Dr. Pradeep Mahapatra
The total global entertainment and media revenue is expected to face stagnation with an annual growth rate of around 5 percent between 2022 and 2027. Leading trade and commerce consultancy PricewaterhouseCoopers (PWC)’s annual ‘Global Entertainment and Media Outlook (2023-27)’ published in July 2023 painted a gloomy future for the media industry. A section of experts expected growth stories in the media landscape during the post-Covid19-pandemic ‘new normal’. But the performance of the industry in 2022 presented an opposite picture. Total revenue year-on-year basis decreased from 10.6 percent in 2021 to 5.4 percent in 2022. It has been predicted that by 2027 revenue will grow just 2.8 percent from 2026. There may be differences in growth rates at different geographies, but it is certain that the media industry will face one of its most turbulent times in the near future.
However, the annual growth rate in the Indian entrainment and media industry recorded 15.9 percent in 2022. It is expected to continue with a growth rate of 9.7 percent during the next five years. Recent experience in East Asian countries indicate far-reaching structural changes in the media ecosystem. The introduction of broadband in rural Indonesia resulted in the growth of OTT platforms. Consumers preferred local and sports programmes. In India, hinterland-wide coverage of the internet and the use of smartphones is expected by 2027. It may result in changed media access habits of local people.
A different picture emerged in China. Online users are increasingly switching over to short video platforms like Duyin, Kuaishu from popular long-form streaming platforms such as iQYI, Tencent Video and Youla. Duyin is owned by TikTok promoter ByteDance. The question arises, whether the surge in online consumers using smartphones in India will spend some time at OTT or leapfrog into short video segments. As short video formats on Facebook and YouTube have achieved considerable popularity in the country by 2023, apprehensions about consumers behavioural change claim priority.
PWC report indicated the prime cause of the slowdown in the global entertainment and media industry is sluggish consumer spending. It has been noted that as the industry is moving from analogue to digital, the cost of production and distribution are declining. Similarly, though consumers are spending more time in digital entertainment and media environments, that does not cost more money. “As a result, consumer spending per capita on E&M will decrease as a share of overall spending falling from 0.53% of average personal income in 2023 to 0.45% in 2027.” It will impact overall revenue generation in the industry.
Entrepreneurs need to change their approach to business on account of a fall in income. In a survey among industry CEOs 40 percent told to PWC that, “their current business model would not be viable in ten years.” Such development “pushes companies to reset expectations, refocus inward and harnessing emerging technology – in particular, by exploring the power of generative AI as an engine of productivity for the creative process.”
The report noted that between 2022 and 2027, global advertising revenue will rise by a 4.5% compounded annual growth rate (CAGR). But it is certain that the advertising spend will be diverted to e-commerce, video games and streaming platforms. As consumers are spending more time in e-commerce platforms browsing products, “companies around the world will be spending significantly more in an effort to reach consumers at the point of purchase and at the point of decision.” The experience in social media platforms like Meta and Alphabet supports the hypothesis. A significant downturn in the collection of advertising revenue has been recorded for five years including 2022 for Meta.
In the entertainment industry theatrical exhibition of cinema through box office revenue is expected to reach pre-pandemic levels by 2025. In an emerging trend, movies enriched on gaming intellectual property, such as storyline and characterisation is gaining popularity. It may gather strength during the next five years. In North America, such movies had a good box office collection in 2022. In the entertainment and media field with the use of algorithms personalized content is on the rise and will accelerate in the near future.
The Internet is fast spreading worldwide and the use of new technology is getting momentum. Experts predict that global 5G penetration will surpass 4G in 2025. The problem of internet connectivity experienced in developing and under-developed countries may get relief with the wide availability of new technology. The growth of resultant digital media will translate into better income for the media industry through a rise in advertising. In India, online advertising is expected to grow 12.3 percent on a yearly basis between 2022 and 2027.
The PWC report concludes, “entertainment and media industry has always been at root, a creative endeavour. But now, that creativity must be extended into multiple dimensions and must be harnessed to a purpose. In the coming years, armed with powerful technology, leaders will have to be more creative about how they create, distribute, and monetise products and services.”
(English translation of the original Odia newsletter by the author circulated on August 11, 2023. https://tinyletter.com/pradeepmahapatra/letters/message-314
It is an open-access content, free for translation and reproduction)
Dr. Pradeep Mahapatra is a retired faculty of Journalism, Berhampur University, Odisha.https://about.me/pradeepmahapatra
Perspectives from the Global Entertainment & Media Outlook 2023-2027/ June 21, 2023
Kohli-Khandekar, Vanita. Future of media not very entertaining. Business Standard (Bhubaneswar Edition). July 25, 2023