25.3 251 32.8 16,822 25.5
5,720 19.3 5,600 24.0 7,378 14.8 1,001 19.6 308 22.7 20,007 18.9
6,561 14.7 6,611 18.1 8,174 10.8 1,138 13.7 358 16.2 22,842 14.2
28.7 29.9 23.4 23.6 36.0 26.8
Sources: PricewaterhouseCoopers LLP, Recording Industry Association of America, Wilkofsky Gruen Associates PricewaterhouseCoopers 34 | Global Entertainment and Media Outlook: 2007–2011
Global Recorded Music Physical Distribution Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
12,614 –8.2 14,712 –2.8 7,517 –4.5 1,098 –6.8 859 –8.4 36,800 –5.3
11,854 –6.0 13,531 –8.0 6,944 –7.6 942 –14.2 835 –2.8 34,106 –7.3
12,154 2.5 12,831 –5.2 6,774 –2.4 1,063 12.8 795 –4.8 33,617 –1.4
11,195 –7.9 12,242 –4.6 6,508 –3.9 1,099 3.4 766 –3.6 31,810 –5.4
9,651 –13.8 11,279 –7.9 6,486 –0.3 1,015 –7.6 675 –11.9 29,106 –8.5
7,802 –19.2 10,425 –7.6 5,900 –9.0 936 –7.8 602 –10.8 25,665 –11.8
6,656 –14.7 9,637 –7.6 5,329 –9.7 864 –7.7 547 –9.1 23,033 –10.3
5,810 –12.7 8,941 –7.2 4,823 –9.5 797 –7.8 500 –8.6 20,871 –9.4
5,206 –10.4 8,301 –7.2 4,382 –9.1 740 –7.2 462 –7.6 19,091 –8.5
4,747 –8.8 7,719 –7.0 4,003 –8.6 693 –6.4 433 –6.3 17,595 –7.8
–13.2 –7.3 –9.2 –7.3 –8.5 –9.6
Sources: PricewaterhouseCoopers LLP, Recording Industry Association of America, Wilkofsky Gruen Associates
Radio and out-of-home advertising The radio and out-of-home market rose 4.5 percent in 2006, down from the 5.2 percent annual gains during 2004–05 although an improvement compared with the 2.7 percent annual gains during 2002–03. Out-of-home was the faster-growing component, with a 6.3 percent increase, while radio rose by only 3.6 percent. The advent of digital billboards that expand the effective out-of-home inventory by allowing multiple ads to be shown on the same display will drive the out-of-home market. Improved out-of-home audience measurement systems and the expansion of captive video networks will attract advertisers. We expect out-of-home advertising to expand at a 6.5 percent compound annual rate during the next five years to $32 billion in 2011 from $23 billion in 2006. High-definition radio will enhance sound quality and allow for multicasts of niche formats that will generate incremental advertising. A growing satellite radio market will boost spending in the United States and Canada and will provide a modest addition in Asia Pacific. Slow-growing public radio license fees will hold down growth in EMEA and Asia Pacific. We look for radio to grow at a 4.5 percent compound annual rate from $46 billion in 2006 to $57 billion in 2011. The overall radio and out-of-home market will increase to $89 billion in 2011, a 5.2 percent compound annual increase from $69 billion in 2006.
Global Radio/Out-of-Home Advertising Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
24,133 4.7 20,737 2.4 11,328 0.3 910 –5.7 1,193 1.8 58,301 2.7
24,734 2.5 21,546 3.9 11,536 1.8 796 –12.5 1,280 7.3 59,892 2.7
25,809 4.3 22,735 5.5 12,216 5.9 901 13.2 1,333 4.1 62,994 5.2
26,973 4.5 24,034 5.7 12,717 4.1 1,061 17.8 1,457 9.3 66,242 5.2
28,291 4.9 24,898 3.6 13,213 3.9 1,215 14.5 1,600 9.8 69,217 4.5
29,756 5.2 25,844 3.8 13,861 4.9 1,344 10.6 1,784 11.5 72,589 4.9
31,455 5.7 26,844 3.9 14,734 6.3 1,482 10.3 2,007 12.5 76,522 5.4
33,426 6.3 27,906 4.0 15,456 4.9 1,619 9.2 2,289 14.1 80,696 5.5
35,439 6.0 28,968 3.8 16,256 5.2 1,757 8.5 2,544 11.1 84,964 5.3
37,450 5.7 30,072 3.8 17,020 4.7 1,888 7.5 2,781 9.3 89,211 5.0
5.8 3.8 5.2 9.2 11.7 5.2
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Global Entertainment and Media Market by Segment Overview | 35
Global Radio Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
18,901 5.8 14,183 2.5 4,957 0.5 743 –3.0 952 3.0 39,736 3.7
19,229 1.7 14,672 3.4 5,072 2.3 619 –16.7 1,030 8.2 40,622 2.2
19,975 3.9 15,414 5.1 5,337 5.2 694 12.1 1,066 3.5 42,486 4.6
20,672 3.5 16,139 4.7 5,569 4.3 796 14.7 1,154 8.3 44,330 4.3
21,451 3.8 16,528 2.4 5,762 3.5 911 14.4 1,269 10.0 45,921 3.6
22,306 4.0 17,046 3.1 5,968 3.6 1,021 12.1 1,423 12.1 47,764 4.0
23,335 4.6 17,532 2.9 6,255 4.8 1,132 10.9 1,610 13.1 49,864 4.4
24,616 5.5 18,070 3.1 6,529 4.4 1,243 9.8 1,857 15.3 52,315 4.9
25,969 5.5 18,594 2.9 6,869 5.2 1,356 9.1 2,077 11.8 54,865 4.9
27,320 5.2 19,097 2.7 7,182 4.6 1,462 7.8 2,279 9.7 57,340 4.5
5.0 2.9 4.5 9.9 12.4 4.5
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Global Out-of-Home Advertising Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
5,232 0.8 6,554 2.0 6,371 0.2 167 –16.1 241 –2.8 18,565 0.7
5,505 5.2 6,874 4.9 6,464 1.5 177 6.0 250 3.7 19,270 3.8
5,834 6.0 7,321 6.5 6,879 6.4 207 16.9 267 6.8 20,508 6.4
6,301 8.0 7,895 7.8 7,148 3.9 265 28.0 303 13.5 21,912 6.8
6,840 8.6 8,370 6.0 7,451 4.2 304 14.7 331 9.2 23,296 6.3
7,450 8.9 8,798 5.1 7,893 5.9 323 6.3 361 9.1 24,825 6.6
8,120 9.0 9,312 5.8 8,479 7.4 350 8.4 397 10.0 26,658 7.4
8,810 8.5 9,836 5.6 8,927 5.3 376 7.4 432 8.8 28,381 6.5
9,470 7.5 10,374 5.5 9,387 5.2 401 6.6 467 8.1 30,099 6.1
10,130 7.0 10,975 5.8 9,838 4.8 426 6.2 502 7.5 31,871 5.9
8.2 5.6 5.7 7.0 8.7 6.5
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Internet advertising and access spending The global Internet market rose 21.8 percent, the fastest-growing segment in 2006 and the fourth consecutive increase in excess of 20 percent. Advertising rose 37.9 percent, and access spending increased 18.8 percent. The migration of Internet subscribers from dial-up to broadband is the principal driver. Cable operators and telephone companies have introduced triple-play packages that combine broadband with television and telephone service. These packages are attracting subscribers and fueling growth in the broadband market. Competition is bringing down broadband fees, further contributing to subscriber growth. In the United States and Canada, broadband providers are offering higher-speed options at higher price points, a development that will help maintain or increase average payments even as the basic broadband service becomes less expensive. Asia Pacific passed EMEA in 2006 to become the largest access region. The number of broadband households in Asia Pacific will increase by more than 145 million during the next five years, more than threequarters of which will come from the PRC, leading to a 16.9 percent compound annual increase to $118 billion for that region. The PRC will pass the United States in overall Internet spending in 2010 to become the largest Internet territory in the world. We expect access spending to increase from $145 billion in 2006 to $258 billion in 2011, a 12.2 percent compound annual increase.
PricewaterhouseCoopers 36 | Global Entertainment and Media Outlook: 2007–2011
Broadband growth is also stimulating Internet advertising. Broadband users spend more time online than dial-up users do; they buy more products online; and use search engines to visit more Web sites. Broadband users are also converting the Internet into a medium for social networking and entertainment. Advertisers are following users and going online. We project global online advertising to expand at an 18.3 percent compound annual rate to $73 billion in 2011 from $32 billion in 2006. Internet advertising and access spending as a whole will increase to $332 billion in 2011, growing at a 13.4 percent compound annual rate from $177 billion in 2006. The Internet will continue to be the fastest-growing segment during the next five years.
Global Internet Advertising and Access Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
24,819 9.1 26,674 26.2 21,311 24.7 2,224 22.1 1,377 17.5 76,405 19.5
29,093 17.2 33,199 24.5 27,551 29.3 2,753 23.8 1,525 10.7 94,121 23.2
33,631 15.6 43,073 29.7 37,704 36.9 3,618 31.4 1,824 19.6 119,850 27.3
39,178 16.5 50,979 18.4 48,473 28.6 4,598 27.1 2,192 20.2 145,420 21.3
47,235 20.6 61,653 20.9 59,616 23.0 6,025 31.0 2,547 16.2 177,076 21.8
54,478 15.3 71,793 16.4 73,507 23.3 7,346 21.9 2,947 15.7 210,071 18.6
61,106 12.2 81,721 13.8 87,446 19.0 8,555 16.5 3,328 12.9 242,156 15.3
67,269 10.1 90,584 10.8 101,256 15.8 9,768 14.2 3,703 11.3 272,580 12.6
73,107 8.7 98,292 8.5 115,178 13.7 10,910 11.7 4,098 10.7 301,585 10.6
78,351 7.2 105,268 7.1 131,265 14.0 12,174 11.6 4,520 10.3 331,578 9.9
10.7 11.3 17.1 15.1 12.2 13.4
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Global Internet Advertising Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
6,010 –16.6 1,650 8.0 1,146 19.5 86 7.5 155 82.4 9,047 –8.3
7,267 20.9 2,356 42.8 1,666 45.4 90 4.7 209 34.8 11,588 28.1
9,626 32.5 3,850 63.4 2,522 51.4 132 46.7 321 53.6 16,451 42.0
12,542 30.3 5,672 47.3 4,013 59.1 195 47.7 495 54.2 22,917 39.3
16,800 33.9 8,275 45.9 5,567 38.7 245 25.6 706 42.6 31,593 37.9
21,100 25.6 11,060 33.7 7,117 27.8 312 27.3 969 37.3 40,558 28.4
25,200 19.4 13,929 25.9 8,760 23.1 378 21.2 1,234 27.3 49,501 22.0
28,800 14.3 16,722 20.1 10,253 17.0 446 18.0 1,498 21.4 57,719 16.6
32,200 11.8 19,384 15.9 11,724 14.3 514 15.2 1,763 17.7 65,585 13.6
35,400 9.9 21,889 12.9 13,196 12.6 584 13.6 2,027 15.0 73,096 11.5
16.1 21.5 18.8 19.0 23.5 18.3
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Global Entertainment and Media Market by Segment Overview | 37
Global Internet Access Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
18,809 21.1 25,024 27.6 20,165 25.1 2,138 22.8 1,222 12.4 67,358 24.5
21,826 16.0 30,843 23.3 25,885 28.4 2,663 24.6 1,316 7.7 82,533 22.5
24,005 10.0 39,223 27.2 35,182 35.9 3,486 30.9 1,503 14.2 103,399 25.3
26,636 11.0 45,307 15.5 44,460 26.4 4,403 26.3 1,697 12.9 122,503 18.5
30,435 14.3 53,378 17.8 54,049 21.6 5,780 31.3 1,841 8.5 145,483 18.8
33,378 9.7 60,733 13.8 66,390 22.8 7,034 21.7 1,978 7.4 169,513 16.5
35,906 7.6 67,792 11.6 78,686 18.5 8,177 16.2 2,094 5.9 192,655 13.7
38,469 7.1 73,862 9.0 91,003 15.7 9,322 14.0 2,205 5.3 214,861 11.5
40,907 6.3 78,908 6.8 103,454 13.7 10,396 11.5 2,335 5.9 236,000 9.8
42,951 5.0 83,379 5.7 118,069 14.1 11,590 11.5 2,493 6.8 258,482 9.5
7.1 9.3 16.9 14.9 6.3 12.2
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Video games The introduction of the new generation of video game consoles and the associated increase in video game software purchases for those consoles boosted spending by 14.3 percent in 2006. The Xbox 360 from Microsoft entered the market at the end of 2005. Wii from Nintendo was introduced in late 2006, and PlayStation 3 from Sony was launched in Japan and the United States at the end of 2006 and will be introduced in other territories in 2007. We anticipate two more years of double-digit growth in software as a result of these newly introduced consoles. The new consoles, which have Internet capabilities, will also spur growth in the online game market as will growing broadband penetration. New wireless handsets with enhanced graphics designed to play video games will drive demand for wireless games. High-speed wireless networks will provide an environment for wireless games that will approach the quality of console games. We project the video game market to expand from $32 billion in 2006 to $49 billion in 2011, a 9.1 percent compound annual increase.
Global Video Game Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
7,187 11.4 5,939 9.4 7,786 2.3 451 32.6 518 23.3 21,881 8.1
7,497 4.3 6,545 10.2 8,154 4.7 515 14.2 593 14.5 23,304 6.5
8,200 9.4 7,630 16.6 9,282 13.8 544 5.6 678 14.3 26,334 13.0
8,170 –0.4 8,227 7.8 9,996 7.7 528 –2.9 744 9.7 27,665 5.1
9,034 10.6 9,441 14.8 11,696 17.0 586 11.0 872 17.2 31,629 14.3
10,438 15.5 11,135 17.9 14,146 20.9 715 22.0 1,034 18.6 37,468 18.5
11,221 7.5 12,450 11.8 15,841 12.0 785 9.8 1,161 12.3 41,458 10.6
11,642 3.8 13,539 8.7 16,980 7.2 815 3.8 1,250 7.7 44,226 6.7
12,069 3.7 14,560 7.5 17,938 5.6 843 3.4 1,310 4.8 46,720 5.6
12,473 3.3 15,352 5.4 18,813 4.9 871 3.3 1,368 4.4 48,877 4.6
6.7 10.2 10.0 8.2 9.4 9.1
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
PricewaterhouseCoopers 38 | Global Entertainment and Media Outlook: 2007–2011
Business information Business information spending rose 6.9 percent in 2006, the largest increase during the past five years. Favorable economic conditions, increased M&A activity, and growth in international investment are fueling demand for business information. Growing interest in entering emerging markets is driving demand for industry information. Rising investment and the growth of hedge funds are fueling demand for financial information. Increased competition is driving demand for marketing information. And information providers are packaging their data with analytic tools to make their information more useful to subscribers and to distinguish their fee-based services from advertiser-supported services. We expect the market to rise at a 5.8 percent compound annual rate to $111 billion in 2011 from $84 billion in 2006.
Global Business Information Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
38,300 –1.3 20,770 –0.6 5,898 –2.3 1,267 –4.2 4,182 0.0 70,417 –1.1
38,500 0.5 20,834 0.3 5,904 0.1 1,258 –0.7 4,204 0.5 70,700 0.4
40,650 5.6 21,518 3.3 6,103 3.4 1,294 2.9 4,327 2.9 73,892 4.5
43,300 6.5 22,583 4.9 6,433 5.4 1,347 4.1 4,490 3.8 78,153 5.8
46,500 7.4 24,046 6.5 6,872 6.8 1,407 4.5 4,694 4.5 83,519 6.9
49,775 7.0 25,594 6.4 7,337 6.8 1,473 4.7 4,914 4.7 89,093 6.7
53,025 6.5 27,132 6.0 7,848 7.0 1,544 4.8 5,139 4.6 94,688 6.3
56,200 6.0 28,669 5.7 8,329 6.1 1,618 4.8 5,359 4.3 100,175 5.8
59,300 5.5 30,168 5.2 8,836 6.1 1,697 4.9 5,579 4.1 105,580 5.4
62,400 5.2 31,649 4.9 9,344 5.7 1,770 4.3 5,799 3.9 110,962 5.1
6.1 5.6 6.3 4.7 4.3 5.8
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Global Entertainment and Media Market by Segment Overview | 39
Magazine publishing Magazine publishing increased 2.6 percent in 2006 to $101 billion, the slowest growth since 2003. Circulation decreases in the United States and Canada contributed to the slowdown, while circulation spending in the remaining regions rose 3.3 percent. Rising incomes will fuel circulation growth in Eastern Europe, Latin America, and portions of Asia Pacific. In North America, the migration of readers to the Internet will cut into the print circulation market. Consumer magazine advertising will be buoyed by both economic expansion and new titles targeting affluent readers in Asia Pacific and a growing middle class in Central and Eastern Europe and Latin America. Trade magazines will benefit from a rebounding telecommunication market, which is a key advertiser in business-to-business publications. We project magazine publishing to expand at a 3.1 percent compound annual rate to $117 billion in 2011.
Global Magazine Publishing Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
32,588 –4.6 38,692 –1.4 14,969 0.9 2,311 –11.0 1,294 –2.2 89,854 –2.5
32,999 1.3 38,737 0.1 15,379 2.7 2,443 5.7 1,316 1.7 90,874 1.1
34,481 4.5 39,878 2.9 15,972 3.9 2,671 9.3 1,339 1.7 94,341 3.8
35,933 4.2 41,190 3.3 16,727 4.7 2,927 9.6 1,361 1.6 98,138 4.0
36,488 1.5 42,475 3.1 17,237 3.0 3,135 7.1 1,387 1.9 100,722 2.6
37,022 1.5 43,767 3.0 17,807 3.3 3,350 6.9 1,415 2.0 103,361 2.6
37,883 2.3 45,163 3.2 18,481 3.8 3,563 6.4 1,442 1.9 106,532 3.1
39,044 3.1 46,551 3.1 19,141 3.6 3,779 6.1 1,467 1.7 109,982 3.2
40,293 3.2 48,019 3.2 19,845 3.7 3,999 5.8 1,491 1.6 113,647 3.3
41,532 3.1 49,416 2.9 20,551 3.6 4,208 5.2 1,516 1.7 117,223 3.1
2.6 3.1 3.6 6.1 1.8 3.1
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
PricewaterhouseCoopers 40 | Global Entertainment and Media Outlook: 2007–2011
Newspaper publishing Newspaper publishing increased 1.8 percent in 2006, its weakest showing since the 1.1 percent decrease in 2002. Circulation declines and the migration of advertising, particularly classified advertising, to the Internet is hurting the print newspaper market. Free papers are attracting readers from paid dailies in EMEA, Asia Pacific, and Canada, thereby reducing circulation spending while contributing to overall increases in print advertising. In the United States, advertising on newspaper Web sites will be the principal source of growth. Newspaper Web sites are attracting advertisers in other regions, but we do not have data to track it. The overall newspaper market will expand from $181 billion in 2006 to $201 billion in 2011, growing at a 2.1 percent compound annual rate.
