The Outlook is definitely a worthy read to get a grip on the high-level and (very) long-term trends shaping the media industry, such as where advertising dollars are expected to flow and how consumer demand will impact where and how content is consumed. The below press release has a lot of information packed in. Let’s take a look!
Here are a couple highlights I gathered ...
Growth Drivers - mobile consumers, new tech like AI, personalization, OTT
OTT is Hot – The report assigns OTT video a five-year CAGR of 10.1%.
Publishers should be eyeing this opportunity, especially in combination with subscription offers.
Podcasts & Streaming Music - According to the report: “Total global music, radio and podcasts revenue will increase at a 3.6% CAGR from US$94.9bn in 2017 to US$113.4bn in 2022, with growth largely generated by the recorded music segment.”
If there’s any question as to whether subscriptions and membership are the future of media and entertainment, take a look at where consumer dollars are aimed in the music industry in the above chart.
Global Entertainment & Media Outlook 2018-2022 (Outlook), the ongoing rapid evolution of the industry has entered a dynamic new phase. Amid growth that is broad-based and consistent – but unevenly distributed – three imperatives are affecting every company in the industry: convergence, connecting with consumers and the need to build trust.
“Convergence 3.0” is redefining the competitive playing field. Differing from earlier waves of convergence, it’s creating an ever-expanding group of “supercompetitors” and specialized, niche brands that are striving to secure the engagement and spending of increasingly demanding consumers.
As this wave of change plays out, the borders that once separated the entertainment and media, technology and telecom industries are dissolving. Large Internet access providers and delivery platforms are integrating vertically, and online giants are expanding horizontally into content. Traditional segment distinctions are blurring – between print and digital, video games and sports, wireless and fixed access, cable and online, social and traditional media. In the process, business models are being reinvented so all companies can tap into new revenue streams and create relevance at scale. Some required capabilities include targeting fans and connecting more effectively with consumers to develop a membership mind-set. Amid these changes and ongoing advances in technology, the challenge to build and sustain consumer and public trust is growing more critical and the pace of change will only accelerate.
Continued overall revenue growth…
All of this is happening against a backdrop of continued global growth in industry revenue
…but with stark differences among segments…
Within this overall increase, the fastest revenue growth will be in digitally driven segments. Virtual reality will lead the way, albeit from a low base, at a five-year CAGR of 40.4%. OTT video follows at 10.1%. By contrast, newspapers and magazines will see revenues decline over the next five years. Books, radio and traditional TV and home video will each grow at a CAGR of less than 2%.
Even among the most dynamic segments, there are sharp differences among sub-segments. Although the video games and e-sports segment will grow at an overall CAGR of 7.2%, the e-sports component will leap by 20.6% compounded annually. Conversely, global recorded music is projected to rise at a robust 6.1% CAGR, but three of its sub-components – physical, downloads and ringtones/ringbacks – will see significant declines. Global box office rose 4.3% in 2017, but fell in France, the US and Australia. Global TV advertising will grow at a CAGR of 2.7% through 2022, but fell, for the first time, in 2017. And although newspaper revenue is declining almost everywhere else, in India it will increase by close to US$1 billion by 2022.
…and between countries
Similar contrasts are evident in countries’ overall entertainment and media spending. The fastest-rising markets through 2022 will be Nigeria and Egypt.
Drivers of the new ecosystem
So, what are the forces behind the latest wave of convergence reshaping the industry? The Outlook pinpoints five key drivers:
Ubiquitous connectivity: The number of high-speed mobile Internet connections will increase by 2.2 billion globally by 2022, vastly expanding the market for mobile content consumption at faster speeds. A symbolic tipping point will occur in 2020, when total global data consumption via smartphones overtakes fixed-broadband data consumption.
The mobile consumer: The worldwide explosion in mobile access is seeing the connected mobile device become consumers’ primary means of accessing content and services across virtually all markets. This makes mobile an increasingly important focus for advertisers. And again, a key tipping point underlines this shift: 2018 will be the first year in which global mobile Internet advertising revenue will exceed its wired equivalent.
Need for new sources of revenue growth: E&M companies are looking to expand beyond traditional revenue sources, which in some cases are declining. At the same time, telecom companies are targeting entertainment and media content to revitalize their growth. As a result, every player in the ecosystem is racing to develop new revenue streams. Consider that OTT spending will grow at a CAGR of 10.1% through 2022, compared with just 2.3% for broadcast TV advertising.
Value shift to platforms: Social media and technology platforms are outpacing traditional content creators in capturing consumers’ attention and a rising share of their spending, trends that have fueled the rise of supercompetitors. Now some traditional content companies are fighting back by developing their own platform-like businesses.
Personalization: Today’s empowered consumers reject one-size-fits-all content experiences. As a result, it’s vital for companies, ranging from supercompetitors to fan-focused niche players, to use data analytics and AI to personalize their offerings. And the appeal of the live experience endures. For example, ticket sales for e-sports events will rise at a CAGR of 21.1% through 2022.
Winning – and then retaining – trust is vital
Across all the drivers and trends examined in the Outlook, one overarching imperative emerges: the absolute need to earn and sustain the trust of consumers and ecosystem partners. We’re in an era in which trust in many industries is at a historically low ebb and regulators are targeting media businesses’ use of data. As a result, a company’s ability to maintain trust is becoming a vital differentiator.
This can be especially challenging for entertainment and media companies, because they must demonstrate their trustworthiness across many dimensions, including content, data, monetization, social impact and the appropriateness of advertising content. When building trust, content and brand form the foundation, starting with delivering on the promise of quality.