Australian entertainment and media spending grew by 4.5% in 2013, below the global average, and the sector’s growth rate is projected to be even lower in the next five years.
That’s according to PwC’s Australian Entertainment & Media Outlook 2014-2018, which was released today.
PwC predicts interactive games will be the fastest-growing consumer sector while internet-protocol delivered TV services (IPTV) are set to drive the subscription TV market.
Advertising revenues on traditional media platforms will continue to fall as companies boost spending on their own channels, mostly digital and social media.
PwC’s Megan Brownlow tells IF there are two clear take-outs for screen producers from the report. “Firstly, government support for screen production is going to be extremely limited over the next five years,” she says.
“Secondly, producers should look for new commercial partners and new distribution models, for example those branded ‘owned’ channels.”
Australian entertainment and media spending grew by 4.5% to $33.7 billion last year, compared to 5.2% globally and 7.1% in the Asia-Pacific, the latter spurred by China and India. Consumer spending rose by 4.4% to $21.4 billion and advertising improved by 4.8% to $12.3 billion.
The total market is projected to expand at an annual compound growth rate (CAGR) of 3.4% to reach $39.8 billion in 2018, with consumer spending rising by 3.5% to $25.4 billion.
The interactive games market is forecast to accelerate at a CAGR of 7.7% from $1.75 billion this year to $2.29 billion, with the digital console games segment jumping from $315 million last year to $807 million.
In last year’s Outlook PwC was pessimistic about the games industry. Brownlow acknowledges, “We thought the market would be flooded; we missed the uptick. But our forecasts are getting better as we have beefed up consumer research and ‘road-testing’ our findings in each of the markets. Our audit showed that in every other segment we were within 2% of the 2013 (actuals).”
She says the games sector has never had big financial support from governments and thus doubts the federal government axing the interactive games fund run by Screen Australia will have a major impact.
Total advertising spending is projected to reach $14.4 billion by 2018, a CAGR of 3.1%, as internet advertising is entrenched as the dominant category, accounting for as much as $5.7 billion.