PWC ENTERTAINMENT & MEDIA OUTLOOK 2017-2021 - MEDIENORGE

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PWC ENTERTAINMENT & MEDIA OUTLOOK 2017-2021 - MEDIENORGE
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PwC Entertainment &
Media Outlook
2017-2021
PWC ENTERTAINMENT & MEDIA OUTLOOK 2017-2021 - MEDIENORGE
Consumer/end-user &
advertising spending
                         5 Year historical &
                         5 Year forecast data      54        countries               17    segments

     Data         Video games        Internet    TV advertising             Cinema            Music
 consumption                          access

   Radio          Magazine          Newspaper    Book publishing         Out-of-home        Business-
                  publishing        publishing                            advertising      to-business

   E-sports        Internet          Internet      Traditional TV        Virtual reality
                  advertising         video       and home video
                                                                                   www.pwc.com/outlook
PWC ENTERTAINMENT & MEDIA OUTLOOK 2017-2021 - MEDIENORGE
Emerging technologies are enabling
companies to differentiate by
creating innovative user experiences
PWC ENTERTAINMENT & MEDIA OUTLOOK 2017-2021 - MEDIENORGE
The accelerating speed of technological change is
opening up large opportunities for innovation in
product offerings that revolve around user experience

                   1   Technology is the driving force behind
                       new and rapidly growing segments                  2    Exploitation of data and new technology
                                                                              is enabling innovative user experiences.
                                                                                       Internet of
                                                                                         Things

                                                                                                          Augmented
                                                                     Robots                                 reality

                                        Virtual reality
                                                                                          2021                     Virtual
                                                                Drones
   Emerging                                E-sports                                      outlook                   reality
technologies are
  changing the
 E&M industry
                                                                         3D printing                  Blockchain

                                                                                        Artificial
                                                                                       intelligence
PWC ENTERTAINMENT & MEDIA OUTLOOK 2017-2021 - MEDIENORGE
Technology companies now dominate the world‘s
largest companies measured by market capitalization

Top 5 public traded companies by market cap (June 30)   Tech
                                                        Other

2007

2017

Source: FT Global 500 & Ycharts.com
PWC ENTERTAINMENT & MEDIA OUTLOOK 2017-2021 - MEDIENORGE
Companies are already leveraging emerging
technologies to enhance user experience

Worldwide tech company developing                                                                     A U.S-based VR startup is
next mobile OS with AI-powered features                                                               planning to open a VR multiplex
                                                              AI/ auto-
to streamline consumer experience.                                                    AR/ VR          immersing consumers in a personalized
                                                               mation
                                                                                                      entertainment experience.

Global telecom company                                                                                         Social networking
invests in entertainment                                                                           Cyber-      company releases anti-­
                                                Cloud
operating system to deliver a                                                                     security     harassment capabilities to
personalized entertainment                                          Technologies                               enhance user safety.
experience across all devices.                                      transforming
                                                                        E&M
Multinational E&M                                                                                 Access,
                                                                                                               The sharing economy
conglomerate has created a                       3D                                                            shifts consumer behaviour from
                                                                                                 not owner-
patent-pending 3D printer.                    printing                                                         owning assets.
                                                                                                    ship

E-commerce company is investing in                                                   Big data/        Multinational tech company
                                                              Internet
an IoT voice-led operating system to enable                                            data           providing real-time sports statistics and
                                                              of Things
                                                                                     analytics
smart devices.                                                                                        point-by-point analysis.

Business Insider, Forbes, Variety, International Data Corp., Tech News World, CNBC, PwC
PWC ENTERTAINMENT & MEDIA OUTLOOK 2017-2021 - MEDIENORGE
What Are the Global Trends?
Expected global growth in E&M expenditures of 4.3%

                              Scandinavia                          Russia
                              3.1%                                 7.2%
              US                                 Germany
              3.7%                               1.8%
                      UK
                      3.0%                    France
                                              2.4%                                  Japan
                                                                                    1.8%

                                            Global                          China
                                            4.3%                            8.3%
                     Brazil
                     4.7%                                  India
                                                           10.5%

 BRIC: 8.0%

 Mature: 3.1%
E-sports and internet video are expected to outperform
the other segments in the global E&M market in terms
of percentage growth
Global growth by segment 2016-2021F

