Australian ad industry growth to 2023 to be scooped up by internet giants, warns PwC media outlook report

Australia’s advertising industry is expected to grow to $23bn by 2023 with the bulk of growth being taken by internet spending, PwC claims in its latest Entertainment and Media Outlook report.

The report estimates online services will pick up 57.7% of the market in 2023, up from 46.2% in 2018, forcing media owners to look at innovative ways of maintaining revenues.

Partner at PwC Australia and editor of the report, Justin Papps, told Mumbrella that Australian media owners were reacting to the shift by looking outside traditional advertising to boost per user revenues.

“They are actively creating growth with which adjacency things like and things like that. I think that’s a good thing for the industry,” Papps told Mumbrella, citing News Corp’s digital subscriptions focus as a successful strategy.


“You had Michael Miller (News Corp’s executive chairman) come out last week and how they’ve moved through half a million digital subscribers and I think for any medium –whether it’s newspaper, radio, or whatever – it is it’s about keeping and growing the revenue to customers.

“So I think what we will start to see over the next three to four years is actually a it’s not just a competition for the customer it’s actually a competition for the ARPU of the customer.”

“We use the example of Hedley Thomas who is a great journalist who has won six or seven Walkley Awards, all of those have been for print journalism up until the last one which was for a podcast which 45 million people a month number one in three in four countries.”

“That’s a great example of the value that people place on long form investigative journalism and I think that’s a really healthy thing. And it almost moves that news into the news as experience. So people actually experience the news rather than just consume it.”

While News Corp has seen success with subscriptions to its mastheads, PwC’s forecasts for Foxtel are not so encouraging with Australian consumers estimated to cut their subscription TV spending from 2018’s $2.6bn to $1.95bn in 2023.

Papps however sees Foxtel’s streaming strategies, particularly with sports service Kayo, as another example of media owners thinking outside the box.

“If it’s customers transitioning from a box to an SVOD platform, I don’t think that’s a bigger concern for them.

“It’s obviously been public and some of the challenges they’re facing and I think  it’s more around how they transition customers across to a new platform when it’s not a box in the home.

“What they’ve done with Kayo is deliver a really good product in the sporting space, they’ve gone really specific to an exceptional customer experience and I think that would say that that model works well for them. So transitioning customers to an SVOD product would actually be part of that strategy as well.”

PwC’s Papps says Foxtel’s transition to SVOD is an example of media owners looking a new revenue models

Of the other sectors, the interactive games market is set to be the fastest growing segment in consumer spending, forecast to rise at a compound annual growth rate of 15.6% to $7.1 billion, up from 8.5 percent in 2018.

“Another sign of the growth opportunity for BVOD in Australia over the next five years is the rise of the smart home, with ownership of smart speaker devices globally set to rise at a 38.1 percent CAGR to hit 440 million devices in 2023,” Papps said.

“The NBN and 5G will turbo charge the smart home revolution in Australia, bolstering the user experience of downloading content and streaming on the go.”

PwC also forecasts traditional TV and home video segment will see negative growth for the first time while print-exposed newspapers and consumer magazines segment has the worst forecast through to 2023, with revenues projected to suffer a compound annual decline of 2.3 percent.

“In Australia we’re actually seeing a move beyond some of the tired dichotomies that have dominated industry discussion about disruption so far.

“The Global Outlook results drive home the importance of legacy reinvention away from models defined by platform, and with greater emphasis on the fundamental value the organisation can deliver to consumers,” Papps said.

Globally, the People’s Republic of China will add the greatest entertainment and media revenue over the next five years, with absolute growth in 2018-2023 forecast to reach $83.9 billion, followed by the US at $71 billion. India, Japan and the UK round out the top five and are forecast to reach absolute growth of $17.9 billion, $12.6 billion and $11 billion respectively.

Domestically, Papps told Mumbrella he was optimistic about Australian media owners’ appetite for change.

“The thing that we found interesting is while the numbers are tough as far as when you look at what the course looks like they’ really exciting thing is there’s no industry that we spoke to that was waiting for the change to happen.

“They were actually out in front of it thinking hard about their business models,” Papps concluded.


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