PwCAsian e-Marketing concludes its coverage on streaming media in June with PwC’s Global Entertainment and Media Outlook 2012-2016. The company released its 13th annual edition just two weeks ago, providing in-depth analysis and forecast data for advertising and consumer spending.

Thirteen major industry segments have been examined in detail across 48 countries, providing an insightful overview on internet advertising (wired and mobile) and its convergence with television.

Over the next five years, PwC forecasts that global spending on entertainment and media will rise from $1.6 trillion in 2011 to $2.1 trillion in 2016, a 5.7% compound annual advance, reflecting the on-going shift from higher-priced physical distribution to lower-priced digital distribution.

Further, the company expects global advertising to increase by 6.4% from $486 billion in 2011 to $661 billion in 2016, while internet advertising will be the fastest growing advertising category with a 15.9% compound annual increase, followed by the small video games advertising market at 11.2%. Until 2016, television advertising will increase by 6.6%, out-of-home advertising will grow at a projected 5.0%, followed by radio with 3.8% annually. The print segments—newspapers, consumer magazines, trade magazines, and directories—will average less than 3.5%.

According to the company’s findings, increasing digital migration is playing out differently across the various segments and geographies of the entertainment and media industry. Tablets and smartphones will have a stake in the growing revenue opportunities from digital delivery of entertainment and media (E&M) content.

Assuming that the industry has learnt all about the opportunities at hand by now, PwC is talking about the ‘end of the digital beginning’ as rising comfort levels with digital mean that it is becoming business-as-usual. In its new report, PwC analysts, however, urge to make use of newly gained technologies, insights and know-how, and to start implementing digital strategies.


(From left to right): Loren Shuster, Adrian Seto, Charlotte Hsu, Greg Unsworth and Jack Lim

During a press briefing that announced the new report, Charlotte Hsu, Partner and Singapore Entertainment and Media Leader, PwC LLP, explained tipping points and contrasting market development rates globally, but with a special focus on Singapore, saying: “Mobile and internet penetration and digital infrastructure in Singapore, fuelled by the rapid uptake of tablets and smart devices, is closer to the more mature markets in the United States, Europe and Japan. But at the same time, the strength of certain segments such as internet advertising is clearly energized by the rapid and dynamic growth in Asia. Digital prospects will be dictated by how well companies embrace digital strategies as its core strategy, and how they use digital social media and other data collaborative tools to drive that growth.”

This year’s data and analysis outlook shows a growth of E&M spending on digital closing in on the non-digital market share as we see on the example of Singapore:

Singapore’s digital spending will grow at 10% per annum from 2012 to 2016, from a total entertainment and media market size of US$ 4.3 billion in 2012 to a projected size of US$ 5.3 billion in 2016. By 2016, digital spending will increase to nearly half of entertainment and media spend from 39% in 2012 to 45% in 2016.

The trend in Singapore closely follows global levels - global entertainment and media spending on digital advertising and consumer formats increased by 17.6% in 2011 compared with only a 0.6% rise in non-digital spending. Digital’s share of total spend will grow from 28% in 2011 to 37.5% in 2016, and digital spending will account for 67% of total E&M spending growth to 2016.

Digital consumer spending in Singapore at 13% in 2011 to 20% in 2016 will grow at a faster pace than global consumer spending from 7% in 2011 to 11% in 2016. Singapore advertising spending will grow at 5.6% CAGR to 2016 – with digital advertising (inclusive of online and mobile TV and newspaper digital advertising spending) increasing from 10% in 2011 to 19% in 2016.

Companies have to Reshape and Retool as Digital becomes an Obligation

Adrian Seto, Associate Director, Entertainment and Media, PwC LLP Singapore, explained: “Singapore is at a different stage of digital development across the different segments within the E&M sector. Internet advertising spending clearly takes the lion’s share of growth in spending compared to other digital segments. The industry is still dominated by the key players in TV and newspapers but as they have made the commitment to a digital future, becoming core strategy for enterprises, we see them strive to make the necessary changes to their products, distribution and organizations."

