PwC’s Australasian Entertainment and Media Outlook reveals COVID impact on consumer habits
The 2020-2024 Outlook is the 19th iteration from PwC and it shows entertainment and media revenue projected to contract by 4.46 percent to $57.4 billion in 2020. Advertising revenue is also set to diminish with COVID-19-driven changes to consumption behaviour, along with advertisers’ evolving appetite for more measurable media investment, leading to $14.9 billion this year at a CAGR of -11.31 percent.
The Outlook’s results point to Australian consumer habits in the entertainment and media sector, which have taken a lifetime to evolve, changing in a matter of months, due to the impacts of a global pandemic. Australians are increasing their spending on video on demand, podcasting, music streaming and esports, with consumer spending likely to close the gap on industry advertising revenue and overtake it in the next five to seven years.
Justin Papps, PwC Australian partner and the editor of the Outlook, says the changes have simply exacerbated trends that were already underway.
“This result comes amid the sharpest fall in global entertainment and media revenue in the 21-year history of this research, with a global decline of 5.6 percent from 2019 – more than US$120 billion in absolute terms,” he says.
“While the pandemic has had an unprecedented and varying impact, the entertainment and media industry has been going through significant change for years and the pandemic has, in the most part, simply accelerated and amplified ongoing shifts in consumers’ behaviour and in digitalisation.”
Streaming Video On Demand
With the huge numbers of people confined to their homes and/or working remotely, it comes as no surprise that streaming video on demand (SVOD) continues to grow. It is project to reach $2.3 billion by 2024 at an impressive 16.15 percent CAGR (compound annual growth rate). The introduction of Disney+, Apple TV+ and Binge since the last report coincided with the move indoors and the reduction of out of home entertainment options. All SVOD platforms were able to take advantage of this opportunity with the release of content that will create new habits with consumers.
“SVOD is one of the parts of the market that everyone is watching closely, largely based on their own consumption habits changing during 2020. As a market, we are spoilt for choice for streaming services and it will be interesting to watch how many services are retained by consumers once things return to normal,” Papps says.
The pandemic has led to record-breaking levels of news consumption with digital advertising and subscriptions set to grow to $928 million by 2024 at a CAGR of 5.64 percent.
“Australian newspapers have increased their value proposition as a ‘trusted source of news content’ during the pandemic, with many local new publishers offering free coverage of the pandemic, regularly updated blogs and dedicated pages during the health crisis, and before that, the bushfires in early 2020,” Papps says.
“There’s also been an industry-wide focus on digital transformation and the monetisation of digital news formats in the Australian newspaper landscape. The ability of the news media outlets to successfully convert newly acquired digital news audiences during the pandemic to subscription models will be central to future growth within the industry.”
Broadcast Video on Demand (up to over $501 million by 2024, CAGR of 24.87 percent), podcasting, music streaming ($1.4 billion by 2024, CAGR of 10.31 percent) and online gaming ($4.4 billion by 2024, CAGR of 6.87 percent) have also benefited from the pandemic’s effects.
Despite the contraction in Australia’s entertainment and media revenue during 2020, a recovery is expected. Consumer revenue is set to grow to $50.6 billion in 2024, at a CAGR of 3.14 percent while advertising revenue is set to grow more modestly to $17.9 billion in 2024, at a CAGR of 1.37 percent.
“What our Outlook tells us is that entertainment and media in Australia is becoming more virtual, streamed, personal and – at least for the time being – more centred on the home than anyone anticipated at the start of 2020. This is also in line with what our Global Entertainment and Media Outlook shows,” says Papps.
“Across the 12 segments forecast in the Outlook all players have an urgent focus on undertaking the organisational transformation necessary to deliver growth. Consumer habits can take a lifetime to learn, but we’ve seen they can take a lockdown to lose, which means business must continue to adapt in parallel in their search for growth.”