PWC Outlook2017 Report

Perspectives from the Global
Entertainment and Media Outlook

20172021
Curtain up!
User experience takes center stage
www.pwc.com/outlook
PwcOutlook_C1-21-fin3-050417.indd 1 5/5/17 10:54 AM

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PwcOutlook_C1-21-fin1-plusChanges.indd 2 5/2/17 12:00 PM

Perspectives from the Global
Entertainment and Media Outlook
20172021
Curtain up!
User experience takes center stage
PwcOutlook_C1-21-fin1.indd 1 5/1/17 2:51 PM

Global entertainment and
media outlook country contacts
Global Denmark Japan
Deborah Bothun Leif Ulbaek Jensen Yoshihisa Chiyoda
deborah.k.bothun@pwc.com leif.ulbaek.jensen@dk.pwc.com yoshihisa.chiyoda@jp.pwc.com
Argentina Egypt Kenya
Ariel Vidan Jayant Bhargava Anthony Murage
ariel.vidan@ar.pwc.com jayant.bhargava@strategyand.ae.pwc.com anthony.murage@pwc.com
Australia Finland Korea
Megan Brownlow Harri Valkonen Bumtak Lee
megan.brownlow@pwc.com harri.valkonen@fi.pwc.com bumtak.lee@kr.pwc.com
Austria France Malaysia
Hannes Orthofer Richard Bjot Irvin Menezes
hannes.orthofer@at.pwc.com richard.bejot@fr.pwc.com irvin.menezes@my.pwc.com
Belgium Germany Mexico
Kurt Cappoen Werner Ballhaus Luis Roberto Martinez
kurt.cappoen@be.pwc.com werner.ballhaus@de.pwc.com luis.roberto.martinez@mx.pwc.com
Brazil Greece Middle East/North Africa
Estela Vieira Panagiotis Zisis Jayant Bhargava
estela.vieira@br.pwc.com panagiotis.zisis@gr.pwc.com jayant.bhargava@strategyand.ae.pwc.com
Canada Hungary Netherlands
John Simcoe Peter Sere Ennl van Eeden
john.b.simcoe@pwc.com peter.sere@hu.pwc.com ennel.van.eeden@nl.pwc.com
Chile India New Zealand
Ariel Waltuch Frank DSouza Keren Blakey
ariel.waltuch@strategyand.cl.pwc.com frank.dsouza@in.pwc.com keren.j.blakey@nz.pwc.com
China & Hong Kong Indonesia Nigeria
Wilson Chow Mohammad Chowdhury Osere Alakhume
wilson.wy.chow@cn.pwc.com mohammad.chowdhury@id.pwc.com osere.alakhume@ng.pwc.com
Colombia Ireland Norway
Jorge Mario Aez Amy Ball Eivind Nilsen
jorge.anez@co.pwc.com amy.ball@ie.pwc.com eivind.nilsen@pwc.com
Czech Republic Israel Pakistan
Tomas Basta Amir Gleit Syed Shabbar Zaidi
tomas.basta@cz.pwc.com amir.gleit@il.pwc.com s.m.shabbar.zaidi@pk.pwc.com
Italy Peru
Diogo Ferreira Bernardo Duce
diogo.ferreira@it.pwc.com bernardo.duce@pe.pwc.com

Philippines Thailand
Mary Jade Roxas Tina Hammond
jade.roxas@ph.pwc.com tina.ann.hammond@th.pwc.com
Poland Turkey
Pawel Wesolowski Murat Colakoglu
pawel.wesolowski@pl.pwc.com murat.colakoglu@tr.pwc.com
Portugal UAE
Goncalo Mendes Jayant Bhargava
goncalo.saraiva.mendes@pt.pwc.com jayant.bhargava@strategyand.ae.pwc.com
Romania United Kingdom
Florin Deaconescu Phil Stokes
florin.deaconescu@ro.pwc.com phil.stokes@pwc.com
Russia United States
Yury Pukha Deborah Bothun
yury.pukha@ru.pwc.com deborah.k.bothun@pwc.com
Saudi Arabia Stefanie Kane
Jayant Bhargava stefanie.kane@pwc.com
jayant.bhargava@strategyand.ae.pwc.com
Christopher Vollmer
Singapore christopher.vollmer@pwc.com
Charlotte Hsu
Venezuela
charlotte.hsu@sg.pwc.com
Manuel Pereyra
South Africa manuel.pereyra@ve.pwc.com
Vicky Myburgh
Vietnam
vicky.myburgh@za.pwc.com
Ong Tiong Hooi
Spain tiong.hooi.ong@vn.pwc.com
Jorge Planes Trillo
jorge.planes.trillo@es.pwc.com
Sweden
Nicklas Kullberg
nicklas.kullberg@se.pwc.com
Switzerland
Patrick Balkanyi
patrick.balkanyi@ch.pwc.com
Taiwan
Damian Gilhawley
damian.gilhawley@tw.pwc.com

About this report
Each year we take a deep dive into the And these imperatives assume a larger
findings of our Global entertainment importance because, as we document,
and media outlook. Whether youre a the E&M industry is confronting several
newcomer to the Outlook or a longtime challenges to continued top-line growth.
subscriber to our data, you should regard
To learn more about how the findings in
this document as an annual report for
this report can apply to your business,
businesses that invest and operate in
or how your company can subscribe to
the entertainment and media (E&M)
the full body of Outlook research, please
industry and in related sectors, such
connect directly with your local PwC
as technology, communications, retail,
team. Alternatively, you can reach out to
and e-commerce.
either of us, and well put you in touch
As you read through this report, were with our local leaders in your geography.
Deborah Bothun confident you will come away with We look forward to hearing from and
actionable business insights based on working with you.
the trends were identifying and charting
across the 17 defined segments and
54 countries our research covers. The Best regards,
authors of this report connect the dots
Deborah Bothun
between the business challenges our
Global Entertainment & Media Leader
clients face today, whether they are
deborah.k.bothun@pwc.com
coping with value-chain disruption or
mapping an M&A strategy, and the highly Brad Silver
detailed segment and country data that Global Technology, Media, and
emerges from the research. Telecommunications Leader
brad.silver@pwc.com
The intensive debate, discussion, and
Brad Silver analysis we engage in each year yields
important insights. For 2017, we see
an important set of takeaways that
should inform and shape your strategy.
Companies that wish to capture value
amid shifting consumer preferences and
business model disruptions must focus
on an increasingly prominent source of
competitive advantage: user experience.
They must harness technology and data
to attract, retain, and engage users
and convert them into devoted fans.

Contents
06 Methodology and definitions
07 Contributors
10 Curtain up!
Outlook perspective
22 Business models
As distribution splinters, adaptation is the name of the game
26 Value chains
Across E&M, companies chart a direct-to-consumer path
29 Technological change
Driving incremental growth through innovation
32 Content strategy
Adapting to penetrate technological and cultural filters
35 Deals
Strong tailwinds
38 Regulation
Market contrasts, net neutrality, and privacy
Index
PwcOutlook_C1-21-fin2-050417.indd 5 5/4/17 11:12 AM

Methodology and definitions
Historical data collection Forecasting methods Definitions
All forecasts have been built starting All forecasts are prepared as part of Do you want access to consumer
with the collection of historical data a collaborative, integrated process and advertising spending data at
from a variety of sources. A baseline of involving both quantitative and the click of a button? The Global
accurate and comprehensive historical qualitative analysis. The forecasts are the entertainment and media outlook is
data is collected in the first instance result of a rigorous process of scoping, a comprehensive source of global
from publicly available information, market mapping, data collection, analyses and five-year forecasts of
including from trade association and statistical modeling, and validation. consumer and advertising spending
government agencies. When this data across 54 countries for 17 segments:
Note: The only source of all consumer
is used directly, these sources are cited
and advertising spend data is the Global Books
accordingly. In addition, interviews
entertainment and media outlook; Business-to-business
with relevant associations, regulators
however, all the data, charts, and Cinema
and leading players have been held
graphs (unless stated otherwise) in this Data consumption
to gather insights and estimates not
publication are taken from the Global E-sports
available in the public domain. When
entertainment and media outlook. Internet access
this information is collected, it is used
Internet advertising
as part of calculations, and the sources
Internet video
are proprietary.
Magazines
Music
Newspaper
Out-of-home advertising
Radio
Traditional TV and home video
TV advertising
Video games
Virtual reality
To access the full segment
definitions for the Outlook, please
visit www.pwc.com/outlook
6 Global entertainment and media outlook 20172021

Contributors
Kristina Bennin
Wilson Chow
James DePonte
Karel Garside
Stefanie Kane
Art Kleiner
Matt Lieberman
Pauline Orchard
Sally Potts
Emmanuelle Rivet
Phil Stokes
Many other professionals from
the PwC entertainment and media
practice, across 54 countries,
reviewed and added local expertise
to this publication.
Contributors 7
Introduction

Introduction 9

Curtain up!
by Deborah Bothun and
Christopher Vollmer
Executive summary
Its a clich to note that something fundamental
has changed in the global entertainment and media
(E&M) industry. But the reality is that something
significant has changed. E&M companies have been
accustomed to competing and creating differentiation
primarily based on two dimensions: content and
distribution. Now they must focus more intensely on
a third: user experience.
To thrive in a marketplace that is increasingly
competitive, slower-growing, and dependent on
personal recommendations, companies must develop
strategies that engage, grow, and monetize their most
valuable customers i.e., their fans. To do so, they
must combine excellent content with breadth and
depth of distribution, and then bring it all together in
an innovative user experience, in which the content
1
is discoverable easily on an array of screens and at an
attractive price. Simply capturing the natural growth
in consumers and their uptake of services and content
with existing approaches is no longer sufficient.
Across the industry, the resulting quest to create
the most compelling, engaging, and intuitive user
experiences is now the primary objective for growth
and investment strategies and technology and data
lie at their center. Pursuing these strategies will help
companies thrive in an era of complexity and slowing
top-line growth from the traditional revenue streams
that have nourished the E&M industry to date.

