IPTV will be subscribed to by 27% of Australians by 2017 and is expected to be one of the strongest contributors to media revenue over the next five years, which will be driven by consumer spend ahead of ad dollars, a new report has found.

PricewaterhouseCoopers’ ‘Australian Entertainment and Media Outlook 2012-2016′ report puts growth for the entertainment and media industry at 18% over the next five years, but revenue from advertising is only expected to grow 13% compared to a healthier 21% for consumer revenues.

The three strongest sectors of consumer revenues will be subscription TV, interactive games and internet access, according to the report. Research conducted by the management consultants in April found that 52% of Australian homes already own a device that could enable IPTV, such as a connectable television, connectable games console or a set-top-box. The availability of increased programming choice emerged as the number one reason why consumers would join such a service.

Top reasons consumers indicated they would switch to IPTV

PwC technology, information, communications and entertainment leader David Wiadrowski predicts that the sectors set to win over the next five years are those with strong offers on mobile devices.

“Demand for media by consumers has never been stronger,” Wiadrowski says, pointing to increases in viewership, readership and data consumption. “PwC expects the revenue declines in structurally challenged segments, such as newspaper and magazine publishing, to be partly offset by new digital subscriptions,” says Mr Wiadrowski.

“However these new business models require time and patience to be bedded down properly. It would be a mistake to look for instant or short term success when experimentation is crucial at times of change.”

PwC predicts revenue for the entertainment and media industry will $38.3 billion by 2016, with consumer spending generating $24 billion of the pool. The industry’s predicted compounded annual growth rate is 4.1% over the next five years.

PwC predicts that mobile commerce will grow exponentially over the next five years with mobile marketing and m-commerce set to merge to create new forms of transactional advertising exclusive to the mobile environment.

“The long-term success of mobile commerce in Australia will be largely driven by two critical factors: increased consumer confidence and trust in mobile, and the emergence of a secure and accepted mobile wallet offering,” Wiadrowski says.