Next year will be a big one for advertisers, consumers and media companies with sector revenue to grow by 3.4%, according to the latest forecasts by PwC Australia.
However, growth will slow to 2028 when the annual rate will be 1.7%.
Revenue for the Australian entertainment and media (E&M) market rose by an estimated 2.8% to $62.3 billion in 2023.
Growth was slowed by rising inflation, international conflict and a cost of living crisis when compared to 2022.
The composition of the market has remained consistent with 60% advertising spend versus 40% consumer spend.
Digital revenue is forecast to increase to 79% of the total entertainment and media market (excluding internet access) in 2028, representing a spend of A$36.2 billion, from 70% in 2023.
Internet enabled advertising, particularly the subsets of search and video display, are forecast to represent 73% of the entire advertising market in Australia by 2028, an annual growth rate of 5.9%.
The 25th edition of PwC’s Australian Entertainment and Media Outlook shows that it’s advertisers who harness the full value of digital media are reaping rewards.
Louise King, PwC Australia partner and technology, media and telecommunications Leader, said this year’s report highlights the importance of adopting new technologies and taking calculated risks to meet the needs of the modern consumer.
“Back in 2013, digital advertising represented only 27% of the advertising pie,” she said.
“Over the next five years, it’s set to hit close to 80%. This speaks not only to the pace of change, but the success Australian advertisers have seen in shifting their strategies to better suit the tech-enabled world we live in.
“Several factors have driven this huge growth, but the ‘big gorilla’ remains in search - now bolstered by the rise of search activity on retailers’ e-commerce sites, such as Amazon, Coles, Woolworths and eBay.”
Retail paid search advertising’s share of total paid search advertising rose 7.8% to A$529 million in 2023.
PwC expects retail paid search to grow by 23% a year to reach $1.5 billion by 2028.
The shift to digital advertising has had a clear impact on traditional media.
In 2013, printed newspapers, television and radio took 60% of all advertising revenues in Australia.
In 2023 those products captured only 20% of advertising revenue.
PwC’s forecast is that by 2028, they will have shrunk further, representing 11% of the advertising market.
King notes that strategic challenges remain and uncertainties exist in the external environment that will require focus from the entertainment and media industry.
“We see this year as a pivot point,” she said.
“The Australian industry has always thrived on technological disruption, companies looking to succeed in this market will need to be bold in strategic risk taking and move at-pace, capitalising on the digital growth the sector is seeing.”
PwC forecasts growth in box office spend and subscription video on demand revenues will accelerate in 2025, growing faster than the average of the previous two years.
Another bright note is the growth of the Australian video games production sector. Of about $4 billion in revenues in 2023, $345.5 million is attributable to games developed in Australian studios, an increase of 21%.
However, digital revenue is not offsetting declines for broadcasters and media players.
Broadcasters are diversifying revenue streams through streaming, subscription and catch up services.
However, PwC forecasts that Australian television and radio broadcasters will not make up falls in revenue on traditional offerings soon but the gap is closing.
“Broadcasters are definitely moving the dial by exploring new revenue streams,” King said.
“The key to staying competitive against international players will be continuing to invest in new products and services that appeal to Australian consumers and advertisers alike.
“This will include initiatives like FAST channels (free, ad-supported television streamed over the open internet), better cross-platform audience measurement, digital ad insertion into linear ad breaks and new ways to monetise opted-in viewers and listeners directly.”
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