Global Newspaper Publishing Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
55,128 0.1 61,533 –2.1 39,798 –1.0 5,018 –1.7 2,841 0.4 164,318 –1.1
57,380 4.1 61,252 –0.5 41,048 3.1 4,977 –0.8 2,883 1.5 167,540 2.0
59,232 3.2 63,287 3.3 42,639 3.9 5,244 5.4 2,996 3.9 173,398 3.5
60,344 1.9 64,769 2.3 43,925 3.0 5,787 10.4 3,027 1.0 177,852 2.6
60,066 –0.5 66,434 2.6 45,227 3.0 6,238 7.8 3,078 1.7 181,043 1.8
59,231 –1.4 67,659 1.8 46,620 3.1 6,579 5.5 3,118 1.3 183,207 1.2
59,206 0.0 69,258 2.4 48,663 4.4 6,910 5.0 3,154 1.2 187,191 2.2
59,740 0.9 70,872 2.3 50,100 3.0 7,243 4.8 3,186 1.0 191,141 2.1
60,813 1.8 72,458 2.2 51,829 3.5 7,578 4.6 3,210 0.8 195,888 2.5
62,160 2.2 73,953 2.1 53,465 3.2 7,914 4.4 3,230 0.6 200,722 2.5
0.7 2.2 3.4 4.9 1.0 2.1
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Global Entertainment and Media Market by Segment Overview | 41
Book publishing The book publishing market rose 1.7 percent in 2006, down from the 4.4 percent advance in 2005. The absence of a Harry Potter title that had boosted spending in most regions in 2005 contributed to the slowdown. The seventh, and final, Harry Potter title will provide another stimulus in 2007. The Harry Potter cycle affects Asia Pacific a year later than in other regions because releases in that region are delayed. In other developments, electronic browsing technologies will make users aware of more titles and will stimulate spending in the United States, EMEA, and Canada. Increased school funding will enhance the educational book market. Professional books will benefit from improved economic conditions and the advent of digital browsing. At the same time, increased use of electronic books by professionals will cut into print growth. We project spending to increase at a 3.6 percent compound annual rate to $145 billion in 2011 from $121 billion in 2006.
Global Book Publishing Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
32,651 4.2 48,901 0.9 22,873 –0.3 4,284 –1.6 1,658 0.2 110,367 1.5
34,606 6.0 49,491 1.2 22,703 –0.7 4,306 0.5 1,665 0.4 112,771 2.2
34,711 0.3 50,091 1.2 23,470 3.4 4,380 1.7 1,693 1.7 114,345 1.4
36,912 6.3 51,800 3.4 24,389 3.9 4,493 2.6 1,770 4.5 119,364 4.4
36,565 –0.9 52,494 1.3 25,901 6.2 4,620 2.8 1,815 2.5 121,395 1.7
38,485 5.3 54,629 4.1 27,363 5.6 4,753 2.9 1,914 5.5 127,144 4.7
38,942 1.2 55,234 1.1 29,022 6.1 4,897 3.0 1,971 3.0 130,066 2.3
40,667 4.4 56,776 2.8 30,483 5.0 5,039 2.9 2,057 4.4 135,022 3.8
42,316 4.1 58,312 2.7 31,838 4.4 5,178 2.8 2,137 3.9 139,781 3.5
44,123 4.3 59,787 2.5 33,167 4.2 5,317 2.7 2,210 3.4 144,604 3.5
3.8 2.6 5.1 2.9 4.0 3.6
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
PricewaterhouseCoopers 42 | Global Entertainment and Media Outlook: 2007–2011
Theme parks and amusement parks The theme park market rose 4.3 percent in 2006, up from 3.2 percent growth in 2005, buoyed by the late 2005 opening of Hong Kong Disneyland, which had its first full-year impact in 2006. New parks expected in the PRC, India, and other countries will continue to boost spending in Asia Pacific during the next five years. EMEA will benefit from increased investment at existing parks, from growth in Central and Eastern Europe, and from the introduction of major new parks in the United Arab Emirates. The weak U.S. dollar will help destination parks in the United States, and ownership changes will lead to new investment in regional parks. The shift in emphasis in a number of parks from thrill rides for teenagers to family-oriented attractions will boost per capita spending because families generally spend more on food and souvenirs. We project spending to increase from $23 billion in 2006 to $28 billion in 2011, growing at a 4.6 percent compound annual rate.
Global Theme Parks and Amusement Parks Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
9,903 3.2 3,713 7.7 5,527 7.5 254 2.0 379 4.1 19,776 5.2
10,300 4.0 3,775 1.7 5,559 0.6 248 –2.4 382 0.8 20,264 2.5
10,775 4.6 3,980 5.4 5,711 2.7 253 2.0 429 12.3 21,148 4.4
11,230 4.2 4,136 3.9 5,782 1.2 241 –4.7 440 2.6 21,829 3.2
11,543 2.8 4,334 4.8 6,188 7.0 248 2.9 456 3.6 22,769 4.3
12,039 4.3 4,534 4.6 6,498 5.0 260 4.8 469 2.9 23,800 4.5
12,565 4.4 4,739 4.5 6,845 5.3 272 4.6 488 4.1 24,909 4.7
13,024 3.7 4,992 5.3 7,233 5.7 285 4.8 507 3.9 26,041 4.5
13,509 3.7 5,261 5.4 7,662 5.9 299 4.9 527 3.9 27,258 4.7
13,998 3.6 5,546 5.4 8,099 5.7 313 4.7 542 2.8 28,498 4.5
3.9 5.1 5.5 4.8 3.5 4.6
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Global Entertainment and Media Market by Segment Overview | 43
Casino and other regulated gaming Casino and other regulated gaming rose by 8.5 percent in 2006, led by new casinos in Macao, Las Vegas, and other regions. Casino revenues in Macao, which has become a major gaming destination center, surpassed the Las Vegas Strip in 2006. New resort casinos in Singapore and Macao will drive the market in Asia Pacific during the next five years. In EMEA, casino closings in Russia will contribute to a downturn in 2007, while a new destination resort casino in Spain and growth in online and sports betting will help that region rebound. In the United States, new casinos in Las Vegas and the introduction of slot parlors will expand the market. New border casinos in Mexico will boost growth in Latin America, and new and renovated casinos in Canada will lead to double-digit gains during 2007–08. Increased sports wagering related to the FIFA World Cup will boost spending in 2010. We expect spending to increase from $102 billion in 2006 to $144 billion in 2011, a 7.2 percent compound annual increase.
Global Casino and Other Regulated Gaming Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
41,357 7.1 13,866 14.5 7,674 11.8 199 –56.3 2,842 7.7 65,938 8.7
43,964 6.3 16,667 20.2 9,212 20.0 199 0.0 3,155 11.0 73,197 11.0
48,522 10.4 20,146 20.9 11,397 23.7 226 13.6 3,405 7.9 83,696 14.3
53,044 9.3 23,815 18.2 12,737 11.8 251 11.1 3,784 11.1 93,631 11.9
57,482 8.4 25,208 5.8 14,631 14.9 278 10.8 4,010 6.0 101,609 8.5
61,822 7.6 24,579 –2.5 17,518 19.7 311 11.9 4,473 11.5 108,703 7.0
66,660 7.8 24,900 1.3 20,555 17.3 345 10.9 4,966 11.0 117,426 8.0
70,905 6.4 24,455 –1.8 23,434 14.0 392 13.6 5,297 6.7 124,483 6.0
75,570 6.6 26,684 9.1 26,581 13.4 449 14.5 5,583 5.4 134,867 8.3
79,600 5.3 27,755 4.0 30,325 14.1 495 10.2 5,869 5.1 144,044 6.8
6.7 1.9 15.7 12.2 7.9 7.2
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
PricewaterhouseCoopers 44 | Global Entertainment and Media Outlook: 2007–2011
Sports Sports increased 12.0 percent in 2006, the largest increase during the past five years, buoyed by the FIFA World Cup, the Winter Olympics, and the return of the National Hockey League (NHL) in North America. Competition in the TV distribution market is fueling demand for TV rights fees, leading to record deals. Mobile and online rights are also expanding the market, and companies are spending more on naming rights and sponsorship deals. The 2010 FIFA World Cup in South Africa, the 2008 Beijing Summer Olympics, and the 2010 Winter Olympics in Vancouver will boost spending on TV rights fees and sponsorship and merchandising, and the host country will also benefit from increased gate revenues. We expect the sports market to expand at a 5.2 percent compound annual rate to $124 billion in 2011 from $96 billion in 2006.
Global Sports Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
37,082 8.2 21,950 10.7 11,434 12.7 2,229 7.1 827 –3.6 73,522 9.4
39,884 7.6 22,164 1.0 11,133 –2.6 2,234 0.2 842 1.8 76,257 3.7
43,182 8.3 24,057 8.5 11,819 6.2 2,334 4.5 879 4.4 82,271 7.9
44,381 2.8 25,984 8.0 12,602 6.6 2,508 7.5 406 –53.8 85,881 4.4
48,310 8.9 30,476 17.3 13,659 8.4 2,752 9.7 947 133.3 96,144 12.0
51,024 5.6 30,489 0.0 14,200 4.0 2,769 0.6 946 –0.1 99,428 3.4
55,051 7.9 32,966 8.1 17,149 20.8 2,884 4.2 1,056 11.6 109,106 9.7
57,417 4.3 33,656 2.1 15,567 –9.2 3,114 8.0 1,079 2.2 110,833 1.6
61,863 7.7 38,455 14.3 17,019 9.3 3,407 9.4 1,208 12.0 121,952 10.0
64,443 4.2 37,138 –3.4 17,707 4.0 3,421 0.4 1,159 –4.1 123,868 1.6
5.9 4.0 5.3 4.4 4.1 5.2
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Global Entertainment and Media Market by Segment Overview | 45
Global Entertainment and Media Market by Region
United States The United States expanded by 5.9 percent in 2006, led by double-digit growth in Internet advertising and access spending and video games and by high-single-digit increases in sports, casino and other regulated gaming, and TV distribution. Those segments offset declines in recorded music, book publishing, and newspaper publishing. We expect Internet advertising and access spending to be the only segment to average double-digit growth during the next five years. Migration to broadband and rapid growth in online advertising will combine to propel Internet advertising and access spending to double-digit gains through 2009 and a compound annual increase of 10.7 percent through 2011. Video games and casino and other regulated gaming will each expand at a 6.7 percent compound annual rate, with TV networks at 6.5 percent followed by business information at 6.1 percent. Next-generation console games and rapid growth in online and wireless games will propel the video game market. Casino and other regulated gaming will be bolstered by new casinos in Las Vegas, the introduction of slot parlors in regional casinos, and continued growth in tribal casinos. In the TV network market, product placement advertising and basic network license fees will fuel growth. Demand for business information is being fueled by an active M&A market and by interest in investing in emerging markets in Asia, Central and Eastern Europe, and Latin America. Sports, radio and out-of-home advertising, and TV distribution will be the next-fastest-growing segments. Satellite and online sports packages and naming rights deals will contribute to a 5.9 percent annual increase in sports. Radio and out-of-home advertising will grow at a 5.8 percent annual rate, boosted by satellite radio subscriptions, an emerging satellite radio advertising market, new billboard technologies, and increased street furniture advertising. TV distribution will be bolstered by the entrance of telephone companies into the market, which will increase competition, attract new subscribers, and encourage existing subscribers to trade up to advanced services such as digital, premium channels, and video-on-demand. At the same time, the mandated shutoff of analog broadcasts will also boost subscription penetration.
PricewaterhouseCoopers 46 | Global Entertainment and Media Outlook: 2007–2011
Recorded music will fall at a 0.4 percent compound annual rate, and the remaining segments will grow by less than 5 percent annually. The overall market will expand at a 5.3 percent compound annual rate to $754 billion in 2011 from $582 billion in 2006.
Entertainment and Media Market by Segment (US$ Millions) United States Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change TV Distribution % Change Recorded Music % Change Radio/Out-of-Home Advertising % Change Internet Advertising and Access Spending % Change Video Games % Change Business Information % Change Magazine Publishing % Change Newspaper Publishing % Change Book Publishing % Change Theme Parks and Amusement Parks % Change Casino and Other Regulated Gaming % Change Sports % Change Total % Change
2007–11 CAGR
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
31,703
33,297
34,971
34,235
35,185
36,731
38,257
39,889
41,877
44,000
9.5
5.0
5.0
–2.1
2.8
4.4
4.2
4.3
5.0
5.1
4.6
43,286
47,224
54,399
58,096
62,229
66,105
71,920
75,520
80,645
85,410
9.3
9.1
15.2
6.8
7.1
6.2
8.8
5.0
6.8
5.9
6.5
73,812
77,869
85,447
87,988
94,673
98,125 105,305 110,192 118,026 123,261
10.0
5.5
9.7
3.0
7.6
3.6
7.3
4.6
7.1
4.4
5.4
12,643
12,025
12,762
12,270
11,511
10,482
10,427
10,603
10,926
11,308
–8.0
–4.9
6.1
–3.9
–6.2
–8.9
–0.5
1.7
3.0
3.5
–0.4
24,133
24,734
25,809
26,973
28,291
29,756
31,455
33,426
35,439
37,450
4.7
2.5
4.3
4.5
4.9
5.2
5.7
6.3
6.0
5.7
5.8
24,819
29,093
33,631
39,178
47,235
54,478
61,106
67,269
73,107
78,351
9.1
17.2
15.6
16.5
20.6
15.3
12.2
10.1
8.7
7.2
10.7
7,187
7,497
8,200
8,170
9,034
10,438
11,221
11,642
12,069
12,473
11.4
4.3
9.4
–0.4
10.6
15.5
7.5
3.8
3.7
3.3
6.7
38,300
38,500
40,650
43,300
46,500
49,775
53,025
56,200
59,300
62,400
–1.3
0.5
5.6
6.5
7.4
7.0
6.5
6.0
5.5
5.2
6.1
32,588
32,999
34,481
35,933
36,488
37,022
37,883
39,044
40,293
41,532
–4.6
1.3
4.5
4.2
1.5
1.5
2.3
3.1
3.2
3.1
2.6
55,128
57,380
59,232
60,344
60,066
59,231
59,206
59,740
60,813
62,160
0.1
4.1
3.2
1.9
–0.5
–1.4
0.0
0.9
1.8
2.2
0.7
32,651
34,606
34,711
36,912
36,565
38,485
38,942
40,667
42,316
44,123
4.2
6.0
0.3
6.3
–0.9
5.3
1.2
4.4
4.1
4.3
3.8
9,903
10,300
10,775
11,230
11,543
12,039
12,565
13,024
13,509
13,998
3.2
4.0
4.6
4.2
2.8
4.3
4.4
3.7
3.7
3.6
3.9
41,357
43,964
48,522
53,044
57,482
61,822
66,660
70,905
75,570
79,600
7.1
6.3
10.4
9.3
8.4
7.6
7.8
6.4
6.6
5.3
6.7
37,082
39,884
43,182
44,381
48,310
51,024
55,051
57,417
61,863
64,443
8.2
7.6
8.3
2.8
8.9
5.6
7.9
4.3
7.7
4.2
5.9
464,592 488,156 525,231 550,027 582,448 612,163 648,948 680,713 720,203 754,209
4.7
5.1
7.6
4.7
5.9
5.1
6.0
4.9
5.8
4.7
5.3
Note: Beginning in 2003, newspaper Web site advertising is included in both the newspaper and the Internet segments but is counted only once in the overall total. Prior to 2003, newspaper Web site advertising is included only in the Internet segment. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Global Entertainment and Media Market by Region United States | 47
Advertising Advertising rose 5.0 percent in 2006, led by Internet advertising, which soared by 33.9 percent, buoyed by a jump in classifieds, an emerging online video advertising market, and continued growth in keyword search. Out-of-home was the next-fastest-growing medium, with an 8.6 percent advance as digital billboards boosted effective inventory and overall spending, followed by TV distribution at 7.5 percent and TV networks at 5.0 percent. Political advertising on TV stations boosted TV distribution, while product placement advertising and the Winter Olympics contributed to TV network advertising. We expect continued double-digit growth in Internet advertising through 2010, with growth averaging 16.1 percent compounded annually through 2011 as the Internet becomes a central aspect of consumers’ lives and as advertisers adapt to this shift in lifestyle. Out-of-home will remain the second-fastest-growing category, with a projected 8.2 percent compound annual increase, helped by the attraction of digital billboards, captive video networks and other new venues, and improved audience measurement that will make it easier for advertisers to incorporate out-of-home in their campaigns. TV networks will average 5.0 percent compounded annually. The shift to commercial ratings will reduce uncertainty with respect to actual viewing levels, thereby giving advertisers more confidence in the medium. At the same time, product placement advertising will continue to augment spending. In 2008 and 2010, advertising associated with the Olympics will boost spending. Magazines will grow at a 3.3 percent rate, an improvement from the 2.7 percent increase in 2006, with trade magazines rebounding due largely to an expanding telecommunication market. Radio will improve to 2.3 percent compound annual growth, helped by the expansion of high-definition radio, a growing satellite radio market, and a modest improvement in traditional terrestrial radio. TV distribution will increase at a 1.7 percent annual rate, the result of a decrease in political advertising in 2011 compared with elevated levels in 2006. Newspapers will remain the slowest-growing segment, at 1.1 percent, which will be an improvement compared with the 0.3 percent decline in 2006. Expanding newspaper Web site advertising will offset continued declines in print advertising.
