● Virtual reality will be the fastest growing area with revenue set to grow 76% year on year;
● UK internet advertising will remain the biggest market in EMEA, reaching £14.4bn by 2021;
● Consumer spend on Netflix and other internet on-demand video revenue to overtake DVD/Blu-ray this year and box office sales by 2021;
● UK will remain the biggest video games market in Europe;
● Consumer spend on video games to overtake all spending on books by 2021;
● Mobile internet access revenue to overtake fixed broadband in 2019.
According to PwC’s new Global Entertainment & Media (E&M) Outlook 2017-2021 (the “Outlook”), the UK’s E&M sector will grow at a compounded annual growth rate (CAGR) of 3% from 2017-2021 adding £10bn to its value to the economy over five years. Overall, revenue will grow from £62bn in 2016 to £72bn by 2021 and will be the second largest market in Europe, the Middle East and Africa (EMEA) behind Germany.
Phil Stokes, UK head of Entertainment & Media at PwC, said:
“The UK’s entertainment and media sectors will play an important role in economic growth over the next five years. Technology and digital service continues to dictate growth with companies tapping into where and how consumers are spending their time online. With consumers having more control and greater choice, companies will need to find new ways to stand out and engage with customers.”
The UK’s virtual reality industry will grow at a faster rate than any other E&M industry from 2016-2021. PwC forecasts a CAGR of 76% to a value of £801m in 2021 making it the fastest growing and largest virtual reality industry in EMEA.
Phil Stokes commented:
“We forecast the number of virtual reality headsets in use in the UK will pass 16 million by 2021. Around 12 million of these headsets will be portable mobile VR devices that use a smartphone at their core as these are more affordable for consumers and benefit hugely from the fast evolution and replacement rate of smartphones.
“Dedicated home VR headsets - the higher end devices used for gaming and video - will account for three million consumer headsets, with portable dedicated headsets - a new category of self-contained device that are easier to use and have superior capabilities to smartphone-based devices - forecast to account for one million.”
Advertising will be the biggest contributor to Entertainment & Media growth, accounting for a third of total revenue by 2021.
With the PwC Outlook forecasting 89m smartphones to be in use in the UK by 2021, advertising spend will be increasingly directed to mobile. The UK is home to the largest internet advertising market in Europe, and will continue to be so for the next five years. Internet advertising revenues will surpass £10bn for the first time this year and are forecast to grow at 8.9% (CAGR) over the forecast period, reaching £14.4bn in 2021. At that time mobile advertising will overtake wired advertising to account for more than half of total internet advertising revenue.
Phil Stokes added:
“Mobile internet advertising is growing faster than any wired sub-component of total internet advertising revenue. Advertising on mobile is an attractive proposition for brands due to high smartphone penetration and relatively good connectivity across the country.
“The rise in ad-blocking technology which allows users to opt out of receiving ads remains a challenge as does the sheer scale of Facebook and Google for publishers to monetise their own site traffic. To counter this, publishers will need to improve their user experience of ads and work with third-party platforms to ensure they receive a fair share of the revenue their content attracts.”
The amount of data consumed annually in the UK is projected to more than double from 17bn gigabytes in 2016 to 41bn by 2021, driven by internet video consumption on streaming services such as Netflix and Amazon Prime. Revenue from internet video is forecast for overall growth of 9% (CAGR). By 2018, consumer spend on streaming services and on demand video will overtake physical home video, DVD and Blu-ray, which is in terminal decline shrinking at 15% year on year. By 2021, internet video revenue will also surpass box office revenues of £1.3bn by hitting £1.4bn.
Phil Stokes added:
“Demand for internet video shows no signs of slowing down. While the vast back catalogue of shows is often credited as the reason for subscribing to internet video services, companies have invested heavily in producing original content. Four of the top 10 programmes watched via subscription video on demand in 2015 were original productions showing that for consumers, fresh, high quality, content is king.”
Consumer spend on internet access is forecast for 3.6% growth (CAGR) from 2016-2021. Revenue will grow from £11.7bn to £14.1bn during this time and in 2019 mobile access will overtake fixed broadband access and account for just over 50% of all internet access revenue.
Phil Stokes added:
“Government incentives and a more favourable regulatory environment for alternative operators should boost high speed fixed broadband penetration over the next five years to 77% by 2021 up from 17% by the end of 2016. With smartphone ownership forecast to increase over the same period and new players entering the mobile internet market, mobile internet access revenue is set to overtake fixed broadband as consumers spend more time online on their phones.”
The UK’s video games industry is set to remain Europe’s largest market and the fifth largest globally behind the US, China, Japan and South Korea. Revenue is forecast for 6% CAGR over the five year period and by 2021 will be worth £5.2bn. UK consumer spend on video games is set to overtake all spending on books, which will reach £5bn by 2021.
Phil Stokes concluded:
“With the creative industry being identified as a priority area in the Government’s industrial strategy, entertainment and media, particularly digital services, will continue to innovate further and drive prosperity and culture throughout the country.”
Notes to editor:
About the Global entertainment and media outlook
PwC’s 18th annual edition of the Global entertainment and media outlook 2017-2021, is a comprehensive online source of global analysis for consumer and advertising spend. With like-for-like, five-year historical and five-year forecast data and commentary across 17 industry segments in 54 countries, the Outlook makes it easy to compare and contrast consumer and advertising spend across segments and countries. Find out more at https://www.pwc.co.uk/industries/entertainment-media/insights/entertainment-media-outlook.html
Segments covered by the Global entertainment and media outlook
Books, Business-to-business, Cinema, Data consumption, E-sports, Internet access, Internet advertising, Internet video, Magazines, Music, Newspaper, Out-of-home advertising, Radio,
Traditional TV and home video, TV advertising, Video game, Virtual reality.
About Global entertainment and media outlook data
Much of the content in this press release is taken from data in the Global entertainment and media outlook 2017-2021. PwC continually seeks to update the online Global entertainment and 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 and media outlook 2017-2021 is the most up-to-date source of consumer and advertising spend data.
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Manager, Media relations, PwC United Kingdom
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