Millennials, data, and technology shape Canada's entertainment and media future
Demand from young consumers is opening up fresh areas of opportunity for incumbents and new entrants alike
TORONTO(20 Jun 2016)
Canadian entertainment and media revenues will rise at a compound annual growth rate (CAGR) of 3.5% in nominal terms over the coming five years, from US$43.8 billion in 2015 toUS$50.0 billion in 2020, according to PwC's Global entertainment and media outlook 2016–2020.
This growth rate represents a slowdown from last year's 5.0% growth in industry revenues, and will lag behind overall global economic growth during the next five years. But a closer examination brings a different picture into focus. Internet advertising, mobile technology adoption, and Over-the-Top (OTT) streaming top the list with steady and sustainable growth. Drastic slowdowns in some areas such as newspaper publishing and stagnation in others such as cinema coexist with exponential expansion creating a multi-shifting and multi-platform Canadian media landscape.
Overall, what emerges from the report is media companies that combine technology with industry-assets like relationship management, customer insights, and data collected through various platforms will thrive. Millennials, a demographic that adopts and multitasks using new technology quicker than any other age group, will inform the type of content produced for audiences. According to the global report, the strong correlation between the size of a country's under-35 population and its growth in entertainment and media spending confirms that younger consumers are now the primary drivers of global growth in the sector.
"Millennials want the best content delivered to them in the easiest way possible whether it be on their phone, computer, or streaming service. Media companies need to be agile and tailor their offerings to meet the rapidly evolving demands," says Anita McOuat, Partner, Entertainment and Media, PwC Canada. "While media companies still need to produce appealing and innovative content, they also need to focus on how millennials will interact with it, creating data that can be used to shape the creation of yet more content."
OTT streaming will continue to shape the Canadian TV viewing landscape with a CAGR of 10.3% to 2020. "Canadians now have access to multiple OTT or TV on demand services, each with their own exclusive content, and the same can be said of the various music streaming services. It can be difficult to get all your favourite content in one place," adds McOuat. "There is an opportunity for technology firms to create a one-stop-shop by aggregating all content, making it easier and more flexible for Canadians."
Several other trends will continue to reshape the Canadian media landscape including Internet Advertising where revenues will rise at a CAGR of 9.8% to 2020. Music will see a similar trend as in past years where music streaming will rise at a CAGR of 27.3% by 2020 but music downloads will see a decline of 10.0% by the same year.
Globally, revenue across entertainment and media is steadily shifting from publishing businesses to video and Internet businesses—in particular those that provide OTT services and monetise consumer data. Direct consumer spending models will remain strong, while spending on Internet access, including mobile data, will rival advertising. This development creates more fertile ground for new entrants and traditional players alike to jump directly into new markets and segments, like OTT video and new e-commerce offerings.
Five key shifts emerge amid the continuing disruption
The global report identifies key shifts occurring in each of the five dimensions of the entertainment and media landscape: demography, competition, consumption, geography, and business models.
Shift 1. Demography: Youth will be served
Entertainment and media revenue growth in the world's 10 youngest and 10 oldest markets in demographic terms reveals that, on average, entertainment and media spending in the 10 youngest markets is growing three times as rapidly as in the 10 oldest markets.
Shift 2. Competition: Content is still king
The reality is that content is being redefined by forces of globalisation and localisation simultaneously—and that while much of the industry is growing more global, content tastes and cultures remain steadfastly local.
Shift 3. Consumption: The joy of bundles
The bulk of digital OTT mass-market services will gradually be reabsorbed into aggregated offerings that will echo the traditional analogue-style bundle, but that will be more flexibly priced and available on a full range of devices.
Shift 4. Geography: Growth Markets
The dynamics are shifting rapidly as disruption pushes markets to develop in different ways, meaning "opportunity" economies—even within the same region—can display significantly varied growth patterns.
Shift 5. Business models: Transforming with trust
This underlines how the growth of technology and digitisation is acting as a centripetal force—breaking up existing relationships; pushing large, generalist entities to give way to smaller specialists; and allowing smaller, nimble competitors to beat out incumbents.
To visit more insights about the report, please visit www.pwc.com/outlook.
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