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Report: Streaming and Download Spending Will Top Box Office By 2017

PwC's latest annual study predicts a rosy near future for several segments of the biz including filmed entertainment. Deadline's David Lieberman reports.

PwC_Logo_colour_RGB__130423210335-200x156PwC‘s latest five-year financial forecast for the entertainment industry is both optimistic — and a bit of a head-scratcher. The research and advisory firm estimates that total spending for entertainment and media in the U.S. will hit $723.7B in 2018, up 26.3% from last year. And U.S. filmed entertainment will hold its own, increasing an average of 4.7% a year to $39.2B in 2018. Box office will grow 3.1% a year to $12.5B and will exceed physical home video sales next year. Electronic home video (including subscription VOD services like Netflix) will grow 18.3% a year to $17B. That means streaming and downloads will surpass physical home video in 2016 — and in 2017 will account for 43% of domestic industry revenues, exceeding box office. Home video streaming will be the fastest-growing consumer sub-segment in entertainment, growing 24.8% a year to $10.1B in 2018.

Is PwC more upbeat than it was last year? That’s hard to say because the researcher makes it impossible to compare forecasts. Its total industry revenue estimate for 2017 (at $689.4B) is more than 9% higher than the firm forecast last year (at $632.1B). But the new report shows entirely different historical figures for several businesses including book and magazine publishing, Internet access outlays and TV subscriptions and license fees. In cases where the historical numbers are consistent with last year, what stands out is the big drop in PwC’s forecast for Internet advertising: It now expects $61.5B in 2017, down 11.4% from last year’s prediction of $69.4B.

For the most part PwC’s latest forecast sees virtually no losers among traditional and new media, except for newspapers. TV advertising will rise 4.9% per year to $83.6B. TV subscriptions and license fees will grow 1.3% a year to $102.8B. The biggest winners are Internet access spending (+11.4% a year to $174.7B in 2018), Internet advertising (+9% a year to $65.9B), and video games (+6.2% a year to $19.2B). But newspaper revenues will continue to slide 4.4% as year to $25.9B.