PricewaterhouseCoopers 48 | Global Entertainment and Media Outlook: 2007–2011
The U.S. advertising market as a whole will increase at a 4.1 percent compound annual rate to $225 billion in 2011 from $184 billion in 2006.
Advertising by Segment (US$ Millions) United States TV Networks: Broadcast and Cable % Change TV Distribution % Change Radio % Change Out-of-Home % Change Internet
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
28,146
30,254
34,809
36,396
38,219
40,075
43,760
44,550
46,925
48,750
4.2
7.5
15.1
4.6
5.0
4.9
9.2
1.8
5.3
3.9
5.0
28,260
28,328
30,980
29,658
31,877
31,190
34,000
33,000
35,230
34,690
11.1
0.2
9.4
–4.3
7.5
–2.2
9.0
–2.9
6.8
–1.5
1.7
18,877
19,104
19,590
19,660
19,679
19,820
20,095
20,584
21,271
22,100
5.7
1.2
2.5
0.4
0.1
0.7
1.4
2.4
3.3
3.9
2.3
5,232
5,505
5,834
6,301
6,840
7,450
8,120
8,810
9,470
10,130
0.8
5.2
6.0
8.0
8.6
8.9
9.0
8.5
7.5
7.0
8.2
6,010
7,267
9,626
12,542
16,800
21,100
25,200
28,800
32,200
35,400
% Change
–16.6
20.9
32.5
30.3
33.9
25.6
19.4
14.3
11.8
9.9
16.1
Magazines
20,660
21,165
22,351
23,654
24,298
24,850
25,550
26,500
27,550
28,600
–7.5
2.4
5.6
5.8
2.7
2.3
2.8
3.7
4.0
3.8
3.3
44,102
46,155
48,244
49,435
49,276
48,560
48,675
49,300
50,475
51,925
–0.5
4.7
4.5
2.5
–0.3
–1.5
0.2
1.3
2.4
2.9
1.1
151,287 156,562 169,893 175,619 184,325 189,695 201,325 206,719 217,571 225,295
% Change Newspapers % Change Total % Change
1.3
3.5
8.5
3.4
5.0
2.9
6.1
2.7
5.2
3.6
4.1
Note: Beginning in 2003, newspaper Web site advertising is included in both the newspaper and the Internet segments but is counted only once in the overall total. Prior to 2003, newspaper Web site advertising is included only in the Internet segment. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Global Entertainment and Media Market by Region United States | 49
Consumer/end-user spending Consumer/end-user spending rose by 6.3 percent in 2006, up from the 5.4 percent gain in 2005. Double-digit growth in satellite radio subscriptions, Internet access spending, video games, and cable network license fees offset declines in recorded music, newspaper publishing, magazine publishing, and book publishing. Satellite radio subscriptions rose 75.1 percent because factory-installed receivers in new cars introduced people to the service. The shift from dial-up to broadband continued to boost Internet access spending; new console platforms stimulated the video game market; and an increase in basic network license fees contributed to growth in TV networks. Sports, casino and other regulated gaming, and TV distribution were the next-fastest-growing segments, at 8.9 percent, 8.4 percent, and 7.7 percent, respectively. TV rights for the Winter Olympics and lucrative satellite TV and radio deals boosted sports in 2006. Double-digit growth in tribal casinos and a strong Nevada market contributed to the casino and other regulated gaming market. Triple-play offerings helped cable companies stem subscriber losses. Migration to digital boosted spending per cable subscriber and expanded the videoon-demand market. During the next five years, growth in consumer/end-user spending will average 5.8 percent compounded annually, increasing from $398 billion in 2006 to $529 billion in 2011. Single-digit compound annual increase rates are projected for all segments except satellite radio, which will continue to post double-digit percentage increases, and recorded music, which will stay relatively flat, and newspapers which will decline. TV networks will be the second-fastest-growing segment, at a projected 8.8 percent compound annual increase, fueled by rising subscription penetration that will lead to growth in cable network license fees. TV distribution and Internet access spending will be the next-fastest-growing segments, at 7.1 percent each. Increased penetration from participation by telephone companies in the market, the mandated shutdown of analog broadcasts, and a growing video-on-demand market stemming from the expanding digital universe will drive TV distribution. The shift from dial-up to broadband will continue to stimulate Internet access spending. Video games and casino and other regulated gaming will each expand at a 6.7 percent compound annual rate. Console games associated with the new hardware platforms and expanding online and wireless markets will boost video games. New casinos and racinos and continued growth in tribal casinos will sustain growth in the casino market. Business information will expand at a 6.1 percent annual rate fueled by rising investment and the associated demand for information. Sports will grow by 5.9 percent compounded annually, boosted by naming rights and satellite and online rights. Filmed entertainment will grow at a 4.6 percent annual rate, fueled by digital cinemas, 3-D screens, highdefinition DVDs, and download-to-own streaming and online subscription rentals. Theme parks and books will be the next-fastest-growing segments, at 3.9 percent and 3.8 percent, respectively. New rides and attractions will help destination parks, while new capital will lead to upgrades in regional parks. Electronic browsing will help the consumer and professional markets, while (1) increased funding will boost school textbooks and (2) rising enrollment will stimulate the college textbook market. Magazines will grow at a 1.2 percent compound annual rate, and newspapers will fall at a 1.1 percent rate—in both cases hurt by declining unit circulation. The recorded music market will experience double-digit declines in physical spending and double-digit increases in digital, leaving overall spending relatively flat.
PricewaterhouseCoopers 50 | Global Entertainment and Media Outlook: 2007–2011
Consumer/End-User Spending by Segment (US$ Millions) United States Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change TV Distribution % Change Recorded Music % Change Radio
2007–11 CAGR
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
31,703
33,297
34,971
34,235
35,185
36,731
38,257
39,889
41,877
44,000
9.5
5.0
5.0
–2.1
2.8
4.4
4.2
4.3
5.0
5.1
4.6
15,140
16,970
19,590
21,700
24,010
26,030
28,160
30,970
33,720
36,660
20.3
12.1
15.4
10.8
10.6
8.4
8.2
10.0
8.9
8.7
8.8
45,552
49,541
54,467
58,330
62,796
66,935
71,305
77,192
82,796
88,571
9.3
8.8
9.9
7.1
7.7
6.6
6.5
8.3
7.3
7.0
7.1
12,643
12,025
12,762
12,270
11,511
10,482
10,427
10,603
10,926
11,308
–8.0
–4.9
6.1
–3.9
–6.2
–8.9
–0.5
1.7
3.0
3.5
–0.4
24
125
385
1,012
1,772
2,486
3,240
4,032
4,698
5,220
% Change
2,300.0
420.8
208.0
162.9
75.1
40.3
30.3
24.4
16.5
11.1
24.1
Internet Access
18,809
21,826
24,005
26,636
30,435
33,378
35,906
38,469
40,907
42,951
21.1
16.0
10.0
11.0
14.3
9.7
7.6
7.1
6.3
5.0
7.1
7,187
7,497
8,200
8,170
9,034
10,438
11,221
11,642
12,069
12,473
11.4
4.3
9.4
–0.4
10.6
15.5
7.5
3.8
3.7
3.3
6.7
38,300
38,500
40,650
43,300
46,500
49,775
53,025
56,200
59,300
62,400
–1.3
0.5
5.6
6.5
7.4
7.0
6.5
6.0
5.5
5.2
6.1
11,928
11,834
12,130
12,279
12,190
12,172
12,333
12,544
12,743
12,932
% Change Video Games % Change Business Information % Change Magazines % Change Newspapers % Change Books % Change Theme Parks and Amusement Parks % Change Casino and Other Regulated Gaming % Change Sports % Change Total % Change
0.8
–0.8
2.5
1.2
–0.7
–0.1
1.3
1.7
1.6
1.5
1.2
11,026
11,225
10,988
10,909
10,790
10,671
10,531
10,440
10,338
10,235
2.3
1.8
–2.1
–0.7
–1.1
–1.1
–1.3
–0.9
–1.0
–1.0
–1.1
32,651
34,606
34,711
36,912
36,565
38,485
38,942
40,667
42,316
44,123
4.2
6.0
0.3
6.3
–0.9
5.3
1.2
4.4
4.1
4.3
3.8
9,903
10,300
10,775
11,230
11,543
12,039
12,565
13,024
13,509
13,998
3.2
4.0
4.6
4.2
2.8
4.3
4.4
3.7
3.7
3.6
3.9
41,357
43,964
48,522
53,044
57,482
61,822
66,660
70,905
75,570
79,600
7.1
6.3
10.4
9.3
8.4
7.6
7.8
6.4
6.6
5.3
6.7
37,082
39,884
43,182
44,381
48,310
51,024
55,051
57,417
61,863
64,443
8.2
7.6
8.3
2.8
8.9
5.6
7.9
4.3
7.7
4.2
5.9
313,305 331,594 355,338 374,408 398,123 422,468 447,623 473,994 502,632 528,914
6.5
5.8
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
7.2
5.4
6.3
6.1
6.0
5.9
6.0
5.2
5.8
Global Entertainment and Media Market by Region United States | 51
Europe, Middle East, Africa (EMEA) Spending in EMEA totaled $473 billion in 2006, up 6.9 percent from 2005. Growth was paced by double-digit increases in Internet advertising and access spending, sports, video games, and TV distribution. Business information and casino and other regulated gaming were the next-fastest-growing segments, at 6.5 percent and 5.8 percent, respectively, followed by TV networks at 5.2 percent. The remaining segments rose by less than 5 percent, and recorded music and filmed entertainment declined. We expect TV distribution, Internet advertising and access spending, and video games to average doubledigit compound annual increases during the next five years. Sports will grow at a 4.0 percent compound annual rate, reflecting the absence of either a FIFA World Cup or Olympic Games that boosted spending in 2006. Penetration growth fueled by the entrance of telephone companies and the introduction of triple-play packages will stimulate the TV distribution market. Triple-play rollouts will also boost broadband penetration, which in turn will stimulate online advertising, thereby fueling the Internet market. Games associated with the new video game consoles will generate near-term increases in the video game market, while increased spending on online and wireless games will sustain growth over the long run. Business information will grow by 5.6 percent, helped by improved economic conditions, and theme parks will expand at a 5.1 percent annual rate, buoyed by new parks in Eastern Europe and the Middle East and upgrades at existing parks in Western Europe. The remaining segments will each grow by less than 5 percent annually. The entire market will expand at a 5.5 percent compound annual rate, with spending increasing to $617 billion by 2011.
PricewaterhouseCoopers 52 | Global Entertainment and Media Outlook: 2007–2011
Entertainment and Media Market by Segment (US$ Millions) EMEA Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change TV Distribution % Change Recorded Music % Change Radio/Out-of-Home Advertising % Change Internet Advertising and Access Spending % Change Video Games % Change Business Information % Change Magazine Publishing % Change Newspaper Publishing % Change Book Publishing % Change Theme Parks and Amusement Parks % Change Casino and Other Regulated Gaming % Change Sports % Change Total % Change
2007–11 CAGR
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
19,769
21,278
23,228
21,944
21,874
22,136
22,895
23,992
25,318
26,677
16.9
7.6
9.2
–5.5
–0.3
1.2
3.4
4.8
5.5
5.4
4.0
49,927
52,049
55,416
58,536
61,573
64,563
67,723
70,822
74,552
77,253
1.8
4.3
6.5
5.6
5.2
4.9
4.9
4.6
5.3
3.6
4.6
22,619
24,975
27,767
31,099
35,069
39,457
44,642
50,097
56,075
62,722
14.0
10.4
11.2
12.0
12.8
12.5
13.1
12.2
11.9
11.9
12.3
14,750
13,729
13,319
13,338
13,065
12,927
13,087
13,457
13,901
14,330
–2.6
–6.9
–3.0
0.1
–2.0
–1.1
1.2
2.8
3.3
3.1
1.9
20,737
21,546
22,735
24,034
24,898
25,844
26,844
27,906
28,968
30,072
2.4
3.9
5.5
5.7
3.6
3.8
3.9
4.0
3.8
3.8
3.8
26,674
33,199
43,073
50,979
61,653
71,793
81,721
90,584
98,292 105,268
26.2
24.5
29.7
18.4
20.9
16.4
13.8
10.8
8.5
7.1
11.3
5,939
6,545
7,630
8,227
9,441
11,135
12,450
13,539
14,560
15,352
9.4
10.2
16.6
7.8
14.8
17.9
11.8
8.7
7.5
5.4
10.2
20,770
20,834
21,518
22,583
24,046
25,594
27,132
28,669
30,168
31,649
–0.6
0.3
3.3
4.9
6.5
6.4
6.0
5.7
5.2
4.9
5.6
38,692
38,737
39,878
41,190
42,475
43,767
45,163
46,551
48,019
49,416
–1.4
0.1
2.9
3.3
3.1
3.0
3.2
3.1
3.2
2.9
3.1
61,533
61,252
63,287
64,769
66,434
67,659
69,258
70,872
72,458
73,953
–2.1
–0.5
3.3
2.3
2.6
1.8
2.4
2.3
2.2
2.1
2.2
48,901
49,491
50,091
51,800
52,494
54,629
55,234
56,776
58,312
59,787
0.9
1.2
1.2
3.4
1.3
4.1
1.1
2.8
2.7
2.5
2.6
3,713
3,775
3,980
4,136
4,334
4,534
4,739
4,992
5,261
5,546
7.7
1.7
5.4
3.9
4.8
4.6
4.5
5.3
5.4
5.4
5.1
13,866
16,667
20,146
23,815
25,208
24,579
24,900
24,455
26,684
27,755
14.5
20.2
20.9
18.2
5.8
–2.5
1.3
–1.8
9.1
4.0
1.9
21,950
22,164
24,057
25,984
30,476
30,489
32,966
33,656
38,455
37,138
10.7
1.0
8.5
8.0
17.3
0.0
8.1
2.1
14.3
–3.4
4.0
369,840 386,241 416,125 442,434 473,040 499,106 528,754 556,368 591,023 616,918
4.3
4.4
7.7
6.3
6.9
5.5
5.9
5.2
6.2
4.4
5.5
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
The United Kingdom is the largest market in the region, at $96 billion in 2006, followed by Germany at $87 billion and France at $61 billion. Middle East/Africa and Central and Eastern Europe were the fastest-growing areas in EMEA in 2006, with increases of 12.8 percent and 9.4 percent, respectively, over 2005. Western Europe expanded by 6.2 percent. Led by Saudi Arabia/Pan Arab and South Africa, Middle East/Africa will continue to be the growth leader, averaging 8.5 percent compounded annually during 2007–2011. Central and Eastern Europe will increase at a 7.7 percent compound annual rate, and Western Europe will grow by 4.8 percent compounded annually. Global Entertainment and Media Market by Region EMEA | 53
Entertainment and Media Market by Country (US$ Millions) EMEA Western Europe
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
Austria
7,246
7,572
8,016
8,419
8,724
9,118
9,463
9,809
10,157
10,498
Belgium
6,407
6,893
7,443
7,803
8,150
8,484
8,809
9,193
9,517
9,801
Denmark
5,693
6,099
6,549
6,977
7,260
7,603
7,852
8,110
8,372
8,636
Finland
4,426
4,698
5,144
5,491
5,732
5,935
6,146
6,318
6,479
6,605
France
49,781
51,343
54,547
57,073
60,955
64,320
67,352
70,233
73,670
76,638
Germany
75,897
76,011
78,580
81,737
86,843
88,244
91,236
94,369
98,501
100,967
3,636
4,017
4,332
4,640
5,001
5,332
5,623
5,950
6,284
6,618
Greece Ireland
2,343
2,540
2,756
2,982
3,178
3,385
3,602
3,788
3,998
4,202
Italy
34,008
34,941
38,115
39,957
43,013
45,571
48,580
51,484
55,229
57,737
Netherlands
14,494
14,672
15,294
15,677
16,277
16,885
17,530
18,163
18,847
19,490
Norway
6,628
7,277
7,876
8,533
9,078
9,500
9,905
10,344
10,815
11,256
Portugal
3,113
3,234
3,671
4,019
4,288
4,685
5,073
5,472
5,810
6,108
22,278
23,837
25,462
27,502
30,044
32,289
35,501
38,363
41,394
43,795
Sweden
8,454
8,707
9,110
9,529
10,042
10,479
10,901
11,321
11,706
12,128
Switzerland
7,626
7,785
8,261
8,891
9,378
9,782
10,132
10,500
10,887
11,212
Spain
United Kingdom
77,992
81,247
87,064
90,983
95,733
101,344
106,931
112,217
118,852
123,622
330,022
340,873
362,220
380,213
403,696
422,956
444,636
465,634
490,518
509,313
Czech Republic
2,161
2,299
2,510
2,844
3,058
3,287
3,532
3,767
4,063
4,312
Hungary
2,186
2,424
2,753
3,026
3,204
3,485
3,773
4,061
4,357
4,648
Poland
5,132
5,862
6,243
6,839
7,616
8,323
8,979
9,623
10,384
10,990
926
1,006
1,122
1,267
1,440
1,636
1,819
1,988
2,165
2,339
Russia
7,978
10,644
14,999
18,629
19,958
21,114
22,890
23,408
25,723
27,851
Turkey
1,728
1,900
2,444
2,928
