Research

Digital To Make Up 44% of Global Media Spending by 2017

TV Advertising Expected to Remain Steady, According to PwC Report 6/05/2013 9:35 AM Eastern

Spending on digital media – largely driven by smartphone and tablet ownership – is expected to account for 44% of all entertainment and media expenditures in the next five years, far outpacing other sectors, according to a PriceWaterhouseCoopers report issued today.

According to PwC’s Global Entertainment and Media Outlook 2013-2017, consumer access to content is being democratized by increased access to the Internet and smart devices. And though traditional non-digital media will dominate E&M spending over the next five years, the growth will be concentrated in digital media platforms and consumption.

The rising importance of mobility will become a big factor in the rise in digital spending. At a PwC event in New York Wednesday to launch the report, PwC partner, entertainment, media and communications Sean DeWinter said that 77% of Internet searches are done with a mobile device in the presence of a fixed PC or a laptop.

“People reach for their mobile device even before they look at the browser on their laptop,” DeWinter said.

Television advertising will still make up the bulk of total advertising revenue, according to PwC and will grow steadily during the next five years, from $63.8 billion in 2012 to $81.6 billion by 2017. In its report, PwC said TV will account for about 38% of the total net advertising spend in the U.S. by 2017, about the same as it did in 2012.

Pay TV penetration, which peaked at 82% between 2006 and 2009, is expected to decline to about 79% by 2014 and maintain that level for the following three years, according to PwC. Competition from satellite TV – where subscribers are expected to grow by 2.7 million to 34.6 million by 2017 – and telcos – with customers growing from 10.1 million in 2012 to 14.3 million by 2017 – will drive cable customer declines.

PwC estimates that global E&M spending will rise from $1.6 trillion in 2012 to $2.2 trillion by 2017, growing at an annual rate of about 56%. The U.S, market, according to PwC, is expected to grow at a 4.8% annual clip, to $632 billion in 2017 from $499 billion in 2012.

Global digital spending, at 44% of total E&M expenditures, is almost double the level in 2008 and up from 34% in 2012, according to PwC. In the U.S., digital spending is expected to account for 43% of all E&M expenditures, up from 31% in 2012.

“The E&M industry is undergoing a significant shift as digital disruption across every segment is accelerating and as digital media remains the clear driving force behind E&M revenues over the next five years,” said PwC’s US entertainment, media & communications practice leader Ken Sharkey in a statement. “To drive growth and compete effectively in the future, E&M companies must invest in constant innovation that encompasses its products and services, operating and business models and, most importantly, focus on customer experience, understanding and engagement.”

September