E-sports                                                                          21,7 %
Internet video                                                           11,6 %
Internet advertising                                                9,8 %
Video games                                                      8,2 %
Internet access                                          6,0 %
Cinema                                             4,4 %
Total music revenue                              3,5 %
TV advertising                                 2,8 %
Business-to-business                           2,7 %
Radio                                      2,1 %
Total traditional TV and home video      1,3 %
Books                                   1,1 %
Magazines                             -0,5 %
Newspaper                             -2,7 %
The Scandinavian E&M market
Spending on digital channels is expected
   to drive growth in the Scandinavian E&M
   market

                  40                                                 Digital is defined as:
                                                   2016-2021F CAGR   • Online and mobile internet
                  35                                                   advertising
                                                                     • Mobile TV subscription
                  30                 Internet Access      5.0%       • Digital music
                                                                     • Electronic home video
                  25                                                 • Online and wireless video
USD in billions

                                                                       games
                  20                         Digital     8.1%        • Digital consumer magazines
                                                                       circulation spending
                  15                                                 • Digital newspaper circulation
                                                                       spending
                  10                   Non-Digital       -0.9%       • Digital trade magazine
                                                                       circulation spending
                   5
                                                                     • Electronic consumer,
                                             Total                     educational, and professional
                                       Digital and        3.1%         books
                                                                     • Satellite radio subscriptions
                                14

                            20 6

                                       Non-Digital
                       12

                                15

                            20 F
                            20 F
                            20 F
                            20 F
                               13

                                 F
                                1
                              17
                              18
                              19
                              20
                              21
                             20

                             20
                   20

                             20
                        20
Internet advertising is expected to lead
growth across media segments in the
Scandinavian E&M market towards 2021
Scandinavian growth by segment 2016-2021F

Internet advertising                                                                        8,3 %
Video games                                                                         6,7 %
Internet access                                                             5,0 %
Internet video                                                          4,2 %
Music                                                           2,8 %
Radio                                                         2,4 %
Out-of-home advertising                                      2,1 %
Business-to-business                                  1,4 %
TV subscriptions and licence fees                    1,1 %
TV advertising                                  0,9 %
Book publishing                             -0,2 %
Filmed entertainment                        -1,0 %
Magazine publishing                         -1,3 %
Newspaper publishing                        -4,6 %
Digital advertising revenues are expected
to represent 58% of total Scandinavian
advertising revenues in 2021

                   2016                  CAGR: 3.2 %                         2021F
                                                                        4%
                                                                   4%
   5%
              6%        9%
                                                                                 8%

                                                               12%

 18%            8 566                                                        10 023
                USD                                                           USD
               millions        48%                           14%             millions

                                                                                        58%
        16%

 Digital advertising         Television - excluding online           Newspaper print

 Business-to-business        Magazine print                          Other
Mobile is expected to make up more than 70 %
   of internet advertising revenue in US by 2021

   Internet advertising in US advertising revenue

                  120

                  100                                                         26%
                                                                        27%
                                                                                    2016 –2021F CAGR
USD in billions

                                                                  30%

                   80                                       34%
                                                                                    Mobile internet advertising in USA       18.7%
                                                      40%

                   60                                                               Non-Mobile internet advertising in USA   -3.7%
                                                49%

                                                                              74%
                   40                     65%                           73%
                                                                  70%
                                    75%                     66%
                              83%                     60%
                   20   91%                     51%

                                          35%
                                    25%
                        9%    17%
                        12

                        13

                        14

                        15

                        16

                       17

                       18

                       19

                       20

                       21
                     20

                     20

                     20

                     20

                     20

                    20

                    20

                    20

                    20

                    20
User Experience Driving Growth
Print will continue to see a negative growth
rate and digital will not compensate for
this loss
Year-over-year % growth rate in Scandinavia

 60 %

 50 %                                                                  2016 –2021F CAGR
                                                                       11.7 %   Digital circulation
 40 %                                                                  3.1 %    Digital advertising
                                                                       - 6.0 %  Print advertising
 30 %
                                                                       - 6.7 %  Print circulation
 20 %