The challenge for E&M companies is now to focus on planning out and executing their digital strategies in a world where digital is established as ‘business as usual’ – assuming, of course, that the infrastructure is suitably developed to support digital distribution and consumption.

A stronger focus on identifying, choosing and executing the business models, organizational structures and skill sets to harness new consumer behaviors and deliver rising future value becomes apparent, according to PwC’s that suggests to remain observant:

A finger on the consumer’s pulse

E&M companies need more than ever to understand consumer behaviors and motivations in order to engage with and immerse consumers in their connected, multi-screen environment. Data analytics tools are required to mine the mass of customer information, however, the development of such tools may be triggering consumer fears over risks to their privacy. PwC believes that avoiding this will require a shift of industry mind-set from ‘customer ownership’, towards facilitating a position where the customer is ‘in control’. Companies will find that giving consumers more control over how their personal data is used may deliver higher benefits back to consumers, encouraging them to volunteer even more information, as well as providing better value for advertisers and higher rewards for media owners. Businesses need to aim for a win-win model in which the medium, the advertiser and the consumer all collaborate and benefit. Ultimately, the only person who ‘owns’ the customer – and the customer’s data – is the customer him or herself.

New roles emerge across the E&M value chain

E&M companies need to identify the role or roles they will occupy, as new structures emerge across the digital value chain, and collaborate closely with other providers of complementary capabilities. According to PwC’s outlook, roles could include:

- acting as the online destination or physical auditorium that hosts the customer experience (the ‘venue’)

- aggregating and filtering consumers’ content requirements (the ‘community curator’)

- providing exclusive content (the ‘content monopolizer’)

- being the ‘device developer’

- acting as the consumer’s trusted content companion across devices (the ‘digital services champion’)

- being the third-party specialist supporting experimentation, innovation and execution (the ‘ideas generator’)

For creative and media agencies, the rise of unpaid or earned media reflects an innovative new fusion of advertising, content and analytics, and presents an opportunity for sweeping change in their roles and business models. Advancing socialization is feeding into the widely-accepted concept among agencies and advertisers of “bought, owned and earned” advertising. A fourth category is emerging - “managed” advertising, (the orchestrated use of social media, such as engagement via bloggers). Everything that agencies do for their clients now has an embedded digital components and agencies are directing clients’ attention toward output measures such as earned/unpaid media reach, and purchasing intentions. This presents opportunities for agencies to act as digital marketing and brand consultants, guiding their clients with insights into opportunities around the aggregation of data, socialization and content – particularly as the historical distinction between traditional and digital disappears.

The benefits of reorganizing around digital

PwC believes that companies in the ‘new normal’ need to move away from a siloed approach and instead embed and integrate their digital operations into the main enterprise. It is important to keep an eye on improvements in three key areas: profitability, by reducing operational costs through common platforms and integrated business processes; scalability, gaining greater agility to grow and flex the business; and innovation, through integration, automation and talent. To realize these benefits, companies will have to tackle challenges around rights, royalties and piracy – areas where many E&M companies are often burdened by rigid, complex, bespoke legacy systems. There are additional issues in leading and marshalling the talent and culture of innovation, making digital implementation a reality, particularly in meeting the distinctive employment needs and expectations of the Millennial generation. Or as Greg Unsworth, Asia Pacific Technology Industry Practice Leader, PwC LLP Singapore, describes it: “The right talent and the development of new performance indicators, business process and operating behaviors will change the game for businesses, or otherwise, they face the risk of being left behind as the digital generation moves past them.” He spot on concluded: “We have arrived at the tipping point where digital has become the new standard to meet consumer needs. Businesses have to embed digital in their core strategies, to operate within such an environment and find ways to capitalize on it.”

The E&M industry is working for years now on finding the most effective business and operating models through a cycle of constant experimentation, on-going innovation and targeted analysis of the results and will continue to do so. But with digital now at the core of business-as-usual, PwC believes that experiments and execution are no longer sequential but will proceed in parallel, enabling E&M companies to press ahead into the ‘new digital normality’ with confidence.

By Daniela La Marca