COVID-led acceleration and changing viewing habits key to success, says PWC report

Australia’s entertainment and media revenue is set to contract by 4.46% to $57.4 billion in 2020, according to the PWC’s Australian Entertainment & Media Outlook 2020-2024.

The Outlook, now in its 19th year, indicates advertising revenue is set to fall to $14.9 billion in 2020, equating to a compounded annual reduction of 11.31%.

PWC Australia partner and Outlook editor, Justin Papps, said much of the drop could be attributed to the pandemic-driven changes in consumption; although, the industry’s fundamental growth trajectory remains largely positive, as companies accelerate their transformations.

“There has been a lot of examples of acceleration of business transformation,” he told Mumbrella. “The entertainment and media industry has been going through significant change for years and the pandemic has, in the most part, simply accelerated and amplified ongoing shifts in consumers’ behaviour and in digitalisation.”

Report editor, Justin Papps

He added that as the pandemic hit traditional revenue models, companies were forced to look at other alternatives, such as subscription, and bring forward those changes that were already happening.

For some media sectors the COVID-19 impact has been positive, as people forced at home were ready to spend on whatever got them content, quickly, said Papps. However, going forward, as life begins to normalise for the majority of Australians, their willingness to spend money on multiple streaming services will change.

“Media owners will need to keep an eye on household expenditure going forward,” said Papps. “As out of home opportunities come back on line, the media companies will need to look at what share of wallet they can realistically achieve.”

He added that the media and entertainment industry would need to have a “relentless focus on consumers” going forward as the competition for eyes and dollars becomes more intense.

According to the Outlook, Streaming Video on Demand (SVOD) is forecast to grow to $2.3 billion by 2024. The introduction of Disney+, Apple TV+ and Binge in Australia since the last report coincided with people forced to stay more time at home, and a reduction of out of home entertainment options.

“SVOD is one of the parts of the market that everyone is watching closely, largely based on their own consumption habits changing during 2020. As a market, we are spoilt for choice for streaming services and it will be interesting to watch how many services are retained by consumers once things return to normal,” Papps added.

Digital advertising and digital subscriptions are also set to grow to $928 million to 2024. Papps said the “industry-wide focus” on digital transformation and the ability of the news media outlets to successfully convert newly acquired digital news audiences during the pandemic to subscription models will be central to future growth within the industry.

Broadcast Video on Demand (BVOD) is also set to grow rapidly over the forecast period, reaching over $501 million in 2024 and a CAGR of 24.87% according to the Outlook.

Papps said that the Australian market in particular had changed significantly in this respect during the course of the year. “If you look at sport, and the deals being done now, it’s so dynamic. BVOD is now closer to SVOD, and the networks are picking up the lost ad revenues from FTA, and substituting with streaming revenue.”

The interactive games segment is predicted to grow to $4.4 billion in 2024, according to the report, buoyed by growth in app-based games and e-sports as people have looked for alternative forms of entertainment during the lockdown period and while their favourite sporting codes were on hiatus.

“What our Outlook tells us is that entertainment and media in Australia is becoming more virtual, streamed, personal and – at least for the time being – more centred on the home than anyone anticipated at the start of 2020. This is also in line with what our Global Entertainment and Media Outlook shows,” Papps commented.


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