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https://www.panoramaaudiovisual.com/en/2021/02/12/pandemia-acelera-transformacion-sector-entretenimiento-media/

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

Entertainment

The pandemic has accelerated changes in the Entertainment and Media (E&M) industry in Spain and in the world. COVID-19 has driven the transformation in which the sector was immersed and has promoted key aspects such as digitization, personalization or the intelligent use of data, all as a result of changes in user consumption habits.

These are some of the main conclusions of the 21ª edition of the report Entertainment and Media Outlook 2020-2024 Spain, produced by PwC. The report includes growth prospects for 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 global revenue of the sector

In 2020, the E&M sector around the world has seen its growth slow down and it is estimated that, starting in 2021, a period of significant recovery will follow. The document states that in Spain 3.3% revenue growth is expected until 2024, when it will reach 32,567 million euros. Above the growth expected worldwide, in the same period, and which stands at 2.8%, up to 2.2 trillion euros.

Global revenues for the Entertainment and Media sector (Source: PwC)

Uneven impact of the pandemic

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

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

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

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

Despite the fact that over the last few years revenue 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. Globally, this increase will be 4.7%. Mobile devices will continue to be the main growth engine, accounting for 98% of new revenue for the 2019-2024 period.

Spain is an important world market for video game, que está disfrutando de un período de fuerte crecimiento gracias, principalmente, a la espectacular expansión de los juegos sociales en los últimos años, cuyos ingresos superaron a los del juego tradicional, por primera vez en 2016. En 2020, a pesar de la pandemia, se espera que el segmento alcance unos ingresos de 1.823 millones de euros. El mercado mundial de videojuegos, incluyendo los E-Sports, llegarán a los 179.100 millones de euros en 2024, con un crecimiento del 6,5%. Por su parte, el mercado de los eSports en España sigue aumentando a un ritmo superior al del resto de Europa, gracias al interés de los equipos deportivos de alto perfil, de los patrocinadores corporativos y de las audiencias.

The Spanish podcast market is booming, with a monthly audience of 14.3 million, compared to 3.7 million in 2015. A trend that will continue in the coming years, as the number of listeners will grow to 21 million in 2024. Podcast advertising revenue in Spain they are growing even faster than the audience, reaching 23 million euros in 2019, which represents an increase of 46.8% compared to the previous year. Globally, in 2019, the segment's total revenue exceeded $ 1.3 billion, reaching $ 3.6 billion in 2024.

SVOD subscriptions - TVOD (Source: PwC)

Fall of the more traditional segments

The 2020 data show that the newspapers Traditional newspapers are losing their market to native digital newspapers. The report points out 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 print media is remains, but has been accentuated as a result of the pandemic.

The Spanish market for books 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 hit this segment, with a decline 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 offset the overall decline.

Also as a result of the pandemic, the market for television advertising in Spain - which had already been experiencing a decline in recent years as a result of the change in 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 this will continue to be the case in 2024, with 91% of revenues attributable to free-to-air channels.

In 2019, the film industry it reached its best figure in a whole decade, 624 million euros. However, the situation caused by the pandemic indicates that total box office revenues will fall by around 250 million euros in 2020 and will gradually recover in subsequent years, with a fall 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 in sight. Likewise, confinement has forced citizens to remain confined at home, a true battlefield that companies have to conquer in order to reach their customers. The report highlights some lessons learned in recent months:

The study also observes certain changes in consumption patterns: the content consumer has learned quickly and is increasingly demanding, but is 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 infrastructures pave the way for growth: thanks to the speed and latency provided by 5G, users will be able to have access in real time and with higher quality to a large amount of content, games or services. For its part, Artificial Intelligence will be increasingly present in homes and in the daily movements of users and, although they increasingly appreciate its advantages in terms of personalization, some concern regarding privacy persists. The report estimates that, by 2025, 45% of the world will have 5G coverage, connecting more than 1.7 trillion devices.

Patricia MancaPatricia 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, more personalized offers and data have become the key to managing the demands of increasingly demanding users ".

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For • 12 Feb, 2021
• Section: ESP1, Business