PwC: UK entertainment and media industry to recover by 2021 | Media Analysis | Business
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On the presumption that Covid-19 continues to stall growth throughout this year, the UK’s entertainment and media (E&M) sector is forecast to suffer a sharp decline in growth this year as a result of the Covid-19 pandemic, before recovering to grow by £15 billion over the next five years according to PwC’s latest Global Entertainment & Media (E&M) Outlook 2020-2024.
PWC mediaoutlook 9Sep2020
Also factoring in a recession, the study found that 2020 will see a 6.7% fall in UK E&M revenue compared with 2019. Yet at the same time it does say that while the shockwaves from 2020 will continue to ripple through the economy, the industry’s fundamental growth trajectory is forecast to remain strong and in 2021, the UK’s E&M industry will grow by 6.72%. Across the five-year period, it is forecast overall revenue growth will run at a 2.83% compound annual growth rate (CAGR) to be worth £79.8 billion by 2024.

“Parts of the media sector have been hit very hard by the Covid-19 pandemic, particularly in-person activities or those reliant on advertising revenue,” remarked Mark Maitland, UK head of entertainment and media at PwC. “This will drive a c. 7% decline in sector revenues in 2020, but in recent months we have already seen improving performance, and as such, we expect the sector revenues to return to 2019 levels in 2021.”

Yet despite the general bad news, the report also noted that there were some highlights. PwC said that Covid-19 has accelerated the transformation of some E&M segments much earlier than projected. Cinema box office, which as recently as 2015 was generating almost three times as much revenue as subscription video-on-demand (SVOD) is projected to be overtaken by SVOD in 2020, which said PwC will surge further ahead in the coming five years.

With people staying at home, over-the-top (OTT) video has seen revenue surge by 18.6% in 2020 to £1.6 billion. Growth will continue at a CAGR of 10% to £2.3bn by 2024. Video games is another beneficiary with the sector being driven by both a strong eSports market - which is set for 15% growth - and video game consumption up 9.7% in 2020. Overall, the video games industry is forecast for 9% growth this year amounting to £5.2 billion and by 2024, the sector will be worth £6.8 billion at a CAGR of 7%.

“Some parts of the sector, such as gaming and OTT video have been beneficiaries during the pandemic, and we expect these to continue to prosper with many ‘lockdown habits’ continuing far beyond lockdown,” added Maitland summing up the trends found in the 2020 Global Entertainment & Media (E&M) Outlook.

Assessing what the report means for the advertising industry, Abi Jacks, VP of Marketing, International at Rakuten Advertising said that to thrive in a pandemic, the advertising industry must create new revenue models. “The challenge for brands (and media companies) is there are no advertising opportunities with SVOD, which means they are missing out on reaching the highly engaged audience spending time on these platforms,” she said. “One effective way to reach audiences engaged with VOD is AVOD…Our research shows 60% of consumers would likely sign up to AVOD offerings when the service is described to them.”

Karl Knights, VP Revenue, EMEA at Mediaocean added: “PwC predicting such a strong £15 billion recovery from the -6.7% decline in revenues expected in 2020 for the UK entertainment and media sector means that, ultimately, there is a light at the end of the tunnel. However, in order to achieve that recovery brands and advertisers will need to be agile and creatively redefine the customer journey by putting social commerce at the core of their marketing strategy. Just look at how the sports industry is starting to provide satisfying experiences for fans through different online approaches and hosting events behind closed doors.”