Internet will be the engine of growth in the media and entertainment sector

Advertising on free-to-air television will stagnate over the next five years. Although it will continue to bring together an important part of the advertising pie in 2021 (about 2,234 million euros), its growth will be barely 0.6%.

In 2020, the digital format will become the main advertising medium in Spain. This is one of the main conclusions of the report Entertainment and Media Outlook 2017-2021 in Spain, which every year produces PwC, and where the main challenges and opportunities of the sector are analyzed through 11 segments: television and video, television advertising, Internet advertising, video games, radio, music, cinema, books, magazines, Press and Outdoor Advertising. The study concludes that in 2020, digital advertising revenue will reach 2,214 million euros, and will be the main advertising medium in absolute terms, slightly ahead of traditional television -2,140 million euros-, as is already happening in the United States and other neighboring countries, such as the United Kingdom, France and Germany.

The document concludes that the Entertainment and Media industry in Spain will grow by 2.9% between 2016 and 2021, when it will reach 27,629 million euros. The behavior of Internet Advertising will play a major role in this increase, which will increase by 6.3% during that period. A little less than half of all this investment will be allocated to search engine advertising, which will go from 783 - in 2016 - to 953 million euros in 2021, which represents an increase of 4%.

Open television

Television advertising will continue to account for an important part of the advertising pie in 2021 - some 2,234 million euros - although its growth during the years contemplated in the report will be modest, 0.6%. Free-to-air television will have to face different challenges in the coming years, which include the renewal of some formats that allow them to maintain their coverage levels, the need to compensate for the drop in minutes of consumption and to prevent the flight of younger audiences.

Pay television income will increase by 4% in the next five years, when it will reach 2,265 million euros - not including income from streaming video consumption (OTT) -. In 2021, pay television in Spain will reach 7.1 million homes and its penetration will have grown from 40.2% (2016) to 46.6%. Levels still far from the European average -56%-, due, among other factors, to the high quality of free-to-air television in our country. Behind the growth of pay television are the different alliances that have occurred in the sector in recent times, the strong weight that football rights continue to have on consumption and the launch of initiatives such as eSports, which have emerged to reach younger consumers.

"The industry is changing at great speed and all actors must adapt quickly to take advantage of the opportunities. The new digital user wants quality content, at any time and place, but, above all, they want real, direct and interactive experiences. The ability to respond to the demands of more demanding and connected consumers will make the difference between companies in the sector."
Patricia Manca, partner responsible for the Entertainment and Media Sector at PwC Spain

in the world

Over the next five years, annual growth in the Entertainment and Media sector globally is estimated to be 4.2%, down from the 4.4% we estimated last year. Everything indicates that the slowdown in growth is due to the fact that the sector is at an inflection point. Most large markets businesses are approaching or have already reached a kind of maturation point that sometimes borders on saturation.

Specifically, the industry as a whole is losing market share due to the decline in “traditional” revenue sources. According to the report, two of the main segments, Newspapers and Magazines, will decline in absolute terms and others such as Television Advertising, B2B Content and Cinema will also reduce in terms of relative weight until 2021. On the other hand, Internet Video or Online Advertising are showing great growth as well as eSports or virtual reality, which are beginning to emerge. Although they are not yet large enough to compensate for the stagnation of the rest.