3,581
4,237
4,817
5,343
5,824
6,276
20,111
24,135
30,071
35,533
38,857
42,082
45,810
48,190
52,516
56,416
Western Europe Total Central and Eastern Europe
Romania
Central and Eastern Europe Total Middle East/Africa Israel
2,236
2,246
2,335
2,434
2,447
2,508
2,568
2,637
2,724
2,803
Saudi Arabia/Pan Arab†
3,854
4,100
4,655
5,378
6,423
7,166
7,854
8,635
9,396
10,141
South Africa
4,118
4,689
5,366
6,007
6,720
7,456
8,206
8,954
9,840
10,539
10,208
11,035
12,356
13,819
15,590
17,130
18,628
20,226
21,960
23,483
360,341
376,043
404,647
429,565
458,143
482,168
509,074
534,050
564,994
589,212
9,499
10,198
11,478
12,869
14,897
16,938
19,680
22,318
26,029
27,706
369,840
386,241
416,125
442,434
473,040
499,106
528,754
556,368
591,023
616,918
Middle East/Africa Total Country Subtotal Regional Spending Total
†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
PricewaterhouseCoopers 54 | Global Entertainment and Media Outlook: 2007–2011
Entertainment and Media Market Growth by Country (%) EMEA
2002
Western Europe
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
Austria
4.5
4.5
5.9
5.0
3.6
4.5
3.8
3.7
3.5
3.4
3.8
Belgium
7.7
7.6
8.0
4.8
4.4
4.1
3.8
4.4
3.5
3.0
3.8
Denmark
5.4
7.1
7.4
6.5
4.1
4.7
3.3
3.3
3.2
3.2
3.5
Finland
4.0
6.1
9.5
6.7
4.4
3.5
3.6
2.8
2.5
1.9
2.9
France
3.7
3.1
6.2
4.6
6.8
5.5
4.7
4.3
4.9
4.0
4.7
Germany
–0.1
0.2
3.4
4.0
6.2
1.6
3.4
3.4
4.4
2.5
3.1
Greece
11.7
10.5
7.8
7.1
7.8
6.6
5.5
5.8
5.6
5.3
5.8
Ireland
6.2
8.4
8.5
8.2
6.6
6.5
6.4
5.2
5.5
5.1
5.7
Italy
2.8
2.7
9.1
4.8
7.6
5.9
6.6
6.0
7.3
4.5
6.1
Netherlands
2.5
1.2
4.2
2.5
3.8
3.7
3.8
3.6
3.8
3.4
3.7
Norway
10.7
9.8
8.2
8.3
6.4
4.6
4.3
4.4
4.6
4.1
4.4
Portugal
6.9
3.9
13.5
9.5
6.7
9.3
8.3
7.9
6.2
5.1
7.3
Spain
3.5
7.0
6.8
8.0
9.2
7.5
9.9
8.1
7.9
5.8
7.8
Sweden
6.1
3.0
4.6
4.6
5.4
4.4
4.0
3.9
3.4
3.6
3.8
Switzerland
0.3
2.1
6.1
7.6
5.5
4.3
3.6
3.6
3.7
3.0
3.6
United Kingdom
6.1
4.2
7.2
4.5
5.2
5.9
5.5
4.9
5.9
4.0
5.2
Western Europe Total
3.5
3.3
6.3
5.0
6.2
4.8
5.1
4.7
5.3
3.8
4.8
3.1
6.4
9.2
13.3
7.5
7.5
7.5
6.7
7.9
6.1
7.1
Hungary
12.9
10.9
13.6
9.9
5.9
8.8
8.3
7.6
7.3
6.7
7.7
Poland
6.3
14.2
6.5
9.5
11.4
9.3
7.9
7.2
7.9
5.8
7.6
Romania
4.9
8.6
11.5
12.9
13.7
13.6
11.2
9.3
8.9
8.0
10.2
Russia
30.5
33.4
40.9
24.2
7.1
5.8
8.4
2.3
9.9
8.3
6.9
Turkey
22.9
10.0
28.6
19.8
22.3
18.3
13.7
10.9
9.0
7.8
11.9
Central and Eastern Europe Total
16.5
20.0
24.6
18.2
9.4
8.3
8.9
5.2
9.0
7.4
7.7
0.4
4.0
4.2
0.5
2.5
2.4
2.7
3.3
2.9
2.8
Central and Eastern Europe Czech Republic
Middle East/Africa Israel
–0.6
Saudi Arabia/Pan Arab
9.2
6.4
13.5
15.5
19.4
11.6
9.6
9.9
8.8
7.9
9.6
12.5
13.9
14.4
11.9
11.9
11.0
10.1
9.1
9.9
7.1
9.4
Middle East/Africa Total
8.1
8.1
12.0
11.8
12.8
9.9
8.7
8.6
8.6
6.9
8.5
Country Subtotal
4.3
4.4
7.6
6.2
6.7
5.2
5.6
4.9
5.8
4.3
5.2
Regional Spending
3.3
7.4
12.6
12.1
15.8
13.7
16.2
13.4
16.6
6.4
13.2
Total
4.3
4.4
7.7
6.3
6.9
5.5
5.9
5.2
6.2
4.4
5.5
†
South Africa
†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Global Entertainment and Media Market by Region EMEA | 55
Advertising Advertising in EMEA grew 7.2 percent in 2006, the second-largest gain during the past five years, behind the 7.8 percent increase in 2004. Internet advertising rose 45.9 percent, surpassing radio in 2006 and nearly reaching out-of-home advertising spending. TV networks rose 7.1 percent, helped by advertising associated with the FIFA World Cup and the Winter Olympics, both of which were held in Europe. Out-of-home increased by 6.0 percent, radio expanded by 4.7 percent, and newspapers and magazines rose by 4.0 percent and 3.7 percent, respectively. We expect the generally stable economic outlook to sustain advertising growth at mid-single-digit levels. The Internet will continue to expand at double-digit rates, averaging 21.5 percent on a compound annual basis, boosted by rising broadband penetration and the migration of advertisers from print. TV networks will increase by 5.8 percent compounded annually, buoyed by rising digital penetration and HDTV rollouts. Out-of-home will grow by 5.6 percent annually as digital billboards and improved audience measurement attract advertisers. Digital radio and new radio licenses will lead to a 5.1 percent compound annual increase in radio. Increases of 3.9 percent and 3.1 percent compounded annually are anticipated for magazines and newspapers, respectively. Advertising as a whole will increase at a 6.1 percent compound annual rate, reaching $165 billion in 2011 from $123 billion in 2006.
Advertising by Segment (US$ Millions) EMEA TV Networks: Broadcast and Cable % Change Radio % Change Out-of-Home % Change Internet % Change Magazines % Change Newspapers % Change Total % Change
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
31,474
33,271
36,229
38,438
41,166
43,688
46,543
49,032
52,326
54,695
–0.1
5.7
8.9
6.1
7.1
6.1
6.5
5.3
6.7
4.5
5.8
5,337
5,721
6,291
6,622
6,935
7,325
7,707
8,094
8,484
8,874
1.2
7.2
10.0
5.3
4.7
5.6
5.2
5.0
4.8
4.6
5.1
6,554
6,874
7,321
7,895
8,370
8,798
9,312
9,836
10,374
10,975
2.0
4.9
6.5
7.8
6.0
5.1
5.8
5.6
5.5
5.8
5.6
1,650
2,356
3,850
5,672
8,275
11,060
13,929
16,722
19,384
21,889
8.0
42.8
63.4
47.3
45.9
33.7
25.9
20.1
15.9
12.9
21.5
18,270
18,199
18,947
19,617
20,349
21,106
21,987
22,857
23,797
24,677
–4.4
–0.4
4.1
3.5
3.7
3.7
4.2
4.0
4.1
3.7
3.9
33,923
33,473
35,096
36,121
37,552
38,549
39,860
41,202
42,525
43,797
–5.2
–1.3
4.8
2.9
4.0
2.7
3.4
3.4
3.2
3.0
3.1
99,894 107,734 114,365 122,647 130,526 139,338 147,743 156,890 164,907
97,208 –2.4
2.8
7.8
6.2
7.2
6.4
6.8
6.0
6.2
5.1
6.1
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
The United Kingdom generated $25 billion in advertising in 2006, the region leader. Germany was next, at $17 billion, followed by Italy at $14 billion and France at $13 billion. The top four territories constituted 56 percent of total advertising in EMEA. We expect Central and Eastern Europe and Middle East/Africa to average double-digit compound annual gains during the next five years, fueled by expanding economies. Western Europe will average 4.9 percent growth compounded annually, similar to the 5.0 percent increase in 2006.
PricewaterhouseCoopers 56 | Global Entertainment and Media Outlook: 2007–2011
Advertising by Country (US$ Millions) EMEA Western Europe
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
Austria
1,309
1,346
1,440
1,513
1,601
1,696
1,798
1,882
1,981
2,069
Belgium
1,909
2,111
2,295
2,424
2,637
2,788
2,946
3,093
3,265
3,414
Denmark
1,286
1,307
1,364
1,427
1,489
1,556
1,635
1,698
1,774
1,840
Finland
1,106
1,129
1,197
1,242
1,284
1,324
1,377
1,418
1,468
1,510
France
10,424
10,690
11,563
12,011
12,766
13,613
14,511
15,432
16,424
17,359
Germany
17,146
16,017
16,204
16,458
16,906
17,151
17,553
17,842
18,390
18,714
2,032
2,291
2,527
2,731
2,927
3,107
3,261
3,441
3,636
3,821
Greece Ireland
748
855
970
1,095
1,217
1,307
1,432
1,534
1,655
1,766
12,408
12,731
13,492
13,909
14,417
14,868
15,545
16,098
16,759
17,366
Netherlands
4,422
4,218
4,340
4,433
4,615
4,769
4,949
5,106
5,282
5,429
Norway
1,763
1,937
2,097
2,287
2,443
2,600
2,758
2,919
3,086
3,239
Portugal
1,160
1,183
1,236
1,276
1,310
1,356
1,406
1,460
1,535
1,595
Spain
6,139
6,329
7,025
7,709
8,434
9,146
9,848
10,549
11,371
11,938
Sweden
2,099
2,097
2,189
2,373
2,582
2,774
2,949
3,118
3,302
3,466
Switzerland
2,965
2,785
2,830
2,922
3,078
3,250
3,420
3,591
3,781
3,957
United Kingdom
20,238
21,067
22,999
23,809
24,815
26,032
27,671
29,409
31,046
32,564
Western Europe Total
87,154
88,093
93,768
97,619 102,521 107,337 113,059 118,590 124,755
130,047
Italy
Central and Eastern Europe Czech Republic
923
994
1,096
1,239
1,358
1,462
1,589
1,700
1,867
1,983
Hungary
987
1,145
1,341
1,526
1,611
1,780
1,953
2,129
2,307
2,483
2,092
2,594
2,582
2,863
3,327
3,728
4,093
4,445
4,913
5,267
140
171
224
299
395
510
625
738
854
970
Russia
1,872
2,489
3,361
4,415
5,550
6,616
7,796
8,791
9,772
10,740
Turkey
623
707
957
1,156
1,451
1,752
2,020
2,250
2,444
2,603
6,637
8,100
9,561
11,498
13,692
15,848
18,076
20,053
22,157
24,046
Poland Romania
Central and Eastern Europe Total Middle East/Africa Israel
714
648
680
716
725
750
777
806
837
870
Saudi Arabia/Pan Arab†
1,314
1,499
1,929
2,531
3,466
4,115
4,704
5,333
5,922
6,481
South Africa
1,389
1,554
1,796
2,001
2,243
2,476
2,722
2,961
3,219
3,463
Middle East/Africa Total
3,417
3,701
4,405
5,248
6,434
7,341
8,203
9,100
9,978
10,814
99,894 107,734 114,365 122,647 130,526 139,338 147,743 156,890
164,907
Total
97,208
†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Global Entertainment and Media Market by Region EMEA | 57
Advertising Growth by Country (%) EMEA
2002
Western Europe
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
Austria
–1.2
2.8
7.0
5.1
5.8
5.9
6.0
4.7
5.3
4.4
5.3
Belgium
3.8
10.6
8.7
5.6
8.8
5.7
5.7
5.0
5.6
4.6
5.3
Denmark
–6.2
1.6
4.4
4.6
4.3
4.5
5.1
3.9
4.5
3.7
4.3
Finland
–2.6
2.1
6.0
3.8
3.4
3.1
4.0
3.0
3.5
2.9
3.3
France
–1.8
2.6
8.2
3.9
6.3
6.6
6.6
6.3
6.4
5.7
6.3
–10.4
–6.6
1.2
1.6
2.7
1.4
2.3
1.6
3.1
1.8
2.1
Greece
8.5
12.7
10.3
8.1
7.2
6.1
5.0
5.5
5.7
5.1
5.5
Ireland
–0.3
14.3
13.5
12.9
11.1
7.4
9.6
7.1
7.9
6.7
7.7
Italy
–3.8
2.6
6.0
3.1
3.7
3.1
4.6
3.6
4.1
3.6
3.8
Netherlands
Germany
–5.5
–4.6
2.9
2.1
4.1
3.3
3.8
3.2
3.4
2.8
3.3
Norway
2.9
9.9
8.3
9.1
6.8
6.4
6.1
5.8
5.7
5.0
5.8
Portugal
–8.9
2.0
4.5
3.2
2.7
3.5
3.7
3.8
5.1
3.9
4.0
Spain
–1.3
3.1
11.0
9.7
9.4
8.4
7.7
7.1
7.8
5.0
7.2
Sweden
–4.1
–0.1
4.4
8.4
8.8
7.4
6.3
5.7
5.9
5.0
6.1
Switzerland
–8.8
–6.1
1.6
3.3
5.3
5.6
5.2
5.0
5.3
4.7
5.2
United Kingdom
–3.0
4.1
9.2
3.5
4.2
4.9
6.3
6.3
5.6
4.9
5.6
Western Europe Total
–4.4
1.1
6.4
4.1
5.0
4.7
5.3
4.9
5.2
4.2
4.9
Czech Republic
–1.7
7.7
10.3
13.0
9.6
7.7
8.7
7.0
9.8
6.2
7.9
Hungary
19.8
16.0
17.1
13.8
5.6
10.5
9.7
9.0
8.4
7.6
9.0
Poland
5.3
24.0
–0.5
10.9
16.2
12.1
9.8
8.6
10.5
7.2
9.6
Romania
5.3
22.1
31.0
33.5
32.1
29.1
22.5
18.1
15.7
13.6
19.7
Russia
66.8
33.0
35.0
31.4
25.7
19.2
17.8
12.8
11.2
9.9
14.1
Turkey
57.7
13.5
35.4
20.8
25.5
20.7
15.3
11.4
8.6
6.5
12.4
Central and Eastern Europe Total
22.9
22.0
18.0
20.3
19.1
15.7
14.1
10.9
10.5
8.5
11.9
–11.5
–9.2
4.9
5.3
1.3
3.4
3.6
3.7
3.8
3.9
3.7
Saudi Arabia/Pan Arab
21.7
14.1
28.7
31.2
36.9
18.7
14.3
13.4
11.0
9.4
13.3
South Africa
16.6
11.9
15.6
11.4
12.1
10.4
9.9
8.8
8.7
7.6
9.1
Middle East/Africa Total
11.0
8.3
19.0
19.1
22.6
14.1
11.7
10.9
9.6
8.4
10.9
Total
–2.4
2.8
7.8
6.2
7.2
6.4
6.8
6.0
6.2
5.1
6.1
Central and Eastern Europe
Middle East/Africa Israel †
†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
PricewaterhouseCoopers 58 | Global Entertainment and Media Outlook: 2007–2011
Consumer/end-user spending The consumer/end-user market increased 6.8 percent in 2006. Internet access spending, sports, video games, and TV distribution grew at double-digit rates; business information was the next-fastest-growing segment, at 6.5 percent, followed by casino and other regulated gaming at 5.8 percent. Theme parks rose 4.8 percent, and the remaining segments increased by less than 3 percent. TV distribution and video games will be the fastest-growing segments from 2007 to 2011, with compound annual increases of 12.3 percent and 10.2 percent, respectively. Internet access spending will drop to singledigit increases beginning in 2009—as that market begins to mature and penetration growth slows—and will average 9.3 percent compounded annually through 2011. Subscription household growth will fuel TV distribution, and new console games and growth in online and wireless video games will drive the video game market. Business information will grow by 5.6 percent and theme parks by 5.1 percent, while filmed entertainment and sports will each expand at a 4.0 percent compound annual rate. Increases of less than 3 percent annually are anticipated for the remaining segments. Total consumer/end-user spending will rise from $350 billion in 2006 to $452 billion in 2011, growing at a 5.2 percent compound annual rate.
Global Entertainment and Media Market by Region EMEA | 59
Consumer/End-User Spending by Segment (US$ Millions) EMEA Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change TV Distribution % Change Recorded Music % Change Radio % Change Internet Access % Change Video Games % Change Business Information % Change Magazines % Change Newspapers % Change Books % Change Theme Parks and Amusement Parks % Change Casino and Other Regulated Gaming % Change Sports % Change Total % Change
2007–11 CAGR
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
19,769
21,278
23,228
21,944
21,874
22,136
22,895
23,992
25,318
26,677
16.9
7.6
9.2
–5.5
–0.3
1.2
3.4
4.8
5.5
5.4
4.0
18,453
18,778
19,187
20,098
20,407
20,875
21,180
21,790
22,226
22,558
5.1
1.8
2.2
4.7
1.5
2.3
1.5
2.9
2.0
1.5
2.0
22,619
24,975
27,767
31,099
35,069
39,457
44,642
50,097
56,075
62,722
14.0
10.4
11.2
12.0
12.8
12.5
13.1
12.2
11.9
11.9
12.3
14,750
13,729
13,319
13,338
13,065
12,927
13,087
13,457
13,901
14,330
–2.6
–6.9
–3.0
0.1
–2.0
–1.1
1.2
2.8
3.3
3.1
1.9
8,846
8,951
9,123
9,517
9,593
9,721
9,825
9,976
10,110
10,223
3.4
1.2
1.9
4.3
0.8
1.3
1.1
1.5
1.3
1.1
1.3
25,024
30,843
39,223
45,307
53,378
60,733
67,792
73,862
78,908
83,379
27.6
23.3
27.2
15.5
17.8
13.8
11.6
9.0
6.8
5.7
9.3
5,939
6,545
7,630
8,227
9,441
11,135
12,450
13,539
14,560
15,352
9.4
10.2
16.6
7.8
14.8
17.9
11.8
8.7
7.5
5.4
10.2
20,770
20,834
21,518
22,583
24,046
25,594
27,132
28,669
30,168
31,649
–0.6
0.3
3.3
4.9
6.5
6.4
6.0
5.7
5.2
4.9
5.6
20,422
20,538
20,931
21,573
22,126
22,661
23,176
23,694
24,222
24,739
1.6
0.6
1.9
3.1
2.6
2.4
2.3
2.2
2.2
2.1
2.3
27,610
27,779
28,191
28,648
28,882
29,110
29,398
29,670
29,933
30,156
1.9
0.6
1.5
1.6
0.8
0.8
1.0
0.9
0.9
0.7
0.9
48,901
49,491
50,091
51,800
52,494
54,629
55,234
56,776
58,312
59,787
0.9
1.2
1.2
3.4
1.3
4.1
1.1
2.8
2.7
2.5
2.6
3,713
3,775
3,980
4,136
4,334
4,534
4,739
4,992
5,261
5,546
7.7
1.7
5.4
3.9
4.8
4.6
4.5
5.3
5.4
5.4
5.1
13,866
16,667
20,146
23,815
25,208
24,579
24,900
24,455
26,684
27,755
14.5
20.2
20.9
18.2
5.8
–2.5
1.3
–1.8
9.1
4.0
1.9
21,950
22,164
24,057
25,984
30,476
30,489
32,966
33,656
38,455
37,138
10.7
1.0
8.5
8.0
17.3
0.0
8.1
2.1
14.3
–3.4
4.0
272,632 286,347 308,391 328,069 350,393 368,580 389,416 408,625 434,133 452,011
6.9
5.0
7.7
6.4
6.8
5.2
5.7
4.9
6.2
4.1
5.2
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
The United Kingdom and Germany are the leading territories in consumer/end-user spending, at $71 billion and $70 billion, respectively, in 2006. France is a distant third at $48 billion, with Italy at $29 billion, Spain at $22 billion, Russia at $14 billion, and the Netherlands at $12 billion. In contrast with advertising, consumer/ end-user spending in the three areas in EMEA rose at similar mid-single-digit rates in 2006 and will expand at comparable rates during the next five years: 6.7 percent annually in Middle East/Africa, 5.2 percent in Central and Eastern Europe, and 4.7 percent in Western Europe.
