The Channel | 2002 | September

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the channel | 13
Despite the combined “triple whammy” of spill over from dot-com
failures, a global economic/advertising market downturn, and the
impacts of the September 11 tragedy, global entertainment and
media (E&M) industry spending grew in 2001 - rising by 1.5 per
cent and exceeding the US$1 trillion mark.
Forecasting continued growth, Price-
waterhouseCoopers anticipates that global
E&M spending will reach US$1.4 trillion in 2006, for a 5.2 per
cent compound annual growth rate (CAGR) over the next five years.
These predictions were published in the latest edition of the annual
PricewaterhouseCoopers Global Entertainment andMedia Outlook:
2002-2006.
On a global basis, notwithstanding the entertainment and media
industry’s resilience in 2001, weak economic conditions will
continue to dampen spending in 2002 and 2003, but faster growth
will resume in 2004-2006. Digital distribution, piracy and a
rebounding global advertising market will be three main factors
impacting the industry’s growth over the next five years.
Principal drivers of growth
Digital distribution of content, aided by rising broadband
penetration, will be the greatest driver of new entertainment and
media spending in 2005-2006. For example, broadband connections
in the US, driven bymusic and video-on-demand content that require
high-speed connectivity, will surge from 9.4 million households in
2001 to 35.3 million in 2006 - nearly equalling the narrowband
sector at 38.2 million households.
Piracy and unauthorised use of copyrighted material will continue
to limit growth throughout the forecast period, especially in recorded
music. Unless an industry-wide solution is reached, piracy issues
will begin seriously affecting other major E&M sectors, including
filmed entertainment, home video and consumer book publishing.
Despite the near catastrophic year the global advertising market
had in 2001, the OUTLOOK forecasts a gradual rebound with the
ad market beginning to re-solidify in 2002. This will continue to
gain strength in 2003, turning out strong single digit growth during
2004-2006.
Global advertising spending is predicted to increase at a 4.8 per
cent CAGR, reaching a total of US$405 billion in 2006, compared
to US$321 billion in 2001.
Kevin Carton, Global Leader of PricewaterhouseCoopers
Entertainment &Media practice said: “The E&M sector’s promising
future is coming - it’s just taking a longer and more circuitous path
than initially expected. To see where the ‘digital evolution’is headed,
take a look at the surge in spending for digital cable and broadband
Internet access. Consumers who’ve demanded a more diverse
entertainment experience are leading the charge by subscribing to
these upgraded distribution platforms, and new and more diverse
content offerings will follow.”
Growth by region
At US$438 billion in 2001, the United States was the largest market
in terms of overall entertainment and media spending. It is projected
No end to E&M spending
Despite global economic gloom, the Entertainment and Media Industries continue to grow, saysAIBMember
PricewaterhouseCoopers. In fact, last year’s turnover was US$1 trillion, and spending is expected to top
US$1.4 trillion in 2006. Fiona Scholes explains the reasoning behind this unusual level of optimism.
Consumers are leading the charge