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Report: Entertainment and media companies must look to consumer value to drive growth

PwC’s 18th annual Australian Entertainment & Media Outlook analyses trends and consumer and advertising spend

A new report is urging entertainment and media companies to reinvent traditional platforms, and be fundamentally driven by what value they can offer consumers in order to achieve growth in the coming five years.

According to the latest PwC Australia report, Australian media companies must develop innovative strategies to increase their share of consumer attention and spend.

The consulting group's 18th annual Australian Entertainment & Media Outlook analyses trends and consumer and advertising spend across 12 segments and shows spending is expected to rise at a compound annual growth rate (CAGR) of 4.2 per cent over the next five years, up from three per cent in 2018, with players increasingly breaking away from legacy models.

Advertising spending is set to reach $23 billion by 2023, at a steady compound annual growth rate of 7.8 per cent. Internet advertising and subscription TV continue to capture an increasing share of ad spend from free-to-air (FTA) television, newspapers and consumer magazines in particular. The interactive games market is set to be the fastest growing segment in consumer spending, forecast to rise at a CAGR of 15.6 per cent to $7.1 billion, up from 8.5 per cent in 2018. 

PwC Australia partner and Entertainment and Media Outlook editor, Justin Papps, said across the 12 segments forecast in the Outlook all players have an urgent focus on implementing the organisational transformation necessary to deliver growth.

 “In Australia, we’re actually seeing a move beyond some of the tired dichotomies that have dominated industry discussion about disruption so far. The Global Outlook results drive home the importance of legacy reinvention away from models defined by platform, and with greater emphasis on the fundamental value the organisation can deliver to consumers,” Papps said.

“Fragmentation of audiences is driving a ‘race for reach’, with consumers spending more of their time across multiple platforms, events, and devices. Plus, consolidation is driven by media owners’ sprinting to meet marketers’ demands by acquiring mass-reaching assets.”

These findings are supported by a recent Zenith report, which found consumers will spend 800 hours using mobile internet devices this year.

The Zenith Media Consumption Forecasts report also found by 2021 the total will rise to 930 hours, or 39 full days.

Across the 57 countries surveyed, people will spend a collective 3.8 trillion hours using the mobile Internet this year, rising to 4.5 trillion hours in 2021. Since 2015, the average amount of time people around the world spend accessing the mobile internet has risen from 80 to 130 minutes a day, at an average rate of 13 per cent a year, spurred on by the availability of affordable smartphones, faster connections, better screens and app innovation.

Television remains the biggest medium globally, attracting 167 minutes of viewing each day in 2019. Television viewing is predicted to fall slowly to 165 minutes a day in 2021. Television will remain the world’s favourite medium, accounting for 33 per cent of all media consumption in 2021, down from 35 per cent in 2019.

Between 2014 and 2019, the average amount of time spent reading newspapers has fallen from 17 minutes a day to 11, while time spent reading magazines has fallen from 8 to 4, and time spent watching television has fallen from 171 to 167.

“To combat these forces, entertainment and media organisations are increasingly breaking away from legacy models defined by platform. In radio, for example, new opportunities for growth in podcasts are being further developed. Free-to-air television is likewise seeing increasing returns from video-on-demand platforms, where programming is moving beyond catch-up and into back-catalogue viewing,” Papps said.

“Entertainment and media organisations that make the critical link between growth in their share of the marginal minute of consumer attention and their revenue growth will be the ones to succeed in the search for growth.”

Advertising revenue in advertising supported video-on-demand and, in particular, broadcaster video-on-demand (BVOD) is expected to grow strongly over the next five years.  This will be driven by greater penetration of smart televisions with OTT television capability embedded, as well as other internet enabled hardware devices.

“Three strategic takeouts for growth driven by audio in the world of ‘me media’ are: compete on content, know your audience and align curation to mood or genre.  In contrast, video streaming businesses should focus on finding their niche, building a strong content pipeline, quality control and balancing acquired and commissioned content,” Papps said.

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