PricewaterhouseCoopers 60 | Global Entertainment and Media Outlook: 2007–2011
Regional spending consists of those spending streams in EMEA for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. We expect growth in regional spending to average 13.2 percent compounded annually.
Consumer/End-User Spending by Country (US$ Millions) EMEA
2002
Western Europe
2003
2004
2005
2006p
2007
2008
2009
2010
2011
Austria
5,937
6,226
6,576
6,906
7,123
7,422
7,665
7,927
8,176
8,429
Belgium
4,498
4,782
5,148
5,379
5,513
5,696
5,863
6,100
6,252
6,387
Denmark
4,407
4,792
5,185
5,550
5,771
6,047
6,217
6,412
6,598
6,796
Finland
3,320
3,569
3,947
4,249
4,448
4,611
4,769
4,900
5,011
5,095
France
39,357
40,653
42,984
45,062
48,189
50,707
52,841
54,801
57,246
59,279
Germany
58,751
59,994
62,376
65,279
69,937
71,093
73,683
76,527
80,111
82,253
1,604
1,726
1,805
1,909
2,074
2,225
2,362
2,509
2,648
2,797
Greece Ireland
1,595
1,685
1,786
1,887
1,961
2,078
2,170
2,254
2,343
2,436
Italy
21,600
22,210
24,623
26,048
28,596
30,703
33,035
35,386
38,470
40,371
Netherlands
10,072
10,454
10,954
11,244
11,662
12,116
12,581
13,057
13,565
14,061
Norway
4,865
5,340
5,779
6,246
6,635
6,900
7,147
7,425
7,729
8,017
Portugal
1,953
2,051
2,435
2,743
2,978
3,329
3,667
4,012
4,275
4,513
16,139
17,508
18,437
19,793
21,610
23,143
25,653
27,814
30,023
31,857
Sweden
6,355
6,610
6,921
7,156
7,460
7,705
7,952
8,203
8,404
8,662
Switzerland
4,661
5,000
5,431
5,969
6,300
6,532
6,712
6,909
7,106
7,255
57,754
60,180
64,065
67,174
70,918
75,312
79,260
82,808
87,806
91,058
242,868
252,780
268,452
282,594
301,175
315,619
331,577
347,044
365,763
379,266
Czech Republic
1,238
1,305
1,414
1,605
1,700
1,825
1,943
2,067
2,196
2,329
Hungary
1,199
1,279
1,412
1,500
1,593
1,705
1,820
1,932
2,050
2,165
Poland
3,040
3,268
3,661
3,976
4,289
4,595
4,886
5,178
5,471
5,723
786
835
898
968
1,045
1,126
1,194
1,250
1,311
1,369
Russia
6,106
8,155
11,638
14,214
14,408
14,498
15,094
14,617
15,951
17,111
Turkey
1,105
1,193
1,487
1,772
2,130
2,485
2,797
3,093
3,380
3,673
13,474
16,035
20,510
24,035
25,165
26,234
27,734
28,137
30,359
32,370
1,522
1,598
1,655
1,718
1,722
1,758
1,791
1,831
1,887
1,933
Saudi Arabia/Pan Arab
2,540
2,601
2,726
2,847
2,957
3,051
3,150
3,302
3,474
3,660
South Africa
2,729
3,135
3,570
4,006
4,477
4,980
5,484
5,993
6,621
7,076
Middle East/Africa Total
6,791
7,334
7,951
8,571
9,156
9,789
10,425
11,126
11,982
12,669
263,133
276,149
296,913
315,200
335,496
351,642
369,736
386,307
408,104
424,305
9,499
10,198
11,478
12,869
14,897
16,938
19,680
22,318
26,029
27,706
272,632
286,347
308,391
328,069
350,393
368,580
389,416
408,625
434,133
452,011
Spain
United Kingdom Western Europe Total Central and Eastern Europe
Romania
Central and Eastern Europe Total Middle East/Africa Israel †
Country Subtotal Regional Spending
††
Total
†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. ††Regional spending consists of those spending streams in the region for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Global Entertainment and Media Market by Region EMEA | 61
Consumer/End-User Market Growth by Country (%) EMEA
2002
Western Europe
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
Austria
5.9
4.9
5.6
5.0
3.1
4.2
3.3
3.4
3.1
3.1
3.4
Belgium
9.4
6.3
7.7
4.5
2.5
3.3
2.9
4.0
2.5
2.2
3.0
Denmark
9.4
8.7
8.2
7.0
4.0
4.8
2.8
3.1
2.9
3.0
3.3
Finland
6.4
7.5
10.6
7.7
4.7
3.7
3.4
2.7
2.3
1.7
2.8
France
5.2
3.3
5.7
4.8
6.9
5.2
4.2
3.7
4.5
3.6
4.2
Germany
3.4
2.1
4.0
4.7
7.1
1.7
3.6
3.9
4.7
2.7
3.3
Greece
16.0
7.6
4.6
5.8
8.6
7.3
6.2
6.2
5.5
5.6
6.2
Ireland
9.5
5.6
6.0
5.7
3.9
6.0
4.4
3.9
3.9
4.0
4.4
Italy
7.0
2.8
10.9
5.8
9.8
7.4
7.6
7.1
8.7
4.9
7.1
Netherlands
6.5
3.8
4.8
2.6
3.7
3.9
3.8
3.8
3.9
3.7
3.8
Norway
13.9
9.8
8.2
8.1
6.2
4.0
3.6
3.9
4.1
3.7
3.9
Portugal
19.2
5.0
18.7
12.6
8.6
11.8
10.2
9.4
6.6
5.6
8.7
Spain
5.4
8.5
5.3
7.4
9.2
7.1
10.8
8.4
7.9
6.1
8.1
Sweden
9.9
4.0
4.7
3.4
4.2
3.3
3.2
3.2
2.5
3.1
3.0
Switzerland
7.1
7.3
8.6
9.9
5.5
3.7
2.8
2.9
2.9
2.1
2.9
United Kingdom
9.7
4.2
6.5
4.9
5.6
6.2
5.2
4.5
6.0
3.7
5.1
Western Europe Total
6.7
4.1
6.2
5.3
6.6
4.8
5.1
4.7
5.4
3.7
4.7
7.0
5.4
8.4
13.5
5.9
7.4
6.5
6.4
6.2
6.1
6.5
Central and Eastern Europe Czech Republic Hungary
7.8
6.7
10.4
6.2
6.2
7.0
6.7
6.2
6.1
5.6
6.3
Poland
7.0
7.5
12.0
8.6
7.9
7.1
6.3
6.0
5.7
4.6
5.9
Romania
4.8
6.2
7.5
7.8
8.0
7.8
6.0
4.7
4.9
4.4
5.5
Russia
22.3
33.6
42.7
22.1
1.4
0.6
4.1
–3.2
9.1
7.3
3.5
Turkey
9.3
8.0
24.6
19.2
20.2
16.7
12.6
10.6
9.3
8.7
11.5
13.6
19.0
27.9
17.2
4.7
4.2
5.7
1.5
7.9
6.6
5.2
Central and Eastern Europe Total Middle East/Africa Israel
5.5
5.0
3.6
3.8
0.2
2.1
1.9
2.2
3.1
2.4
2.3
Saudi Arabia/Pan Arab†
3.7
2.4
4.8
4.4
3.9
3.2
3.2
4.8
5.2
5.4
4.4
10.5
14.9
13.9
12.2
11.8
11.2
10.1
9.3
10.5
6.9
9.6
Middle East/Africa Total
6.8
8.0
8.4
7.8
6.8
6.9
6.5
6.7
7.7
5.7
6.7
Country Subtotal
7.1
4.9
7.5
6.2
6.4
4.8
5.1
4.5
5.6
4.0
4.8
Regional Spending
3.3
7.4
12.6
12.1
15.8
13.7
16.2
13.4
16.6
6.4
13.2
Total
6.9
5.0
7.7
6.4
6.8
5.2
5.7
4.9
6.2
4.1
5.2
South Africa
††
†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. ††Regional spending consists of those spending streams in the region for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
PricewaterhouseCoopers 62 | Global Entertainment and Media Outlook: 2007–2011
Asia Pacific The entertainment and media market in Asia Pacific rose 10.0 percent in 2006, helped by double-digit increases in Internet advertising and access spending, video games, casino and other regulated gaming, recorded music, and TV distribution. Large increases in the broadband universe and a surging online advertising market led to a 23.0 percent increase in Internet spending. Console games associated with the new console platforms and double-digit increases in online and wireless games boosted the video game market by 17.0 percent. New casinos in Macao (part of the People’s Republic of China, although gaming is not permitted on the mainland) contributed to the 14.9 percent rise in casino and other regulated gaming. Recorded music rose 15.6 percent in Asia Pacific, the only region to post a significant gain. The expanding digital component of the recorded music market constitutes a larger share of total spending in Asia Pacific than it does in other regions and therefore contributed more to growth. Additionally, relatively steady physical sales of recorded music in Australia, India, and Japan kept the overall physical market from the sharp decline that characterized other regions. TV distribution was boosted by increases in subscription households. Sports rose 8.4 percent as TV rights fees and merchandising and sponsorships related to the FIFA World Cup expanded the market. Filmed entertainment increased 7.5 percent, led by double-digit growth in box office spending and an emerging online subscription rental market. A full year of revenues at Hong Kong Disneyland led to 7.0 percent growth in theme parks. Business information rose 6.8 percent because investment opportunities in expanding territories, particularly the PRC and India, are driving demand for information. Book publishing increased 6.2 percent, led by strong growth in the PRC and India and a rebound in Japan. TV networks rose 5.2 percent, helped by large increases in the PRC and India and a rebound in Japan. The remaining segments each grew by less than 5 percent.
Global Entertainment and Media Market by Region Asia Pacific | 63
We expect Asia Pacific to be the fastest-growing region during the next five years. Growth will be helped by double-digit increases in TV distribution, the Internet, casino and other regulated gaming, and video games. The region will also have the fastest overall economic growth, which will support steady increases in each of the other segments. We expect overall spending to increase to $470 billion in 2011 from $297 billion in 2006, growing at a 9.6 percent compound annual rate.
Entertainment and Media Market by Segment (US$ Millions) Asia Pacific Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change TV Distribution % Change Recorded Music % Change Radio/Out-of-Home Advertising % Change Internet Advertising and Access Spending % Change Video Games % Change Business Information % Change Magazine Publishing % Change Newspaper Publishing % Change Book Publishing % Change Theme Parks and Amusement Parks % Change Casino and Other Regulated Gaming % Change Sports % Change Total % Change
2007–11 CAGR
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
13,614
14,537
15,526
15,496
16,664
17,604
18,765
20,167
21,608
23,145
4.7
6.8
6.8
–0.2
7.5
5.6
6.6
7.5
7.1
7.1
6.8
29,504
30,966
33,309
34,758
36,550
38,363
42,047
43,908
46,693
48,967
3.4
5.0
7.6
4.4
5.2
5.0
9.6
4.4
6.3
4.9
6.0
11,494
13,718
15,822
17,977
20,187
22,847
26,268
31,539
38,403
46,363
13.9
19.3
15.3
13.6
12.3
13.2
15.0
20.1
21.8
20.7
18.1
7,614
7,212
7,387
8,077
9,341
10,023
10,650
11,248
11,760
12,177
–3.3
–5.3
2.4
9.3
15.6
7.3
6.3
5.6
4.6
3.5
5.4
11,328
11,536
12,216
12,717
13,213
13,861
14,734
15,456
16,256
17,020
0.3
1.8
5.9
4.1
3.9
4.9
6.3
4.9
5.2
4.7
5.2
21,311
27,551
37,704
48,473
59,616
73,507
87,446 101,256 115,178 131,265
24.7
29.3
36.9
28.6
23.0
23.3
19.0
15.8
13.7
14.0
7,786
8,154
9,282
9,996
11,696
14,146
15,841
16,980
17,938
18,813
2.3
4.7
13.8
7.7
17.0
20.9
12.0
7.2
5.6
4.9
10.0
5,898
5,904
6,103
6,433
6,872
7,337
7,848
8,329
8,836
9,344
–2.3
0.1
3.4
5.4
6.8
6.8
7.0
6.1
6.1
5.7
6.3
14,969
15,379
15,972
16,727
17,237
17,807
18,481
19,141
19,845
20,551
0.9
2.7
3.9
4.7
3.0
3.3
3.8
3.6
3.7
3.6
3.6
39,798
41,048
42,639
43,925
45,227
46,620
48,663
50,100
51,829
53,465
–1.0
3.1
3.9
3.0
3.0
3.1
4.4
3.0
3.5
3.2
3.4
22,873
22,703
23,470
24,389
25,901
27,363
29,022
30,483
31,838
33,167
–0.3
–0.7
3.4
3.9
6.2
5.6
6.1
5.0
4.4
4.2
5.1
5,527
5,559
5,711
5,782
6,188
6,498
6,845
7,233
7,662
8,099
7.5
0.6
2.7
1.2
7.0
5.0
5.3
5.7
5.9
5.7
5.5
7,674
9,212
11,397
12,737
14,631
17,518
20,555
23,434
26,581
30,325
11.8
20.0
23.7
11.8
14.9
19.7
17.3
14.0
13.4
14.1
15.7
11,434
11,133
11,819
12,602
13,659
14,200
17,149
15,567
17,019
17,707
12.7
–2.6
6.2
6.6
8.4
4.0
20.8
–9.2
9.3
4.0
5.3
210,824 224,612 248,357 270,089 296,982 327,694 364,314 394,841 431,446 470,408
4.6
6.5
10.6
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
PricewaterhouseCoopers 64 | Global Entertainment and Media Outlook: 2007–2011
8.8
10.0
10.3
11.2
8.4
9.3
9.0
17.1
9.6
Japan is the dominant market in the region, at $112 billion in 2006, with the PRC next, at $78 billion, followed by South Korea at $35 billion and Australia at $20 billion. In 2006 the PRC was the fastest-growing territory in Asia Pacific, with a 21.6 percent increase. We expect India to be the fastest-growing territory during the next five years, at 18.5 percent compounded annually. The introduction of a major resort casino in Singapore will lead to a surge in growth during 2010–11 that will raise Singapore’s compound annual growth to 18.0 percent. The PRC will continue to record double-digit annual gains that will average 16.8 percent compounded annually. The Philippines also will benefit from a major new casino and will expand at a 13.6 percent compound annual rate. We also expect double-digit annual increases in Indonesia and Pakistan. Japan improved to a 4.5 percent gain in 2006, its largest increase during the past five years, reflecting the increasing role played by domestic demand and the growing flexibility of Japan’s economy. Given these trends, we expect growth in Japan to average 3.3 percent compounded annually during the next five years. In 2009, Japan’s market will be surpassed by the PRC in terms of overall spending.
