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Global Entertainment & Media Outlook 2012 -2016


The end of the digital beginning Association of Canadian Advertisers August 27, 2012 Michael Paterson & Aurlie Olives

The end of the digital beginning


Mobile advertising coming to your device Digital is business as usual Location based advertising Mobile distribution of content The value of social networks
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Slide 2

What we said 5 years ago about 2012


2012 will see a broad scale roll out of IPTV and VOD will steal revenue from Pay-Per-View Sports rights and sponsorship deals will become more lucrative. Value of online and mobile rights will also rise significantly.
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Mobile television will be available in 2008 and become a $100m market by 2011 as new technology enables faster download speeds

The Internet will constitute 19 % of advertising in 2012

Slide 3

2011 Actual Vs Forecasted


Segments with Strong Growth
% Growth
Internet Advertising

22.8% Vs 18.2%

Internet Access

17.5% Vs. 12.1%

TV Advertising

TV Subscriptions

Radio

Actual Growth Projected Growth

Out-of-Home Advertising

0% PwC LLP

5%

10%

15%

20% Slide 4

25%

2011 Actual Vs Forecasted


Segments with Weak Growth
% Growth
Filmed Entertainment

Video Games

Consumer and Educational Book Publishing

-3.5% Vs 1.7%

Consumer Magazine Publishing

Newspaper Publishing

-3.0% Vs. 0.6%

Actual Growth Projected Growth

Recorded Music

-8% PwC LLP

-6%

-4%

-2%

0%

2%

4%

6% Slide 5

Entertainment and media growth rates 20122016


Canada 6.5% UK 3.1% Germany 2.7% Russia 10.1%

US 5.2%

France 3.4%

China 12.0%

Japan 2.8%

Brazil 10.6%

India 14.3%

Mature: 4.1%
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BRIC: 11.8%
Slide 6

Poll Question
What will be the fastest growing segment over next five years?
a) Out of home advertising b) Television Subscriptions c) Television advertising d) Video Games Spending e) Filmed Entertainment
PwC LLP Slide 7

...and the answer is


Television Subscriptions

+8.6%
Out-of-Home Out-of-Home Advertising Advertising

+6.0%

Video Video Game Game Spending Spending

+5.3%

+5.4%

Television Television Advertising Advertising

Filmed Filmed Entertainment Entertainment

+2.5%

PwC LLP Text emoutlook and your question to 37607 or Tweet #EMOutlook to @eusisdm

Slide 8

Money Makers: Advertising Segments


Internet Advertising Television Advertising

+15.7%
Out of Home Advertising

+ 5.4%
Radio Advertising

+6.0%
Online Newspaper Advertising

+4.3%

+ 11.1%
PwC LLP Slide 9

Global advertising spending segment


2011

Global advertising CAGR to 2016: 6.4%

2016

Internet Advertising 18% Television 36%

Internet Advertising 27%

Other 10%

Television 36%

Out-of-Home 6%

Other 7% Out-ofHome 6% Newspapers 18% Consumer Magazines 5% Radio 5%

Consumer Magazines 6%

Radio 6%

Newspapers 14%

Segment data here includes online/mobile advertising in the segments and excludes it from the Internet Advertising total
PwC LLP Slide 10

Canadian advertising spending by segment


Canada 2011
Internet advertising 22%

Canadian advertising CAGR to 2016: 6.6%

Canada 2016

Television advertising 28%

Internet advertising 33%

Television advertising 27%

Others 10% Newspapers 18% Radio 13% Out-of-home 4% Consumer magazine 4% Newspapers 13% Others 8% Radio 11%

Out-of-home 4% Consumer magazine 5%

Segment data here includes online/mobile advertising in the segments and excludes it from the Internet Advertising total
PwC LLP Slide 11

Money Makers: Consumer Segments

Mobile TV +38%

Over-the-top Streaming +18%

eBooks +46%

Recorded Digital Music +12.8%

Satellite Radio +12%


PwC LLP Slide 12

Digital spending drives global growth


2500000

Digital is defined as:


online and mobile Internet advertising mobile TV subscriptions digital music electronic home video online and wireless video games digital consumer magazine circulation spending digital newspaper circulation spending digital trade magazine circulation spending electronic consumer, educational, and professional books satellite radio subscriptions broadband and mobile Internet access

2000000 39% 1500000 $ million 18%

32%

1000000

82%

500000

68%

61%

0 2007 2008 2009 2010 2011 2012 Digital 2013 2014 2015 2016 Non-digital

PwC LLP

Canada- Digital spending will grow at a CAGR of 13.7% from 2012-2016


70,000 60,000

50,000

36%

$ million

40,000 15% 30,000 85% 20,000

29%

71%

64%

10,000

2007 PwC LLP 2008 2009 2010 2011 2012 2013 2014 2015 2016

Non-digital

Digital

Key Trends

Social

Mobile

Local

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Slide 15

Social

Social Local

Mobile

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Slide 16

Mobile
Unit Sale of Smart Devices

Social

Mobile

Local

2011

2016

23M 65M 355M


ebooks Tablets Smartphones

88M
ebooks

330M
Tablets

940M
Smartphones

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Slide 17

Mobile
Internet access spending & advertising
Mobile is still an underutilized advertising medium given the time people spend with the mobile devices on uses other than calling. Mobile internet access in Canada
$5,000 $4,000 $3,000 $2,000 $1,000 $0 2012 2013 2014 2015 2016 $500 $400 $300 $200 $100 $0 2012 2013 2014

Social

Mobile

Local

Mobile internet advertising

2015

2016

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Slide 18

Local Location-Based Marketing

Social Local

Mobile

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Slide 19

The Entertainment & Media Value Chain

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Slide 20

Integrating digital across the business


-Key Priorities
Cost optimisation and process integration Rights and royalty optimisation Metadata modelling Back catalogue consolidation and commercialisation Digital content and publishing integration Talent . . .

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Slide 21

Poll Question
What will be your biggest challenge to monetize digital content or earn digital advertising revenue in next five years? a) Internal skills, resources or systems not adequate b) Consumers believe they should pay less or not pay for digitally distributed content c) Piracy d) Finding the right business model(s) e) The general economy

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Slide 22

The raw materials - talent and innovation The proportion of E&M CEOs who told us talent constraints have caused them to cancel or delay a key strategic initiative in the past year:

Text emoutlook and your question to 37607 or Tweet #EMOutlook to @eusisdm PwC LLP

Slide 23

The Millennials challenge

Talent and innovation ...set free by leaders who understand behavior


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Time for Questions

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Slide 25