Entertainment and media spending rose by 5 percent in Canada in 2010, the first increase in Canadian spending since 2007, according to PwC's Global Entertainment and Media Outlook 2011-2015.
"The entertainment and media industry is highly motivated to create experiences that engage today's consumer, across multiple-platforms, which in turn is creating multiple opportunities for companies to profit," says Jerry Brown, Associate Partner in the Entertainment & Media practice for PwC.
Canada will grow faster than the U.S. through 2015, with an expected 6 percent compound annual increase. Gains in Canadian spending will be due to double-digit growth in Internet advertising and increases of almost 12 percent for Internet access payments (both high speed and mobile), television subscriptions (7 percent), trade magazines (7 percent) and out-of-home advertising (6 percent). Both advertising and end-user spending will also grow in Canada by 5 percent.
Currently, spending on digital platforms accounts for 26 percent of all spending on entertainment and media, but by 2015 PwC says that share will rise to 34 percent as more consumers access content online and through other non-traditional methods.
This will have impacts across all industries and result in new complimentary revenue streams for traditional business models, from Internet and TV advertising to video games, movies and music. Internet and TV advertising will grow by over 50 percent by 2015, while mobile apps and the spread of tablets and smartphones will mean a more than three-fold increase in mobile TV advertising.
"Video-on-demand, new streaming services and 'cloud' based digital storage solutions like digital lockers are going to feed Canadian consumers spending on TV and movies over the next five years," says Michael Paterson, Partner in the Entertainment & Media practice of PwC. "At the same time, more consumers using smartphone's and tablets, together with the increased downloading of video games and the growth of social network games will expand the online and wireless game market."
And while the newspaper market in Canada will be over 10 percent smaller than it was in 2006, paid online content and distribution to mobile devices will begin to offset ongoing decreases in print circulation spending. By 2015, newspaper publishing spending will edge up by about one percent.
"Innovative approaches have supported an unexpectedly strong recovery in advertising led by online and TV. This has helped restore the attractiveness of advertising-funded models for all media types and formats, which are blended with a subscription revenue stream," says jerry.
Many consumers have learned to expect a lot of content to be free. Convincing people to pay where they have not previously will be difficult and require a deep understanding of what consumers' value and will pay for, the report suggests.
"Consumers have never had it so good when it comes to accessing premium content over a variety of devices," says Michael. "E&M CEOs need to adapt their business models to continue to meet what the consumer's demand. The bottom line is that in order for business to continue to create quality content, someone has to pay."
PwC believes that "convenience, the consumer experience, [and] overall quality" are the vital ingredients that matter to consumers when choosing from the menu of content and delivery channels available. Alongside these are "participation and privilege"—meaning consumers enjoy playing an active role in shaping their content and are happy to pay for the privilege to "jump the line" to get earlier access to content.
Jerry adds, "The challenge for Canadian entertainment and media companies will be to turn what consumers want and expect into sustainable, profitable and engaging relationships, by offering them advantages which they value. As the digital market evolves and technologies and legislation mature, these factors will reduce the ubiquity of pirated content."
"New ways to store and access user content like Apple's iCloud intend to be a more convenient, consistent alternative to peer to peer sharing and storing content on a device," Jerry says. "Cloud based solutions will allow greater certainty that content has the appropriate rights assigned to the user which will further benefit rights owners over time."