PwC report: Romanian media & entertainment industry, to grow by 8.8% until 2015

Advertising, Marketing, Media, Studies

After two years of slow growth and inflation, the media&entertainment industry stabilized and shows come back signs, as it is predicted it will have an annual growth of 8.8% between 2011 and 2015, as the annual report PwC Global Entertainment and Media Outlook 2011-2015 shows.

The total value of the Romanian media market will increase from $2.5BN in 2010 to $3.8BN in 2015, with the biggest growth will be generated by internet acces, that will have an annual growth of 12.9% in the mentioned period, while the advertising spend will grow by 8.9%. Also, the spend made by media products consumers will increase slowly, with an annual medium growth rate of 4.7%.

Romanian media&entertainment market will be the 3rd most dynamic in the region, after Turkey (+13,2% annual growth rate) and Russia (11.7%), but before Poland (7.1%), Czech Republic (6.8%) and Hungary (6.2%).

In spite of that, in absolute numbers, Romanian media&entertainment market will continue to be one of the smallest in the region, representing a 10th of the Russian one (estimated to reach to $35.7BN untill 2015).

This is the consumer’s golden era, with digital products demand rising and becoming a rule. On many markets, the entertainment&media industry was affected profoundly by the economical recession period, with consumers accelerating their migration towards online, partially due to technological advance also

Bogdan Belciu

Partener Management and Consultancy Services, PwC Romania.

PwC report predicts that, in the next 5 years, the global spend for media&entertainment products will increase from $1.400BN in 2010 to $1.9ooBN in 2015, with an annual growth rate of 5.7%. Nowadays, the digital component represents 26% of the total spending but, by 2015, PwC estimated the percentage spent on digital media products will reach to 33.9%.

Advertising showed the most important come back out of all the media&entertainment components, with an increase of 5.8% in 2010, after a fall of 11% in 2009. In total, the advertising spendings will show an annual growing rate of 5.5%, from $442BN in 2010 to $578BN  in 2015.

The involved advertiser

As content creators use innovation to increase their digital revenues generated by consumers, the advertisers and advertising agencies are adapting and become more and more sofisticated in identifying and exploiting the new brand opportunities offered by digital platforms and services. The advertisers want more information and the possibility to verify more accurate the results after their budgets are spent and they are, now, interacting more than ever with the consumers.

Advertising agencies are also responsible to fullfil advertisers needs, providing their clients with new ideas to communicate with the consumers by using digital platforms that increase the efficiency of advertising budgets. Also, the agencies are exploring new models to monetize the digital campaigs, some of them involving splitting the risks and benefits of the campaigns with the brands owners.

The new approaches contributed to an unexpected strong relaunch of advertising, dominated by online and TV, the business models based on financing through advertising becoming again popular, together with the revenues from subscriptions.

Digital collaboration business model

The new orientation towards digital opens major opportunities for new types of services, business models, cooperation synergies and relations with consumers.

This also was the foundation on which appeared a new operational system used especially in the digital ecosystem: digital collaboration business, focused on tech innovation and strongly interconnected with the clients, empoyees and suppliers network.

According to PwC, this model can be functional if it embraces 3 general tendencies that will ensure the access to the digital medium  of the future: digital technologies, the demand and data proliferation.

On the main digital market, network owners, content owners, equipment and operating systems   producers and apps developers willc ontinue to work together in different formulas in order to craft experiences of media content that will captivate the consumers.

The study also showed that:

  • Latin America will be the marjet with the fastest growth in terms of media&entertainement spendings in the next 5 years, with a medium annua growing rate of 10.5% and an increase from $66BN in 2010 to $109BN in 2015. Second ranked is Asia Pacific (+6.5%, from $395BN to $541BN), than Europe, Middle East and Africa and, in the end, North America
  • 12 countries were spending over $25BN for media&entertainment in 2010, from which China and Brasil will be the most dynamic markets in the next 5 years
  • Online advertising will be the most dynamic segment of the advertising market in the next 5 years, surpassing print in 2012 and becoming the 2nd medium of choice for advertising after TV, in terms of invested budgets On the other hand, TV will continue to gather audiences, and major events, such as 2012 London Olympic Games will stimulate its growth. The specialized publications decreased with 20% in 2009, but wil slowly recover by 2015, when it’s expected to be one of the most dynamic sectors.
  • In 2010, digital advertising represented 15.9% from the total advertising spendings and will represent 22.5% out of total until 2015. Traditional advertising will decrease from representing 84.1% out of the total global advertising spendings to 77.5 % in 2015.
  • Online spendings increased, per total, by 12.9% in 2010, while the traditional ones had only a 2% growth. In 2015, the advertising spendings in digital will reach to 33.9%.
  • Mobile access to internet is also an important growth factor for the increase of budgets allocated to media&entertainment. This way, the number of internet subscribers will double in Europe, Middle East and Africa and also in Asia-Pacific, will triple in North America and will go up with over 400% in Latin America in the next 5 years
  • While the spending for classical music formats will continue to decrease, the sales for digital formats will grow and are estimated to surpass classical formats by 2014. Globally though, the music sales will decrease by 1.1% per year, from $23BN in 2010 to $22BN in 2015.
  • Movie industry is boosted by the 3D and Blue Ray technologies and by the increasing electronics market. The growth of tablets number and the expansion of broadband internet with high speed will determine a growth of 5.9%, to $115bn by 2015, from $86BN in 2010
  • On the other hand, video games market will reach to $82BN until 2015, from $56Bn in 2010, with an annual growth rate of 8.2%

PwC Global Entertaiment and Media Outlook 2011-2015 is the 12th annual edition of the report and includes detailed analysis and predictions for 13 major segments and 4 regions of the world: North America (United States and Canada), EMEA (Europe, Middle East and Africa), Asia-Pacific and Latin America.