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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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WEF Announces Global Technology Governance Summit and Flagship Report

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The World Economic Forum today published its flagship Global Technology Governance

Report in advance of its upcoming Global Technology Governance Summit. The summit will be held virtually and in Tokyo, Japan, from 6 to 7 April 2021. The central focus will be the transformation experienced as a result of COVID-19 and its technological impact on society, businesses, and governments. The theme of the meeting is Harnessing New Technologies of the Fourth Industrial Revolution.

“Fourth Industrial Revolution technologies can play a significant role in helping societies emerge from the pandemic stronger than ever” shared Murat Sönmez, Managing Director, World Economic Forum. However, if not directed with purpose, the Fourth Industrial Revolution could exacerbate inequality; therefore, proactive steps must be taken to ensure technology adoption does not heighten abuse of power, bias, wealth disparities, exclusion and loss of livelihoods.”

Efforts to recover from COVID-19 have triggered an influx of innovations in work, collaboration, distribution and service delivery – and shifted many customer behaviours. While these technologies can help drive enormous social breakthroughs and economic value, they can also be misused.

New governance models are required to fill gaps, enhance technology’s benefits and avoid harm. The COVID-19 pandemic has accelerated the urgent need to address these gaps.

The World Economic Forum and Deloitte produced a practical handbook to examine some of the Fourth Industrial Revolution’s most critical applications. The report aims to address these technologies’ governance challenges in a post-pandemic world so they can reach their full potential.

“Every industrial revolution has reshaped economies and social structures in ways that have defined local, regional and global history. The technologies driving the Fourth Industrial Revolution are already presenting opportunities and challenges we can only address through a forward-looking and innovative approach to governance,” said William D. Eggers, Executive Director of the Deloitte Center for Government Insights. “The question is, how can we harness and shape this disruption in a way that promotes global economic recovery, expands human opportunity and increases cooperation and security?”

Global Technology Governance Report 2021

The analysis revealed common challenges across the five Fourth Industrial Revolution technologies, focused on:

· Artificial intelligence (AI)

· Blockchain

· Drones and unmanned air systems

· Internet of things (IoT)

· Mobility (including autonomous vehicles)

These challenges include a lack of regulation, misuse of technology, and addressing cross-border differences. For instance, one estimate suggests that bitcoin accounts for more than 90% of ransomware payments. The lack of regulation of facial recognition technologies and incidents of misuse by law enforcement agencies has caused a backlash against this technology throughout the world.

There are common themes in what makes technology governance effective. For example, many governing bodies are unprepared for the legal consequences of facial recognition and other transformative technologies – much less the ethical implications. The report profiles a series of innovative governance and regulatory frameworks to address these and many other challenges.

Governing these new technologies will require new principles, rules and protocols that promote innovation while mitigating social costs. This report aims to help governments, innovators and other stakeholders understand the current challenges.

The study will enable conversations across a broad cross-section of stakeholders to partner on technology governance globally.

Global Technology Governance Summit 2021

Solving this dilemma requires a more agile approach to governing advanced technologies, creating public-private partnerships and managing business models. To that end, the World Economic Forum, as the International Organization for Public-Private Cooperation, is convening the first Global Technology Governance Summit virtually and in Tokyo, Japan, on 6-7 April 2021 in close collaboration with the Forum’s Centre for the Fourth Industrial Revolution Network launched in 2017.

This global network comprises more than 50 governments and international organizations as well as 150 companies. The summit will have 250 on-site participants with 300 more joining virtually.

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COVID-19 could see over 200 million more pushed into extreme poverty

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Children play outside a metal polishing workshop in a slum in Uttar Pradesh, India. © UNICEF/Niklas Halle'n

An additional 207 million people could be pushed into extreme poverty by 2030, due to the severe longterm impact of the coronavirus pandemic, bringing the total number to more than a billion, a new study from the UN Development Programme (UNDP) has found. 

According to the study, released on Thursday, such a “high damage” scenario would mean a protracted recovery from COVID-19, anticipating that 80 per cent of the pandemic-induced economic crisis would continue over a decade. 

Not a foregone conclusion 

The gloomy scenario, is however, “not a foregone conclusion”. 

A tight focus on achieving the Sustainable Development Goals (SDGs), could slow the rise of extreme poverty – lifting 146 million from its grip – and even exceed the development trajectory the world was on before the pandemic, UNDP said

Such an ambitious but feasible “SDG push” scenario would also narrow the gender poverty gap, and reduce the female poverty headcount, even taking into account the current impacts of the COVID-19 pandemic, the agency added. 

