Dive Brief:

• PwC released its 18th annual Global Entertainment and Media Outlook 2017-2021 and found global E&M revenues will rise from $1.8 trillion last year to $2.2 trillion in 2021 at a compound annual growth rate (CAGR) of 4.2%, per a press release. But, the big picture takeaway from the report is a shift in consumer expectations and how E&M companies produce and disseminate their content and products. Instead of focusing on content and distribution, E&M companies must now focus on user experience (UX) per PwC.
• "E&M companies are operating amidst a wave of geopolitical turbulence, regulatory changes and technological disruption. Even if the macro context is set aside, these companies are facing significant pressures on growth," said Mark McCaffrey, PwC's U.S. Technology, Media, and Telecommunications Leader, in the press release. "In order to thrive in the marketplace, PwC suggests that these companies understand and develop sustainable relationships with consumers to advance their UX.”
• The rise of mobile, particularly in paid search, will come at the expense of desktop which is expected to decline 3.7% over the five-year period, as reported by MediaPost. Even though desktop revenue is declining, total desktop and mobile advertising revenue will reach more than 50% by 2021.

Dive Insight:

The report sees a growing future in virtual reality (VR) with 68 million new headsets in use in the U.S. by 2021 and the installed base growing at 69.2% CAGR, and interestingly expected to add around the same revenue as TV advertising over the five-year forecast period. The report pointed out VR’s close relationship with gaming, but added news and content companies are expecting VR to reinvigorate their programming and recapture audiences lost to the internet.

Internet video is expected to grow at 9.6 CAGR to produce revenues of $18.8 billion in 2021 with almost three-fourths of that revenue coming from video-on-demand (VOD) services. The U.S. is the largest and most established worldwide with 47% of global revenue in 2016, but expected to fall to 43% by 2021 as it becomes more established worldwide driven by U.S. companies expanding globally.

Internet advertising is forecast to grow at 9.9 CAGR to reach $116.2 billion in 2021 compared to $72.5 billion last year, and the sector was predicted to surpass TV advertising this year but actually accomplished the feat by the end of 2016. Mobile has become a key driver of internet advertising, accounting for 50.5% of total internet ad revenue last year, up from 34.7% in 2015. By 2021 mobile advertising is expected to account for 74.4% of all U.S. internet advertising.