Entertainment and Media Market by Country (US$ Millions) Asia Pacific
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
Australia
15,673
17,132
18,578
19,496
20,454
21,537
22,863
23,773
24,998
26,229
China
31,426
38,805
50,616
63,953
77,776
95,529
115,187
131,961
149,836
169,309
Hong Kong
3,208
3,305
3,779
4,223
4,769
5,047
5,400
5,632
5,922
6,147
India
7,425
8,104
8,969
10,107
11,590
13,616
16,218
19,324
23,213
27,089
Indonesia
1,546
1,871
2,315
2,631
3,030
3,443
3,837
4,248
4,649
5,059
Japan
101,839
102,061
105,769
107,567
112,429
116,139
121,215
124,175
128,391
132,205
Malaysia
1,817
2,024
2,258
2,404
2,575
2,745
2,935
3,115
3,307
3,483
New Zealand
2,660
2,884
3,086
3,270
3,403
3,588
3,764
3,921
4,097
4,276
568
646
774
894
1,006
1,135
1,284
1,426
1,574
1,714
Philippines
1,544
1,614
1,796
2,021
2,159
2,351
2,741
3,220
3,694
4,090
Singapore
1,634
1,733
1,906
1,956
2,031
2,116
2,199
2,438
3,119
4,650
27,496
29,291
31,428
32,625
34,683
36,789
39,133
40,292
41,937
43,250
Taiwan
6,194
6,544
7,077
7,326
7,786
8,136
8,586
8,983
9,438
9,813
Thailand
3,110
3,410
3,708
3,878
4,016
4,296
4,620
4,929
5,285
5,710
206,140
219,424
242,059
262,351
287,707
316,467
349,982
377,437
409,460
443,024
4,684
5,188
6,298
7,738
9,275
11,227
14,332
17,404
21,986
27,384
210,824
224,612
248,357
270,089
296,982
327,694
364,314
394,841
431,446
470,408
Pakistan
South Korea
Country Subtotal Regional Spending† Total
†Regional spending consists of those spending streams in the region for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Global Entertainment and Media Market by Region Asia Pacific | 65
Entertainment and Media Market Growth by Country (%) Asia Pacific
2002
Australia
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
3.6
9.3
8.4
4.9
4.9
5.3
6.2
4.0
5.2
4.9
5.1
22.9
23.5
30.4
26.3
21.6
22.8
20.6
14.6
13.5
13.0
16.8
0.2
3.0
14.3
11.7
12.9
5.8
7.0
4.3
5.1
3.8
5.2
India
10.2
9.1
10.7
12.7
14.7
17.5
19.1
19.2
20.1
16.7
18.5
Indonesia
18.6
21.0
23.7
13.7
15.2
13.6
11.4
10.7
9.4
8.8
10.8
Japan
–1.6
0.2
3.6
1.7
4.5
3.3
4.4
2.4
3.4
3.0
3.3
Malaysia
10.1
11.4
11.6
6.5
7.1
6.6
6.9
6.1
6.2
5.3
6.2
New Zealand
6.7
8.4
7.0
6.0
4.1
5.4
4.9
4.2
4.5
4.4
4.7
Pakistan
8.2
13.7
19.8
15.5
12.5
12.8
13.1
11.1
10.4
8.9
11.2
Philippines
5.2
4.5
11.3
12.5
6.8
8.9
16.6
17.5
14.7
10.7
13.6
Singapore
8.2
6.1
10.0
2.6
3.8
4.2
3.9
10.9
27.9
49.1
18.0
South Korea
8.1
6.5
7.3
3.8
6.3
6.1
6.4
3.0
4.1
3.1
4.5
Taiwan
0.6
5.7
8.1
3.5
6.3
4.5
5.5
4.6
5.1
4.0
4.7
Thailand
6.8
9.6
8.7
4.6
3.6
7.0
7.5
6.7
7.2
8.0
7.3
4.3
6.4
10.3
8.4
9.7
10.0
10.6
7.8
8.5
8.2
9.0
14.9
10.8
21.4
22.9
19.9
21.0
27.7
21.4
26.3
24.6
24.2
4.6
6.5
10.6
8.8
10.0
10.3
11.2
8.4
9.3
9.0
9.6
China Hong Kong
Country Subtotal Regional Spending
†
Total
†Regional spending consists of those spending streams in the region for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
PricewaterhouseCoopers 66 | Global Entertainment and Media Outlook: 2007–2011
Advertising Advertising rose 6.5 percent in 2006, with Internet advertising soaring by 38.7 percent and the remaining segments growing at low- to mid-single-digit rates. TV networks rose 5.5 percent, newspapers increased 4.3 percent, out-of-home grew 4.2 percent, radio rose 3.8 percent, and magazines increased 2.6 percent. The Internet will continue to be the fastest-growing category, rising at an 18.8 percent compound annual rate, driven by increased online penetration and an expanding broadband market. TV networks will grow by 6.5 percent compounded annually, with a double-digit spike in 2008 associated with the Olympics in Beijing. New radio licenses in India, rapid growth in the PRC, and new street furniture contracts will drive radio and outof-home advertising. Out-of-home and radio will each expand at rates in excess of 5 percent compounded annually, and newspapers and magazines will grow at rates in excess of 4 percent. Advertising in Asia Pacific will increase from $77 billion in 2006 to $108 billion in 2011.
Advertising by Segment (US$ Millions) Asia Pacific TV Networks: Broadcast and Cable % Change Radio % Change Out-of-Home % Change Internet
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
25,206
26,593
28,698
29,882
31,534
33,209
36,780
38,498
41,136
43,263
3.8
5.5
7.9
4.1
5.5
5.3
10.8
4.7
6.9
5.2
6.5
3,114
3,197
3,360
3,479
3,610
3,752
3,985
4,193
4,448
4,674
0.0
2.7
5.1
3.5
3.8
3.9
6.2
5.2
6.1
5.1
5.3
6,371
6,464
6,879
7,148
7,451
7,893
8,479
8,927
9,387
9,838
0.2
1.5
6.4
3.9
4.2
5.9
7.4
5.3
5.2
4.8
5.7
1,146
1,666
2,522
4,013
5,567
7,117
8,760
10,253
11,724
13,196
% Change
19.5
45.4
51.4
59.1
38.7
27.8
23.1
17.0
14.3
12.6
18.8
Magazines
5,553
5,712
5,947
6,187
6,350
6,571
6,874
7,167
7,504
7,836
% Change
–0.4
2.9
4.1
4.0
2.6
3.5
4.6
4.3
4.7
4.4
4.3
19,235
20,036
21,115
21,901
22,851
23,849
25,445
26,445
27,719
28,837
–3.2
4.2
5.4
3.7
4.3
4.4
6.7
3.9
4.8
4.0
4.8
60,625
63,668
68,521
72,610
77,363
82,391
90,323
95,483 101,918 107,644
0.7
5.0
7.6
6.0
6.5
6.5
9.6
Newspapers % Change Total % Change
5.7
6.7
5.6
6.8
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Japan is the dominant advertising market in Asia Pacific, at $36 billion and constituting 47 percent of the total, with the PRC next, at $11 billion. We expect the PRC to be the fastest-growing territory during the next five years, with a 15.0 percent compound annual increase. India will grow nearly as fast, at 14.6 percent. Indonesia, which also has a strong economy, will increase at a 12.7 percent compound annual rate.
Global Entertainment and Media Market by Region Asia Pacific | 67
Advertising by Country (US$ Millions) Asia Pacific
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
Australia
5,737
6,272
7,018
7,536
8,011
8,454
8,898
9,277
9,703
10,203
China
5,811
7,022
8,153
9,738
11,222
13,057
16,594
18,238
20,511
22,570
Hong Kong
1,429
1,486
1,772
1,988
2,180
2,303
2,526
2,635
2,823
2,962
India
2,117
2,314
2,623
3,016
3,471
3,995
4,660
5,408
6,195
6,863
876
1,133
1,484
1,727
2,067
2,420
2,748
3,088
3,421
3,764
33,213
33,173
34,460
35,136
36,314
37,366
39,046
40,310
41,686
43,001
Malaysia
396
425
496
515
536
560
595
620
657
679
New Zealand
993
1,119
1,254
1,341
1,377
1,486
1,579
1,660
1,756
1,878
Pakistan
107
114
123
133
142
153
165
175
190
200
Philippines
404
470
534
599
661
720
826
885
985
1,054
Singapore
581
600
676
683
708
733
762
783
812
838
South Korea
5,897
6,137
6,086
6,272
6,694
7,037
7,552
7,852
8,346
8,609
Taiwan
1,939
2,098
2,396
2,404
2,481
2,567
2,740
2,845
3,017
3,118
Thailand
1,125
1,305
1,446
1,522
1,499
1,540
1,632
1,707
1,816
1,905
60,625
63,668
68,521
72,610
77,363
82,391
90,323
95,483
101,918
107,644
Indonesia Japan
Total
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Advertising Growth by Country (%) Asia Pacific Australia
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
1.4
9.3
11.9
7.4
6.3
5.5
5.3
4.3
4.6
5.2
5.0
China
24.6
20.8
16.1
19.4
15.2
16.4
27.1
9.9
12.5
10.0
15.0
Hong Kong
–2.8
4.0
19.2
12.2
9.7
5.6
9.7
4.3
7.1
4.9
6.3
6.0
9.3
13.4
15.0
15.1
15.1
16.6
16.1
14.6
10.8
14.6
Indonesia
36.2
29.3
31.0
16.4
19.7
17.1
13.6
12.4
10.8
10.0
12.7
Japan
–6.8
–0.1
3.9
2.0
3.4
2.9
4.5
3.2
3.4
3.2
3.4
Malaysia
7.6
7.3
16.7
3.8
4.1
4.5
6.3
4.2
6.0
3.3
4.8
New Zealand
5.2
12.7
12.1
6.9
2.7
7.9
6.3
5.1
5.8
6.9
6.4
Pakistan
7.0
6.5
7.9
8.1
6.8
7.7
7.8
6.1
8.6
5.3
7.1
Philippines
5.2
16.3
13.6
12.2
10.4
8.9
14.7
7.1
11.3
7.0
9.8
Singapore
8.2
3.3
12.7
1.0
3.7
3.5
4.0
2.8
3.7
3.2
3.4
South Korea
23.8
4.1
–0.8
3.1
6.7
5.1
7.3
4.0
6.3
3.2
5.2
Taiwan
–3.2
8.2
14.2
0.3
3.2
3.5
6.7
3.8
6.0
3.3
4.7
Thailand
13.3
16.0
10.8
5.3
–1.5
2.7
6.0
4.6
6.4
4.9
4.9
0.7
5.0
7.6
6.0
6.5
6.5
9.6
5.7
6.7
5.6
6.8
India
Total
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
PricewaterhouseCoopers 68 | Global Entertainment and Media Outlook: 2007–2011
Consumer/end-user spending Consumer/end-user spending increased 11.2 percent in 2006, helped by 21.6 percent growth in Internet access spending and double-digit increases in video games, casino and other regulated gaming, recorded music, and TV distribution. We expect faster growth during the next two years and a 10.6 percent compound annual increase through 2011. Subscription household growth and an emerging mobile TV subscription market will boost TV distribution by 18.1 percent compounded annually. Increases in Internet households and broadband subscriptions will propel access spending at a 16.9 percent compound annual rate. New resort casinos in Macao and Singapore will contribute to a 15.7 percent compound annual increase in casino and other regulated gaming. Video games will average 10.0 percent compound annual growth, boosted by rising online and wireless growth and by new console games. Filmed entertainment will expand at a 6.8 percent annual rate as modern cinemas contribute to box office growth and increases in mobile music will more than offset decreases in physical music spending. Business information will expand at a 6.3 percent annual rate, and gains of 5 percent or more are expected for theme parks, recorded music, sports, and book publishing. Spending will total an estimated $363 billion in 2011, up from $220 billion in 2006.
Global Entertainment and Media Market by Region Asia Pacific | 69
Consumer/End-User Spending by Segment (US$ Millions) Asia Pacific
2007–11 CAGR
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
13,614
14,537
15,526
15,496
16,664
17,604
18,765
20,167
21,608
23,145
4.7
6.8
6.8
–0.2
7.5
5.6
6.6
7.5
7.1
7.1
6.8
4,298
4,373
4,611
4,876
5,016
5,154
5,267
5,410
5,557
5,704
1.5
1.7
5.4
5.7
2.9
2.8
2.2
2.7
2.7
2.6
2.6
11,494
13,718
15,822
17,977
20,187
22,847
26,268
31,539
38,403
46,363
13.9
19.3
15.3
13.6
12.3
13.2
15.0
20.1
21.8
20.7
18.1
7,614
7,212
7,387
8,077
9,341
10,023
10,650
11,248
11,760
12,177
–3.3
–5.3
2.4
9.3
15.6
7.3
6.3
5.6
4.6
3.5
5.4
1,843
1,875
1,977
2,090
2,152
2,216
2,270
2,336
2,421
2,508
1.5
1.7
5.4
5.7
3.0
3.0
2.4
2.9
3.6
3.6
3.1
20,165
25,885
35,182
44,460
54,049
66,390
78,686
91,003 103,454 118,069
25.1
28.4
35.9
26.4
21.6
22.8
18.5
15.7
13.7
14.1
7,786
8,154
9,282
9,996
11,696
14,146
15,841
16,980
17,938
18,813
2.3
4.7
13.8
7.7
17.0
20.9
12.0
7.2
5.6
4.9
10.0
5,898
5,904
6,103
6,433
6,872
7,337
7,848
8,329
8,836
9,344
% Change
–2.3
0.1
3.4
5.4
6.8
6.8
7.0
6.1
6.1
5.7
6.3
Magazines
9,416
9,667
10,025
10,540
10,887
11,236
11,607
11,974
12,341
12,715
1.7
2.7
3.7
5.1
3.3
3.2
3.3
3.2
3.1
3.0
3.2
20,563
21,012
21,524
22,024
22,376
22,771
23,218
23,655
24,110
24,628
1.3
2.2
2.4
2.3
1.6
1.8
2.0
1.9
1.9
2.1
1.9
22,873
22,703
23,470
24,389
25,901
27,363
29,022
30,483
31,838
33,167
–0.3
–0.7
3.4
3.9
6.2
5.6
6.1
5.0
4.4
4.2
5.1
5,527
5,559
5,711
5,782
6,188
6,498
6,845
7,233
7,662
8,099
7.5
0.6
2.7
1.2
7.0
5.0
5.3
5.7
5.9
5.7
5.5
7,674
9,212
11,397
12,737
14,631
17,518
20,555
23,434
26,581
30,325
11.8
20.0
23.7
11.8
14.9
19.7
17.3
14.0
13.4
14.1
15.7
11,434
11,133
11,819
12,602
13,659
14,200
17,149
15,567
17,019
17,707
12.7
–2.6
6.2
6.6
8.4
4.0
20.8
–9.2
9.3
4.0
5.3
150,199 160,944 179,836 197,479 219,619 245,303 273,991 299,358 329,528 362,764
Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change TV Distribution % Change Recorded Music % Change Radio % Change Internet Access % Change Video Games % Change Business Information
% Change Newspapers % Change Books % Change Theme Parks and Amusement Parks % Change Casino and Other Regulated Gaming % Change Sports % Change Total % Change
6.2
7.2
11.7
9.8
11.2
11.7
11.7
9.3
10.1
10.1
16.9
10.6
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Japan is the leading territory in consumer/end-user spending, at $76 billion, with the PRC close behind at $67 billion. In 2007, the PRC will pass Japan in consumer/end-user spending, although it will remain well behind Japan in advertising throughout the forecast period. Singapore will be the fastest-growing territory, with a 23.6 percent compound annual increase, principally the result of new resort casinos. India and the PRC will be the next-fastest-growing territories, at 20.0 percent and 17.1 percent, respectively. Large increases in Internet access spending and subscription households in both territories will fuel growth. PricewaterhouseCoopers 70 | Global Entertainment and Media Outlook: 2007–2011
Regional spending consists of categories for which we do not have country breakouts, including several rapidly growing digital segments. We expect regional spending to grow by 24.2 percent compounded annually.
Consumer/End-User Spending by Country (US$ Millions) Asia Pacific Australia China Hong Kong India Indonesia Japan Malaysia New Zealand Pakistan Philippines Singapore South Korea Taiwan Thailand Country Subtotal Regional Spending† Total
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
9,936 25,615 1,779 5,308 670 68,626 1,421 1,667 461 1,140 1,053 21,599 4,255 1,985 145,515 4,684 150,199
10,860 31,783 1,819 5,790 738 68,888 1,599 1,765 532 1,144 1,133 23,154 4,446 2,105 155,756 5,188 160,944
11,560 42,463 2,007 6,346 831 71,309 1,762 1,832 651 1,262 1,230 25,342 4,681 2,262 173,538 6,298 179,836
11,960 54,215 2,235 7,091 904 72,431 1,889 1,929 761 1,422 1,273 26,353 4,922 2,356 189,741 7,738 197,479
12,443 66,554 2,589 8,119 963 76,115 2,039 2,026 864 1,498 1,323 27,989 5,305 2,517 210,344 9,275 219,619
13,083 82,472 2,744 9,621 1,023 78,773 2,185 2,102 982 1,631 1,383 29,752 5,569 2,756 234,076 11,227 245,303
13,965 98,593 2,874 11,558 1,089 82,169 2,340 2,185 1,119 1,915 1,437 31,581 5,846 2,988 259,659 14,332 273,991
14,496 113,723 2,997 13,916 1,160 83,865 2,495 2,261 1,251 2,335 1,655 32,440 6,138 3,222 281,954 17,404 299,358
15,295 129,325 3,099 17,018 1,228 86,705 2,650 2,341 1,384 2,709 2,307 33,591 6,421 3,469 307,542 21,986 329,528
16,026 146,739 3,185 20,226 1,295 89,204 2,804 2,398 1,514 3,036 3,812 34,641 6,695 3,805 335,380 27,384 362,764
†Regional spending consists of those spending streams in the region for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Consumer/End-User Spending Market Growth by Country (%) Asia Pacific Australia China Hong Kong India Indonesia Japan Malaysia New Zealand Pakistan Philippines Singapore South Korea Taiwan Thailand Country Subtotal Regional Spending† Total
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
5.0 22.5 2.8 11.9 1.4 1.2 10.8 7.7 8.5 5.2 8.2 4.5 2.5 3.4 5.9 14.9 6.2
9.3 24.1 2.2 9.1 10.1 0.4 12.5 5.9 15.4 0.4 7.6 7.2 4.5 6.0 7.0 10.8 7.2
6.4 33.6 10.3 9.6 12.6 3.5 10.2 3.8 22.4 10.3 8.6 9.4 5.3 7.5 11.4 21.4 11.7
3.5 27.7 11.4 11.7 8.8 1.6 7.2 5.3 16.9 12.7 3.5 4.0 5.1 4.2 9.3 22.9 9.8
4.0 22.8 15.8 14.5 6.5 5.1 7.9 5.0 13.5 5.3 3.9 6.2 7.8 6.8 10.9 19.9 11.2
5.1 23.9 6.0 18.5 6.2 3.5 7.2 3.8 13.7 8.9 4.5 6.3 5.0 9.5 11.3 21.0 11.7
6.7 19.5 4.7 20.1 6.5 4.3 7.1 3.9 14.0 17.4 3.9 6.1 5.0 8.4 10.9 27.7 11.7
3.8 15.3 4.3 20.4 6.5 2.1 6.6 3.5 11.8 21.9 15.2 2.7 5.0 7.8 8.6 21.4 9.3
5.5 13.7 3.4 22.3 5.9 3.4 6.2 3.5 10.6 16.0 39.4 3.5 4.6 7.7 9.1 26.3 10.1
4.8 13.5 2.8 18.9 5.5 2.9 5.8 2.4 9.4 12.1 65.2 3.1 4.3 9.7 9.1 24.6 10.1
5.2 17.1 4.2 20.0 6.1 3.2 6.6 3.4 11.9 15.2 23.6 4.4 4.8 8.6 9.8 24.2 10.6
†Regional spending consists of those spending streams in the region for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Global Entertainment and Media Market by Region Asia Pacific | 71
Latin America Latin America’s entertainment and media market rose 11.5 percent, the fastest-growing region in 2006. Spending was paced by double-digit increases in Internet advertising and access spending, radio and outof-home advertising, TV networks, TV distribution, video games, casino and other regulated gaming, and by high-single-digit increases in sports, filmed entertainment, and newspaper and magazine publishing. Double-digit increases in the next five years are anticipated for Internet access and advertising, TV distribution, and casino and other regulated gaming, with high single-digit growth projected for radio and outof-home advertising, TV networks, and video games. Increased Internet household penetration and a growing broadband market will fuel Internet spending; subscription household growth will boost TV distribution; and new casinos will expand a small casino and other regulated gaming market. Digital launches and economic expansion will sustain growth in radio and out-of-home advertising. Multichannel advertising growth will boost the TV network market, and new consoles will enhance the video game market. We project overall growth to average 8.9 percent compounded annually during the next five years. Spending will rise to $68 billion by 2011 from $44 billion in 2006.
