Stagnant outlook for Australia’s filmed entertainment industry
The filmed entertainment sector faces five years of zero growth as a modest increase in BO grosses is offset by the continuing slump in DVD/Blu-ray sales and rentals.
Overall, consumer and advertiser spending on Australian entertainment and media is forecast to rise at a compound annual growth rate (CAGR) of 3 per cent, from $24.1 billion in 2017 to $28 billion in 2022.
The subscription TV market is the fastest growing sector with spending expected to expand at a CAGR of 10.1 per cent while the internet advertising market rises by 7.7 per cent.
That’s according to PwC’s 17th annual Australian Entertainment & Media Outlook, which analyses trends and consumer and advertising spend across 12 segments.
The study predicts annual BO receipts will improve by just by 3 per cent, from $1.26 billion this year to $1.39 billion in 2022.
Confirming a trend which should worry producers, distributors and exhibitors, the report found admissions per capita fell by 8 per cent between 2012 and 2017 despite an 11 per cent hike in screens and a 65 per cent jump in the number of theatrical releases.
“That is a significant change which should concern the industry,” Megan Brownlow, PwC Australia’s entertainment & media industry leader, tells IF.
Brownlow strongly suspects the burgeoning popularity of Netflix and other streaming services is impacting ticket sales. She quotes a visiting US media executive who told her last week, “For many people it used to be dinner and a movie. Now it’s Netflix and Uber Eats.”
The report predicts home entertainment revenues including digital will fall by 5.7 per cent from $967 million this year to $763 million in 2022 while cinema advertising goes up by 3.5 per cent. Transactional VOD will continue to decline as consumers no longer want to own videos.
So, overall the filmed entertainment business is expected to register a minus 0.4 per cent CAGR over those five years.
Despite that pessimistic outlook the report quotes Screen Australia CEO Graeme Mason as saying, “‘It’s [all about] the power of niches and the multitude of niches available to filmmakers and distributors.”
It urges the entertainment and media sector, particularly traditional media companies, to bridge the trust deficit with consumers.
“Numerous breaches of trust by corporates in Australia and globally over the last year have soured relationships with consumers. Companies that get the consumer trust piece right will take it to the bank and boost investor and regulator confidence,” Brownlow said.
PwC identified four trust drivers: Advocacy (“Are you acting in my best interests?”); consistency (“Have you proved credible before?”); transparency (“Do I really understand what you’re doing?”); and success (“Do you have what it takes to help me achieve my goals?”).
“Organisational strength on these drivers can be understood by how your target market would answer these questions,” she concluded.