 10 %

  0%

(10 %)
                     14

                                   16
                           15

                                               F

                                                    F

                                                         F

                                                              F
           13

                                                                   F
                                            17

                                                   18

                                                        19

                                                             20

                                                                  21
                  20

                                 20
                          20
         20

                                         20

                                                   20

                                                        20

                                                             20

                                                                  20
Mobile will continue to be the biggest growth
story towards 2021 in internet advertising

Internet advertising market by sub segment in Scandinavia

                  2016                CAGR: 8.3 %           2021F

           16%                                                         17%
                               25%                    24%
                                                                               2016 –2021F CAGR
    4%                                                                         Mobile             17.6 %
                  3 788                                      5 638             Search             10.7 %
                  USD                                        USD               Video               8.9 %
                 millions                            4%     millions           Classified          2.8 %
   19%
                                                                               Banner/Display      0.3 %
                                                     15%
                                                                         40%
                         35%
Number of apps per smartphone & tablet
  is expected to continue to grow and drive
  growth in mobile internet advertising
  Apps per smartphone & tablet

                 200

                 180                                                                      2016 –2021F CAGR
                                                                                          10.5 %   Central & Eastern Europe
                 160                                                                      9.2 %    Scandinavia
                                                                                          7.7 %    Western Europe
                 140
Number of apps

                                                                                          6.0 %    US
                 120

                 100

                  80

                  60

                  40

                  20

                       2012   2013   2014   2015   2016   2017F 2018F 2019F 2020F 2021F
The gap between TV advertising revenue and
  Internet revenue is increasing

  Internet and TV advertising revenues in Scandinavia

                                                                                         2016 –2021F CAGR
                  6 000
                                                                                         8.3%     Internet
                                                                                         0.9 %    TV
                  5 000
USD in millions

                  4 000

                  3 000

                  2 000

                  1 000

                      2012   2013   2014   2015   2016   2017F 2018F 2019F 2020F 2021F
Traditional losing ground to online
   streaming services focusing on user
   experience
   Traditional TV advertising is losing ground to online streaming services.

                  1 800
                                                                               CAGR 0,90%
                                                     %
                                     CAGR 1,80
                  1 500
                                                                         7%     8%       9%     10%      11%              2016 –2021F CAGR
                                                         5%     6%

                  1 200
USD in millions

                                                                                                                    Online       14.5%

                   900
                               84%    83%      81%       80%    79%      77%    76%      75%    73%      72%

                    600                                                                                        Multichannel      2.8%

                    300

                               15%    15%      15%       15%    16%      16%    16%      16%    17%      17%     Terrestrial      -0.9%
                                            14

                                                               16
                          12

                                                     15

                                                                      F

                                                                               F

                                                                                      F

                                                                                               F
                                     13

                                                                                                      F
                                                                      17

                                                                               18

                                                                                      19

                                                                                               20

                                                                                                      21
                                          20

                                                           20
                          20

                                                 20
                                 20

                                                                    20

                                                                           20

                                                                                    20

                                                                                           20

                                                                                                    20
Electronic home video is expected to grow, but
cinema is still keeping up

Scandinavian filmed entertainment revenue
100%                                                                                                       2016 –2021F CAGR
                                                                   12%      11%   10%
                                                   16%      14%
 90%                                        18%
                                  24%
                           33%
 80%                41%

          54%
                                                                                        Electronic home video      4.2%
 70%
                                                                            52%   53%
                                                            51%    52%
 60%                                        46%    49%
                                  41%

 50%                21%
                           33%                                                                Cinema tickets       2.0%
           7%
 40%

 30%
                                                                                         Physical home video       -9.6%
 20%      39%       38%    35%    35%       36%    35%      36%    36%      36%   37%

 10%

  0%
                          14

                                        16
          12

                                  15

                                                  F

                                                         F

                                                                  F

                                                                              F
                13

                                                                             F
                                                  17

                                                         18

                                                                  19

                                                                         20

                                                                           21
                      20

                                       20
       20

                               20
               20

                                              20

                                                       20

                                                              20

                                                                       20

                                                                         20
Despite growth in streaming, live music will
continue to be the main revenue stream in the
music industry

Scandinavian music revenue

100%                                                                                              2016 –2021F CAGR
                                          10%    10%      9%     9%       8%    8%
                       11%      11%
 90%     16%
                13%

                                                                                         Streaming        6.7%
 80%                   19%      21%       23%    24%      25%    26%      27%   27%
         12%    16%
 70%

 60%
                                                                                          Live music      2.5%
 50%