A new focus on the user interests; and (2) capitalize on those themselves with audiences that are
emerging technologies that delight more engaged, are more committed,
Historically, the debate in the E&M users in new ways, deliver superior user and spend more per capita. Todays
industry has revolved around the experiences, and enhance productivity fans will also recruit tomorrows. And
relative importance of content versus (see Exhibit 1). companies that super-serve fans
distribution, and the strategic value via new and deeper experiences will
of combining the two. Weve seen this move faster to unlock opportunities
play out in vertical integration, industry Fan-centric businesses for revenue expansion. Embracing a
consolidation, and, to dust off a phrase In a Summer 2017 strategy+business fan-centric approach requires making
from the recent past, digital convergence article, How to Make Entertainment transformational changes throughout
strategies. More always equaled better, and Media Businesses Fan-tastic, the enterprise. Ultimately, the four most
and size itself became the defining Christopher Vollmer described why E&M important priorities for business leaders
competitive advantage. businesses built around fans command to consider are:
Rapid changes in technology, user multiple strategic advantages in todays
Know who the fans are. Companies
behavior, and business models, however, hypercompetitive landscape. The
must be able to distinguish their fans
have created a gap between how steady march of digital technology has
from casual users, understand what
consumers want to experience and pay ushered in a more direct-to-consumer
drives fandom for their brands, and
for entertainment and media and how environment characterized by greater
analyze the relative value of different
companies produce and distribute their choice and user control. With an ever-
audience or user segments. This creates
offerings. To bridge this gap, companies greater supply of media, there is simply
an imperative to build deeper user
should pursue two related strategies: (1) too much competition to allow E&M
insights and better targeting
focus their efforts on building businesses businesses to survive on experiences
capabilities. To do this, E&M companies
and brands anchored by active, higher- that disproportionately cater to casual
must strengthen capabilities in data
value communities of fans, who are eyeballs, infrequent users, and other
analytics, measurement, and
united by shared passions, values, and lower-value audiences. By contrast,
management. They can then more
businesses that are fan-centric will find
readily analyze what converts users
into higher-value fans. These insights
can help executives concentrate
Exhibit 1: Move over, content. Move over, distribution. User experience resources on the initiatives that matter
is king
most for driving overall company
growth and profitability.
Examples:
Increase business agility and
Accessibility exibility. Todays fast-moving, tech-
Affordability Artificial intelligence and experience-driven market is
Authenticity Augmented reality compelling E&M companies to optimize
Convenience
En
Blockchain their operations in new ways.

t
Cool
ablin
er wish lis
Chatbots Organizations need to be wired so they

Customization have the flexibility to respond faster to
Digital assistants
Discoverability
g technolog
Entertainment User Face recognition new user preferences, new business

Fun, funny experience Machine learning models, and new technologies. Teams
nsum
Robotics must be more multidisciplinary in their

Participation
Sensors / IoT approaches bringing together
Personalization
Virtual reality
Co
Privacy expertise across content, product,

ies
Security Voice interfaces

technology, distribution, and sales more
Simplicity 4DX
smoothly than ever before. For many
Spontaneity E&M businesses, this means
transforming organization structure,
teaming models, and company culture.
Source: PwC
Introduction 11

Monetize the total fan relationship.
Exhibit 2: Companies are leveraging emerging technologies to enhance
Fans want to do more with their favorite
the user experience
E&M brands than just watch. And fans
are by definition fanatics: They are the
users who cannot get enough of the A U.S.-based VR startup is planning
Worldwide tech company developing
to open a VR multiplex immersing
brands they love. Following fan passions next mobile OS with AI-powered features AI/ consumers in a personalized
to streamline consumer experience. automation AR/VR
creates a natural pathway to identifying entertainment experience.
new revenue opportunities. By super- Global telecom company Social networking
serving fans and extending the brands invests in entertainment
Cyber- company released
operating system to deliver Cloud
and franchises associated with a personalized entertain-
security anti-harassment capabilities
to enhance user safety.
passionate fans into new areas, E&M ment experience across Technologies
companies can create additional all devices. transforming
revenue opportunities in core offerings E&M
Multinational E&M The sharing economy
across multiple business models, conglomerate has created
3D
printing
Access, not shifts consumer behavior
ownership
including advertising, subscriptions, a patent-pending from owning assets.
3D printer.
and transactions.
E-commerce company is investing Big data/ Multinational tech company is
Internet
Adopt a user-/fan-centric focus. of Things data providing real-time sports statistics
in an IoT voice-led operating system to analytics
Leading E&M companies will develop enable smart devices. and point-by-point analysis.
the capabilities to compete and win in
an increasingly direct-to-consumer Source: Business Insider, Forbes, Variety, International Data Corp., Tech News World, CNBC,
landscape. This means moving from PwC
playing solely in a wholesale world,
where other players in the value chain
often manage the end-user relationship, and retain them. That ultimately creates potential to improve user experience
to operating in a more retail-like further opportunities for value creation. (see Exhibit 2).
environment, where companies deliver
In the U.S. and China, a few large A caveat is necessary in any discussion
end-to-end experiences directly to
companies Netflix, Tencent, Baidu of investments in technology and
users, consumers, and fans. Capabilities
have successfully embraced emerging data. It is increasingly challenging to
in areas such as user interface design,
technologies to achieve these goals. In measure with great precision the E&M
customer acquisition and retention,
their Summer 2017 strategy+business industry revenue and value generated
personalization, customer service, and
article, AI Is Already Entertaining You, by the collection, mining, and use of
even billing will therefore become more
Deborah Bothun and David Lancefield data. If companies can deploy data to
critical to E&M success moving forward.
explored how technology, media, and sell more subscriptions, capabilities
telecommunications companies are using in this area will show up in revenue
artificial intelligence (AI) solutions to totals immediately. But, of course, there
Improve user experience through
increase productivity, enhance creativity, are ways to monetize data that arent
emerging technologies
and innovate in ways that address captured by traditional methods of E&M
For E&M companies, a great user
consumers desires and challenges. spend measurement for instance, data
experience (UX) and advances in data
Although were still in the early days can be used to enhance e-commerce,
and digital technology along with
of machine learning and autonomous build brand loyalty, and increase
great content provide the makings of
systems, many of the executives Bothun engagement. These factors are implicitly
a virtuous circle. Increasing engagement
and Lancefield interviewed recognize included in valuations of companies, but
and attention can lead to the capture
that AI is not just another IT investment not necessarily in the traditional revenue
of more data and more understanding
it is becoming part of the technology measurement buckets.
about what crucial customers want. And
stack and touches all parts of the
that understanding enables companies
business. AI is a key component of seven
to further refine, target, and engage
of the eight emerging technologies PwC
their core audiences in ways that delight
has identified as having the biggest
PwcOutlook_C1-21-fin1-plusChanges-ReplacedExhibits.indd 12 5/2/17 5:26 PM

A slowdown Barring a step change in technology,
experiences, or platforms, the growth
in global growth rate of the E&M industry will be below
Across segments, and at any stage of the growth rate of global GDP. Simply
the economic cycle, it is clear that put, based on the traditional revenue
connecting with consumers as fans streams that have driven growth
and focusing on the user experience historically, E&M is losing market share
can be powerful levers for growth and in the global economy (see Exhibit 3).
profitability. These capabilities assume Why is this happening? This slowdown
a particularly high importance when stems from a set of challenges that
top-line growth begins to ebb in a are specific to E&M businesses as well
sector or industry. Which is precisely as larger factors that are affecting
the challenge many participants in the many industries.
E&M industry are facing. In our annual
review of the Global entertainment
and media outlook data, we look at Are consumers maxed out on
a composite of all 54 countries and media?
17 segments included in the study Because so many of our conversations
Based on the
to arrive at a global market forecast. with CEOs and board members traditional revenue
Few businesses have global strategies currently start off with questions about
that neatly match all of these markets. overarching geopolitical, regulatory, streams that have
Still, we use this approach to take the
temperature of how the overall industry
and technological uncertainties, were powered growth to
confident that some of the projected
is faring from year to year. Over the decline in growth stems from these date, E&M is losing
next five years were projecting that risks. (See A trio of macro challenges,
annual growth in the E&M industry will page 18.) However, even if we hold the
market share in the
average 4.2 percent, down from the macro risk steady, the E&M industry is global economy.
4.4 percent CAGR we forecast last year.
Exhibit 3: Global E&M revenue as a share of global GDP

E&M revenue will fall as a share of global GDP over the next five years
2016 2017 2018

2.54% 2.53% 2.52% 2019
2.48% 2020
2.44% 2021
2.39%
Source: Global entertainment and media outlook 20172021, PwC, Ovum
Introduction 13

facing significant pressures on growth. instead of mass-media purchases, their
Thats because it appears we may have overall spending may not grow as rapidly
arrived at a tipping point. In many of as in the past.
the largest markets, and hence in the
The same truism that holds for most
industry as a whole, E&M businesses
consumer markets holds true for the
are approaching or have reached a form
E&M industry: As markets mature,
of saturation. It may be that there are
they grow more slowly (see Exhibit 4).
limits to the willingness and ability
The most rapid growth rates will be
of people to consume and pay for the
seen in less-developed markets and
expanding array of media products
economies, where E&M spending on a
and services. But it could also be that
per capita basis is generally quite low
as digital media markets mature, and
(see Exhibit 5).
as user experiences improve, consumer
and advertising spending is becoming There are no real outliers or exceptions
more efficient. As consumers purchase to this rule. As Exhibit 4 (call it a seesaw
streaming subscriptions instead of chart) shows, the top left quadrant is
buying music downloads, and as populated by mature markets in North
advertisers make targeted online buys America and Europe, and wealthier
Exhibit 4: A world of differences