A “Baseline COVID” scenario, based on current mortality rates and the most recent growth projections by the International Monetary Fund, would result in 44 million more people living in extreme poverty by 2030 compared to the development trajectory the world was on before the pandemic. 

COVID-19 ‘a tipping point’ 

Achim Steiner, UNDP Administrator, highlighted that the COVID-19 pandemic is a “tipping point” and the future would depend on decisions made today. 

“As this new poverty research highlights, the COVID-19 pandemic is a tipping point, and the choices leaders take now could take the world in very different directions. We have an opportunity to invest in a decade of action that not only helps people recover from COVID-19, but that re-sets the development path of people and planet towards a fairer, resilient and green future.” 

The concerted SDG interventions suggested by the study combine behavioural changes through nudges for both governments and citizens, such as improved effectiveness and efficiency in governance and changes in consumption patterns of food, energy and water.  

The proposed interventions also focus on global collaboration for climate action, additional investments in COVID-19 recovery, and the need for improved broadband access and technology innovation. 

The study was jointly prepared by UNDP and the Pardee Center for International Futures at the University of Denver. It assesses the impact of different COVID-19 recovery scenarios on sustainable development, and evaluates multidimensional effects of the pandemic over the next ten years. 

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Cut fossil fuels production to ward off ‘catastrophic’ warming

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Countries must decrease production of fossil fuels by 6 per cent per year, between 2020 and 2030, if the world is to avert “catastrophic” global temperature rise, a new UN-backed report has found. 

Released, on Wednesday, in the shadows of the coronavirus pandemic, the Production Gap Report also revealed that while the pandemic and resulting lockdowns led to “short-term drops” in coal, oil and gas production, pre-COVID plans and post-COVID stimulus measures point to a continuation of increasing fossil fuel production. 

“As we seek to reboot economies following the COVID-19 pandemic, investing in low-carbon energy and infrastructure will be good for jobs, for economies, for health, and for clean air,” said Inger Andersen, Executive Director of UN Environment Programme (UNEP).  

“Governments must seize the opportunity to direct their economies and energy systems away from fossil fuels, and build back better towards a more just, sustainable, and resilient future.” 

The Production Gap Report, produced jointly by research institutions – Stockholm Environment Institute (SEI), International Institute for Sustainable Development (IISD), Overseas Development Institute, and E3G – and UNEP, measures the “gap” between the aspirations of the Paris Agreement on climate change and countries’ planned production of coal, oil, and gas. 

The report also comes at a potential turning point, according to the author organizations, as the global pandemic prompts unprecedented government action – and as major economies, including China, Japan, and the Republic of Korea, have pledged to reach net-zero emissions. 

‘Recover better together’ 

The 2020 edition found that the “production gap” remains large: countries plan to produce more than double the amount of fossil fuels in 2030 than would be consistent with a 1.5-degree Celsius temperature limit. 

UN Secretary-General António Guterres said that the report showed “without a doubt” that the production and use of fossil needs to decrease quickly if the world is to achieve Paris Agreement goals. 

“This is vital to ensure both a climate-safe future and strong, sustainable economies for all countries – including those most affected by the shift from grey to green,” he said. 

“Governments must work on diversifying their economies and supporting workers, including through COVID-19 recovery plans that do not lock in unsustainable fossil fuel pathways but instead share the benefits of green and sustainable recoveries. We can and must recover better together.” 

Use COVID-19 recovery plans 

The report outlined key areas of action, providing policymakers with options to start winding down fossil fuels as they enact COVID-19 recovery plans. 

“Governments should direct recovery funds towards economic diversification and a transition to clean energy that offers better long-term economic and employment potential,” said Ivetta Gerasimchuk, report co-author and lead for sustainable energy supplies at IISD. 

She also highlighted that the pandemic-driven demand shock and the plunge of oil prices this year once again demonstrated the vulnerability of many fossil-fuel-dependent regions and communities. 

“The only way out of this trap is diversification of these economies beyond fossil fuels,” Ms. Gerasimchuk added. 

A ‘clear’ solution 

The report also urged reduction of existing government support for fossil fuels, introduction of restrictions on production, and stimulus funds for green investments. 

Michael Lazarus, report co-author and the head of SEI’s US Center, underscored “research is abundantly clear, we face severe climate disruption if countries continue to produce fossil fuels at current levels, let alone at their planned increases.” 

“The research is similarly clear on the solution: government policies that decrease both the demand and supply for fossil fuels and support communities currently dependent on them. This report offers steps that governments can take today for a just and equitable transition away from fossil fuels.”  

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