The Irish entertainment and media (E&M) industry is set to grow 3.3% annually (Compound Annual Growth Rate) to 2021, according to PwC’s latest Global entertainment and media outlook 2017-2021, the Irish results which are published today. This is equivalent to revenues of €4.8 billion for the industry by 2021 and is marginally lower than last year’s prediction of 3.8% growth projection. This growth is primarily fuelled by increasing internet access and significant growth in internet advertising. The growth projection incorporates all Irish E&M industry sectors including internet and out of home advertising, internet access, TV subs and licenses, radio, video games, filmed entertainment, newspaper, book and magazine publishing.
Globally, the entertainment and media industry is expected to grow at a compound annual growth rate (CAGR) of 4.2% in the period. Growth in the Irish market lags the global forecast largely due to significant growth in internet access but which is partially offset by contraction expected in the Irish newspaper publishing sector.
“The steady march of digital technology has ushered in a more direct-to-consumer environment characterised by greater choice and user control."
Amid shifting consumer preferences, rapid advances in technology and ongoing disruption to business models, the new strategic imperative for E&M companies is to turn customers into fans – by innovating to create the most compelling, engaging and intuitive user experiences.
Speaking at the Irish launch, Amy Ball, Partner, PwC Ireland Entertainment and Media Practice, commented: “Growth of 3.3% annually presents significant opportunities for the Irish E&M industry. This growth is primarily driven by growth over the period in internet access (33%), internet advertising (63%) and video games (32%). In particular, the rise of mobile internet advertising, tracking at 13% annually, will represent 40% of all internet advertising spend in Ireland by 2021. We see traditional newspaper publishing continuing to lose ground with a decline of 5% annually over the period.”
“As companies compete to create the most desired user experiences, advances in technology are at the heart of their strategies. Traditional entertainment companies are also increasingly competing with digital tech giants such as Amazon and Apple and subscription based streaming services such as Netflix. Combined with a great user experience, companies can harness technology and data to create a virtuous circle - one which increasing consumer engagement and attention lead to the capture of more data and more insights into what users want. This understanding enables companies to further target and engage their core audiences, opening up new opportunities to generate revenue.”
“E&M companies have been accustomed to competing and creating differentiation across two dimensions: content and distribution. Now they need to focus on a vital third element – that of user experience. To thrive in a market that is increasingly competitive and dependent on personal recommendations, companies must develop strategies that engage, grow and monetise their most valuable customers i.e. their fans! ”
Ireland’s total E&M market of €4.8 billion by 2021 comprises digital and non-digital components of €2.3 billion and €2.5 billion respectively. By 2021, digital revenue in Ireland will account for 48% of all E&M spend in Ireland. Forecasted growth rates suggest that Irish digital spend will outpace non digital by 2023.
Internet access continues to be the largest revenue stream within the Irish E&M segment, growing 33% to €1.3 billion by 2021. Ireland’s three mobile operators, Meteor, Three and Vodafone, are continuing with their Long Term Evolution (LTE) network rollouts and the penetration of mobile internet connections on high speed networks is expected to jump 26% to 86% by the end of 2021. Overall, mobile internet penetration will rise from 69% to 81% by 2021, at which point mobile internet revenues of €807 million will account for 63% of total internet access revenues.
The Irish Government’s National Broadband Plan (NBP) calls for 85% of premises to have at least 30Mbps broadband by 2018, rising to 100% in 2020. Much of the rollout will be carried out by private sector operators but the Government is holding a tender for a provider to build the network in more remote areas.
Total Irish newspaper revenue is forecast to fall from €571 million in 2016 to €441 million in 2021, a decline of approximately 5% annually. Print circulation is on course to almost halve within the decade. Total average daily circulation is set to decrease from 525,000 units in 2016 to 392,000 units by 2021, while free daily newspaper circulation will also decrease from 45,000 units to 16,000 over the same time period. With most print sales coming as one off purchases rather than home subscriptions, there is little product loyalty and discretionary spend is easy to cut.
Irish papers have amongst the smallest digital advertising revenue platforms in Western Europe. While there is lots of investment in online and digital, publishers continue to be challenged to monitise online and digital reveunes, but there are significant opportunities over the longterm.
Ireland’s internet advertising market is expected to post solid growth over the forecast period with total internet advertising revenue to reach €575 million by 2021, a growth of 63% in the period.
Mobile internet advertising already accounts for more than one-third of total online spend in Ireland, and spend in this sector is forecast to grow 13.4% annually to 2021.
The internet video segment in Ireland continues to grow and will overtake physical home video in terms of revenue by 2019. Growth of 3% annually will produce revenues of €48 million by 2021. As more subscription services launch and enhance their offering, it will be SVOD (subscription video on demand) that dominates representing over 76% of forecast revenues.
Satellite TV penetration in Ireland is set to remain constant at 41% through to 2021, while subscription TV penetration will increase from 66% in 2016 to 70% in 2021.
Amy Ball concluded: “To thrive in this very competitive market, entertainment and media companies need to know their consumers, increase business flexibility; monetise the total consumer relationship, adopt a consumer centric focus and improve the user experience through emerging technologies. The steady march of digital technology has ushered in a more direct-to-consumer environment characterised by greater choice and user control. Amid an ever greater supply of media, businesses that are consumer-centric will find themselves with audiences that are more engaged, more loyal and spend more per capita. To thrive in the experience-driven marketplace characterised by our latest Outlook, companies need to attract and harness the economic, social and emotional power of their consumers.”