Scale vs. growth in global E&M markets
Global E&M
growth = 4.2%
730
U.S.
China
Japan
Total E&M revenue 2021 (US$ billions)
U.K.
Germany
France South Korea
Canada India
45 Italy Brazil
40 Australia
35 Average market
Spain size = $41 billion
30
25 Mexico Russia
Netherlands Indonesia
20 Switzerland
Sweden Turkey
Thailand
15 Norway
Belgium
Malaysia
10 Denmark U.A.E. Philippines
N.Z.
5 Finland Egypt
Israel Peru Pakistan Nigeria
0 Romania
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13%
CAGR 201621
14 Global entertainment and media outlook 2017 2021

Exhibit 5: Markets with low per capita spending will grow most quickly
Each bubble represents a country

Size of bubble represents total E&M revenue
Dollar amount represents per capita spending
Switzerland
$2,000 U.S.
$2,260
Slower growth
E&M revenue per capita, 2021
U.K.
$1,447
China
$222
Higher growth India

$32
E&M CAGR 2016 21 (%)

Asia-Pacific markets, in which consumers growth rates. Over the next five years,
spend a lot more than US$500 per most E&M segments will struggle to
capita annually on E&M. In both keep pace with GDP growth. Only two
the U.S. and Switzerland, consumers segments, newspapers and magazines,
spend more than $2,000 per capita. The are declining in absolute terms. But
bottom right quadrant is home to less- other major segments, including TV
developed economies, which, although advertising, B2B content, and cinema,
they may be highly populous, feature will shrink as a share of the global
much lower per capita spending. In five economy between now and 2021. And
of those markets (Pakistan, Nigeria, the areas that are showing growth,
India, Egypt, and Vietnam, which have a such as Internet video and Internet
combined population of 1.9 billion), per
capita E&M spending is less than $50
advertising, are not sufficiently large to
overcome the stagnation in other areas
It could be that as
per year. Although revenues are rising (see Exhibit 6, next page). digital media markets
rapidly in these markets, they are doing
so from a very low base. As a matter of
In other words, we are approaching an mature, and as user
industry plateau. Traditional, mature
mathematics, the rapid growth in the
segments are in decline, the Internet experiences improve,
lower right quadrant cant compensate
for the lower growth in the upper left
and digital E&M content is growing but consumer and
at a slowing rate and the next wave of
quadrant over the forecast period.
content and entertainment is in areas advertising spending
The majority of the traditional industry
segments included in the Outlook
such as e-sports and virtual reality,
which are just beginning to ramp up.
is becoming more
forecast also show a decline in projected According to Nielsens 2016 report on efficient.
Introduction 15

total audience measurement, U.S. adults
Exhibit 6: Internet video, Internet ads, gaming, and access are the
now spend 10 hours and 39 minutes
engines powering global E&M growth
a day consuming media, including an
CAGR minus GDP growth by segment, 201621 average of 4 hours and 31 minutes spent
watching live television. Because the U.S.
-10% 0 10% 20% is the largest revenue market for both
E&M overall and per capita spending,
Internet video 6.0
%
it is hard to see how its consumers will
continue to boost their consumption and
Internet advertising 4.3% spending at levels above GDP growth
Four major unless there is a major change in must
Video games 2.7% growth drivers
have technologies and brands. One
example of such a technology step
Internet access 0.5% change could come with the adoption
of autonomous vehicles which would
Cinema -1.2% significantly add to the number of
available screens and screen time for
Out-of-home ads -1.7% consumers.
Music -2.0%
Emerging areas
TV advertising -2.8% Theres another possible explanation
for the apparent slowdown in growth.
B2B -2.9% CAGR %
The universe of what is considered
E&M 4.2% E&M spending is clearly expanding, in
Radio -3.4% GDP 5.6% an ever-proliferating range of venues,
platforms, devices, arenas, and consumer
Traditional TV & video -4.2% products. But many of these areas, which
have significant growth potential, are
Books -4.5% not captured directly in the 17 segments
that we follow. Many companies are
Magazines -6.0% channeling portions of their advertising
budgets to e-commerce sites, but those
Newspapers -8.3% totals are not aggregated. The tallies
of cinema box office do not include the
-10% 0 10% 20% growing revenues movie theater owners
realize from using their properties to
GDP CAGR %
stream sporting and music events. Live
Note: E-sports and VR have been excluded from this chart because their very high growth events have great appeal. Live music,
rates (from very low bases) would distort the scale. The data consumption segment is not
a $25.6 billion business, is projected
included here because it is a usage-based metric.
Source: Global entertainment and media outlook 20172021, PwC, Ovum to grow at a 3 percent CAGR through
2021. And we havent traditionally
broken out live theater, which is
booming: Broadway box office sales
in 2016 alone were $1.4 billion.
PwcOutlook_C1-21-fin3-050417.indd 16 5/4/17 4:32 PM

Pockets of divergence Exhibit 7: Global divergences
Not all markets or segments are slowing
or in decline. Pockets of divergence and
potential market growth opportunities
109% growth in U.S. paid
surfaced in several areas of our
music subscriptions in 2016 10.1% India: the highest
research (see Exhibit 7). E&M growth excluding access
(201621 CAGR)
Cinema. Global box office spending
may be under pressure. But we were
struck by the varying amounts of
ad-based revenue as a proportion of
cinema revenue from essentially
nothing in Japan to 40 percent in Cinema advertising % of total cinema
South Africa. Cinema is a medium
that commands consumers absolute
South Africa 40%
attention in most cultures, engaging U.K. 13%
with a second screen (e.g., checking U.S. 8%
email or Facebook on a smartphone
during a movie) is frowned upon. These Russia 2%
factors make cinemas an especially Canada 2%
good place for targeting younger Japan 0%
demographics. Although there might
be resistance in certain countries to
viewing ads, we believe there is ample Music streaming revenue, 2016 growth
room in many developed countries to Global 65%
use the largest screens available as a
vehicle for targeted campaigns. U.S. 99%
Music in Japan. Thanks to enduring
consumer preferences, Japans physical Music unit sales, 201621 CAGR
music unit sales will withstand the -21%
difficult global climate far better than Japan
-8%
other countries. Indeed, with projected
unit sales of 88 million in 2021, Japan -15% U.S.
Digital
will have the highest such sales in the -12% Physical
world and be one of the few markets that
see only single-digit declines. Japan is
the one remaining country in the world
where Tower Records has a physical
we cover. This paradox actually makes more of their rising incomes in non-
presence. Total music revenue per capita
sense. The low level of Internet access digital traditional print and broadcast
in Japan will be $43 in 2021, nearly five
in India means the countrys growing physical media, shielding segments
times the global average of $9.
number of middle-class consumers such as television from the digital
E&M in India. E&M revenues will have comparatively limited access to competition they face in other markets.
grow rapidly despite the fact that India digital content and experiences. As a
is the least digitized of the 54 markets result, Indian consumers are investing
Introduction 17

A trio of macro Exhibit 8: Global economic uncertainty is the top threat identified
challenges by CEOs
As E&M companies face a host of

challenges particular to their own
industries, they are also confronting
big-picture forces that affect all
companies operating in todays
global context. 72%
Economic and geopolitical risks.
According to the 2016 CEO Pulse 55%
study from PwCs Global Crisis Centre, 49% 47% 47%
economic and geopolitical uncertainties
are among the top two threats for
companies today (see Exhibit 8). The
growth forecasts for the E&M industry
have been lowered in part to reflect the
broad-based economic and political Global Increased Exchange- Geopolitical Speed of
uncertainty that has stemmed from the economic regulation rate uncertainty technological
U.K.s Brexit plans and from national uncertainty volatility change
elections in which populist and anti-
Source: PwC CEO Pulse 2016
globalization themes have emerged
whether it is in the U.S., France, or
the Netherlands. Despite its promise,
Exhibit 9: Catalysts of change
Latin America, and particularly
Brazil, remains hampered by issues of
governance. Chinas growth remains
Increased The competitive
steady although not without significant
comfort with advantage of
challenges: economic imbalances technology technology
continue to grow, leadership has slowed
market reforms, and economic trade-
offs are becoming more acute.
Theres always a base level of
uncertainty inherent in the global
economy. But the severity of issues such
as slow growth, currency policy, civil
unrest, and geopolitical tensions have
intensified concerns.
Globalization Multiplier effect
of technology of technology
Cheaper access
to technology
Source: PwC

Speed of technological change.
Exhibit 10: Data protection regulations are evolving in the United States Technological advancements are
and abroad appearing rapidly and simultaneously
Data privacy and security are top of mind today for policymakers and across many industries (see Exhibit
regulators in the U.S. and abroad: 9). The E&M industry is facing
a significant level of uncertainty
concerning the speed of change in
areas such as AI, 5G networks, IPv6
protocols, virtual reality (VR), and the
E.U. Internet of Things (IoT). At the same
time, uncertainty also surrounds the
U.S. speed of monetization and the viability
APEC
of new business models enabled by
these new technologies. The concerns
Latin
America created by the confluence of these
disruptions may have a chilling effect
on investments. Alternatively, they
could be largely offset by an increased
FCC broadband Countries are General Data More countries level of spending on related consumer
privacy rules repealed. developing data Protection becoming
protection laws Regulation goes into compliant with categories such as e-commerce, or
FTC will be primary
U.S. authority for but these vary from effect May 2018 APECs by faster Internet speeds and more
country to country. data usage differs cross-border data
privacy for broadband;
from U.S. regulations. privacy rules
powerful devices that are fundamental
enforcement actions Some laws, such as to improving the user experience.
refocused on Argentina's on data E-privacy regulation (CBPR) system.
consumer harm. protection, mirror in final negotiations Rules to better Regulatory risks. CEOs in all
The Trump E.U. data protection for electronic enable trade as
rules. communications, CBPR provides a industries identified increased
administration is
committed to ISPs, OTTs, others. single data-transfer regulation as the second-most
strengthening Significant consent framework for
requirements. companies. common threat. And within the E&M
cybersecurity.
industry, regulatory challenges are
evident in every major region. Beyond
Stakeholder-generated codes of conduct/best practices and the need for the changes to be expected with a new
interoperable global standards are emerging as key policy themes, as regulators administration in the U.S., around the
do not want to stifle innovation in industries such as the IoT, autonomous vehicles, world we are seeing that issues of data
commercial drones, artificial intelligence, and other emerging technologies.
privacy and security are capturing
the attention of policymakers and
Source: PwC regulators. Stronger regulations
in these areas could make it more
difficult to track data about personal
preferences, thereby making it harder
to improve the user experience
(see Exhibit 10).
Introduction 19