 40%
         68%    67%    68%      67%       66%
 30%
                                                 65%      65%    64%      64%   65%
                                                                                      Physical music     -3.7%

 20%

 10%

  0%
                      14

                                      16
          12

                                15

                                                F

                                                       F

                                                                F

                                                                            F
               13

                                                                           F
                                                17

                                                       18

                                                                19

                                                                       20

                                                                         21
                      20

                                     20
       20

                             20
               20

                                            20

                                                     20

                                                            20

                                                                     20

                                                                       20
Emerging technologies will change
how companies generate, distribute
and control content
Among emerging technologies, AI, IoT and VR received
most funding in 2016

Global VC funding, Essential
Eight technologies
                                                        24%
AI
IoT
VR
Other
(Robots, AR,                           29%    5 876
Drones, 3D                                    USD
Printing and                                 millions
Blockchain)                                                   14%

                                             33%

Source: CB Insights, PwC, VC Funding
Benefits from AI include an improved ability
to tap into consumer preferences and
generate personalized content

AI can help companies innovate content creation and
improve customer experience

Simplifying content creation
• AI-generated music
• AI generated video-ads                                                             Artificial Intelligence (AI) could
                                                                                     contribute up to $15.7 trillion to
Improving the customer experience
• AI-generated content curation (e.g. Spotify playlists)
                                                                                     the global economy by 2030 and the
• AI-generated product recommendations (film, TV, music)                             E&M industry can seize a significant
                                                                                     share of this gain
Better, more creative decisions
• Maximization of film and content licensing revenues                                                PwC AI-report: Sizing the prize
• AI-generated insight from video and social media

Freedom of repetitive tasks
• Programmatic ad buying
• Newsletter curation, creation and distribution
• AI-generated sports summaries, film scoring and stock music

Outlook 2017-21: AI is already entertaining you. Deborah Bothun & David Lancefield
Scandinavia is better positioned to create
value from Internet Of Things compared to
the rest of the world

Key drivers for the Scandinavian IoT value creation
potential
                                                                          By expanding to new or even
                                                                          non-existing entertainment
1     Well developed fiber- and internet-
      infrastructure.                                                     platforms, E&M companies can
                                                                          unlock the potential of IoT
2     4G coverage is widely spread across Scandinavia. Sweden is
      leading in testing 5G coverage.
                                                                                          PwC AI-report: Sizing the prize

3     On average, each person in the Nordics has almost 3 devices
      connected to the internet in 2016. By 2021, this is expected
      to grow to 6 devices per capita, which represents four times
      as many devices as in the rest of the world.                                      67M USD
                                                                                      IoT Scandinavian market size 2016

                                                                                               20 %
                                                                                      Nordic loT CAGR 2016-2021 in the
Source: Connected Things: New digital ecosystems – unlocking the growth                      Nordics 2016 - 2021
potential of IoT (2017) Arthur D. Little and Telia
We are at an amazing point in history for
artists. A revolution is going to happen, and
next year it’s going to take over. It’s the ability
of artists to have the control and the say of
what they do with their music at large. The
answer to this is in the blockchain.”
                   - Imogen Heap, British singer & songwriter
CEO perspective: E&M CEOs are mostly concerned about
changing consumer behaviour

  81 %                                     78 %                                            78 %

 of E&M CEOs are                         of E&M CEOs are                                 of E&M CEOs are
 concerned about                         concerned about                                 concerned about
changing consumer                        availability of key                            volatile energy costs
     behaviour
                      77 %                     skills
                                                                   75 %

                     of E&M CEOs are                              of E&M CEOs are
                     concerned about                            concerned about the
                    uncertain economic                         speed of technological
                          growth                                       change
Find your own
Outlook story
   online ...
www.pwc.com/outlook
Contact us!

                    Eivind Nilsen
                    Partner
                    952 608 32
                    eivind.nilsen@pwc.com

                    Øystein B. Sandvik
                    Director
                    952 604 15
                    oystein.sandvik@pwc.com

© 2017 PwC. All rights reserved. In this context, “PwC”
refers to PricewaterhouseCoopers AS, Advokatfirmaet
PricewaterhouseCoopers AS, PricewaterhouseCoopers
Accounting AS and PricewaterhouseCoopers Skatterådgivere AS
which are member firms of PricewaterhouseCoopers International
Limited, each member firm of which is a separate legal entity.
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