Australia's entertainment and media sector bounce from the pandemic depths is forecast to continue for the next five years, according to analysis by PwC.
Spending on entertainment, media and internet access services was up 10.45% to $65.3 billion in 2021.
And PwC Australia's 21st edition of its annual Entertainment and Media (E&M) Outlook indicates growth will continue through to 2026 at a compound annual rate of 4.1%, reaching $79.9 billion
Consumer spending was up 6.23% to $45.6 billion in 2021, the highest single year leap in the history of the E&M Outlook.
By end 2022, average annual household spend into the sector -- supercharged by subscription services and gaming, and boosted by the return of in-person entertainment -- will have increased by about $510 compared to pre-pandemic 2019.
Consumer spending is forecast to grow at 4% a year over next five years, reaching $55.5 billion in 2026. That means a further $7.2 billion in spending on entertainment, media and access on offer for all in the sector to compete for.
Internet access remains the largest contributor to consumer spending followed by subscription TV and gaming. The latter two are expected to see significant continued growth.
Ad spend also roared out of the early pandemic slide, growing 20.2% to $19.67 billion in 2021 with further growth predicted in 2022 of 8.33% to $21.46 billion.
This year has been boosted by early year gains from election spend, the return of categories such as travel and continued digital-led growth.
However, ad spend is expected to slow over the next five years, flattening in 2025 and 2026, resulting in a compound annual growth rate of 4.4%, and a total of $24.4 billion in 2026.
PwC has also developed a forecast for the retailer media sector, believed to be at $850 million in 2021 and expected to grow rapidly at a 20.3% a year, reaching more than $2.1 billion by 2026
Dan Robins, the editor and Australia director of the Australian Entertainment and Media Outlook, says the darkest period of the pandemic is behind us but its effect on disruption, both as challenges and opportunity creation, remain.
“Where the initial wave of the pandemic may have been characterised by households reigning in spend, coupled with the inability to visit in-person entertainment, the second wave into 2021 saw consumers turn to entertainment and media to help alleviate the boredom of extended lockdowns with a more confident approach to spending,” he says.
“Moreover, as in-person events return, this spending is likely to extend alongside habits around subscriptions, gaming and access to content likely to stick.
“It was broadly believed consumers were stockpiling savings and consumer spending may have been down, given that in-person events are still only steadily returning and crowds returning through late 2021 and into 2022, this is certainly not the case.
“Digitised entertainment and media has entwined itself in our daily lives, and people are consuming content across more devices, at all times of the day, in all types of places.”
PwC highlights defining factors for growth through 2021 and 2022:
The subscription economy - Australians now manage 6.5 premium subscriptions from a selection of more than 100 available across video-on-demand, audio, news and lifestyle content, gaming and other sources of entertainment.
Subscriber growth is slowing in music streaming as it reaches saturation but still delivering growth to sectors transitioning from offline revenue sources, while further growth is also expected in subscription video on demand (SVOD).
Social gaming - In 2017, Australian gaming made up 21% of consumer spending (excluding access). In 2021, this stood at 26% and will continue to gain share,
By 2026, gaming will account for close to 30% of consumer spending (excluding access) as the niche becomes more mainstream. In-game advertising reached $1.3 billion in 2021 growing 8.8%.
Reconverging Channels - Media businesses are increasingly representing their media as total TV, audio or publishing, with media buyers slowly becoming able to deliver more seamlessly across offline and online environments.
Blurring of ads and media - The rapid rise of e-commerce, spurred by the pandemic, has further raised the importance of tying advertising investment to purchases. In-ad shopping reduces friction between advertising and purchase than previous click-throughs, while offering greater measurement of an ad’s effectiveness.
Changing business models, diversifying revenue streams - As consumer growth becomes harder to achieve for individual businesses in the highly competitive video-on-demand sector, 2021 and early 2022 has seen announcements of leading players looking to trial different models for access.
Return to and Premiumisation of in person - Live entertainment increasingly competes against home-based channels to gain share of the consumer wallet and is working ever harder to entice consumers off their sofas.
The Next New Thing - Companies are investing in creating new metaverse experiences and, though definitely nascent, NFTs have the potential to put power and control over rights and assets back into the hands of creators.
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