Canadian entertainment and media revenues are projected to rise at a compound annual growth rate (CAGR) of 5% over the next five years, according to the latest version of PwC’s Global Entertainment and Media Outlook.
The report, which covers 2015 to 2019, says the Canadian increase is in line with the global average, which is predicted to rise 5.1% during the same period. Canadian media and entertainment revenues are expected to reach $61.2 billion by 2019, up from $47.9 billion in 2014.
Growth is expected to vary widely on a market-by-market basis: Japan, for example, will see the slowest growth at a CAGR of 0.9%, while Nigeria will grow fastest at 15.1%.
The report predicts Canadian advertising revenues to grow at a CAGR of 3.6% compared to 4.7% globally, with the report calling for “digital growth and non-digital resilience.”
While global digital advertising is expected to rise at a CAGR of 12.2%, digital growth in Canada will be slightly slower (10.7%); non-digital advertising will grow at a mere 0.6% over the forecast period, but will still account for 55% of the total Canadian ad spend in 2019.
The report says there is a “clear move” towards digital, underlined by internet advertising’s position as the fastest-growing segment. The report says internet spending is poised to surpass TV globally by 2019, with rapid rises in both mobile and video internet the primary drivers.
Other trends poised to reshape the global advertising landscape include the rapid expansion of over-the-top video services, which are familiarizing consumers with an ad-free viewing experience and supporting the shift from ad-supported to subscription-based consumption.
The latter is expected to result in Canadian subscription TV penetration falling to 79.2% in 2019, from 80.1% in 2012. It will also play a key role in restricting broadcast TV advertising revenue to a CAGR of just 1.9% in Canada.
The report also identifies digital out-of-home as a high-growth area, with revenues projected to rise at a 10.9% CAGR over the forecast period. Digital is expected to account for 45.6% of total Canadian out-of-home revenue by 2019, with major cities the most lucrative markets.
Across all segments and territories, global advertising revenues – rising at 4.7% – will outpace consumer spending (2.9%), which the report says means the prospect of a global entertainment and media industry that is “increasingly dependent” on ad revenues.
The gap between advertising and consumer spending is narrower in mature markets and wider in growth markets. While consumer and advertising revenues in the U.S., for example, will grow at 2.9% and 3.5% respectively, they will grow at 5.2% and 12.9% in Indonesia. “The industry globally will need to keep a close eye on this divergence in its revenue streams,” the report concludes.
Consumers increasingly live in a world where they regard the distinction between digital and non-digital as irrelevant, and are migrating to offerings combining relevance and convenience – such as attractive content, easy discovery and a social community – with an inspiring, personalized experience.
“Instead of favouring one or the other, they’ve taken on board the proliferation of content and access options enabled by digital, and are exploiting it to seek more flexibility, freedom and choice in what, when and how they consume,” says the report.
In a rare bit of positive news for the newspaper industry, the report also notes that circulation continues to evolve and grow, driven partly by an increased number of free publications, expanded digital offerings and per-copy price increases. Newspaper circulation revenue increased 1.2% to $875 million in 2014, with the report projecting continued growth in the coming years.
Lisa Coulman, partner, audit and assurance for PwC, says media companies must place an emphasis on the user experience and deliver local relevant content as opposed to adopting a global “one-size-fits-all” approach.
She identifies three “actions for success” in the evolving industry: A focus on innovation for the user experience; facilitating consumer relationships across distribution channels, and an increased focus on mobile in keeping with consumer migration to that channel.
