Consumer habits can take a lifetime to learn – but just a lockdown to lose. According to PwC’s Global Entertainment & Media Outlook 2020–2024, the COVID-19 pandemic has accelerated and amplified ongoing shifts in consumers’ behaviour, pulling forward digital disruption and forging industry tipping points that wouldn’t have been reached for many years. Digitalisation, one of the major forces shaping all industries, has been intensified by social distancing and mobility restrictions. As a result, the entertainment and media (E&M) world in 2020 has become more remote, more virtual, more streamed, more personal and – for now at least – more centred on the home than anyone anticipated at the start of the year.
Industry growth contracts sharply…
The pandemic afflicting the world brought the global E&M industry’s growth to a shuddering halt. As a result, we delayed publication of the Outlook by three months so we could properly assess the pandemic’s impacts. The revised projections for revenue growth underline why this was the right decision. Amid a global recession, 2020 will see the sharpest fall in global E&M revenue in the 21-year history of this research, with a decline of 5.6% from 2019 – more than US$120bn in absolute terms. In 2009, the last year the global economy shrank, total global E&M spending fell by just 3.0%.
…but remains robust in the longer term
However, while the shockwaves from 2020 will continue to ripple through the global economy, our forecast shows the industry’s fundamental growth trajectory remains strong. In recent years, as media experiences have become ever more central to our lives, global E&M growth has typically outpaced GDP. Just so, after the challenges of 2020, we expect E&M to reassume its outperformance.
Our projections show that in 2021, E&M spending will grow by 6.4%. Looking across the five-year forecast period, from 2019 to 2024, we’re forecasting overall revenue growth running at a 2.8% compound annual growth rate (CAGR).
Tipping point timelines accelerate
As is the case in the economy at large, the current pain in E&M is not evenly shared around the industry. It’s most acute in segments that COVID-19 literally shut down, such as events: live music, cinema and trade shows. Spending on advertising likewise will fall by 13.4%. At the same time, the long-running transition in newspapers from print to digital has been fast-forwarded several years, cutting into papers’ print revenues, for example.
One result is that E&M segments are being transformed much earlier than was originally projected. Take cinema box office versus subscription video on demand (SVOD). As recently as 2015, box office revenue was three times SVOD. SVOD revenue will overtake box office in 2020 and is projected to surge away in the coming five years, reaching more than twice the size of box office in 2024. Or consider the amount of data consumed on smartphones versus on fixed broadband. Having taken a small lead in 2019, the smartphone is now set to pull away as the leading individual device used by consumers to access the Internet globally.
Winners and losers emerge…
So, how are the shifts accelerated by COVID-19 playing out in different industry segments? With people staying at home, over-the-top (OTT) video has seen global revenue surge by 26.0% in 2020. And it will keep rising strongly in the coming years, almost doubling in size from US$46.4bn in 2019 to US$86.8bn in 2024. The launch of the Disney+ streaming service in late 2019 could hardly have been better timed: having projected between 60mn and 90mn paying subscribers by 2024, Disney+ reached 60.5mn in early August 2020. Not surprisingly given the rise of streaming, global data consumption is another beneficiary of the digital acceleration powered by COVID-19. It will jump by 33.8% in 2020, and will more than double from 1.9 quadrillion megabytes (MB) in 2019 to 4.9 quadrillion MB in 2024.
At the other end of the scale are the segments that have been hit hardest. With many cinemas closed and major movie releases delayed, we project that total global cinema revenues will plunge by almost 66% this year. And it’s not likely that lost ground will be recovered; our forecast is that in 2024, cinema revenues for 2024 will be below their 2019 level. A further COVID-related impact is that the ongoing decline in global newspapers and consumer magazines has accelerated sharply in 2020, with overall revenues slumping by more than 14%, with consumer magazines suffering the most. That said, digital offers a silver lining: a tipping point for consumer magazines in 2023 will see their global revenue from digital advertising overtake that from print advertising. Other important sectors will struggle to claw back the growth they lost in 2019. For example, the global advertising sector – which will fall by 13.4% in 2020 to US$559.5bn – is not expected to return to its 2019 level until 2022.
…as a vast industry reconfigures
Yet – perhaps counterintuitively – some “traditional” media has held its own despite the effects of COVID-19 and digital acceleration. Amid reports of book sales booming during lockdowns, total global consumer books revenue is projected to continue its upward trajectory, rising at 1.4% compounded annually between 2019 and 2024 to reach US$64.7bn. Significantly, technology is playing an important role, with increasing use of smartphones and smart speakers boosting uptake of audiobooks, enabling consumers to listen on-the-go.