Exhibit 11: Are you paying more today for video content
than you were one year ago?
Yes 42% No Traditional pay-TV subscribers:

58% Skew 35+ (69%)
Oldest group in survey
Report highest household income
Pay-TV of all four groups
subscribers
Cord trimmers:
Under 35
51% 49% Over one-third are 18 to 34 years old
Many have adopted skinny bundles
to lower cost
Cord trimmers
Cord cutters:
Skew younger than 35
32% Lower-than-average disposable income
68% Cord nevers:

Youngest group in survey
Cord cutters 68% are younger than 35
The baby boomers are Never subscribed to pay-TV
aging out of their prime Prefer to cherry-pick content
40% Lowest household income
consumption years, 60%
and the generations
Cord nevers
that replace them may
not exhibit the same 42%
propensity to spend 58%
on E&M.
Total
Yes No
Source: Videoquake 4.0: Binge, stream, repeat How video is changing forever,
PwC Consumer Intelligence Series, 2016
Shifts in generational the past 10 years, PwCs Consumer

Intelligence Series has captured
preferences the changing consumer behavior of
Theres another long-term challenge to millennials (those born between 1981
top-line growth. The baby boomers are and 1998) and generation Z (born 1998
aging out of their prime consumption to now) across a number of topics. And
years, and the generations that its clear that the impact of technology
replace them may not exhibit the same and digital media has changed the way
propensity to spend on E&M. Over younger generations experience and

Generational Exhibit 12: U.S. household spending by generation (US$)
spending habits $0 $20,000 $40,000 $60,000
Millennials, who are now the largest
Housing
cohort in the U.S. workforce, have Greatest generation
(1928 or earlier) Eating out
less money to spend than their
elders. And they spend their scarce Entertainment
money differently. Two out of three Silent generation Clothing

(1929 to 1945)
millennials rent their home. They have Food at home
the fewest vehicles per household All other spending
Baby boomers
(1.5) of any generation, except those (1946 to 1964)
born before 1929. Although they
spend the largest share of their budget Generation X
(more than 6 percent) eating out. And (1965 to 1980)
millennials spend significantly less
on entertainment ($2,186 annually) Millennials
than baby boomers ($3,286) and (1981 to now)
Generation X ($3,231).
$0 $20,000 $40,000 $60,000
If millennials stick to their current
spending habits as they age and earn Source: U.S. Department of Labor, Nov. 2016 (based on analysis of generational data from
the Bureau of Labor Statistics)
more, it will have a significant impact
on these industries.
purchase content. They stream songs Of course, millennials will probably Conclusion
or watch videos on YouTube instead eventually marry, have children, and Thriving in a world of slower growth,
of buying albums; they consume free purchase homes in greater numbers. But intense competition for attention, and
news on Facebook or Snapchat instead it seems unlikely they will adopt their continual disruption will be challenging.
of spending hundreds of dollars for elders habits when it comes to media But the opportunities inherent in this
home delivery of newspapers. Rather consumption and spending. world are immense. Our data, analysis,
than subscribing to expensive pay-TV and perspective offers compelling
Barring a step change in must
bundles, they source their video through insights into how E&M companies are
have technology (e.g., autonomous
a combination of over-the-top services adapting, investing, experimenting, and
vehicles), profitable growth in the E&M
(see Exhibit 11). According to a recent innovating. As we move forward, we
industry will increasingly come from
study, millennials account for 43 percent know the Outlook will continue to be a
capturing market share, rather than
of the U.S. cordless population those valuable source of nuanced information
from market expansion.
who have never had cable, satellite, or and vital perspective on segments and
fiber-optic cable service and those who geographic markets. Several of our
have cut the cord. Thirty percent of U.S. PwC colleagues have explored the 2017
millennials are now cordless, compared Outlook findings within the context
with just 16 percent of baby boomers, of their specialization and geographic
according to GfK MRIs January 2017 markets. The chapters that follow
Survey of the American Consumer. take you deeper into the analysis and
their insights into industry trends and
challenges across business models, value
chains, technological change, content
strategy, deals, and regulation.
Introduction 21

Business models
As distribution splinters, adaptation is the
name of the game
PERSPECTIVE: In aggregate, the amount of money
consumers and advertisers are spending on E&M is
still growing modestly. For the industry as a whole,
the outlook is relatively stable. But in many of the
Outlooks segments, we may be at a tipping point of
significant changes in how consumers and advertisers
allocate their choices and dollars. Yes, companies
must continue to battle for market share in their
traditional delivery platforms. But to capture their
fair share of the new growth streams, theyll have to
ramp up their flexibility and innovation. They can do
so by focusing on emerging business models that can
drive growth through building creative partnerships
and greater brand and franchise loyalty.
2
Cinema and celebrity backers including Steven
Cinema serves as a prime example Spielberg announced their investment
of how revenues are being diverted in a startup that would allow people
from existing channels into new ones. willing to pay a premium to watch new
The major studios face steep declines movies at home on the same day they hit
in home entertainment revenue. As theaters. Although the project has since
Exhibit 13 shows, global revenue from lost traction, the debate between studios
the rental and sales of physical home and exhibitors about shortening release
video, which has already been falling delays has continued.
sharply, will decline at an 8.8 percent
Exhibitors also have an opportunity to
CAGR through 2021. In response to such
redefine their value proposition and
changes, and in recognition that viewers
adapt to these changes. For example,
are increasingly agnostic as to the size
movie theater owners, faced with
of the screen on which they view films,
stagnant box office sales for first-run
many major studios are considering new
films, can expand their menu of content
ways to shorten the traditional delay
to include remote-viewing experiences
between the cinematic release of films
for fans of opera, the symphony, sporting
and their availability for home viewing.
events, and pop festivals. In emerging
In 2016, Napster cofounder Sean Parker
markets with a rising middle class,
PwcOutlook_22-C4-fin1.indd 22 5/1/17 3:45 PM

companies can use promotions and
Exhibit 13: Global physical home video revenue (US$ billions)
rebates to boost admissions, and can
expand the use of in-cinema advertising,
as is common in South Africa, to increase 35
revenue over the long term. CAGR

30
25 -8.8%
Advertising 20
Pressures on ad-supported business
15
models reflect two stark realities. First,
many consumers, especially among the 10
most attractive demographic segments, 5

such as high earners and millennials,
prefer ad-free environments, especially 0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
when they are viewing or reading high-
quality content. This shift is evident
in the rising use of ad-blocking and Source: Global entertainment and media outlook 20172021, PwC, Ovum
ad-skipping technologies and the rapid
growth of ad-free/ad-light subscription
revenues. Exhibit 14: Total global advertising growth rates (%)
A 2015 study by Sourcepoint and

comScore found that whereas 10 2014
percent of users block ads in the U.S. 6.5%
2016
2017
and U.K., about 25 percent do so in 2015 6.1%
5.6% 2018
France and Germany. Younger and 5.1% 4.9%
2013 2019
wealthier users also have a greater 2020
4.1% 4.0%
propensity to use ad blockers. 3.7%
2021
By 2021, Internet video defined 2.7%
as consumer spending on streaming
services, such as Netflix, that do not
require a pay-TV subscription will
grow at an 11.6 percent CAGR to
$36.7 billion.
Concurrently, media businesses and
premium advertisers are not migrating
to digital advertising as fast as viewers
are diverting their attention to digital
media primarily due to a lack of trust,
transparency, and brand relevance.
These twin challenges are not leading
to a decline in Internet advertising,
however (see Exhibit 13). In fact,
overall advertising growth is now
overwhelmingly driven by Internet
advertising, which will grow at a CAGR
of 9.8 percent through 2021. By contrast,
non-digital advertising is forecast to grow
Business models 23

events; ticket sales are forecast to grow
Exhibit 15: Global digital music downloading revenue vs. digital music
streaming revenue (US$ billions) at a 3.2 percent CAGR between 2016
and 2021. But the music business also
20 faces some unique challenges. Although
growth accelerated considerably with
the launch of Apple Music in 2015,
15
competition is intensifying. New entrants
with deep pockets, such as Amazon, are
10
putting more emphasis on the free in
freemium, subsidizing consumer costs
5 on the backs of other business models.
Moreover, similar to what we see in video
0 content, music is very much a short
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 tail business. As we note elsewhere in
this report (see Content strategy, page
Digital music downloading revenue Digital music streaming revenue
32), when consumers are presented with
expanded choices, they often fall back on
the familiar. The top 50 songs account for
almost all the streaming activity, yet the
at just a 0.2 percent CAGR. Although Music
companies are paying music publishers
advertisers are still willing to spend Revenues in the global music industry,
for access to catalogs with hundreds of
within the rapidly growing Internet which had remained flat from 2012
thousands of songs.
advertising market, we see a remarkably through 2015, are rising thanks to the
high level of concentration of ad tech success of new business models. Built
companies controlling that spending. on freemium models, streaming plans
U.S. television distribution and
According to eMarketer forecasts, Google in 2016 led the global music industry
Internet access
and Facebook will account for almost to its second straight year of growth.
A particularly notable challenge to
50 percent of advertisers total global And as streaming gains momentum, we
current business models exists in
digital ad spending in 2017, and Chinas forecast that recorded music revenues
the U.S. market, where cable TV and
Tencent, Alibaba, and Baidu will capture will rise at a 4.2 percent CAGR through
telecoms bundling strategies for pay-TV
approximately 15 percent. Thats five 2021. This seemingly modest growth is
and Internet access are coming under
companies harvesting 65 percent of quite impressive particularly given
pressure.
total global digital advertising revenues. the continued decline in digital music
This concentration is forcing digital and downloading revenues (see Exhibit 15). Pay-TV challenges. As streaming
traditional publishers alike to rethink In 2017, streaming will become the platforms and networks proliferate,
how content is distributed, consumed, dominant revenue source for recorded sports has been a powerful magnet
and monetized over third-party music. Concurrent with the growth in keeping consumers attracted to
platforms, and to pursue new types streaming, major labels are reaping gains traditional pay-TV subscription models.
of partnerships and business models in performance rights royalties. Global But thats changing. Viewership for
as a result. performance rights will increase at a 6.4 many of cables top sports properties
percent CAGR through 2021. the NFL, the Olympics, Major League
Baseball, and NASCAR is shrinking.
Overall, the music industry seems much
And as more consumers have been
healthier than it was a few years ago.
cutting the cord, some premium cable
In addition to the growth in streaming,
channels have seen their number of
theres also strong growth in live music

