Media companies expected to see digital growth of 2.7%

MEDIA AND entertainment companies have reached “the end of the digital beginning”, with digital activities now the “new normal” for traditional media companies, according to a report by PricewaterhouseCoopers (PwC).

Digital growth will propel the Irish entertainment and media industries to annual growth rates of 2.7 per cent over the next five years, the PwC Global Entertainment and Media Outlook forecasts.

This will be driven by broadband penetration as well as consumer spending on television subscriptions and video games.

Between 2012 and 2016, the only segment of the Irish market set for annual double-digit growth will be online advertising, according to PwC. Higher revenues in these sectors will offset the declining fortunes of book and magazine publishers and filmed entertainment, while print advertising revenues and print circulations will also continue to tumble, PwC predicts. The Irish market will be worth €3.8 billion by the end of 2012, which will represent just marginal growth on 2011, after several years of decline. By 2016, the sector will reach €4.4 billion in value, PwC forecasts.

Rates of growth in the Irish entertainment and media sector will be significantly more modest than the global average, which is forecast to enjoy an annual growth rates of 5.7 per cent, to $2.1 trillion over the same period. This global rate of expansion will be driven by burgeoning media activity in South America, the Middle East and the Asia-Pacific region.

Global spending on entertainment and media rose 4.9 per cent in 2011, a little faster than the 4.5 per cent increase in 2010.

“Entertainment and media companies have reached what we’re calling the end of the digital beginning,” said Susan Kilty, entertainment and media partner at PwC Ireland. “They’ve made the commitment to a digital future and are now striving to make the necessary changes to their products, distribution and organisations.”

PwC offers book publishing trends as an example, forecasting that global spending on e-books will rise by 30 per cent annually to reach $20.8 billion (€16.5 billion) in 2016. This means that e-books’ share of the global book market will rise from less than 5 per cent of the total in 2011 to around 18 per cent in 2016.

“The new world is hugely more complicated that the old world and companies have to work harder and faster to stay relevant to consumers. However, we’ve reached a time when talking specifically about ‘digital’ increasingly misses the point,” said Bartley O’Connor, head of PwC Ireland’s technology and media consulting practice.

“It is part-and-parcel of the business. In fact, it is more important than that because it is the part of the business that will experience growth.”

On a global basis, PwC forecasts that digital spending will increase at annual rates of 12.1 per cent compared with just 2.8 per cent for non-digital spending.