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Future forward: The entertainment and media industry reconfigures amid recovery

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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.”

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Wide Variations in Post-COVID ‘Return to Normal’ Expectations

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London, UK, Covid-19 restrictions in place in Soho. IMF/Jeff Moore

A new IPSOS/World Economic Forum survey found that almost 60% expect a return to pre-COVID normal within the next 12 months. including 6% who think this is already the case, 9% who think it will take no more than three months, 13% four to six months, and 32% seven to 12 months (the median time). About one in five think it will take more than three years (10%) or that it will never happen (8%).

Views on when to expect a return to normal vary widely across countries: Over 70% of adults in Saudi Arabia, Russia, India, and mainland China are confident their life will return to pre-COVID normal within a year. In contrast, 80% in Japan and more than half in France, Italy, South Korea, and Spain expect it will take longer.

At a global level, expectations about how long it will take before one’s life can return to its pre-COVID normal and how long it will take for the pandemic to be contained are nearly identical. These findings suggest that people across the world consider that being able to return to “normal” life is entirely dependent on containing the pandemic.

An average of 45% of adults globally say their mental and emotional health has gotten worse since the beginning of the pandemic about a year ago. However, one in four say their mental health has improved since the beginning of the year (23%), about as many that say it has worsened (27%).

How long before coronavirus pandemic is contained?

Similar to life returning to pre-COVID normal, 58% on average across all countries and markets surveyed expect the pandemic to be contained within the next year, including 13% who think this is already the case or will happen within 3 months, 13% between four and six months and 32% between seven and 12 months (the median time in most markets).

Majorities in India, China, and Saudi Arabia think the pandemic is already contained or will be within the next 6 months. In contrast, four in five in Japan and more than half in Australia, France, Poland, Spain, and Sweden expect it will take more than a year.

Change in emotional and mental health since beginning of the pandemic about a year ago

On average across the 30 countries and markets surveyed, 45% of adults say their emotional and mental health has gotten worse since the beginning of the pandemic about a year ago, three times the proportion of adults who say it has improved (16%)

In 11 countries, at least half report a decline in their emotional and mental health with Turkey (61%), Chile (56%), and Hungary (56%) showing the largest proportions.

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African fisheries need reforms to boost resilience after Covid-19

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The African fisheries sector could benefit substantially from proper infrastructure and support services, which are generally lacking. The sector currently grapples with fragile value chains and marketing, weak management institutions and serious issues relating to the governance of fisheries resources.

These were the findings of a study that the African Natural Resources Centre conducted from March to May 2020. The centre is a non-lending department of the African Development Bank. The study focused on the impact of the Covid-19 pandemic in four countries – Morocco, Mauritania, Senegal and Seychelles. The countries’ economies depend heavily on marine fisheries. The fisheries sector is also a very large source of economic activity elsewhere in Africa. It provides millions of jobs all over the continent.

The study dwells on appropriate and timely measures that the four countries have taken to avoid severe supply disruptions, save thousands of jobs and maintain governance transparency amid the ongoing global uncertainty and crisis.

Infrastructure shortcomings include landing facilities, storage and processing capacity, social and sanitary equipment, water and power, ice production, and roads to access markets.

Based on the findings, researchers made recommendations to strengthen the resilience of Africa’s fisheries sector in the context of a prolonged crisis, and looking ahead to a post-Covid-19 recovery.

The report strongly advocates for:

– Increased acknowledgment of the essential role of marine fisheries stakeholders and the right of artisanal fishermen to access financial and material resources.

– Strengthening the collection of gender-disaggregated statistical data in a sector that employs a vast number of women and youth.

– Establishing infrastructure and support services at landing and processing sites of fishery products, with priority access to water.

– Investing in human capital to ensure high-level skills in the different areas of fisheries management.

– Improving governance frameworks by encouraging the private sector and civil society to participate in formulating sectoral policies and resource management measures.

The study recommends urgent reforms to make marine fisheries more resilient and enable the sector to contribute sustainably to the wealth of the continent’s coastal countries.

Marine fisheries are a crucial contributor to food security and quality of life in Africa. Good nutrition is a key factor to quality of life, and the marine fisheries sector supports the nutrition of more than 300 million people, the majority of whom are children, youth and women. It also provides more than 10 million direct and indirect jobs.

Dominated by artisanal fishing and traditional value chains, the fisheries sector in Africa is mainly informal and is rarely considered in public policies or in assessing the wealth of countries.

Like other sectors, the African fisheries sector has been severely hit by the Covid-19 pandemic. Covid has affected supply markets and regional trade. This has resulted in substantial economic losses for most households that depend on fisheries.

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Top Trends Impacting Global Economy, Society and Technology

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The new technologies of the Fourth Industrial Revolution, such as artificial intelligence (AI), the cloud and robotics, are changing the way we live, learn and do business at a rate unprecedented in human history. This seismic shift is playing out in a world characterized by unreliable political landscapes and increasing environmental instability.

Scenario planning in this environment can be very difficult for businesses, affecting their ability to plan for the future, and properly assess the risks and opportunities that may present themselves. The Technology Futures report, released in collaboration with Deloitte, provides leaders with data analysis tools to scenario plan and forecast future technology trends.

“The rapid pace of technological change, alongside the global crisis caused by COVID-19, means that leaders today need new tools to understand challenges and develop strategies in the face of an increasingly uncertain future. This report provides three new analytical tools for business leaders to think about the future in a dynamic environment,” said Ruth Hickin, Strategy and Impact Lead, Centre for the Fourth Industrial Revolution, World Economic Forum.

“We are delighted to collaborate with the World Economic Forum to take a disciplined look into the future, particularly as we emerge from a world-altering event, like COVID-19,” said Mike Bechtel, Managing Director and Chief Futurist, US Consulting, Deloitte, and lead author of the report. “We hope that by providing a clearer picture of how today’s nascent technologies will impact our future, we can play a meaningful part in driving innovation, collaboration and economic growth that improves life for all people.”

The report breaks down future trends into four categories for business leaders and provides some examples of what is likely to remain constant in the years ahead.

  • Information: With the volume of accessible data exploding and more of our personal lives lived online, the report projects the probable implications for remote learning, remote working and healthcare.
  • Locality: Since the onset of COVID-19, even more of our interpersonal interaction is virtual and physical experiences have dwindled. The report projects more niche, readily available virtual experiences available to consumers.
  • Economy: The report forecasts a growing likelihood that flexible and clean energy production will continue rising.
  • Education: Personalized education will likely grow, along with the availability of digitized and virtualized content.

In addition to strategic modelling, the report gives leaders a baseline history of how the Fourth Industrial Revolution has progressed. It highlights just how fast technology is evolving and outlines one way risk management could evolve to better address and adapt to it.

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