According to PwC’s latest Global Entertainment & Media (E&M) Outlook 2020-2024, the UK sector is forecast to suffer a sharp decline in growth this year as a result of the Covid-19 pandemic, before recovering to grow by £15bn over the next five years*.
Amid a global recession, 2020 will see a 6.7% fall in UK E&M revenue compared to 2019. However, while the shockwaves from 2020 will continue to ripple through the economy, the industry’s fundamental growth trajectory is forecast to remain strong and in 2021, the UK’s E&M industry will grow by 6.72%. Across the five-year period, it is forecast overall revenue growth will run at a 2.83% compound annual growth rate (CAGR) to be worth £79.8bn by 2024.
Mark Maitland, UK head of Entertainment and Media at PwC, said:
“Parts of the media sector have been hit very hard by the Covid-19 pandemic, particularly in-person activities or those reliant on advertising revenue. This will drive a c. 7% decline in sector revenues in 2020, but in recent months we have already seen improving performance, and as such, we expect the sector revenues to return to 2019 levels in 2021.”
Covid-19 has accelerated the transformation of some E&M segments much earlier than projected. Cinema box office, which as recently as 2015 was generating almost three times as much revenue as subscription video on demand (SVOD) will be overtaken by SVOD in 2020, which will surge further ahead in the coming five years. The situation is the same for how data is being consumed - on smartphone versus on fixed broadband. After taking a small lead in 2019, smartphones are now set to pull away as the leading individual device used by consumers to access the Internet in the UK.
A marked shift
There have been some beneficiaries. With people staying at home, over-the-top (OTT) video has seen revenue surge by 18.6% in 2020 to £1.6bn. Growth will continue at a CAGR of 10% to £2.3bn by 2024. Video games is another beneficiary with the sector being driven by both a strong e-sports market - which is set for 15% growth - and video game consumption up 9.7% in 2020. Overall, the video games industry is forecast for 9% growth this year amounting to £5.2bn and by 2024, the sector will be worth £6.8bn at a CAGR of 7%.
At the other end of the scale industries that have been hit the hardest by the pandemic have begun to show signs of recovery. Cinemas have started to reopen, albeit in a safe and socially distanced way and pop up/drive through cinemas are providing new ways to watch film. Our forecast shows cinema will rebound to revenue of £1.3bn in 2024, slightly lower than 2019 levels. Out-of-home advertising is another sector that has struggled during the pandemic but activity has started to pick up driven by a strong digital market, Forecasts show the market will recover by 2022.
Live music has tried to adapt to the lockdown restrictions by embracing technology. With concert halls and stadiums closed for much of the year, some live events are using digital platforms to stay connected to their audiences such as this year’s Wireless Festival which teamed up with tech outfit Melody VR to deliver virtual reality performances from renown artists. More than 130,000 people attended from across the globe virtually. Providing more venues reopen we forecast live music to bounce back immediately next year from it’s growth loss this year with revenue reaching 2019 levels by 2023.
Mark Maitland said:
“Some parts of the sector, such as gaming and OTT video have been beneficiaries during the pandemic, and we expect these to continue to prosper with many ‘lockdown habits’ continuing far beyond lockdown.
“For sectors adversely affected by the pandemic, this has brought forward some of the digital disruption prophesied to come years later and it has reinforced the digitisation of the industry. This is reflected in industries that are forecast to claw back their lost revenue are ones being driven by or have embraced technology as a way to connect with consumers.”
Notes to editors
*Future accuracy of the Outlook forecasts could be affected by the continued rapid changes related to the pandemic, including policy responses from the Government.
About the Global Entertainment & Media Outlook
PwC’s 21st annual edition of the Global Entertainment & Media Outlook is a comprehensive online source of global analysis for consumer and advertising spending. With like-for-like, five-year historical and five-year forecast data and commentary for 14 defined industry segments in 53 territories, the Outlook makes it easy to compare and contrast consumer and advertising spending across segments and territories. Find out more at www.pwc.com/outlook.
Segments covered by the Global Entertainment & Media Outlook
Books; Business-to-business; Cinema; Data consumption; Internet access; Internet advertising; Music, radio and podcasts; Newspapers and consumer magazines; OTT video; Out-of-home advertising; Traditional TV and home video; TV advertising; Video games and esports; Virtual reality
About Global Entertainment & Media Outlook data
Much of the content in this press release is taken from data in the Global Entertainment & Media Outlook 2020–2024. PwC continually seeks to update the online Global Entertainment & Media Outlook data. Therefore, please note that the data in this press release may not be aligned with the data found online. The online Global Entertainment & Media Outlook 2020–2024 is the most up-to-date source of consumer and advertising spend data.
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 276,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
© 2020 PwC. All rights reserved
Manager, Media relations, PwC United Kingdom
Tel: +44(0)7841 468 245