Live physical events is another long-standing segment looking to adapt to the reality of an accelerated digital world. With concert halls, exhibition centres and stadiums closed for much of the year, some live events are using digital platforms to stay connected to their audiences. In the UK, London’s Wireless Festival teamed up with tech outfit MelodyVR in mid-2020 to deliver recorded virtual reality performances from artists such as Cardi B, Travis Scott, and Migos. More than 130,000 people from 34 countries attended virtually.
A year that stands apart
Although 2020 has been a challenging and disruptive year for most industries – including many segments of E&M – it is clear that consumer demand for the varied and expanding array of media choices now on offer continues to grow. The revenue figures in this year’s Outlook reflect the full force of the economic downturns and digital acceleration triggered by COVID-19, but the longer-term outlook for the E&M industry as a whole remains bright. That said, it’s also clear that as normality slowly returns, there will continue to be winners and losers.
Werner Ballhaus, Global Entertainment & Media Industry Leader at PwC, comments: “It’s clear that COVID-19 has accelerated consumers’ transition to digital consumption and triggered disruptive change – both positive and negative – across many forms of media. Yet it’s equally evident that the E&M industry’s underlying strengths and appeal to consumers remain as strong as ever. While there will still be challenges for E&M companies as we move beyond the pandemic, the digital migration that it has pulled forward will also generate opportunities in all segments – not only those that have benefited from its impacts to date.”
Post-COVID-19, regaining citizen’s trust should be a priority for governments
The COVID-19 crisis has demonstrated governments’ ability to respond to a major global crisis with extraordinary flexibility, innovation and determination. However, emerging evidence suggests that much more could have been done in advance to bolster resilience and many actions may have undermined trust and transparency between governments and their citizens, according to a new OECD report.
Government at a Glance 2021 says that one of the biggest lessons of the pandemic is that governments will need to respond to future crises at speed and scale while safeguarding trust and transparency. “Looking forward, we must focus simultaneously on promoting the economic recovery and avoiding democratic decline” said OECD Director of Public Governance Elsa Pilichowski. “Reinforcing democracy should be one of our highest priorities.”
Countries have introduced thousands of emergency regulations, often on a fast track. Some alleviation of standards is inevitable in an emergency, but must be limited in scope and time to avoid damaging citizen perceptions of the competence, openness, transparency, and fairness of government.
Governments should step up their efforts in three areas to boost trust and transparency and reinforce democracy:
Tackling misinformation is key. Even with a boost in trust in government sparked by the pandemic in 2020, on average only 51% of people in OECD countries for which data is available trusted their government. There is a risk that some people and groups may be dissociating themselves from traditional democratic processes.
It is crucial to enhance representation and participation in a fair and transparent manner. Governments must seek to promote inclusion and diversity, support the representation of young people, women and other under-represented groups in public life and policy consultation. Fine-tuning consultation and engagement practices could improve transparency and trust in public institutions, says the report. Governments must also level the playing field in lobbying. Less than half of countries have transparency requirements covering most of the actors that regularly engage in lobbying.
Strengthening governance must be prioritised to tackle global challenges while harnessing the potential of new technologies. In 2018, only half of OECD countries had a specific government institution tasked with identifying novel, unforeseen or complex crises. To be fit for the future, and secure the foundations of democracy, governments must be ready to act at speed and scale while safeguarding trust and transparency.
Governments must also learn to spend better, according to Government at a Glance 2021. OECD countries are providing large amounts of support to citizens and businesses during this crisis: measures ongoing or announced as of March 2021 represented, roughly, 16.4% of GDP in additional spending or foregone revenues, and up to 10.5% of GDP via other means. Governments will need to review public spending to increase efficiency, ensure that spending priorities match people’s needs, and improve the quality of public services.
Sweden: Invest in skills and the digital economy to bolster the recovery from COVID-19
Sweden’s economy is on the road to recovery from the shock of the COVID-19 crisis, yet risks remain. Moving ahead with a labour reform to facilitate adaptation in a fast-changing economic environment, and investing in digital skills and infrastructure, will be crucial to revive employment and build a sustainable recovery, according to the latest OECD Economic Survey of Sweden.