subscribers fall. Its not that people are
Exhibit 16: U.S. Internet video revenue (US$ billions)
watching fewer events, its that theyve
migrated to digital platforms and to
20
the ever-expanding array of available
CAGR
streaming services and apps. The
15 9.6% growth options for both television
networks and pay-TV providers can
be seen in the proliferation of skinny
10
bundles, direct-to-consumer digital
distribution models, and mobile apps
5 that enable viewing of sports highlights
and statistics.
0 Broadband provider challenges.
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 U.S. cable providers are capturing
gains from a growing high-speed fixed
Source: Global entertainment and media outlook 20172021, PwC, Ovum broadband market. Over the next five
years, the market will expand from
63.3 million households to 72.2 million
Exhibit 17: U.S. Internet access revenue (US$ billions), households, representing a 3.7 percent
fixed broadband vs. mobile Internet five-year CAGR. In time, the shift to 5G
wireless networks and IPv6 protocols
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 will pose a significant threat to cable
Mobile Internet 150
access revenue
companies reliance on revenue from
wired broadband. However, in the near
120 term, overall broadband penetration has
reached saturation at 85.8 percent of all
90 U.S. households in 2017. The main threat
Fixed broadband today is wireless substitution for slower-
access revenue
60 speed fixed broadband services as telcos
introduce unlimited wireless offerings
30
of 4G services and as public Wi-Fi
becomes ever more prevalent. As Exhibit
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
17 shows, we expect U.S. spending
Source: Global entertainment and media outlook 20172021, PwC, Ovum on mobile Internet access to rise at an
8.9 percent CAGR through 2021 while
spending on fixed broadband Internet
access will grow at a 1.5 percent CAGR.
Still, innovation and competition in plan
designs and access to speed may slow the
pace at which consumers decide to move
from wired to wireless.
Business models 25

Value chains
Across E&M, companies chart a direct-to-
consumer path
PERSPECTIVE: When asked about the threat of
industry disruption, 23 percent of all the leaders
who responded to PwCs annual CEO survey said
technology will reshape their industry over the next
five years. But the proportion of E&M CEOs who
shared this sentiment was more than twice as high:
56 percent. Indeed, technological advancements,
and the dramatic changes in consumer behavior that
they enable, are already redistributing revenues and
competitive advantage.
As a result, E&M businesses now have a mandate to
build and fortify direct, sustainable relationships with
consumers. The paths and choices to navigate to the
consumer depend on a relentless focus on the user
experience. But they also depend on a companys
3
current role in the ecosystem of content, distribution,
and advertising.
Exhibit 18: Top five concerns for E&M CEOs
Changing consumer
behavior 81%
Availability of key skills 78%
Volatile energy costs 78%

Uncertain economic
growth 77%
Speed of technological
change 75%
Source: PwC, 20th Annual Global CEO Survey

Content
Exhibit 19: Consumer spending on Internet video (US$ billions) by region
In their path to build closer relationships
with consumers, content companies 25
have doubled down on blockbuster hits.
In a February 2017 special report, the 20
Economist described an industry in which
blockbusters continue to dominate, 15
despite the immense choices consumers
have. Overwhelmed by content choices, 10
consumers fall back on the familiar;
they rely on recommendations from 5
friends, algorithms, and rankings. As a
result, content that is popular becomes
0
more popular. The promise of digital 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
distribution was that content providers
would be able to monetize the massive North America EMEA Asia-Pacific Latin America
amount of intellectual property (IP)
gathering dust in their vaults, catalogs,
archives, and backlists often referred
to as long tail content. In a digital Distribution agreement with the National Football
world, no book would ever go out of The continual splintering of distribution League to stream Thursday night games.
print; even the most obscure title would platforms is making it imperative for Increasingly, Netflix is entering into
always be available to the few people distribution companies to figure out distribution partnerships with U.S. and
who wanted access to it. The long tail how to get closer to consumers. To reach international carriers as part of its global
would create recurring revenue streams attractive demographics in the increasingly expansion strategy.
from hundreds or thousands of titles digital and mobile environment, were
Amid this flurry of activity, its not
and provide content creators with the seeing a significant number of organic and
clear which will be the top distribution
incentive to produce work, even if it inorganic investments aimed at combining
channels five years from now, and
appealed to only a small niche audience. distribution with video content.
what forces will separate the winners
But instead, weve seen that across Content companies are making bolder from the losers.
the E&M industry, theres a heavy moves to get directly involved in
concentration of blockbuster content. distribution. Much of this is driven by the
Investment dollars are thus flowing into rapid growth of over-the-top aggregators Advertising
high-quality, premium content. Disneys and the threat of cannibalization not For advertisers, forging a profitable path
major franchises produced the top five being able to reach audiences through to consumers means gaining visibility
highest-grossing films in 2016, including traditional pay-TV distribution (see in digital distribution platforms where
all four of the films that grossed more Exhibit 19). Some are taking direct- consumers discover and recommend
than $1 billion. Disneys live-action to-consumer approaches by building content (and brands). From the Outlook
version of Beauty and the Beast tallied $1 proprietary apps, such as HBO Now, or data, we know that global spending on
billion at the box office within a month pursuing acquisitions. Firms are also advertising is growing at a faster pace
of its launch in the spring of 2017. And in entering into content deals with tech than consumer spending, and signs
April 2017, Universal Pictures The Fate of giants to reach consumers on third- indicate it will continue to do so through
the Furious reached $1 billion in the third party social platforms. Examples include 2021. But whats less apparent is the
weekend after its release, largely driven Facebooks recently announced deals to concentration of advertiser spending
by strong performance in China and stream content from Major League Soccer on the digital side where all the
other international markets. games, along with original content deals growth is. Rather than being spread
with several other media companies across many outlets, advertising now
(CNN, HuffPost, the New York Times, flows disproportionately to a few large
etc.). For its part, Amazon has struck an platforms, such as Facebook and Google.
Value chains 27

Exhibit 20: Total Internet access revenue and Internet advertising revenue
by make-up (%), 2012 vs. 2016 vs. 2021
Fixed broadband access revenue Total wired Internet advertising revenue

Mobile Internet access revenue Total mobile Internet advertising revenue
51% 91%
2012 2012
49% 9%
43% 62%
2016 2016
57% 38%
37% 44%
2021 2021
63% 56%
The fact that the rising tide will lift only a future, aiming to dominate the online
The robust growth of few very large boats presents increasingly
difficult challenges for traditional media
finance and e-commerce market. Other
companies that have proved to be
Internet advertising segments. The media planning business, powerful magnets for user attention,
as well as newspaper and magazine such as Amazon, Facebook, and Google,
masks an embedded publishers, will come under particularly are moving in a similar direction.
form of inertia. acute pressure.
With each passing month, more of the
Premium brands are In the new environment, value flows to worlds Internet experience is taking
the companies that control the three Cs: place via mobile. But last year, wired
reluctant to take on the content, communication, and commerce. Internet advertising still accounted
perceived risks inherent For Internet advertisers, the route to
control is through focusing on the user
for 61.6 percent of total Internet
advertising (see Exhibit 20). The robust
in concentrating more experience, especially in mobile. The growth of Internet advertising also
growth of Internet advertising is being masks an embedded form of inertia.
of their advertising in powered by mobile advertising, which Premium brands are reluctant to take
digital mediums. grew by 54 percent in the past year, on the perceived risks inherent in
to $43.8 billion. Through 2021, that concentrating more of their advertising
number will grow at a 17.1 percent in digital mediums. Without accepted
CAGR ultimately reaching $96.9 measurement practices that can provide
billion. An example can be seen in transparency on the efficacy and
Chinas Tencent, which is laser-focused efficiency of the major platforms, larger
on creating a mobile ecosystem (pushing agencies and their clients have held back
users from desktop to mobile gaming, for their ad dollars. It often takes a period
example) that is sufficiently compelling of time for advertisers to catch up to
for the user never to leave the Tencent where consumers are spending their
experience. Introduced in 2011, time and attention. In 2016, smartphone
Tencents enormously popular messenger connections accounted for more than
app, WeChat, surpassed 800 million 50 percent of global mobile phone
monthly active users in 2016. Tencent connections, a proportion that will rise to
invests heavily in the mobile commerce more than 75 percent by 2021.

