In a year dominated by Sars, terrorist threats and general gloom, I am sure these forecasts will be undergoing considerable scrutiny and the emphasis will already be turning towards the medium term. After all, that must be better, right?
To help answer that question I turned to the PricewaterhouseCoopers Global Entertainment and Media (E&M) Outlook. This annual publication examines the key trends and developments affecting the industry and assesses their impact on the various E&M segments over a five-year period. The 2003 to 2007 Outlook has forecast overall compound annual growth of 4.7 per cent for E&M in Asia-Pacific. This compares with a modest three per cent growth in 2002. The forecasts are formulated with regard to certain global dynamics and principal industry drivers. The two global dynamics are:
The economic uncertainty, where an apparent shift towards military and security spending will dampen private investment and constrain advertising growth in the next two years.
The expansion of digital technology will mean that by the end of the decade all E&M consumed will be in a digital format.
New products and services made possible by digital technology will stimulate the market while creating opportunities for unauthorised usage that threaten industry business models.
The principal drivers of industry growth underlying the forecasts are:
- Change in share of advertising spending.
- Introduction of next generation technologies, that spur growth in internet spending and HDTV.
- Expansion of broadband internet access.
- Changes in traditional distribution channels, which affect how consumers buy E&M products. This is likely to adversely affect music sales but boost DVD, video gaming and enhance the consumer book market.
The tight economic environment in the past two years caused advertisers to be even more selective with their funds and to allocate resources to media with the largest audiences, so giving TV a competitive edge. As economic conditions improve and advertising budgets increase, more resources will be allocated to print and other media. The internet and out-of-home categories will also benefit as new metrix are developed that provide reach and frequency data.
The forecast growth for advertising spending in Asia is 3.1 per cent compound, as Japan, which still dominates regional advertising, will remain sluggish for the next two years. The internet will be the fast growing category, boosted by technology enhancements, new audience measures and greater consumer acceptance of online commerce. It is interesting to note how Sars has driven up online commerce and although people will return to retail shopping there is now greater comfort with online shopping.
Consumer spending on E&M will grow by 5.4 per cent compounded annually.
Piracy will damage growth in film entertainment and music but cable and satellite and internet access spending will see strong progress. The medium term outlook is therefore positive but by no means stellar - time for more thought!