The pandemic triggered a severe recession in Sweden, despite mild distancing measures and swift government action to protect people and businesses. GDP fell by less than in many other European economies in 2020, thanks to reinforced short-time work, compensation to firms for lost revenue and measures to prop up the financial system, but unemployment still rose sharply. Solid public finances provided room for further stimulus in 2021 to buttress the recovery.
The Survey recommends maintaining targeted support to people and firms until the pandemic subsides, then focusing on strengthening vocational training and skills and increasing investment in areas like high-speed internet and low-carbon transport. Addressing regional inequality, which is low but rising, should also be a priority as the recovery takes hold.
The Survey shows that Sweden has been among the most resilient OECD countries in the face of a historic shock. Yet, like other economies, it faces challenges from demographic changes and the shift to green, digital economies. Investments in education and training, and labour reforms along the lines negotiated by the social partners, will support job creation and strengthen economic resilience. Building on Sweden’s leadership in digital innovation and diffusion will also be key for driving productivity.
After a 3% contraction in 2020, interrupting several years of growth, the Survey projects a rebound in activity with 3.9% growth in 2021 and 3.4% in 2022 as industrial production resumes and exports recover. The recovery in world trade is bolstering the Swedish economy, however the country remains vulnerable to potential disruptions in global value chains.
|The pandemic has aggravated a mismatch in Sweden’s job market, with unfilled vacancies for highly qualified workers coinciding with high unemployment for low-skilled workers and immigrants. The public employment service needs strengthening to provide better support to jobseekers, including immigrants and women, and labour policies should strike the right balance between supporting businesses and workers and supporting transitions away from declining businesses towards growing sectors.|
A rising share of youths and older people in the population, especially in remote areas, is affecting the finances of local governments, which provide the bulk of welfare services. Strengthening local government budgets and ensuring equal welfare provision across the country will require providing tax income to poorer regions more efficiently and raising the economic growth potential across regions through investments in innovation. Improving coordination between government entities and reinforcing the role of universities in local economic networks would help achieve that aim.
Fewer women than men will regain work during COVID-19 recovery
Fewer women will regain jobs lost to the COVID-19 pandemic during the recovery period, than men, according to a new study released on Monday by the UN’s labour agency.
In Building Forward Fairer: Women’s rights to work and at work at the core of the COVID-19 recovery, the International Labour Organization (ILO) highlights that between 2019 and 2020, women’s employment declined by 4.2 per cent globally, representing 54 million jobs, while men suffered a three per cent decline, or 60 million jobs.
This means that there will be 13 million fewer women in employment this year compared to 2019, but the number of men in work will likely recover to levels seen two years ago.
This means that only 43 per cent of the world’s working-age women will be employed in 2021, compared to 69 per cent of their male counterparts.
The ILO paper suggests that women have seen disproportionate job and income losses because they are over-represented in the sectors hit hardest by lockdowns, such as accommodation, food services and manufacturing.
Not all regions have been affected in the same way. For example, the study revealed that women’s employment was hit hardest in the Americas, falling by more than nine per cent.
This was followed by the Arab States at just over four per cent, then Asia-Pacific at 3.8 per cent, Europe at 2.5 per cent and Central Asia at 1.9 per cent.
In Africa, men’s employment dropped by just 0.1 per cent between 2019 and 2020, while women’s employment decreased by 1.9 per cent.
Throughout the pandemic, women faired considerably better in countries that took measures to prevent them from losing their jobs and allowed them to get back into the workforce as early as possible.
In Chile and Colombia, for example, wage subsidies were applied to new hires, with higher subsidy rates for women.
And Colombia and Senegal were among those nations which created or strengthened support for women entrepreneurs.
Meanwhile, in Mexico and Kenya quotas were established to guarantee that women benefited from public employment programmes.
To address these imbalances, gender-responsive strategies must be at the core of recovery efforts, says the agency.
It is essential to invest in the care economy because the health, social work and education sectors are important job generators, especially for women, according to ILO.
Moreover, care leave policies and flexible working arrangements can also encourage a more even division of work at home between women and men.
The current gender gap can also be tackled by working towards universal access to comprehensive, adequate and sustainable social protection.
Promoting equal pay for work of equal value is also a potentially decisive and important step.
Domestic violence and work-related gender-based violence and harassment has worsened during the pandemic – further undermining women’s ability to be in the workforce – and the report highlights the need to eliminate the scourge immediately.
Promoting women’s participation in decision-making bodies, and more effective social dialogue, would also make a major difference, said ILO.
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