Technological change
Driving incremental growth through innovation
PERSPECTIVE: The accelerating speed of technological
change creates a macro-level risk for most businesses.
But in the E&M industry its also opening up a large
opportunity for innovation in product offerings,
brands, and business models that revolve around
the user experience. We see it in emerging segments
with rapid growth such as virtual reality and e-sports,
both of which were added as new Outlook segments
this year. In addition, across many segments, data is
evolving into a form of currency. To a large degree, the
value that companies can now capture from data
because it allows for personalization, customization,
segmentation, and greater ROI and brand equity
gets captured indirectly in the Outlook segment
data, such as Internet advertising. But in other cases,
the value may flow into adjacent sectors, such as
4
e-commerce. Either way, the growing volume of
data and the technologies that allow companies to
mine and deploy it are transforming the ways E&M
companies monetize both content and distribution.
E-sports dedicated e-sports stadium in 2005

The Outlooks new e-sports segment might dispute the idea that e-sports
is defined as consumer and advertiser is new. The video game industry in
spending on organized video game China is enormous and with the growing
competitions. E-sports is rapidly development of e-sports venues, we
evolving from a hobby (or an obsession expect high growth potential in this
for many users) into something sector. But what is undeniably new is
resembling a professional sport, through the emergence of e-sports as a global
a combination of one-off events and phenomenon that attracts large,
leagues. Companies and consumers in youthful audiences and premium
countries such as Germany and South multinational brands.
Korea the latter of which built a
Technological change 29

Much in the same way social gaming
Exhibit 21: Total e-sports revenue by country (US$ millions)
evolved, the audience makeup has now
grown well beyond hardcore gamers and
1,000 Russia
their niche segment of brands and social
networks. Most who livestream e-sports Japan
do so on sites such as Twitch, which was China
800
acquired by Amazon in 2014 and hosts South Korea
2.1 million unique streamers per month. Spain
In the U.S., where colleges are starting 600 Italy
to field e-sports teams, pay-TV networks Germany
are getting involved. Time Warners France
Turner broadcasted the ELeague on TBS 400
U.K.
and its digital platforms for the first time
U.S.
last summer, averaging 228,000 viewers 200
per episode. And ESPN has begun
covering major e-sports such as Defense
of the Ancients 2 on its streaming and 0
broadcast channels. Exhibit 21 shows 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
monetization is starting to catch up with
this rising attention. In the Outlook, Source: Global entertainment and media outlook 20172021, PwC, Ovum
e-sports revenues fall into four buckets:
ad spending on streamed events,
sponsorship revenue at events and for traditional sports or other entertainment creators are still struggling with
teams, consumer spending on tickets to and media. The spending per fan has distribution and monetization. Margins
attend e-sports events, and consumer significant potential to grow, given are still razor-thin given the technical
spending on passes to virtually attend that it is very low compared to per-fan constraints and high costs of headsets.
events. Overall, e-sports revenues more spending for established sports leagues,
To experiment in VR as a video medium,
than quadrupled between 2013 and 2016, such as the NBA and NFL. With more
the team behind Googles Art, Copy &
and could nearly triple again by 2021. technology innovation and sophistication
Code is developing content on WebVR.
in storytelling, e-sports can become
E-sports is a great example of a fan- This approach lets audiences view
even more interesting to watch, easier
centric business. Its reaching fans who content through a Chrome browser or
for viewers to follow, and attractive for
are not spending as much time with with low-cost headsets that incorporate
advertisers and their brands.
smartphones such as Google
rts users) Cardboard or Daydream. The idea is to
In 2017, we introduced two new create a faster path to large audiences
categories to the Outlook: e-sports and Virtual reality
To start measuring the impact of virtual ones that will attract advertisers.
virtual reality. In some markets, these
categories are very immature and reality (VR) on the E&M industry, the As hardware (device) platform leaders
therefore extremely hard to measure. Outlook now includes consumer spending emerge, their related marketplaces for
For that reason, were focusing now on the video content, games, and content will mature. No one will get rich
only on the 10 markets in which the applications associated with the sale of from hardware alone; the end game will
revenue streams and business models head-mounted VR systems for consumers. be to become the standard platform for
have developed sufficiently so that As was the case in the early days of VR and hence start to create revenue
it is possible to measure results and smartphones, this is a highly immature streams from content sales, licensing, or
analyze trends: the United States, market with several underdeveloped advertising dollars. We anticipate VR will
Japan, China, South Korea, the United business models and lots of experimental grow at an 80 percent five-year CAGR
Kingdom, France, Germany, Russia, or low-quality content. Game publishers through 2021, at which point it will be a
Italy, and Spain. have made good progress in getting $15 billion global market, compared with
beyond the free demo stage. VR video $869 million in 2016 (see Exhibit 22).

In 2016, PwCs Consumer Intelligence Exhibit 22: Total VR revenue (US$ billions) in the three largest markets
Series conducted a study about
e-sports consumers in the U.S.
12
market. The group with a high degree
of awareness of e-sports had the
10
following characteristics:
Gender-neutral 8 Japan
Median age: 28
6
69% age 1834
Racially diverse 4 China
More likely to own multiple 2

tech devices (desktop computer,
connected TV, connected device, 0 U.S.
etc.)
2016 2017 2018 2019 2020 2021
Spent more time in front of screens
than non-e-sports users, whether Source: Global entertainment and media outlook 20172021, PwC
gaming or streaming video content
Data as currency creation by helping companies gain share

Any buyerseller transaction or in mature markets and attract growth in
relationship involves an exchange of emerging markets (while possibly also
value. Historically, that value has been slowing the drain of piracy).
measured in monetary currencies
But the value of data becomes even
such as dollars, euros, or renminbi.
more powerful as artificial intelligence
But its increasingly likely that for
begins to play a bigger role in E&M
E&M companies, value will come to be
organizations. As detailed in Deborah
measured in the monetizable currency
Bothun and David Lancefields
of data. By virtue of operating, any E&M
article in the Summer 2017 issue
company gathers an immense amount
of strategy+business, AI Is Already
of powerful information about user
Entertaining You, data is a critical
behavior and preferences, performance,
input for powering AI solutions. And by
and transactions.
deploying AI, companies can become
The revenue forecasts in the Outlook far more efficient in building audiences,
reflect the upside value of monetizing attracting advertisers, extending the
data. Businesses could be implicitly (if brand experience, interacting, and
not explicitly) capturing the value of upselling across the customer journey.
user data into the abundance of free, They can also become much better
freemium, and subscription-based at designing the user experience in a
pricing for content today. For example, way that extends the amount of time
Amazon could use the data gleaned from consumers spend with content and the
tracking viewers of the NFL games it amount of brand equity gained through
will be streaming to promote the sale of loyalty and recommendations to others.
merchandise. Data could also abet value
Technological change 31

Content strategy
Adapting to penetrate technological and
cultural filters
PERSPECTIVE: In last years Outlook report, we found
a nearly perfect correlation between rapid E&M
growth and countries with younger populations. But
the growth opportunity we saw was far from a one-
size-fits-all content strategy. Local differences factor
heavily into consumer preferences for the provenance
of content (global versus local), for specific genres,
and for key segments of content. But even if you
get this part of your strategy perfectly tuned, the
bigger issue for building your content strategy comes
down to discovery. In a world where consumers
increasingly curate their own content, how do you
penetrate the powerful filtering mechanisms that act
as gatekeepers?
5
Decoding content preferences in at which that digital infrastructure is
local markets likely to evolve.
The world may be flat in many ways, but
For all these reasons, even markets that
evidence abounds that it remains very
might appear similar at the surface
spiky in places. Content preferences are
may offer remarkably different revenue
highly influenced by the dynamics and
opportunities (see Exhibit 23). Here are
diversity of culture, language, income,
several examples.
and regulation. All of these factors can
affect companies ability to monetize Magazines. On a per capita basis,
investments in content. The quality of consumers in Portugal spend twice
the underlying digital infrastructure the amount of money on magazines
also varies widely: The relative level of as consumers in Spain, the countrys
Internet access penetration, the speed neighbor on the Iberian Peninsula.
of those connections, the preferred A similar disparity holds between
platforms (mobile or fixed broadband), Scandinavian neighbors Finland
and the variance in the popularity of and Sweden.
devices with which people access content
Internet access. In Asia, China
can differ greatly. And for each market,
and India represent the two most
you have to consider the pace and scale
populous markets and hence

vast potential. But Internet use in battle for consumers limited time and immense choice, consumers often have
India is overwhelmingly a mobile attention. However, the dominance a narrower, more homogeneous view
phenomenon. Only 8 percent of data of a few social and search giants of content choices filter bubbles,
traffic in India will course through and their role in shaping consumers as Internet activist Eli Pariser describes
broadband in 2021. By contrast, in content choices is a complicating factor. them. (Pariser argues that users get less
China, 56 percent of Internet traffic Consumers decisions on how to spend exposure to conflicting viewpoints and
will travel on fixed broadband in 2021. their time and attention are increasingly are isolated intellectually in their own
determined by social media likes, information bubbles.) They are steered
Cinema. International blockbuster
shares, and recommendations from toward the content they are most likely to
movies will find more of an audience
algorithms and like-minded people. As a like as determined by their past choices
in Germany than in South Korea;
result, even in a world characterized by and whats most popular.
in the latter country, of the 10
top-grossing films, locally made
productions accounted for more than
81 percent of revenues. China still has Exhibit 23: Regional spending differences
a quota system for the importation
of foreign films and effectively limits Per capita spending on magazines, US$, 2017
foreign films ability to compete at the
box office against local releases.
$13 $29 $72 $130
Video games. The social gaming
portion of video game revenue in
Spain Portugal Sweden Finland
Germany is more than twice as high as
it is in Ireland.
Fixed broadband share of data traffic, 2021
To expand globally, two of the largest
players in video distribution Netflix
and Amazon have taken different
content strategy approaches. Netflix is 8% 56%
investing $6 billion to create original
content in 2017. It plans to coproduce India China
original, local flagship content that
can be heavily promoted to drive up
subscriptions in a number of countries. Local share of top 10 grossing films, 2016
A leading equity analyst estimated
that Amazon is spending $4.5 billion
on original content. But the company 9% 22% 56% 81%
has focused on fewer big markets. It is
building a slate of multilingual offerings Germany Brazil China South Korea
largely by acquisition and by co-
producing original content with
local firms. Social gaming share of total video game dollars, 2021
Deciphering changes in 60% 28%

content choices
At its core, E&M is all about building
audiences. Companies monetize Germany Ireland
those audiences through advertising,
subscriptions, and transactions. Success Source: Global entertainment and media outlook 20172021, PwC, Ovum, Hollywood
has always turned on winning the Reporter, Wikipedia, Box Office Mojo, Korean Film Biz Zone
Content strategy 33
PwcOutlook_22-C4-fin1-ReplacedExhibits.indd 33 5/2/17 5:15 PM

