Consumer and advertiser lust for internet-delivered content will help to lift total spending on U.S. media and entertainment to $759.1 billion in 2021, a 19.5% increase over last year, consulting firm PwC predicts today in its 18th annual Global Entertainment and Media Outlook — a widely followed five-year forecast.
PwC’s new estimates are notably higher than they were last year for music, internet advertising, and video games — but lower for book publishing, newspapers, and TV advertising and subscription spending.
All told, entertainment and media companies “are facing significant pressures on growth,” U.S. Technology, Media, and Telecommunications Leader Mark McCaffrey says. Likely winners will “enhance and differentiate” user experiences.
“Essentially, we’ve entered The Age of the Consumer,” he adds. “It’s no longer sufficient to be ‘consumer-centric,’ one must be ‘consumer-obsessed.’”
The firm sees spending on internet access, advertising, and video accounting for 42.8% of industry revenues in 2021 (after adjusting for double counting). The businesses represented 35.4% of the $635.1 billion spent on U.S. media in 2016.
The biggest source of media industry dollars will be consumer payments for internet access. People will spend nearly $190.0 billion on connections in 2021, up from $140.3 billion last year.
Advertisers will follow, spending $116.2 billion on digital media in 2021, up from $72.5 billion last year.
Meanwhile internet video will boom, led by spending for subscription VOD services including Netflix, Amazon Prime and Hulu. The category will grow by 70.9% from last year to $14.0 billion in 2021.
If that’s right, then SVOD sales could surpass domestic movie box office revenues in 2019.
Exhibitors should generate $12.2 billion in 2021, with revenues growing an average of 1.3% a year, PwC says.
The firm has discouraging news for studios on the home video front. Sales and rentals of DVDs and other physical home video formats could fall an average of 13.4% a year — to a little less than $4.0 billion in 2021 from $8.1 billion last year.
That will be only partially offset by digital sales and rentals (not including SVOD). They could improve to $6.5 billion from $5.4 billion.
There’s also static in the outlook for traditional TV. Calling subscription TV “extremely mature,” PwC sees consumer spending for cable, satellite, and telco TV remaining basically flat — rising to $101.1 billion in 2021 from $100.9 billion last year.
TV advertising also will flatten, growing an average of 1.3% a year: Buyers will spend $25.2 billion on cable networks in 2021, up 15.5% from last year. But broadcast networks will only grow about 5% to $18.9 billion while spending at TV stations drops 7.5% to $20.4 billion.
Linear TV “remains the primary medium to consume video in the U.S.,” PwC says. But with the growth of digital alternatives “linear TV’s dominance is in decline.”
Elsewhere in media: Newspapers will be the biggest losers with revenues plummeting 19.1% to $23.9 billion in 2021. (Video game spending — expected to grow 35.5% to $28.5 billion in 2021 — could surpass newspapers in 2019.) Magazines will rise 1% to $30.5 billion. Books will remain flat at $38.3 billion.
PwC is surprisingly upbeat about music, seeing a 31.3% jump in spending to $22.6 billion. The bulk of the growth will come from digital streaming, up 144.1% to $7.4 billion. In addition, live music sponsorship and ticket sales will rise 25.3% to nearly $12 billion.
The firm also sees life in radio. Spending should grow 9.5% to $23.9 billion due to pick ups in online ad sales for terrestrial radio stations, and satellite radio subscriptions.
Virtual reality will start to come into its own by 2021, generating nearly $5 billion in revenues vs $421 million last year. That suggests VR will contribute as much to industry growth as TV advertising.
And Esports will develop into a $300 million business in 2021, up from $108 million.