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Asia Pacific will remain the fastest-growing region during the
next five years, led by powerful growth in China, which is on track
to overtake Japan as the region's biggest market by 2008. Spending
growth in China will be the highest in the world, at a 14.2 per
cent CAGR excluding Internet access spending, and 25.2 per cent
after accounting for the explosion in Internet access spending.
The growth in the region will be led by double-digit increases in
the Internet, video games, casino gaming, TV distribution and recorded
music segments.
"Rapid economic growth and a continually improving regulatory
environment, which is facilitating greater investment in China,
will drive spending and accelerate regional growth during the next
five years. These factors and the aggressive roll out of broadband
infrastructure will enable the country to generate the most significant
increase in media penetration beyond any other region. The only
cloud on the horizon is the on-going threat of piracy, which continues
to hinder growth throughout Asia/Pacific, where efforts to stem
the tide have had only limited success," said PricewaterhouseCoopers'
Entertainment & Media Practice Asia Pacific leader Marcel Fenez.
Key drivers of global entertainment and media industry
A favorable economic environment and new spending streams will offset
declining categories. Broadband Internet will be the major growth
catalyst across all regions, boosting overall Internet access spending
and creating new opportunities for online advertising and making
it easier to conduct online transactions. In addition, entertainment
companies are increasingly licensing a greater amount of content
to digital distribution services, which will help to alleviate the
negative impact of piracy.
Online and wireless games are the fastest-growing components of
the video game market, and online film rental subscriptions will
boost the home video rental market. Electronic books represent a
small but expanding area that will bolster the professional and
college book markets and provide new distribution opportunities
for consumer books. Video-on-demand (VOD) and satellite radio are
emerging new spending streams contributing to growth.
Global advertising upswing
Global advertising spending will increase at a robust 5.9 per cent
CAGR during the 2005-2009 period, rising to $477 billion in 2009
from $358 billion in 2004. Television advertising is projected to
expand at a 6.4 per cent CAGR during this period, boosted by new
channels and an expanding multi-channel household universe. Television
remains the largest advertising medium, rising to $186 billion in
2009.
Internet advertising is the fastest-growing advertising medium
with a projected 15.8 percent compound annual increase to $32 billion
globally in 2009.
Growth by region
The US remains the largest entertainment and media market but is
projected to be the slowest-growing region at a 5.6 per cent CAGR,
reaching $690 billion in 2009. While US economic conditions will
generally remain favorable, rising interest rates and higher energy
costs will lead to slightly more moderate growth rates during the
next five years. After several years of sluggish growth, the EMEA
region will recover, growing at a 6.5 per cent CAGR to reach $572
billion in 2009.
"We're forecasting healthy growth in EMEA with double-digit
increases in video games, including console games, handheld games,
PC games, online games, and wireless games, as well as Internet
advertising and access spending, and TV distribution," said
PricewaterhouseCoopers' Entertainment & Media Practice European
leader John Middelweerd.
"Recorded music, one of the slowest-growing segments over
the past few years, will experience an enormous turnaround to become
one of the fastest-growing segments in EMEA during the next five
years, as spending on mobile music and legal digital distribution
services take off," he added.
Asia Pacific will remain the world's third-largest region. It is
projected to average 11.6 per cent CAGR increasing to $432 billion
in 2009. Latin America's entertainment and media market is projected
to rise at an 8.2 per cent CAGR to $47 billion in 2009. Canada is
projected to expand at a 6 per cent CAGR to $37 billion in 2009,
fueled by double-digit increases in video games and the Internet.
Key findings by segment
Television Networks (Broadcast and Cable): Digital television
will add to the number of outlets and fuel multi-channel advertising,
which will be the principal driver. Public TV license fees in EMEA
and Asia/Pacific will continue to be slow-growing components of
the market. Spending will increase at a 6 per cent CAGR annually
to $204 billion in 2009 from $152 billion in 2004.
Television Distribution (Station, Cable and DBS): Subscription
TV household growth will drive spending in Asia/Pacific, Latin America,
and EMEA, while saturated markets will dampen growth in the United
States and Canada. VOD and pay-per-view will contribute to growth
in the US, EMEA and Canada, but piracy will remain a problem, particularly
in Asia/Pacific and Latin America. The market will reach $210 billion
in 2009 from $146 billion in 2004, a 7.4 per cent compound annual
increase.
Recorded Music: In 2004, the recorded music market finally reversed
course and grew by 5.7 per cent to $38 billion. Ring tone spending
and an expanding digital distribution market are the biggest growth
drivers. Globally, recorded music spending will rise at an 8.3 per
cent CAGR to $56 billion in 2009. Spending in the US will rise to
$18.8 billion in 2009, an 8 per cent CAGR.
Filmed Entertainment: Rising DVD household penetration and DVD
sell-through will continue to drive home video spending, but generally
at the expense of in-store rentals. An emerging online film rental
subscription market will buttress rental spending, but continued
piracy will cut growth, particularly in Asia/Pacific and Latin America.
Box office in EMEA, Asia/Pacific, and Latin America will benefit
from modernised theaters and more screens. Nevertheless, as the
DVD hardware market begins to approach maturity, growth will moderate.
Spending will increase at a 7.1 per cent CAGR, rising to $119 billion
in 2009.
Internet Access and Advertising: Broadband will be the principal
driver of access spending during the next five years and will surpass
the dial-up market. There is still huge potential for subscriber
growth in Asia/Pacific, where access spending is expected to more
than triple. In the US, EMEA and Canada, however, penetration is
approaching saturation, and access spending will slow.
Internet advertising will grow rapidly, fueled by an expanding
broadband subscriber base and ad formats geared to broadband, such
as keyword search and full-motion video. Spending is expected to
more than double during the next five years, increasing to $289
billion in 2009, growing at a 16.9 per cent compound annual rate.
Video Games: After a drop to single-digit growth in 2005 as the
current generation of consoles enters its last year, growth will
ramp up in 2006 as the next generation of console hardware is introduced,
leading to a new round of console game software spending. Online
and wireless will become important distribution channels for video
games, helped by growing broadband penetration and new mobile phones
that will be used as much for entertainment as for communication.
Overall, the video game market will expand at a 16.5 per cent CAGR
to $55 billion in 2009 driven by growth in Asia/Pacific, the largest
market.
The Outlook also includes in-depth global analysis and five-year
market forecasts for eight other industry segments, including: radio
and out-of-home advertising, business information, magazine publishing,
newspaper publishing, book publishing, theme parks and amusement
parks, casino gaming (included for the first time, covering gross
gaming revenues generated on-site at casinos), and sports.
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