Successful content strategies must adapt
Exhibit 24: Newspaper revenue (circulation + advertising) (in US$ billions)
to this environment. Consumers, content,
and brands now connect across a small 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
number of large platforms rather 100
than through a direct relationship with
traditional publishers (see Diminishing Australia 80
print returns) and distributors. As a France
result, building audiences now requires a 60
U.K.
different set of strategies and capabilities
Germany
to penetrate filters. 40
China
Beyond the revenue impact for
Japan 20
traditional content businesses, theres
also an implicit risk for confirmation U.S.
0
bias and the ability for governments and
criminals to exploit that bias. Perhaps the 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
most visible impact of these filter bubbles Source: Global entertainment and media outlook 20172021, PwC, Ovum
was seen in the 2016 U.S. presidential
election. A BuzzFeed analysis found
that the top fake election news stories
individual TV aggregator platforms to
generated more total engagement on
find the show theyre looking for. But, Diminishing print
Facebook than the top election stories
from 19 major news outlets combined.
as global E&M leader Deborah Bothun returns
points out, artificial intelligence could
To address this challenge, Facebook and The impact of changing consumer
eventually form the basis of a seamless
other companies have since announced preferences in content consumption is
experience for consumers that spans
measures aimed at combatting the especially dramatic for the newspaper
existing content, distribution, discovery industry (see Exhibit 24). Consumers in
proliferation of fake news.
methods, and technology. But, she also Europe, North America, and Australasia
notes, this frustration may turn out to continue to abandon print for digital
be a generational issue. Bothun posits channels. In North America, which
Are consumers overwhelmed?
that younger demographics (generation is the third-largest newspaper region
In our PwC Consumer Intelligence
Z) may not see a curation problem at all by revenue and the region in which
Series, we routinely survey consumers revenues are declining at the fastest
theyve grown up in a world in which
on their video viewing preferences and pace, social platforms have become the
content choices have always been guided
behavior. Many consumers tell us they dominant intermediaries for consumers.
by suggestions from friends, family,
are flummoxed by the choices they
coworkers, celebrities, journalists, or
have. In a 2016 survey, 69 percent of all
chatbots, and in which content resides
participants agreed that the amount
on a range of platforms. They are more
of TV content is overwhelming. They in deals and partnerships. Advertisers
comfortable with technology and more
say its becoming harder and harder are also looking to take advantage of
savvy with search.
to decide where to spend their leisure the valuable content migrating onto
time. The dominant ways of choosing In addition, platforms understand that social platforms, which are developing
content were inertia (its a show Ive they and their audiences thrive when new ad formats to address this demand,
watched in the past, at 78 percent), they publish valuable content. It is along with new monetization models
direct recommendations from friends therefore to be expected that competition that compensate all parties and deliver a
and family members (45 percent), among these platforms for the right to nonintrusive experience to users.
and flipping channels (41 percent). display content, including live content
Consumers are also frustrated with (from sports, for example), will continue
having to navigate across multiple to intensify. This will result in an increase
PwcOutlook_22-C4-fin3-050417.indd 34 5/4/17 3:43 PM

Deals
Strong tailwinds
PERSPECTIVE: Overall, 2016 continued a multiyear trend
of strong activity across the global technology, media,
and telecommunications (TMT) sector. According
to Mergermarket, 2016 deal value in TMT reached
$698.2 billion, accounting for 21.4 percent of all
global deal activity. The United States was the most
active region, reporting 1,101 deals worth $362.7
billion. Within TMT, media showed the biggest
increase, growing 118 percent, from $86.1 billion to
$188.1 billion. A rise in foreign investment of U.S.-
based targets from Asia-Pacific countries, particularly
China, contributed to the impressive growth. So,
too, did AT&Ts announced $85.4 billion purchase of
Time Warner, which, if approved, will be one of the
largest deals in the history of the industry (see Exhibit
25). Looking ahead through 2021, there are more
6
tailwinds than headwinds for deal activity. We expect
corporate and private equity investments to remain
very active. Deal activity will primarily be aimed
at gaining global scale, diversifying revenues, and
acquiring new capabilities to drive growth.
Tailwinds assets, strengthen analytics capabilities,

The powerful underlying shifts in the power innovation with ad tech and
global E&M industry point to a growth emerging technologies (VR, AR, AI,
in capabilities-driven deals designed etc.), and orchestrate live events and
to create new revenue streams and experiences across digital and physical
enhance the user experience. We expect venues. Although transformative
an increase in strategic deals (large and blockbuster deals will garner headlines,
small) that will expand a companys many significant transactions will be
ability to create and manage its data smaller, undisclosed, tuck-in deals. Some
Deals 35

Exhibit 25: Mature players in the U.S. pay-TV sector are making deals
that will enable them to grow (US$ billions)
AT&T/Time Warner: This deal matches Time Warners premium content

network with AT&Ts leading scale in pay-TV subscribers and in mobile and
broadband distribution to connect with consumers on every screen
Comcast: Multiple deals will drive digital growth for Comcast/NBCU through
large investments in Snap, BuzzFeed, and Vox, and purchases of SportsEngine
and DreamWorks
Pay-TV 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
subscriptions 120
100
80
60
40
Internet video
20
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
good examples of publicly disclosed deals audiences, and allowing for the
are Disneys 33 percent stake in BAMtech bundling of services.
Companies will use (a technology company spun off from
Changing regulatory environments.
M&A activity to Major League Baseballs digital video
Changes in net neutrality and privacy
streaming unit) and Spotifys recent
get closer to their purchases of four analytics-enabled
regulations across the world could
make the environment more ripe
customers both businesses: Soundwave, Cord Project,
for deal making. In particular, with
CrowdAlbum, and Sonalytic.
to consumers and a change of administration, the
The deals environment should continue U.S. market seems more favorably
to brands. to benefit from three positive trends. positioned for ongoing consolidation
within E&M, and across the broader
Continuing convergence. Companies
TMT universe.
will use M&A activity to get closer to
their customers both to consumers Cross-border investment. In the
and to brands. These vertical introduction of this report, we noted
integration deals are not focused that anti-globalization trends due
on cost synergies. They are aimed to geopolitical factors could affect
at boosting growth, monetizing broader global E&M spending. But

its also the case that a large amount the Pacific may impact the pace of
of foreign investment continues to growth in FY17; however, we believe
flow into the U.S. E&M sector. The the U.S. market will continue to
largest increase in 2016 foreign remain attractive to Chinese business
investment was from the Asia-Pacific leaders. In a recent article, the Wall
region, particularly China. However, Street Journal detailed how Hollywood
megadeals involving foreign acquirers studios are increasingly dependent
included the completion of U.K.- on China as a source of investment
based Liberty Globals purchase of and as a source of ticket-purchasing
U.S.-based Cable & Wireless and customers.
Netherlands-based Altices purchase of
Escalating valuations. Pricing of
U.S.-based Cablevision.
todays deals reflects companies focus
on driving growth, as opposed to
general cost-cutting or streamlining
Headwinds
operations. Although a ceiling on
Although the tailwinds supporting the
valuation has not been established,
progress of deals are strong, significant
escalating prices may inhibit the
headwinds remain that E&M companies
willingness of certain private investors
must contend with. These include:
to participate. For example, unless
China. Direct foreign investment from an individual private equity (PE)
China conglomerates in U.S. targets is firm has a deep E&M portfolio, its
expected to subside in coming years. ability to leverage synergies may be
President Xi Jinpings government has limited. That said, both corporate
enacted controls to limit the flow of and PE buyers are nonetheless
outbound capital, and is concerned actively pursuing deals in the E&M
about currency valuation challenges. industry. Overall, we expect PE firms
Uncertainty about trade relations and to contribute to escalating valuations
regulatory changes on both sides of going forward.
Regulation 37
PwcOutlook_22-C4-fin2-050417-ForP34.indd 37 5/4/17 12:42 PM

Regulation
Market contrasts, net neutrality, and privacy
PERSPECTIVE: Regardless of where they operate,
companies must adapt to the evolving regulatory
landscape. And although companies increasingly
operate on a global scale, it is vital to understand
the crucial changes afoot at the local level. Whether
its foreign ownership restrictions in some markets,
a Republican-controlled Federal Communications
Commission (FCC) in the U.S., the forthcoming
introduction of the General Data Protection
Regulation (GDPR) in Europe, or debates over net
neutrality, the regulatory docket is full of both
opportunities and challenges. Although its difficult to
predict what the impact will be on future E&M spend
levels, these shifts could alter the climate for many
investors and businesses.
7
Impacts in specific countries Russia, a 2014 ruling that banned pay-TV
China, the worlds most populous advertising was amended in February
country and the second-largest E&M 2015 to avoid a collapse of multichannel
market, is on the radar screen of every advertising. But the amendment
major E&M organization. But censorship stipulated that channels must show 75
and other regulatory constraints play a percent local content (many top sports
significant role in inhibiting investments. channels have been given an exemption).
Although both Netflix and Amazon
Another example can be seen in the
expanded their services globally in
book industry (see Exhibit 26). In many
2016, neither will compete directly in
markets, a sharp increase in online book
the highly regulated Chinese market. In
sales (of both print and digital books)
withdrawing from its original plan to
has compensated for a decline of sales
operate in China, Netflix announced it
in retail channels. But because so many
will instead license content to existing
countries in Europe, the Middle East,
online distributors in the country.
and Africa (EMEA) have fixed-price book
Chinas streaming markets are not the laws, consumers in those countries have
only markets where new regulations not been able to take advantage of deep
affect local strategies. For example, in discounts from online publishers.

