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PwC: Pandemic Still “Driving the Dynamics” of Media & Entertainment Biz

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(Image credit: ATEME)

LONDON—The pandemic pushed the media and entertainment into its worst performance since PwC began tracking global revenues in the 1990s, with 2020 seeing a 3.8% decline of about $81 billion in revenue.  

The new edition of PwC’s annual “Global Entertainment and Media Outlook, 2021-25” predicts a 6.5% rebound of revenue in 2021. But the recovery is coming from a lower base and the compound average growth rate (CAGR) growth rate for a six-year period to 2025 will be “a less optimistic picture with a rate of just 3.5%.”

“More than a year into the most globally disruptive event of most consumers’ lifetimes, COVID-19 remains the unavoidable force driving the dynamics of the media and entertainment industry,” the Global Entertainment and Media Outlook, 2021-2015 explained. “Although uncertainty persists due to varied vaccination rates and the risk of resurgent waves of infection from new variants of the disease, we forecast that the combination of vaccines and more developed virus control systems should support a tentative return to normal for most developed nations in the second half of the year.”

The outlook varies, however, by sector. “While sectors like cinema, live music, and trade shows suffered unprecedented setbacks, the persistent growth of digitization softened the blow for the broader industry,” the report noted.

This was particularly good for OTT video and internet access. Globally, about 1.1 billion households had fixed broadband in 2020 and there were an additional 4.6 billion smartphone connections, with total data consumption increasing by 30% during 2020.

In contrast to the whole industry, the new PwC report found that 2020 “was a year of extreme growth for OTT video,” with global revenues growing by more than $12 billion in 2020. 

Total OTT video revenue will be nearly $94 billion by 2025, PWC predicts, a 60% pop in the five-year period beginning in 2021. But PwC sees slower growth in 2021, “due to a combination of a reduction in demand and an exhaustion of the customer conversion pipeline.” Globally, growth in OTT will decrease from 29.4% in 2020 to 13.2% in 2021.

Traditional TV and home video will however 1.2% CAGR decline to 2025, with ongoing declines in TV subscription revenue.

TV advertising also faces challenges, with PwC predicting that “broadcast revenue will not recover to pre-pandemic levels until 2025.” A bright spot is that online ads for TV content and connected TV advertising will grow by $22.6 billion to nearly the same level as multichannel advertising by 2025.  

Meanwhile, total internet access revenues will increase at a 4.9% CAGR to $880 billion in 2025, “as consumer demand and increasingly ubiquitous access drives growth,” the report noted. 

Mobile internet advertising will hit $332.3bn, or 67.9% of total internet advertising revenue by 2025.