The pandemic accelerates the transformation of the entertainment sector in Spain

Technologies such as 5G will pave the way for the growth of a sector that will grow by 3.3% until 2024.

La pandemia ha acelerado los cambios en la industria de Entretenimiento y Medios (E&M) en España y en el mundo. La COVID-19 ha impulsado la transformación en la que el sector estaba inmerso y ha potenciado aspectos clave como la digitalización, la personalización o el uso inteligente de los datos, todo ello como consecuencia de los cambios en los hábitos de consumo de los usuarios.

These are some of the main conclusions of the 21st edition of the Entertainment and Media Outlook 2020-2024 Spain report, produced by PwC. The report includes the growth prospects of thirteen industry segments in Spain: Television and Video, OTT Video, Television and Internet Advertising, Video Games, Virtual Reality, Radio, Music, Cinema, Books, Magazines, Newspapers and Outdoor Advertising.
The overall income of the sector

En 2020, el sector de E&M en todo el mundo ha visto cómo su crecimiento se ha frenado y se estima que, a partir de 2021, le seguirá un periodo de recuperación significativa. El documento señala que en España Revenue growth of 3.3% expected until 2024, when it will reach 32,567 million euros. Above the expected growth worldwide, in the same period, which stands at 2.8%, up to 2.2 trillion euros.

Uneven impact of the pandemic

The shock caused by the coronavirus has impacted the entire industry unevenly, since while some segments have strengthened, others have accentuated the decline that they have been dragging on for years. For example, the COVID-19 crisis has boosted video-on-demand consumption in Spain.

The report highlights that the Over The Top (OTT) revenues have grown by 26% in 2020, Over the previous year. In addition, OTT video revenue is expected to increase by 14.1% over the next five years, reaching 625 million in 2024.

Specifically, the income from Video on Demand subscription (Subscription Video on Demand (SVOD)) in Spain will increase by 15.3% in the same period of time. Globally, the report estimates that this segment will practically double revenues by 2024.

Pay television in Spain continues to expand and, currently, more than ten million homes have access to some of its modalities. The document maintains that income from television subscriptions will increase by 2.8%, reaching 2,782 million euros in 2024.

Although over the last few years the income from advertising On the Internet they have gained strength compared to television and traditional media; and that it has registered very positive growth figures, the COVID-19 crisis has also had a strong impact on this segment. The report estimates an increase in Spain of 2.2% until 2024. At a global level, this increase will be 4.7%. Mobile devices will continue to be the main growth driver, accounting for 98% of new revenues in the period 2019-2024.

Spain is an important global market for video game, which is enjoying a period of strong growth thanks mainly to the spectacular expansion of social games in recent years, whose revenues surpassed those of traditional gaming for the first time in 2016. In 2020, despite the pandemic , the segment is expected to reach revenues of 1,823 million euros. The global video game market, including E-Sports, will reach 179.1 billion euros in 2024, with a growth of 6.5%. For its part, the eSports market in Spain continues to increase at a faster rate than the rest of Europe, thanks to the interest of high-profile sports teams, corporate sponsors and audiences.

He mercado español de podcasts está en auge, con una audiencia mensual de 14,3 millones, frente a los 3,7 millones de 2015. Una tendencia que continuará en los próximos años, ya que el número de oyentes crecerá hasta los 21 millones en 2024. Los ingresos por publicidad de podcasts en España están creciendo incluso más rápidamente que la audiencia, alcanzando los 23 millones de euros en 2019, lo que supone un aumento del 46,8% con respecto al año anterior. A nivel global, en 2019, los ingresos totales del segmento superaron los 1.300 millones de dólares, llegando hasta los 3.600 millones en 2024.

Caída de los segmentos más tradicionales

The 2020 data shows that the newspapers traditional newspapers are losing market to digital native newspapers. The report indicates that, in Spain, income from the circulation of printed newspapers will continue to fall at a rate of 7%, going from 538 million euros in 2019 to 374 million in 2024. The fall in printed media is maintains, but has been accentuated as a result of the pandemic.

The Spanish market books of consumption - the fifth largest in Western Europe - will increase its income to 1,603 million in 2024, with a growth rate of 1.4%. The pandemic has punished this segment, with a decrease in book sales between 80% and 90% at the peak of the crisis, according to the Federation of European Publishers (FEP) and, although online book sales have increased, the rise has not been able to compensate for the general fall.

Also as a result of the pandemic, the television advertising In Spain - which had already been experiencing a decline in recent years as a result of changing consumer habits - has suffered a sharp decline in 2020, reaching 19%. In 2021, television advertising investment is expected to recover and increase by 13%. In Spain, Television Advertising is highly concentrated in the conventional television format and will continue to be this way in 2024, with 91% of income attributable to free-to-air channels.

In 2019, the film industry reached its best figure in a decade, 624 million euros. However, the situation caused by the pandemic suggests that total box office revenue will drop by around 250 million euros in 2020 and will gradually recover in subsequent years, with a drop of 2.8% in the period 2019- 2024. A relevant aspect of the sector is the growing symbiosis between cinema seen in theaters and streaming video platforms.

Lessons learned in recent months

The pandemic has accelerated changes and trends that were already visible. Likewise, confinement has forced citizens to remain confined at home, a true battlefield that companies have to conquer to reach their customers. The report highlights some lessons learned in recent months:

The study also observes certain changes in consumption patterns: content consumers have learned quickly and are increasingly demanding, but are willing to pay for content if it is of quality and meets their expectations.

Las compañías del sector no pueden quedarse paradas: el mercado se ha fragmentado y, como consecuencia, las empresas de E&M están identificando y adaptando modelos de crecimiento innovadores y, sobre todo, que se adapten bien a las nuevas preferencias de un cliente cada vez más dinámico. El refuerzo de las suscripciones en detrimento de la publicidad pone de manifiesto el poder de las conexiones directas con el consumidor como motor de crecimiento.

On the other hand, technology and infrastructure pave the way for growth: thanks to the speed and latency provided by 5G, users will be able to have real-time and higher quality access to a large amount of content, games or services. For its part, Artificial Intelligence will be increasingly present in users' homes and daily trips and, although they increasingly appreciate its advantages in terms of personalization, some concern persists in relation to privacy. The report estimates that, by 2025, 45% of the world will have 5G coverage and that it will connect more than 1.7 billion devices.

Patricia Manca, partner responsible for Entertainment and Media at PwC Spain, highlights that “the pandemic has accelerated the changes and trends that have been seen coming for years. Today, the industry is more digital, offers are more personalized and data has become the key to managing the demands of increasingly demanding users.”

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