Exhibit 26: Total, consumer, educational, and professional books revenue
CAGR (%) by region, 201621
EMEA will shrink while other regions see growth
1.0%
North America 2.9%
-1.5%
0.0%
-0.2%
-0.5% EMEA
0.5%
-0.5%
2.5%
2.5%
Asia-Pacific 2.5%
2.2%
0.7%
Latin America 0.6%
0.1%
1.7%
1.1%
Total 1.6%
0.5%
0.5%
Total Consumer Educational Professional

Global uncertainty over net Outside the U.S., net neutrality laws
Governments and neutrality have been passed in many markets and
In the U.S., the FCC sets the standards are under consideration in others. The
regulatory bodies for Internet service providers. These Dutch government is taking a tougher
standards encompass net neutrality stance in its interpretation of European
in many markets and there may be changes under the Union (E.U.) rules on net neutrality than
are taking steps to Trump administration. In November many other E.U. member states; it favors
2014, President Obama opposed the banning online service providers from
reduce the dominance practices of blocking or throttling paying for preferential access. At the
of incumbents and content, or offering higher speeds to same time, governments and regulatory
customers willing to pay for them. bodies in many markets are taking
increase competition in Following various court decisions regulatory and legal steps to reduce the
backing the principle of net neutrality dominance of incumbents and increase
both fixed and mobile between 2014 and 2016, the FCC pressed competition in both fixed and mobile
Internet coverage. ahead with its regulatory agenda, Internet coverage. Efforts are particularly
including proposals to unlock the set- notable in some Latin American and
Efforts are notable in top box to usher in a more competitive MENA countries that have been slower to
some Latin American environment for video content. The FCC open to competition than those in other
has launched a proposal to roll back parts of the world.
and MENA countries. the nations net neutrality rules and set
the stage for tech companies and Internet
service providers to reopen the debate
over the future of the Web.
Regulation 39
PwcOutlook_22-C4-fin2-050417.indd 39 5/4/17 11:47 AM

Privacy IP protection remains fragmented
Privacy regulation continues to have Copyright infringement remains a
major implications for E&M user problem in many markets; rights holders
experiences and the role of brands are in a constant battle against pirates.
within E&M digital media ecosystems. One favored approach aimed at reducing
Companies continue navigating the fine unlawful file sharing is graduated
line between delighting customers and response (also known as three strikes).
annoying them or even alienating But the use of graduated response, under
them. In the U.S., President Trump which copyright violators can ultimately
recently signed congressional legislation have their accounts suspended, is
that repeals FCC privacy protection for uneven, and opinions vary as to its
Internet users. This means that, like effectiveness. Since the U.S. decided in
Internet service companies, telecom January 2017 to shutter its program,
providers will not be required to ask Canada is the only country in North
consumers for permission to collect, America that has a graduated-response
store, share, or sell certain types regime in place to deter illicit behavior.
of customer data. The change puts By contrast, the U.K. set up its first
Verizon, Comcast, and AT&T on a level graduated-response program in early
footing with tech giants such as Google, 2017 as leading ISPs joined forces with
Facebook, Amazon, and Netflix, but it content owners to start sending out
was viewed as a setback for consumer millions of warnings to those engaging in
privacy by many Internet activist groups. infringing activities.
Ironically, it comes at a time when E.U.
The U.K. initiatives effectiveness is
regulatory changes are driving toward
likely to be measured against Frances
greater protection of the personal data
similar HADOPI effort. Although it has
of E.U. citizens. The E.U.s GDPR, due
sent out 7.5 million first-warning notices
for introduction in May 2018, has data
since its 2009 launch, HADOPI has
security implications for E&M companies
been criticized for its perceived failure.
that operate in Europe and throughout
Meanwhile, in Russia, the authorities
the rest of the world.
have been promising to close down the
Privacy regulation is evolving elsewhere. many popular BitTorrent sites operating
In the 21-country Asia-Pacific Economic in the country; telecom and media
Cooperation (APEC) forum, for example, regulator Roskomnadzor vows to block
more members are now becoming leading operations. In Latin America,
compliant with APECs cross-border where piracy is a significant problem,
privacy rules (CBPR) system for data. DirecTV Latin America has joined with
And in Latin America, countries are other subscription TV operators to create
developing data protection laws. Some an anti-piracy group. Dubbed Alianza, it
of these laws mirror E.U. data protection works with governments and regulators
rules, as is the case in Argentina. But to combat the problem. By contrast,
the laws under development vary from in Japan, the potential for the Internet
country to country. video business is boosted by stringent
regulations countering online piracy:
Japanese Internet users who illegally
download files face up to two years in
prison and heavy fines.

Index
Segments Countries
B2B content 15, 16 Argentina 40 Nigeria 14, 15
books 16, 38, 39 Australia 14, 34 Norway 14
cinema 15, 16, 17, 22, 33 Belgium 14 Pakistan 14, 15
data consumption 31 Brazil 14, 18, 33 Peru 14
e-sports 15, 16, 29, 30, 31 Canada 14, 17, 40 Philippines 14
Internet access 16, 17, 24, China 12, 14, 15, 18, 24, Portugal 32, 33
25, 28, 32, 33, 39 27, 28, 29, 30, 31, 32, 33,
Romania 14
34, 35, 37, 38
Internet advertising 15,
Russia 14, 17, 30, 38, 40
16, 23, 24, 28 Denmark 14
South Africa 17, 23
Internet video 15, 16, 23, Egypt 14, 15
25, 27, 34 South Korea 14, 29, 30,
Finland 14, 32, 33
33
magazines 15, 16, 28,
France 14, 18, 23, 30,
32, 33 Spain 14, 30, 32, 33
34, 40
music 14, 16, 17, 24 Sweden 14, 32, 33
Germany 14, 23, 29, 30,
newspapers 15, 16, 21, 33, 34 Switzerland 14, 15
28, 34
India 14, 15, 17, 32, 33 Thailand 14
out of home advertising
Indonesia 14, 15 Turkey 14
16
Ireland 33 U.A.E. 14
radio 16
Israel 14 United Kingdom 14,
traditional TV and home
15, 17, 18, 23, 30, 34,
video 16, 20, 21, 23, 24, Italy 14, 30
37, 40
27, 30, 34, 36
Japan 14, 15, 17, 30,
United States 12, 14,
TV advertising 15, 16, 38 31, 40
15, 16, 17, 18, 19, 21, 23,
video games 16, 30, 33 Malaysia 14 24, 25, 30, 31, 34, 36,
37, 38, 39, 40
virtual reality 15, 16, 19, Mexico 14
29, 30, 31, 35 Vietnam 15
Netherlands 14, 18, 37
New Zealand 14

Global entertainment and media outlook 20172021
BC
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technological advancements and the user experience are driving change within the
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and consumer spending. Regardless of how you inuence business decisions, the Outlook can
help you understand industry trends so you can capitalize on new opportunities.
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The ability to compare ve-year historic and ve-year forecast data
Learn more at www.pwc.com/outlook
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Perspectives from the Global

Entertainment and Media Outlook

PwcOutlook_C1-21-fin3-050417.indd 1 5/5/17 10:54 AM

of performance, merchantability, and

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6 Global entertainment and media outlook 20172021

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8 Global entertainment and media outlook 20172021

PwcOutlook_C1-21-fin1.indd 8 5/1/17 6:30 PM

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10 Global entertainment and media outlook 20172021

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Blockchain their operations in new ways.

Chatbots Organizations need to be wired so they

Entertainment User Face recognition new user preferences, new business

Robotics must be more multidisciplinary in their

Privacy expertise across content, product,

Security Voice interfaces

PwcOutlook_C1-21-fin1.indd 11 5/1/17 2:51 PM

12 Global entertainment and media outlook 20172021

PwcOutlook_C1-21-fin1-plusChanges-ReplacedExhibits.indd 12 5/2/17 5:26 PM

Exhibit 3: Global E&M revenue as a share of global GDP

2016 2017 2018

Source: Global entertainment and media outlook 20172021, PwC, Ovum

PwcOutlook_C1-21-fin1.indd 13 5/1/17 2:51 PM

Exhibit 4: A world of differences

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13%

14 Global entertainment and media outlook 2017 2021

PwcOutlook_C1-21-fin1.indd 14 5/1/17 2:51 PM

Each bubble represents a country

Higher growth India

E&M CAGR 2016 21 (%)

PwcOutlook_C1-21-fin1-plusChanges-ReplacedExhibits.indd 15 5/2/17 5:33 PM

16 Global entertainment and media outlook 20172021

PwcOutlook_C1-21-fin3-050417.indd 16 5/4/17 4:32 PM

PwcOutlook_C1-21-fin1.indd 17 5/1/17 2:51 PM

As E&M companies face a host of

18 Global entertainment and media outlook 20172021

PwcOutlook_C1-21-fin1.indd 18 5/1/17 2:51 PM

PwcOutlook_C1-21-fin1.indd 19 5/1/17 2:51 PM

Yes 42% No Traditional pay-TV subscribers:

68% Cord nevers:

Shifts in generational the past 10 years, PwCs Consumer

20 Global entertainment and media outlook 20172021

PwcOutlook_C1-21-fin1.indd 20 5/1/17 2:51 PM

money differently. Two out of three Silent generation Clothing

PwcOutlook_C1-21-fin1-plusChanges-ReplacedExhibits.indd 21 5/2/17 5:43 PM

22 Global entertainment and media outlook 20172021

PwcOutlook_22-C4-fin1.indd 22 5/1/17 3:45 PM

revenue over the long term. CAGR

most attractive demographic segments, 5

A 2015 study by Sourcepoint and

PwcOutlook_22-C4-fin1.indd 23 5/1/17 3:45 PM

24 Global entertainment and media outlook 20172021

PwcOutlook_22-C4-fin1.indd 25 5/1/17 3:45 PM

Exhibit 18: Top five concerns for E&M CEOs

Availability of key skills 78%

Volatile energy costs 78%