Media competitors need to become frenemies in a time of anaemic growth: PwC
“Negotiation is cheaper and more effective than combat”, according to PwC’s Megan Brownlow in this year’s Australian Entertainment & Media Outlook, as the industry faces continued shifts in consumer and advertiser spending patterns.
PwC’s 16th annual Australian Entertainment & Media Outlook
With the overall Australian entertainment and media market facing anaemic growth of 2.1% over the next five years, Brownlow said industry participants need to start working together as ‘frenemies’ while ditching ‘old-school thinking’ that’s seen a divide between digital and traditional media sectors.
Brownlow said Australians’ increasing willingness to pay for content – being driven by Netflix and Amazon – along with increased mobile and video revenues would define the media landscape over the next five years.
“Across Australia’s media and entertainment industry we continue to see a strong divergence in traditional and digital media spend. The story has been the same for a number of years now,” she said. “Instead of entrenching the dichotomy between traditional and digital players, this trend is forcing companies to take a different approach and has led to blurring of business functions, business models and of industries.”
The main shift in Australian consumers’ media usage is in online video with audiences embracing pay-for-view platforms like Netflix and Amazon Prime while increasing enjoying interactive sports and e-gaming.
Online video is expected to continue its double-digit growth over the next five years with a compound annual growth rate of 23.8%, the second-fastest growth rate across all categories, after mobile advertising which Brownlow estimated will grow by 25% each year.
As part of this shift, Brownlow estimates internet advertising revenues will represent 55% of the total Australian advertising market by 2021, with $10 billion revenue, up from $7.4 billion in 2016.
The survey forecasts the proportion of internet advertising going to digital pure plays declining from its current 90%, as traditional media moves more strongly into online video and wins back market share.
However the news is less positive for the traditional outlets, with Brownlow forecasting free-to-air television and newspaper advertising markets will continue their decline out to 2021, with a compound annual decline of 4.7% and 8.9% respectively.
To overcome those declines, Brownlow suggested traditional competitors have to work together and find way to co-operate with the newer players.
“Competition is no longer a zero-sum game – the new competitive landscape is underpinned by frenemies,” she said. “We’re seeing three new circumstances arising as companies seek other revenues using their natural competitive advantage: competitors are potential new clients, or new partners, and key suppliers are now competitors somewhere else in the value chain.”
Megan Brownlow will be asking ‘What business are you now in?’ and detailing the blurring of industry lines as she reviews this year’s PwC Australian Entertainment & Media Outlook at the Mumbrella360 Conference in Sydney on Thursday afternoon. For more information, and to grab one of the final tickets, click here.
