While spending on non-digital media will continue to dominate the next five years, the growth will come from spending related to media delivered digitally.
China, India, and Indonesia (together with Brazil, Russia, Mexico, Argentina, the Middle East and North Africa) will see the most growth—nearly doubling their shares of total E&M revenue during PwC's forecast period (2013-2017).
The average compound annual growth rate (CAGR) for these eight high-growth markets is more than double that of the E&M industry as a whole; they will account for 22 per cent of total global E&M revenues in 2017.
The new middle class, which increasingly accesses the internet via mobile devices, has caused PwC to predict that China, Brazil, India and Russia alone will account for 45 per cent of fixed-broadband subscriptions and half of all mobile-internet users by the end of 2017.
While there will be no change in the markets in the top 10, there will be considerable reshuffling, said Marcel Fenez, global leader of entertainment and media at PwC. Looking solely at consumer spending on E&M, China will rise from fifth in 2012 to third in 2017, surpassing the UK in 2013 and Germany in 2016.
When looking at TV revenue, China will overtake the UK and Japan in 2014 to reach third spot behind the US and Germany. China will also leapfrog Germany in 2015 to become the second largest TV market.
In the global trade-show business, worth in excess of US$36 billion in 2017, China can expect to surpass the UK and Japan in 2014 to become the fourth biggest market.
In terms of advertising spend, China will surpass Japan to become the second largest market in 2016, as the Japanese advertising market matures and begins showing less room for growth. Overall advertising spending in China to 2017 is projected to grow by 12.4 per cent compounded annually, led by internet advertising with a CAGR of 21.5 per cent. In addition, consumer spending on entertainment and media will grow by 8 per cent CAGR, driven by films at 14.7 per cent CAGR and pay TV subscriptions at 13.5 per cent.
As for neighbouring Hong Kong, given the high levels of mobile and fixed internet penetration, the city will see growth of internet advertising at 11.3 per cent CAGR, driven by video advertising at 40 per cent CAGR and mobile advertising at 19 per cent CAGR.
Cecilia Yau, PwC's Hong Kong entertainment and media partner, says mobile media is incredibly popular, making Hong Kongers a captive audience for mobile marketing.
Meanwhile, TV remains the most popular and increasingly competitive advertising medium in Hong Kong at around 30 per cent of total spend, compared with newspapers at 20 per cent. The vast majority of advertising spend remains focused on terrestrial channels (86 per cent) despite the high take-up of subscription pay-TV.
With the vast majority of homes are already receiving digital pay-TV, and with increasing competition from digital terrestrial television (DTT), pay-TV operators will focus on developing value-added services in order to attract higher-value customers, according to PwC.
In the next five years, TV advertising will grow by 8.5 per cent CAGR and will still dominate the advertising market in Hong Kong.
Overall consumer spending on entertainment and media in Hong Kong will grow by 3.2 per cent CAGR in the next five years, as legal digital content become more pervasives. For example, Hong Kong will benefit from streaming music services resulting in overall growth of 5.8 per cent CAGR.
Fenez said E&M companies need to invest in developing and distributing content in ways that compel customers to loyalty and take advantage of their propensity to engage in sharing content.
He added: “It really is all down to being agile enough to respond operationally and to innovate with new business models.”