PricewaterhouseCoopers Predicts Fractured Audiences For Social Media

outlook2010coverPricewaterhouseCoopers (PwC) finds significant growth potential over the next five years for the entertainment and media (E&M) industries as they feed the growing global appetite for new media. The report states that conversing with consumers “provides the only reliable guide to the commercial viability of products and services” – a finding that should come as no surprise. Perhaps less expected is a willingness by consumers to pay for unique, convenient and personalized content.

The PricewaterhouseCoopers Global Entertainment & Media Outlook 2010-2014 sees digital media transformation driving audience fragmentation at a level of magnitude well above previous ones in its speed and simultaneous impact across all segments. Among the report’s insights and analysis, PwC believes three themes will emerge from the resulting change in consumer behavior:

The rising power of mobility and devices

The growing dominance of the Internet experience over all content consumption

Increasing engagement and readiness to pay for content – driven by improved consumption experiences and convenience

The report sees content providers partnering with others to create viable commercial offerings while sharing the costs and risks – increasingly, those partners are being found from a diverse set of industries. Concomitantly, the advertising industry is responding to consumers’ shifting attention and headed towards total marketing or total brand communication. Brands are changing their focus from advertising on a medium, to marketing through, and with, content.

Marcel Fenez, Global Leader of PwC’s E&M practice said, “The continuing fragmentation of the market offers companies the chance for creativity around the approaches to their buyers, be it via traditional channels or, more importantly, by embracing social media.” He points to the “re-socialization” of the media consumption experience. “The combination of digital access, mobility and social networking is seeing consumption of all forms of media migrate from a solo activity towards being a social experience with social networking forums to discuss and share views and content.”

Just a few of the statistics and five-year forecasts related to the social web, with general data for context, include:

Following a year of decline in 2009, the global E&M market, as a whole, will grow by 5.0% compounded annually for the entire forecast period to 2014 reaching $1.7 trillion, up from $1.3 trillion in 2009.

Regional and country variations in current market size and future growth reflect local factors around infrastructure, access availability and consumer behavior.

PwC expects a relatively flat market in aggregate global advertising and consumer/end-user spending in 2010, improved growth in 2011 and a return to mid-single-digit gains during 2014.

Internet advertising will join television in 2014 as the only media with spending in excess of $100 billion.

Internet access is a key driver of spending in most segments. Increased broadband penetration will boost wired access while growing smartphone penetration and wireless network upgrades will drive mobile access. Spending on wired and mobile Internet access will rise from $228 billion in 2009 to $351 billion in 2014.

Globally, the online and wireless video game market will grow from $52.5 billion in 2009 to $86.8 billion in 2014, a compound growth rate of 10.6%. This will make it the second fastest-growing segment of E&M behind wired/mobile Internet advertising, yet ahead of TV subscriptions and license fees.

The massive study, an annual must-read for those in E&M and industries that rely upon it for survival, contains analyses and forecasts of major E&M industry segments across the globe. Digital spending referenced includes 13 segments: broadband and mobile access; wired and mobile internet advertising; video on demand; mobile TV subscriptions; online and mobile TV advertising; digital recorded music distribution; online movie subscription rentals and digital downloads; online and wireless video games; digital advertising in newspapers and consumer magazines; satellite radio subscriptions and online radio advertising; electronic consumer; education and professional books; digital directory advertising; trade magazine digital advertising.