PwC report says entertainment and media industry must leverage trust assets to grow

Australian entertainment and media companies must assess trust and create, capture and monetise their trust assets in order to find growth in the next five years, according to a PwC Australia report released today.

PwC’s 17th annual Australian Entertainment & Media Outlook analyses trends and consumer and advertising spend across 12 segments and shows spending is expected to rise at a compound annual growth rate (CAGR) of 3 percent over the next five years, but with sharp differences between industry segments and sectors.

The subscription television market is the fastest growing segment in spending, forecast to rise at a compound annual growth rate (CAGR) of 10.1 percent, trailed by the internet advertising market at 7.7 percent.

Megan Brownlow (pictured above), PwC Australia’s Entertainment & Media Industry Leader said the trust deficit continues to grow between companies and consumers and to succeed companies must measure and capitalise on their trust assets.

Says Brownlow: “Numerous breaches of trust by corporates in Australia and globally over the last year have soured relationships with consumers.  Companies that get the consumer trust piece right will take it to the bank and boost investor and regulator confidence.

“We’ve identified four trust drivers: advocacy – are you acting in my best interests?; consistency – have you proved credible before?; transparency – do I really understand what you’re doing?; and success – do you have what it takes to help me achieve my goals?  Organisational strength on these drivers can be understood by how your target market would answer these questions.

“Consistency is a particularly powerful trust driver for traditional media because they have a longer organisational legacy. Restaurateur and Masterchef judge Gary Mehigan’s podcast program, A Plate to Call Home, shows how traditional media can capitalise on this by using a core skill to connect with audiences in new ways.  

“While this framework seems simple, drivers carry different weights at different times and for different groups, meaning trade-0ffs will need to be made,” Brownlow said.

Digitally driven segments propelling growth

PwC’s Australian Outlook shows growth is broad-based but unevenly distributed across the industry, with the fastest revenue growth in digitally driven segments.

The internet advertising market is forecast to reach $12,681 million or 65 percent of the total advertising market in 2022 and will overtake the internet access market ($11,507m) for the largest segment in the entertainment and media industry.  

Fast growth in video advertising, at a CAGR of 23.8 percent, will see the segment account for 25 percent of the total internet advertising market by 2022.

A substantial increase in digital revenue is underpinning total out-of-home market growth at 15.9 percent compared to -5.7 percent for physical.

Strong growth in digital music is also propelling the total music market, which is expected to rise at a CAGR of 5 percent and attract 6.4 percent ($1,792m) of consumer spend by 2022.  Digital music is expected to grow at a CAGR of 10.2 percent.

By contrast, PwC Australia has forecast the newspaper, free-to-air television, magazine and filmed entertainment spending markets will reduce in size from 2018 to 2022.

Podcasting and interactive games top performers

Podcasting and interactive gaming continue to outperform other consumer-funded entertainment sectors such as music and filmed entertainment.

Says Brownlow: “Podcasting is fast becoming a consumer favourite, propelling growth in the radio sector.  It’s forecast to more than double revenue over the next five years, growing at an impressive CAGR of 85.9 percent.

“The podcast monthly listeners forecast is expected to more than double to 8.9 million in 2022.  The advent of voice-activated smart speakers, especially in the home, will also boost music-listening opportunities for Australian artists and labels.”

The interactive games market also shows signs of strong growth into 2022, with an expected CAGR of 5.1 percent, driven by digital sell-through revenue with a CAGR of 14.6 percent.  The sector is forecast to attract 11.8 percent of the total Australian consumer spend in 2022.

Says Brownlow: “Growth in attention to eSports and recognition of its audiences’ high disposable incomes is attracting the interests of marketers.  The total eSports market is forecast to be $21 million in 2022, up from $8 million in 2017.

“The next wave of supporting infrastructure, including greater cloud usage and fifth generation wireless systems otherwise known as 5G, will enable hardware and software improvements to drive future growth in the interactive games market.”

The online Australian Entertainment & Media Outlook 2018-2022 is available here: www.pwcoutlook.com.au.