PricewaterhouseCoopers 72 | Global Entertainment and Media Outlook: 2007–2011
Entertainment and Media Market by Segment (US$ Millions) 2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
1,443
1,549
1,765
1,741
1,871
1,994
2,125
2,271
2,420
2,574
9.7
7.3
13.9
–1.4
7.5
6.6
6.6
6.9
6.6
6.4
6.6
4,505
4,866
5,841
7,019
7,905
8,517
9,502
10,150
11,473
12,073
–3.8
8.0
20.0
20.2
12.6
7.7
11.6
6.8
13.0
5.2
8.8
TV Distribution
4,877
4,880
5,200
5,810
6,539
7,508
8,632
9,942
11,362
12,883
% Change
–14.8
0.1
6.6
11.7
12.5
14.8
15.0
15.2
14.3
13.4
14.5
Recorded Music
1,116
988
1,203
1,360
1,409
1,456
1,532
1,634
1,741
1,831
% Change
–5.3
–11.5
21.8
13.1
3.6
3.3
5.2
6.7
6.5
5.2
5.4
Radio/Out-of-Home Advertising
910
796
901
1,061
1,215
1,344
1,482
1,619
1,757
1,888
% Change
–5.7
–12.5
13.2
17.8
14.5
10.6
10.3
9.2
8.5
7.5
9.2
Latin America Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change
Internet Advertising and Access Spending
2,224
2,753
3,618
4,598
6,025
7,346
8,555
9,768
10,910
12,174
% Change
22.1
23.8
31.4
27.1
31.0
21.9
16.5
14.2
11.7
11.6
15.1
Video Games
451
515
544
528
586
715
785
815
843
871
% Change
32.6
14.2
5.6
–2.9
11.0
22.0
9.8
3.8
3.4
3.3
8.2
1,267
1,258
1,294
1,347
1,407
1,473
1,544
1,618
1,697
1,770
–4.2
–0.7
2.9
4.1
4.5
4.7
4.8
4.8
4.9
4.3
4.7
Magazine Publishing
2,311
2,443
2,671
2,927
3,135
3,350
3,563
3,779
3,999
4,208
% Change
–11.0
5.7
9.3
9.6
7.1
6.9
6.4
6.1
5.8
5.2
6.1
Newspaper Publishing
5,018
4,977
5,244
5,787
6,238
6,579
6,910
7,243
7,578
7,914
Business Information % Change
% Change
–1.7
–0.8
5.4
10.4
7.8
5.5
5.0
4.8
4.6
4.4
4.9
4,284
4,306
4,380
4,493
4,620
4,753
4,897
5,039
5,178
5,317
% Change
–1.6
0.5
1.7
2.6
2.8
2.9
3.0
2.9
2.8
2.7
2.9
Theme Parks and Amusement Parks
254
248
253
241
248
260
272
285
299
313
% Change
2.0
–2.4
2.0
–4.7
2.9
4.8
4.6
4.8
4.9
4.7
4.8
Casino and Other Regulated Gaming
199
199
226
251
278
311
345
392
449
495
Book Publishing
% Change
–56.3
0.0
13.6
11.1
10.8
11.9
10.9
13.6
14.5
10.2
12.2
Sports
2,229
2,234
2,334
2,508
2,752
2,769
2,884
3,114
3,407
3,421
7.1
0.2
4.5
7.5
9.7
0.6
4.2
8.0
9.4
0.4
4.4
31,088
32,012
35,474
39,671
44,228
48,375
53,028
57,669
63,113
67,732
–3.4
3.0
10.8
11.8
11.5
9.4
9.6
8.8
9.4
7.3
8.9
% Change Total % Change
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Brazil is the largest market in Latin America, at $18 billion in 2006, with Mexico second, at $10 billion. Every territory except Chile expanded at double-digit rates in 2006, and Chile improved to an 8.7 percent increase. A stable economic environment will help all countries in the region. We project continued double-digit growth in Colombia and Venezuela. Mexico will expand at a projected 9.3 percent annual rate, with Argentina and Brazil each growing at a 9.1 percent rate and Chile at 6.0 percent.
Global Entertainment and Media Market by Region Latin America | 73
Entertainment and Media Market by Country (US$ Millions) Latin America
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2,970
3,282
3,904
4,618
5,234
5,827
6,375
6,925
7,506
8,103
Brazil
11,947
12,355
13,834
15,761
17,615
19,314
21,272
23,098
25,309
27,256
Chile
1,961
2,030
2,138
2,277
2,474
2,633
2,812
2,976
3,154
3,310
Colombia
2,182
2,166
2,265
2,528
2,816
3,108
3,464
3,833
4,250
4,638
Mexico
7,395
7,469
8,244
8,985
9,989
10,964
12,041
13,145
14,459
15,593
660
648
763
838
934
1,009
1,129
1,237
1,398
1,523
27,115
27,950
31,148
35,007
39,062
42,855
47,093
51,214
56,076
60,423
Argentina
Venezuela Country Subtotal Regional Spending
†
Total
3,973
4,062
4,326
4,664
5,166
5,520
5,935
6,455
7,037
7,309
31,088
32,012
35,474
39,671
44,228
48,375
53,028
57,669
63,113
67,732
†Regional spending consists of those spending streams in the region for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Entertainment and Media Market Growth by Country (%) Latin America Argentina Brazil Chile
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
–25.2
10.5
19.0
18.3
13.3
11.3
9.4
8.6
8.4
8.0
9.1
–1.6
3.4
12.0
13.9
11.8
9.6
10.1
8.6
9.6
7.7
9.1
3.1
3.5
5.3
6.5
8.7
6.4
6.8
5.8
6.0
4.9
6.0
Colombia
–2.5
–0.7
4.6
11.6
11.4
10.4
11.5
10.7
10.9
9.1
10.5
Mexico
–2.0
1.0
10.4
9.0
11.2
9.8
9.8
9.2
10.0
7.8
9.3
2.6
–1.8
17.7
9.8
11.5
8.0
11.9
9.6
13.0
8.9
10.3
–4.6
3.1
11.4
12.4
11.6
9.7
9.9
8.8
9.5
7.8
9.1
5.9
2.2
6.5
7.8
10.8
6.9
7.5
8.8
9.0
3.9
7.2
–3.4
3.0
10.8
11.8
11.5
9.4
9.6
8.8
9.4
7.3
8.9
Venezuela Country Subtotal Regional Spending† Total
†Regional spending consists of those spending streams in the region for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Advertising Advertising in Latin America rose 12.0 percent in 2006, the third consecutive double-digit gain, reflecting sustained economic growth and a stable economic environment. Internet advertising was the fastestgrowing category in 2006, at 25.6 percent, followed by out-of-home at 14.7 percent, radio at 14.4 percent, TV networks at 12.6 percent, and magazines and newspapers at 10.6 percent and 10.0 percent, respectively. This is the only region in which publishing rose at double-digit rates, the result of rising unit circulation. Internet advertising will grow at a 19.0 percent compound annual rate during the next five years, buoyed by an expanding broadband-household universe. Radio will grow at a 9.9 percent compound annual rate, boosted by digital launches. TV advertising will grow at an 8.8 percent rate as new channels expand the market. Magazine advertising will increase by 8.4 percent compounded annually, benefiting from economic growth. Out-of-home will be helped by increased exposure to ads because rising employment increases the number of people commuting, thereby helping out-of-home spending to grow at a 7.0 percent compound annual rate. Newspaper advertising will grow more slowly as the growing Internet universe begins to attract readers from newspapers. We project advertising during the next five years to increase at an 8.2 percent compound annual rate, rising from $15 billion in 2006 to $22 billion in 2011. PricewaterhouseCoopers 74 | Global Entertainment and Media Outlook: 2007–2011
Advertising by Segment (US$ Millions) Latin America TV Networks: Broadcast and Cable
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
4,505
4,866
5,841
7,019
7,905
8,517
9,502
10,150
11,473
12,073
% Change
–3.8
8.0
20.0
20.2
12.6
7.7
11.6
6.8
13.0
5.2
8.8
Radio
743
619
694
796
911
1,021
1,132
1,243
1,356
1,462
% Change
–3.0
–16.7
12.1
14.7
14.4
12.1
10.9
9.8
9.1
7.8
9.9
Out-of-Home
167
177
207
265
304
323
350
376
401
426
% Change
–16.1
6.0
16.9
28.0
14.7
6.3
8.4
7.4
6.6
6.2
7.0
Internet
86
90
132
195
245
312
378
446
514
584
% Change
7.5
4.7
46.7
47.7
25.6
27.3
21.2
18.0
15.2
13.6
19.0
Magazines
825
889
988
1,135
1,255
1,379
1,504
1,629
1,759
1,878
% Change Newspapers % Change Total % Change
–8.3
7.8
11.1
14.9
10.6
9.9
9.1
8.3
8.0
6.8
8.4
3,033
3,133
3,364
3,825
4,208
4,488
4,761
5,035
5,312
5,587
–0.5
3.3
7.4
13.7
10.0
6.7
6.1
5.8
5.5
5.2
5.8
9,359
9,774
11,226
13,235
14,828
16,040
17,627
18,879
20,815
22,010
–3.3
4.4
14.9
17.9
12.0
8.2
9.9
7.1
10.3
5.7
8.2
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Brazil and Mexico are the leading territories in terms of advertising spending, at $6.6 billion and $4.3 billion, respectively, together constituting 74 percent of 2006 advertising in Latin America. Venezuela, the smallest territory, at $396 million, will be the fastest growing, with a projected 10.1 percent compound annual increase. Growth will reflect rising oil revenues and relatively high inflation compared with other territories in Latin America.
Advertising by Country (US$ Millions) Latin America
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
Argentina
542
699
838
1,046
1,206
1,320
1,436
1,527
1,651
1,733
3,586
3,849
4,556
5,866
6,626
7,215
7,996
8,595
9,560
10,110
Brazil Chile
681
740
793
855
945
992
1,060
1,107
1,167
1,216
Colombia
1,153
1,095
1,146
1,263
1,382
1,472
1,585
1,674
1,807
1,897
Mexico
3,143
3,132
3,586
3,857
4,273
4,621
5,075
5,459
6,032
6,412
254
259
307
348
396
420
475
517
598
642
9,359
9,774
11,226
13,235
14,828
16,040
17,627
18,879
20,815
22,010
Venezuela Total
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Global Entertainment and Media Market by Region Latin America | 75
Advertising Growth by Country (%) 2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
–33.8
29.0
19.9
24.8
15.3
9.5
8.8
6.3
8.1
5.0
7.5
Brazil
–4.3
7.3
18.4
28.8
13.0
8.9
10.8
7.5
11.2
5.8
8.8
Chile
5.6
8.7
7.2
7.8
10.5
5.0
6.9
4.4
5.4
4.2
5.2
–5.5
–5.0
4.7
10.2
9.4
6.5
7.7
5.6
7.9
5.0
6.5
Latin America Argentina
Colombia Mexico
3.4
–0.3
14.5
7.6
10.8
8.1
9.8
7.6
10.5
6.3
8.5
Venezuela
22.7
2.0
18.5
13.4
13.8
6.1
13.1
8.8
15.7
7.4
10.1
Total
–3.3
4.4
14.9
17.9
12.0
8.2
9.9
7.1
10.3
5.7
8.2
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Consumer/end-user spending Consumer/end-user spending increased by 11.2 percent in 2006. Double-digit growth in Internet access spending, TV distribution, video games, and casino and other regulated gaming, and high-single-digit growth in sports and filmed entertainment paced the market. The remaining segments rose by less than 5 percent. We expect Internet access spending to continue to grow at double-digit rates, averaging 14.9 percent compounded annually driven by increased Internet penetration and a rapidly growing broadband market. Growth in subscription TV households will drive TV distribution to a 14.5 percent compound annual increase. Casino and other regulated gaming will grow at a 12.2 percent rate during the next five years, helped by a stronger economy and new casinos in Mexico and Chile. Video games will expand at an 8.2 percent compound annual rate, helped in the near term by new console platforms. Anticipated growth during 2009– 11 will be less than 4 percent annually. Filmed entertainment will rise at a 6.6 percent annual rate as new multiplexes attract people to theaters. Recorded music will rise at a 5.4 percent compound annual rate as large increases in digital distribution will offset declines in physical distribution. The remaining segments will each grow by less than 5 percent annually. Overall consumer/end-user spending in Latin America will increase from $29 billion in 2006 to $46 billion in 2011, growing at a 9.2 percent compound annual rate.
PricewaterhouseCoopers 76 | Global Entertainment and Media Outlook: 2007–2011
Consumer/End-User Spending by Segment (US$ Millions) Latin America
2007–11 CAGR
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
1,443
1,549
1,765
1,741
1,871
1,994
2,125
2,271
2,420
2,574
9.7
7.3
13.9
–1.4
7.5
6.6
6.6
6.9
6.6
6.4
6.6
TV Distribution
4,877
4,880
5,200
5,810
6,539
7,508
8,632
9,942
11,362
12,883
% Change
–14.8
0.1
6.6
11.7
12.5
14.8
15.0
15.2
14.3
13.4
14.5
Recorded Music
1,116
988
1,203
1,360
1,409
1,456
1,532
1,634
1,741
1,831
–5.3
–11.5
21.8
13.1
3.6
3.3
5.2
6.7
6.5
5.2
5.4
2,138
2,663
3,486
4,403
5,780
7,034
8,177
9,322
10,396
11,590
22.8
24.6
30.9
26.3
31.3
21.7
16.2
14.0
11.5
11.5
14.9
Filmed Entertainment % Change
% Change Internet Access % Change Video Games
451
515
544
528
586
715
785
815
843
871
% Change
32.6
14.2
5.6
–2.9
11.0
22.0
9.8
3.8
3.4
3.3
8.2
1,267
1,258
1,294
1,347
1,407
1,473
1,544
1,618
1,697
1,770
% Change
–4.2
–0.7
2.9
4.1
4.5
4.7
4.8
4.8
4.9
4.3
4.7
Magazines
1,486
1,554
1,683
1,792
1,880
1,971
2,059
2,150
2,240
2,330
% Change
–12.4
4.6
8.3
6.5
4.9
4.8
4.5
4.4
4.2
4.0
4.4
Newspapers
1,985
1,844
1,880
1,962
2,030
2,091
2,149
2,208
2,266
2,327
–3.4
–7.1
2.0
4.4
3.5
3.0
2.8
2.7
2.6
2.7
2.8
Business Information
% Change Books
4,284
4,306
4,380
4,493
4,620
4,753
4,897
5,039
5,178
5,317
% Change
–1.6
0.5
1.7
2.6
2.8
2.9
3.0
2.9
2.8
2.7
2.9
Theme Parks and Amusement Parks
254
248
253
241
248
260
272
285
299
313
% Change
2.0
–2.4
2.0
–4.7
2.9
4.8
4.6
4.8
4.9
4.7
4.8
Casino and Other Regulated Gaming
199
199
226
251
278
311
345
392
449
495
% Change
–56.3
0.0
13.6
11.1
10.8
11.9
10.9
13.6
14.5
10.2
12.2
Sports
2,229
2,234
2,334
2,508
2,752
2,769
2,884
3,114
3,407
3,421
7.1
0.2
4.5
7.5
9.7
0.6
4.2
8.0
9.4
0.4
4.4
21,729
22,238
24,248
26,436
29,400
32,335
35,401
38,790
42,298
45,722
–3.5
2.3
9.0
9.0
11.2
10.0
9.5
9.6
9.0
8.1
9.2
% Change Total % Change
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Brazil is the leading consumer/end-user territory in Latin America, at $11 billion in 2006. Mexico is second, at $6 billion, followed by Argentina at $4 billion. Each of these territories will expand at rates in excess of 9 percent compounded annually. Regional spending consists of categories for which we do not have country breakouts. It consists largely of relatively new and rapidly growing digital sectors. We expect regional spending to grow by 7.2 percent compounded annually.
