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PwC: Digital Spending to Outpace Physical by 2016

4 Jun, 2014 By: Chris Tribbey

A new report from PricewaterhouseCoopers (PwC) forecasts electronic home video revenue exceeding physical home video revenue by 2016, and the electronic home video segment will be the main moneymaker in all of filmed entertainment by 2018, taking over box office revenue with 43% market share.

The main reason is subscription VOD services, which accounted for $7.34 billion in 2013, but will more than double to more than $17 billion by 2018.

The report also sees U.S. box office revenue topping physical home entertainment revenue next year, and growing to $12.5 billion by 2018, compared with $10.8 billion in 2013.

Worldwide, the report forecasts total annual entertainment and media spending at $2.3 trillion by 2018, up from $1.8 trillion in 2013, with the United States remaining the main source, spending $724 billion by 2018, up from $573 billion in 2013.

“The consumer is now at the center of their own entertainment and media world, pivoting from finding to being found by content experiences via every channel and device,” said Ken Sharkey, PwC’s U.S. entertainment, media and communications practice leader. “The battle for relevancy has never been greater as [entertainment and media] businesses are being joined by companies from other industries such as retailers, automakers and utilities to compete head on for the same consumer relationship.

“What’s important to the consumer is the specific experience — whether it’s live or on-demand and on any screen.”

With 86% of Americans expected to have mobile Internet access by 2018, spending on digital advertising is expected to ramp up quickly, gaining 40% of total ad spending by 2018, compared to 17% in 2013. Online TV ads will more than double its current share of total ad revenue, increasing from $2.8 billion in 2013 to $5.9 billion in 2018.

“As entertainment and media companies increasingly cross traditional boundaries to compete in each other’s core area, the race to achieve relevancy to the individual consumer and a greater share of lifetime value is expanding,” said Deborah Bothun, PwC’s U.S. advisory entertainment media and communications leader. “Those players that achieve relevancy can join the consumer’s ‘inner circle of trust.' To stay there, they’ll need to apply innovation and agility to keep pace with the roll-out of new ways to deliver, package and price content and services.”

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