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Report: Digital to Account for 25% of all U.S. Filmed Entertainment Spending by 2017

5 Jun, 2013 By: Erik Gruenwedel

Online purchases of movies, rentals and subscription video-on-demand services will account for 25% of consumer entertainment spending by 2017 compared to 13% in 2012, according to a new report from PricewaterhouseCoopers LLC.

Digital spending in the U.S. — largely driven by widespread smart device ownership — is expected to account for 43% of all entertainment and media (music, news and related content) spending in 2017, up from 31% in 2012.

Overall spending on filmed entertainment, which includes physical and theatrical, will increase at a compound annual growth rate of 3.4% (CAGR).
The U.S. remains the largest entertainment and media market, growing at 4.8% CAGR and reaching $632 billion in 2017, from $499 billion in 2012.

“The E&M industry is undergoing a significant shift as digital disruption across every segment is accelerating and as digital media remains the clear driving force behind E&M revenues over the next five years,” said Ken Sharkey, PwC’s US entertainment, media & communications practice leader, in a statement.

The rising value of content available on demand via myriad devices has fired the starting-gun on an industry-wide race to acquire it, according to the report. Recent years have seen several major acquisitions of content assets (i.e. SVOD license deals and TV Everywhere agreements), as consumers’ rising expectation of ubiquitous access to premium and library content drives companies to focus on licensing and/or acquiring content, as well as on developing deeper customer engagement and insights.

“Connected consumers are clearly in control and an even greater portion of viewing and interaction of TV and film content will take place on multiple screens and devices,” said Deborah Bothun, PwC’s US advisory entertainment media & communications leader, in a statement.

Specifically, the report said that as media consumption fragments across devices, consumers increasingly demand personalized experiences from their content. This move to “my media” can be seen in “cord-cutting”, where consumers abandon their pay TV subscriptions and instead access content they want via cheaper, Internet and mobile broadband-based content services such as Netflix and Hulu.

A further manifestation of “my media” is consumers’ growing use of the “second screen” — smartphones and tablets — to comment on and share the experience of TV and other companion content with friends, often via social media.

“E&M companies have the opportunity to deepen engagement with consumers by trying different business models for delivering content and experimenting with price points and offerings,” Bothun said.

The report found that for content creators to adapt to the demands of connected consumers, they will need to get closer to the behaviors and needs of those consumers than ever before. This includes harvesting data from social media, adapting the way products are created and distributed, and embracing new business models, including partnerships. As they pursue these strategies, the good news for content creators is that content’s central role in attracting, engaging and retaining consumers has been strengthened by the fragmentation of media choices.

“To drive growth and compete effectively in the future, E&M companies must invest in constant innovation that encompasses its products and services, operating and business models and, most importantly, focus on customer experience, understanding and engagement,” Sharkey said.


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