Global entertainment and media revenues rose to $2.3 trillion; Virtual reality sees 36% growth as gaming and esports move closer to becoming a $324 billion business: PwC

NEW YORK, June 22, 2022 /PRNewswire/Last year, the global entertainment and media (E&M) industry surged ahead, well ahead of overall global economic growth. After a pandemic-related decline of 2.3% in 2020, E&M’s revenue rose 10.4% in 2021. US$2.12 trillion to US$2.34 trillion. As the industry becomes more digital, more mobile, and more youth-friendly, virtual reality (VR) and games are becoming powerful growth drivers, with digital advertising permeating the entire industry. These are finds from PwC Entertainment & Media Global Forecast 2022-202623rd annual analysis and forecast of consumer and advertiser spending on E&M in 52 countries and territories.

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Findings from this year’s forecast include:

  • Total revenue from video games and esports US$215.6 billion in 2021 and is projected to grow at a CAGR of 8.5% to US$323.5 billion in 2026. Asian-Pacific area brought in the lion’s share of revenue in 2021 US$109.4 billionalmost doubled North America, the second largest region. Games are currently the third most data-consuming E&M content category after video and communications.

  • VR continues to be the fastest growing E&M segment, albeit with a relatively small base. Global virtual reality spending up 36% year-on-year in 2021 to US$2.6 billionafter a meteoric rise of 39% in 2020. Growth is expected to be 24% p.a. between 2021 and 2026, bringing the segment US$7.6 billion. Game content is the main source of income from VR, taking into account US$1.9 billion in 2021. This should increase to US$6.5 billion in 2026, 85% of total VR revenue.

  • The proliferation of advertising in the digital world has made it the dominant industry category. After falling nearly 7% in 2020, ads are up an impressive 22.6% in 2021. US$747.2 billion. Almost entirely digitally driven advertising is expected to grow at a CAGR of 6.6% through 2026. Online advertising revenues will grow even faster, with a CAGR of 9.1%. In 2026, advertising is predicted to become a $1 trillion market and E&M’s largest revenue generator, surpassing consumer spending and internet access.

  • After growing 35.4% in 2020, video over the Internet (OTT) grew another 22.8% in 2021, pushing revenue to US$79.1 billion. OTT revenue growth will slow slightly; it is expected to grow at a CAGR of 7.6% until 2026, bringing revenue US$114.1 billion.

  • Traditional TV, surrounded by competition from OTT streaming services, is still generating significant revenues, but its inexorable decline will continue, with global revenues forecast to decline at a CAGR of 0.8% compared to US$231 billion in 2021 until US$222.1 billion in 2026.

  • Global cinema revenues are recovering, offsetting losses caused by the pandemic, and are expected to hit a new high US$46.4 billion in 2023. Box office expected to reach US$49.4 billion in 2026 from US$20.8 billion in 2021, the average annual growth rate will be 18.9%. China surpassed the US to become the world’s largest cinema market in 2020 and is expected to maintain that lead until 2026.

  • In 2024, live music revenue is projected to exceed pre-pandemic levels. Digital music streaming subscriptions are driving growth in the recorded music sector where, US$36.1 billion in 2021 until US$45.8 billion in 2026

  • Content growth is fueling massive data consumption with 2.6 million petabytes (PB) of data consumed in 2021 and is expected to grow at a CAGR of 26% to reach 8.1 million PB by 2026. Games will be the fastest growing data. consumers during the forecast period with an expected CAGR of 29.6%. Mobile phones will be the fastest growing device category between 2021 and 2026 with a CAGR of 28.8% and mobile data consumption is expected to increase from 1.1M PB to 3.8M PB.

Werner BallhausHead of International Entertainment & Media, PwC Germany, said: “The industry press tends to focus on the companies that have dominated the E&M industry. But the choices billions of consumers make about where they will invest their time, attention and money are fueling industry transformation and setting trends. We are seeing the emergence in the coming years of a global E&M consumer base that will be younger, more digital and more passionate about streaming and gaming than the current consumer population. This is shaping the future of the industry.”

North America dominates E&M per capita, but faster growth is in other areas

At the regional level, North America orders by far the highest per capita spending on O&M, at $2229almost doubled Western Europe $1158. Against, Asian-Pacific areawhich was the largest E&M region by revenue in 2021. US$844.7 billionhas per capita spending $224. Tea Middle East as well as Africa have the lowest E&M spending per capita of any region in the world, $82.

Meanwhile, the top ten growing markets by CAGR are concentrated in Latin America, Middle East, Africa as well as Asiawhile OTT video and games account for most of the revenue growth, with esports and cinema also showing rapid growth. Turkey (estimated CAGR 14.2%), Argentina (10.4%), India (9.1%) and Nigeria (8.8%) rank first in E&M’s consumer spending growth outlook over the five-year forecast period.

The Metaverse Is Waiting

In the not-too-distant future, the metaverse could become a stunningly realistic world where people access immersive virtual experiences through a VR headset or other connected device. Because the Metaverse is an evolution that could fundamentally change how businesses and consumers interact with products, services, and each other, its potential financial and economic value goes far beyond virtual reality. Over time, much of the revenue from video games, music performances, advertising, and even e-commerce could move into the metaverse.

How big is the potential of E&M in the metaverse? The starting point to consider is the rapidly growing virtual reality market. It is currently one of the smaller segments being monitored, but a 36% increase in global spending over the past year is a hint of its long-term potential. The global installed base of standalone and tethered VR headsets is projected to grow from 21.6 m in 2021 until 65.9 m in 2026.

CJ Banga, director of technology, media and telecommunications, PwC, USA, said:: “We are seeing a strong recovery in key sectors since the pandemic. It set a new growth platform for entertainment and media heading into a turbulent future with fault lines, cracks and new monetization opportunities dotting the landscape. As we enter FY23 and beyond, we expect digital and digital content and multimedia experiences to continue to grow, gaming will become the new battleground for consumer entertainment, and content and streaming will be transformed by market and consumer dynamics.”

O Global Entertainment & Media Forecast 2022-2026

The PwC Global Entertainment & Media Outlook, together with the accompanying publication Fault Lines and Fracture: Innovation and Growth in a New Competitive Environment, provide a detailed analysis of global E&M consumer and advertising spending. The forecast includes five-year historical and five-year forecast data and commentary for 16 industry segments in 52 territories. Segments include advertising (television, internet, outdoor); books; business to business; cinema; data consumption; Internet access; music, radio and podcasts; newspapers and consumer magazines; OTT video; TV and home video; as well as Metaverse and NFT included for the first time this year.

About PwC

Our goal at PwC is to build trust in society and address important issues. We are a network of firms in 156 countries employing more than 295,000 people committed to providing quality audit, advisory and tax services. Find out more and tell us what’s important to you by visiting us at www.pwc.com.

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