Subscription television will continue to grow across global markets despite the rise of online video services. The annual Global Entertainment and Media Outlook report from PricewaterhouseCoopers suggests that “subscription TV is in a healthy position” with revenues forecast to grow at 3.5% annually over the next five years. Online video revenue will grow at nearly 20% a year to overtake that of physical home video, but online video advertising from traditional broadcasters will still only account for 4.5% of total television advertising revenue in 2018.
Total entertainment and media spending on digital services is forecast by PwC to rise between 2013 and 2018 at a compound annual growth rate of 12.2% and account for 65% of the increase in global entertainment and media spending.
Online video and music services are two of the fastest-growing areas noted in the report, with revenues forecast to rise at annual rates of 28.1% and 13.4% respectively.
The total combined global revenue from online streaming services and the video on demand services of broadcasters will grow at a 19.9% a year. This will overtake physical home video revenue from the sale and rental of discs in 2018.
Global subscription television revenues excluding licence fees will grow at a compound annual rate of 3.5% over the next five years to $236 billion in 2018. PwC says this growth demonstrates that subscription TV is in a healthy position, assisted by the initiatives it has implemented to counter the impact of over the top online services and other disruptive influences.
Marcel Fenez, Global leader for entertainment and media at PwC said: “Pay television will grow, particularly in those markets where penetration rates have hitherto been relatively low.”
PwC predicts that cable television will fight back in the next five years, boosted by the switch to digital, with a return to growth in the longer term. The report forecasts that cable will still serve six out of ten pay-television homes in 2018, while IPTV will increase its market share from 8.9% to 13.2% and satellite will move from 24.2% to 25.9%.
Internet TV advertising revenue from traditional broadcasters will increase from $3.7 billion in 2013 to $9.7bn in 2018, but will only represent 4.5% of television advertising revenue, up from 2.2% in 2013. Traditional broadcasters still dominate and are adapting to the Internet video opportunity, creating a significant new revenue stream despite competition from Internet rivals.
Nine high-growth markets are powering global entertainment and media revenue. China, Brazil, Russia, India, Mexico, South Africa, Turkey, Argentina and Indonesia collectively are forecast to account for 21.7% of global entertainment and media revenue in 2018, up from just 12.4% in 2009.
“Driven by increased rates of mobile internet access as well as the increased spending power of a growing middle class these markets are becoming even more important to the overall industry.”
Investment in sophisticated subscription television technologies in the BRIC countries – Brazil, Russia, India and China — will produce big gains over the next five years.
Subscription television revenue in India is forecast to increase from $6.7 billion to $12.9 billion in 2018, while China will increase from $11.5 billion to $19.7 billion.
China will overtake Japan as the world’s second-largest entertainment and media market by 2018, behind only the United States. When including all TV revenues, China will surpass both the United Kingdom in 2014 and Germany in 2016 to reach the number two spot behind the United States.
The PwC report underlines the informitv view that pay-television remains resilient despite increasing competition from online video. The informitv Multiscreen Index shows that pay-television services are responding to the threats and opportunities of online distribution continuing to add subscribers worldwide.
The annual Global Entertainment and Media Outlook is available from the PwC web site.