Global Entertainment and Media Market by Region Latin America | 77
Consumer/End-User Spending by Country (US$ Millions) Latin America
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
Argentina
2,428
2,583
3,066
3,572
4,028
4,507
4,939
5,398
5,855
6,370
Brazil
8,361
8,506
9,278
9,895
10,989
12,099
13,276
14,503
15,749
17,146
Chile
1,280
1,290
1,345
1,422
1,529
1,641
1,752
1,869
1,987
2,094
Colombia
1,029
1,071
1,119
1,265
1,434
1,636
1,879
2,159
2,443
2,741
Mexico
4,252
4,337
4,658
5,128
5,716
6,343
6,966
7,686
8,427
9,181
406
389
456
490
538
589
654
720
800
881
17,756
18,176
19,922
21,772
24,234
26,815
29,466
32,335
35,261
38,413
Venezuela Country Subtotal Regional Spending
†
Total
3,973
4,062
4,326
4,664
5,166
5,520
5,935
6,455
7,037
7,309
21,729
22,238
24,248
26,436
29,400
32,335
35,401
38,790
42,298
45,722
†Regional spending consists of those spending streams in the region for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Consumer/End-User Market Growth by Country (%) 2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
–23.0
6.4
18.7
16.5
12.8
11.9
9.6
9.3
8.5
8.8
9.6
Brazil
–0.3
1.7
9.1
6.7
11.1
10.1
9.7
9.2
8.6
8.9
9.3
Chile
1.8
0.8
4.3
5.7
7.5
7.3
6.8
6.7
6.3
5.4
6.5
Colombia
1.0
4.1
4.5
13.0
13.4
14.1
14.9
14.9
13.2
12.2
13.8
Latin America Argentina
Mexico
–5.6
2.0
7.4
10.1
11.5
11.0
9.8
10.3
9.6
8.9
9.9
Venezuela
–6.9
–4.2
17.2
7.5
9.8
9.5
11.0
10.1
11.1
10.1
10.4
–5.3
2.4
9.6
9.3
11.3
10.7
9.9
9.7
9.0
8.9
9.7
5.9
2.2
6.5
7.8
10.8
6.9
7.5
8.8
9.0
3.9
7.2
–3.5
2.3
9.0
9.0
11.2
10.0
9.5
9.6
9.0
8.1
9.2
Country Subtotal Regional Spending
†
Total
†Regional spending consists of those spending streams in the region for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
PricewaterhouseCoopers 78 | Global Entertainment and Media Outlook: 2007–2011
Canada Canada’s entertainment and media market rose 6.7 percent in 2006—comparable to increases during 2002– 04 and a significant improvement from the 3.5 percent growth in 2005, when cancellation of the NHL season cut into growth in sports. With the return of the NHL in 2006, sports more than doubled. Video games rose by 17.2 percent, Internet advertising and access spending increased 16.2 percent, and radio and out-of-home expanded by 9.8 percent. TV distribution grew 5.7 percent, and TV networks rose by 5.5 percent. Casino and other regulated gaming rose 6.0 percent, helped by double-digit growth in online gaming. The remaining segments grew by less than 5 percent, and recorded music declined by 7.6 percent. We expect double-digit growth in the Internet and radio and out-of-home segments and high-single-digit increases in video games and casino and other regulated gaming. A surging online advertising market will boost Internet spending, while radio and out-of-home will be driven by high-definition terrestrial radio, an emerging satellite radio market, and digital billboards, 3-D displays, and in-store networks that will fuel out-ofhome advertising. New console platforms and gains in online and wireless games will propel the video game market, and casino and other regulated gaming will benefit from new and upgraded casinos, a new sportsbetting parlor, and broadband growth that will stimulate online gaming. TV distribution will be the only other segment to grow by more than 5 percent annually, helped by the shift to digital and the entrance of telephone companies into the market, which will enhance penetration while inducing subscribers to trade up to higher services, in turn boosting revenues. The recorded music market will flatten out during the next five years as the rapidly expanding digital component becomes large enough to offset continued declines in physical spending. The overall market will expand at a 5.6 percent compound annual rate to $47 billion in 2011 from $36 billion in 2006.
Global Entertainment and Media Market by Region Canada | 79
Entertainment and Media Market by Segment (US$ Millions) Canada Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change TV Distribution
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
4,160
4,825
5,519
5,507
5,645
5,826
6,068
6,326
6,587
6,867
33.3
16.0
14.4
–0.2
2.5
3.2
4.2
4.3
4.1
4.3
4.0
2,958
3,234
3,422
3,525
3,719
3,856
4,045
4,230
4,430
4,632
6.9
9.3
5.8
3.0
5.5
3.7
4.9
4.6
4.7
4.6
4.5
3,254
3,494
3,669
3,951
4,175
4,409
4,678
4,974
5,248
5,516
% Change
4.2
7.4
5.0
7.7
5.7
5.6
6.1
6.3
5.5
5.1
5.7
Recorded Music
860
839
820
814
752
729
736
751
770
791
% Change
–8.3
–2.4
–2.3
–0.7
–7.6
–3.1
1.0
2.0
2.5
2.7
1.0
1,193
1,280
1,333
1,457
1,600
1,784
2,007
2,289
2,544
2,781
1.8
7.3
4.1
9.3
9.8
11.5
12.5
14.1
11.1
9.3
11.7
1,377
1,525
1,824
2,192
2,547
2,947
3,328
3,703
4,098
4,520
% Change
17.5
10.7
19.6
20.2
16.2
15.7
12.9
11.3
10.7
10.3
12.2
Video Games
518
593
678
744
872
1,034
1,161
1,250
1,310
1,368
% Change
23.3
14.5
14.3
9.7
17.2
18.6
12.3
7.7
4.8
4.4
9.4
4,182
4,204
4,327
4,490
4,694
4,914
5,139
5,359
5,579
5,799
Radio/Out-of-Home Advertising % Change Internet Advertising and Access Spending
Business Information % Change Magazine Publishing % Change Newspaper Publishing % Change Book Publishing
0.0
0.5
2.9
3.8
4.5
4.7
4.6
4.3
4.1
3.9
4.3
1,294
1,316
1,339
1,361
1,387
1,415
1,442
1,467
1,491
1,516
–2.2
1.7
1.7
1.6
1.9
2.0
1.9
1.7
1.6
1.7
1.8
2,841
2,883
2,996
3,027
3,078
3,118
3,154
3,186
3,210
3,230
0.4
1.5
3.9
1.0
1.7
1.3
1.2
1.0
0.8
0.6
1.0
1,658
1,665
1,693
1,770
1,815
1,914
1,971
2,057
2,137
2,210
% Change
0.2
0.4
1.7
4.5
2.5
5.5
3.0
4.4
3.9
3.4
4.0
Theme Parks and Amusement Parks
379
382
429
440
456
469
488
507
527
542
% Change
4.1
0.8
12.3
2.6
3.6
2.9
4.1
3.9
3.9
2.8
3.5
2,842
3,155
3,405
3,784
4,010
4,473
4,966
5,297
5,583
5,869
7.7
11.0
7.9
11.1
6.0
11.5
11.0
6.7
5.4
5.1
7.9
Sports
827
842
879
406
947
946
1,056
1,079
1,208
1,159
% Change
–3.6
1.8
4.4
–53.8
133.3
–0.1
11.6
2.2
12.0
–4.1
4.1
28,343
30,237
32,333
33,468
35,697
37,834
40,239
42,475
44,722
46,800
6.7
6.7
6.9
3.5
6.7
6.0
6.4
5.6
5.3
4.6
5.6
Casino and Other Regulated Gaming % Change
Total % Change
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Advertising Advertising rose 7.2 percent in 2006, its largest increase during the past five years. Internet advertising rose 42.6 percent; high-single-digit increases were generated in out-of-home and radio; and TV networks rose 6.0 percent. Magazines rose 3.8 percent, TV distribution increased 2.8 percent, and newspapers were the slowest-growing category, at 2.1 percent.
PricewaterhouseCoopers 80 | Global Entertainment and Media Outlook: 2007–2011
We expect the Internet to continue to be the fastest-growing category, at 23.5 percent—driven by broadband penetration—followed by out-of-home at 8.7 percent. Radio will grow at a 6.5 percent annual rate, TV networks will expand by 4.0 percent compounded annually, magazines will increase at a 3.1 percent annual rate, and newspapers and TV distribution will each grow by less than 3 percent annually. For the advertising market as a whole, spending will climb at a 6.0 percent compound annual rate, rising to $11 billion in 2011 from $8 billion in 2006.
Advertising by Segment (US$ Millions) 2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
1,930
2,135
2,258
2,300
2,437
2,507
2,622
2,723
2,843
2,971
% Change
3.5
10.6
5.8
1.9
6.0
2.9
4.6
3.9
4.4
4.5
4.0
TV Distribution
356
358
354
356
366
366
375
383
397
410
% Change
–7.8
0.6
–1.1
0.6
2.8
0.0
2.5
2.1
3.7
3.3
2.3
Radio
952
1,030
1,066
1,154
1,247
1,344
1,436
1,529
1,618
1,705
% Change
3.0
8.2
3.5
8.3
8.1
7.8
6.8
6.5
5.8
5.4
6.5
Out-of-Home
241
250
267
303
331
361
397
432
467
502
% Change
–2.8
3.7
6.8
13.5
9.2
9.1
10.0
8.8
8.1
7.5
8.7
Internet
155
209
321
495
706
969
1,234
1,498
1,763
2,027
% Change
82.4
34.8
53.6
54.2
42.6
37.3
27.3
21.4
17.7
15.0
23.5
Magazines
699
732
766
784
814
842
869
895
921
948
% Change
–2.8
4.7
4.6
2.3
3.8
3.4
3.2
3.0
2.9
2.9
3.1
2,213
2,228
2,300
2,344
2,393
2,432
2,468
2,500
2,525
2,547
0.4
0.7
3.2
1.9
2.1
1.6
1.5
1.3
1.0
0.9
1.3
6,546
6,942
7,332
7,736
8,294
8,821
9,401
9,960
10,534
11,110
1.8
6.0
5.6
5.5
7.2
6.4
6.6
5.9
5.8
5.5
6.0
Canada TV Networks: Broadcast and Cable
Newspapers % Change Total % Change
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Consumer/end-user spending Consumer/end-user spending rose 6.5 percent in 2006. Sports jumped 133.3 percent with the return of the NHL, and video games rose 17.2 percent as games associated with the new consoles boosted spending. Internet access, TV distribution, and casino and other regulated gaming were the only other segments to grow by more than 5 percent in 2006. Rising broadband penetration boosted Internet access spending, videoon-demand drove TV distribution, and growth in sports betting and online gaming spurred casino and other regulated gaming. Satellite radio subscriptions—a new market in Canada that will reach $574 million in 2011—will be the only category to grow at double-digit rates. We expect increases of greater than 5 percent annually in video games, casino and other regulated gaming, Internet access spending, TV distribution, and TV networks. Video games associated with next-generation consoles and large increases in online and wireless games will fuel video game growth by 9.4 percent compounded annually. Casino upgrades and growth in sports and online betting will enhance the casino and other regulated gaming market, which we project will increase by 7.9 percent compounded annually. Internet access spending will rise at a 6.3 percent annual rate, and TV distribution by 6.0 percent compounded annually. The continued shift from dial-up to broadband will drive Internet access spending, and video-on-demand will boost TV distribution. TV subscription penetration growth will also boost specialty channel license fees, which will lead to a 5.3 percent compound annual
Global Entertainment and Media Market by Region Canada | 81
increase for TV networks. No other segment will exceed 5 percent growth. Overall consumer/end-user spending will increase from $27 billion in 2006 to $36 billion in 2011, growing at a 5.4 percent compound annual rate.
Consumer/End-User Spending by Segment (US$ Millions) Canada Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change TV Distribution
2002
2003
2004
2005
2006p
2007
2008
2009
2010
2011
2007–11 CAGR
4,160
4,825
5,519
5,507
5,645
5,826
6,068
6,326
6,587
6,867
33.3
16.0
14.4
–0.2
2.5
3.2
4.2
4.3
4.1
4.3
4.0
1,028
1,099
1,164
1,225
1,282
1,349
1,423
1,507
1,587
1,661
14.1
6.9
5.9
5.2
4.7
5.2
5.5
5.9
5.3
4.7
5.3
2,898
3,136
3,315
3,595
3,809
4,043
4,303
4,591
4,851
5,106
% Change
5.8
8.2
5.7
8.4
6.0
6.1
6.4
6.7
5.7
5.3
6.0
Radio
—
—
—
—
22
79
174
328
459
574
% Change
—
—
—
—
—
259.1
120.3
88.5
39.9
25.1
92.0
Recorded Music
860
839
820
814
752
729
736
751
770
791
% Change
–8.3
–2.4
–2.3
–0.7
–7.6
–3.1
1.0
2.0
2.5
2.7
1.0
1,222
1,316
1,503
1,697
1,841
1,978
2,094
2,205
2,335
2,493
12.4
7.7
14.2
12.9
8.5
7.4
5.9
5.3
5.9
6.8
6.3
Internet Access % Change Video Games
518
593
678
744
872
1,034
1,161
1,250
1,310
1,368
% Change
23.3
14.5
14.3
9.7
17.2
18.6
12.3
7.7
4.8
4.4
9.4
4,182
4,204
4,327
4,490
4,694
4,914
5,139
5,359
5,579
5,799
0.0
0.5
2.9
3.8
4.5
4.7
4.6
4.3
4.1
3.9
4.3
Business Information % Change Magazines
595
584
573
577
573
573
573
572
570
568
% Change
–1.5
–1.8
–1.9
0.7
–0.7
0.0
0.0
–0.2
–0.3
–0.4
–0.2
Newspapers
628
655
696
683
685
686
686
686
685
683
% Change
0.5
4.3
6.3
–1.9
0.3
0.1
0.0
0.0
–0.1
–0.3
–0.1
Books
1,658
1,665
1,693
1,770
1,815
1,914
1,971
2,057
2,137
2,210
% Change
0.2
0.4
1.7
4.5
2.5
5.5
3.0
4.4
3.9
3.4
4.0
Theme Parks and Amusement Parks
379
382
429
440
456
469
488
507
527
542
% Change
4.1
0.8
12.3
2.6
3.6
2.9
4.1
3.9
3.9
2.8
3.5
2,842
3,155
3,405
3,784
4,010
4,473
4,966
5,297
5,583
5,869
7.7
11.0
7.9
11.1
6.0
11.5
11.0
6.7
5.4
5.1
7.9
Sports
827
842
879
406
947
946
1,056
1,079
1,208
1,159
% Change
–3.6
1.8
4.4
–53.8
133.3
–0.1
11.6
2.2
12.0
–4.1
4.1
21,797
23,295
25,001
25,732
27,403
29,013
30,838
32,515
34,188
35,690
8.3
6.9
7.3
2.9
6.5
5.9
6.3
5.4
5.1
4.4
5.4
Casino and Other Regulated Gaming % Change
Total % Change
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Full discussions of the trends and drivers discussed here in the Global Overview are provided in the full edition of PricewaterhouseCoopers’ Global Entertainment and Media Outlook: 2007–2011 covering the United States, EMEA, Asia Pacific, Latin America, and Canada. Containing numerous tables and charts with summary data broken out into subcomponents, the full Outlook provides a more detailed and more granular depiction of the industry. The tables and charts accompany in-depth forecasts and analyses for each of the 14 industry segments organized into 14 separate chapters. The full Outlook is available in a single volume, and individual chapters can also be acquired separately at www.pwc.com/outlook.
PricewaterhouseCoopers 82 | Global Entertainment and Media Outlook: 2007–2011
Global Entertainment and Media Outlook: 2007–2011, Global Overview
Global Recorded Music Physical Distribution Market................................................ 35 Global Radio/Out-of-Home Advertising Market.... 35 Global Radio Market............................................. 36
Summary of Tables and Charts
Global Out-of-Home Advertising Market.............. 36
Regions/Countries Covered.................................... 9
Global Internet Advertising and Access Market.... 37
Exchange Rates per US$...................................... 10
Global Internet Advertising Market........................ 37
Global Entertainment and Media Market by Segment........................................................... 12
Global Internet Access Market.............................. 38
Global Entertainment and Media Market by Region.............................................................. 13
Global Business Information Market..................... 39
Global Video Game Market................................... 38
Global Advertising................................................. 14
Global Magazine Publishing Market...................... 40
Global Consumer/End-User Spending.................. 16
Global Newspaper Publishing Market................... 41
Global Spending Added Annually by Category..... 17
Global Book Publishing Market............................. 42
Revenues Subject to Digital Competition............. 18
Global Theme Parks and Amusement Parks Market..................................... 43
Revenues Not Subject to Digital Competition....... 19 Nominal GDP Growth in BRIC............................... 21
Global Casino and Other Regulated Gaming Market...................................................... 44
E&M Market in BRIC............................................. 21
Global Sports Market............................................ 45
Convergent Platform Market................................. 24
United States
Other Entertainment and Media Platforms . ......... 24
Entertainment and Media Market by Segment..... 47
E&M Spending by Platform................................... 25
Advertising by Segment........................................ 49
Broadband Households........................................ 25
Consumer/End-User Spending by Segment......... 51
Wireless Subscribers............................................. 26
EMEA
Digital/Mobile Revenues........................................ 27
Entertainment and Media Market by Segment..... 53
Nominal GDP Growth by Region........................... 28
Entertainment and Media Market by Country....... 54
Nominal GDP Growth by Country in EMEA.......... 29
Entertainment and Media Market Growth by Country............................................................. 55
Nominal GDP Growth by Country in Asia Pacific........................................................ 30
Advertising by Segment........................................ 56
Nominal GDP Growth by Country in Latin America..................................................... 30
Advertising by Country.......................................... 57
Global Filmed Entertainment Market..................... 31
Consumer/End-User Spending by Segment......... 60
Global Television Network Market......................... 32
Consumer/End-User Spending by Country.......... 61
Global TV Distribution Market............................... 33
Consumer/End-User Market Growth by Country............................................................. 62
Global Recorded Music Market............................ 34 Global Recorded Music Digital Distribution Market................................................ 34
Advertising Growth by Country............................. 58
Asia Pacific Entertainment and Media Market by Segment..... 64
Index – Summary of Tables and Charts | 83
Entertainment and Media Market by Country....... 65 Entertainment and Media Market Growth by Country............................................................. 66
Entertainment and Media Market Growth by Country............................................................. 74 Advertising by Segment........................................ 75
Advertising by Segment........................................ 67
Advertising by Country.......................................... 75
Advertising by Country.......................................... 68
Advertising Growth by Country............................. 76
Advertising Growth by Country............................. 68
Consumer/End-User Spending by Segment......... 77
Consumer/End-User Spending by Segment......... 70
Consumer/End-User Spending by Country.......... 78
Consumer/End-User Spending by Country.......... 71
Consumer/End-User Market Growth by Country............................................................. 78
Consumer/End-User Spending Market Growth by Country................................................ 71
Canada
Latin America
Entertainment and Media Market by Segment..... 80
Entertainment and Media Market by Segment..... 73
Advertising by Segment........................................ 81
Entertainment and Media Market by Country....... 74
Consumer/End-User Spending by Segment......... 82
PricewaterhouseCoopers 84 | Global Entertainment and Media Outlook: 2007–2011
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