China entertainment market to grow to $96b in 2015 (PWC)

15 June 2011 9 h 42 min 31 comments

China is expected to overtake Germany this year to become the world’s third-largest entertainment and media market with spending hitting $96 billion, according to a report published by PricewaterhouseCoopers (PwC) on Tuesday 13 June.

According to China Daily, The country’s overall spend on entertainment and media grew by 13.9 percent to $85.5 billion in 2010. The sector will continue strong growth over the next five years, said the report.

With a projected 11.6 percent compound annual increase, spending is likely to reach $148 billion by 2015, it said.

Wu Binghui, a Beijing-based partner at PwC, said that “China’s overall entertainment and media market is experiencing a shift to digital platforms facilitated by an explosion in broadband households and mobile access.” “We forecast that 26.3 percent of total entertainment and media spending in China will be digital in nature by 2015,” he said.

5.7% annual worldwide growth

According to the report, PwC forecasts that aggregate entertainment and media worldwide spending will grow at a 5.7 percent compound annual rate, from $1.4 trillion in 2010 to $1.9 trillion in 2015. industry revenues jumped 4.6% in 2010, to $1.4tr.

. Income levels in Asia Pacific should hit $541bn from a starting point of $395bn, not least thanks to China, where the segment is likely to grow by a CAGR of 11.6%.

. Latin America will enjoy the most rapid acceleration across this timeframe, as revenues increase from $66bn to $109bn (a 10.5% uptick per year). Brazil, boasting a CAGR of 11.4%, will be the region’s fastest-growing nation.

. EMEA (Europe, the Middle East and Africa) are pegged to deliver $614bn in 2015, measured against $477bn in 2010,

. totals standing at $607bn and $481bn for North America.

Worldwide growth between 2010 and 2015 (in US$ bn)

EMEA                               477              614            +28,72%

North America            481               607           +26,2%

Asia pacific                    395               541           +36,96%

Latin America                 66               109           +65,15%

World                             1 400          1 900          +35,71%

In EMEA, E&M spending is forecast to rise to $614 billion in 2015, a 5.2 percent CAGR. In EMEA, Germany is the largest E&M market, followed by the U.K. and France. The fastest-growing market is the Middle East/North Africa, with a 13.1 percent CAGR, as compared with 10.1 percent for CEE and 3.8 percent for Western Europe.

In the Asia Pacific, a 6.5 percent CAGR is predicted for the E&M segment, which is expected to reach $539 billion in 2015. Japan remains the dominant market, followed by China, South Korea, Australia, India and Indonesia.

Global segment spending to 2015

As one of the most important spending streams, advertising is projected to reach $578 billion in 2015 from $442 billion last year, said the report. PWC forecasts segment spending as following : 

• Video-on-demand spending will pass pay-per-view in 2011 and reach $4.7 billion in 2015, a 9.8 percent compound annual increase from $2.9 billion in 2010.
• Mobile advertising spending in EMEA in 2015 is predicted to grow at 33.2% CAGR, to $2 billion, putting EMEA on a par with North America, but behind Asia Pacific which will still lead with $4.5 billion.
• Recorded music is the only segment where consumer/end-user spending will be lower in 2015 than in 2010, declining at 1.1 per cent CAGR to $22 billion. Global recorded music revenues are not expected to show growth again until 2014, the year when spending on digital music will overtake physical spending.
• The People’s Republic of China and Russia each posted enormous gains in 2010 in filmed entertainment box office spending, which rose by 63.9 percent in the PRC and 49.5 percent in Russia, driven by new multiplexes and 3-D screens.
• Newspaper publishing revenues will continue to see strong growth in some countries. For example, Asia Pacific’s fastest-growing newspaper markets will be Indonesia, at a CAGR of 9.9 percent, and India, at 9.4 percent compounded annually.

Digital media world

By medium, digital spending rose 12.9% worldwide in 2010, beating the 2% lift registered by all other sectors. It could accrue an average 11.5% in incremental returns per year to 2015, as traditional alternatives see a more modest 3.3% gain.

As such, digital will generate 59% of entertainment and media growth in the next five years, during which time its share of revenues is due to climb from 26% to 33.9%. Digital took 15.9% of advertising outlay in 2010, and is predicted to be responsible for 22.5% in 2015.

Mobile broadband may encourage these processes, as the number of users more than doubles in Asia Pacific and Europe, the Middle East and Africa, triples in North America, and rises 400% in Latin America.

The web will post the strongest growth of any medium, becoming the second-largest global outlet, behind TV, in 2012, after overtaking newspapers.

“This is a golden age for consumers, who have never had it so good when it comes to accessing premium content (often free) over multiple devices. The bottom line is that in order to continue to create quality content, someone has to pay”, Marcel Fenez, PwC’s global leader for E&M practice, said.

TV will keep the throne

PwC expects television to corner 40 per cent of total ad spend globally by 2015, larger than its current 38 per cent share last year.

In Asia alone, television advertising should grow by an annual 8.3 per cent on the average in the next five years, to S$75.8 billion by 2015. That still beats the expected S$43.8 billion of ad spending via the internet. Experts said television should be able to adapt to the digital evolution where consumers have wider options for accessing information.

Advertising in Asian newspapers, as well as consumer and trade magazines, will grow by the low single digits at an annual average of 3.9 per cent, 2.8 per cent, and 2.4 per cent respectively. Radio ads are forecast to rise by six per cent annually through 2015.

Greg Unsworth, Singapore Entertainment and Media Leader with PwC, said to ChannelNewsAsia: “What we’re seeing now more than ever before is the ability of the consumer to access premium content on different platforms and also at a very favourable price point or in some cases, free as well, built into subscription. So we’re seeing consumers now with a wealth of choice in terms of entertainment media content that is available and the modes with which they can access and use that content. That should continue to evolve.”

PWC report website

SOURCES: PWC (14/06/2011), ChannelNewsAsia, China daily, (15/06/2011)

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