5 Trends for the Future of Media and Entertainment

While the media and entertainment industry was one of the first industries to address digital disruptions, their transformation is far from over.

This is the main finding from PwC's annual Media & Entertainment Outlook 2018, which estimates that industry revenue will reach $ 792.3 billion by 2022, up from $ 666.9 billion in 2017.
"The differences between print and digital, video games and sports, wireless and fixed Internet access, pay-TV and OTT, and social and traditional media are blurring," said Mark McCaffrey, technology, media and telecommunications leader of PwC in the US. "To be successful in the future, companies need to rethink every aspect of their work and approach. This means that the right technology and premium content can be inexpensively delivered to or accessed by an audience associated with the brand. "

In the following, let's take a look at five industry trends highlighted in the PwC report that are expected to continue to shape the M & E landscape.

Fastest growing revenue segments

Over the five-year period 2017-2022, PwC will see Virtual Reality (VR), Over-the-Top Video (OTT) and Internet Advertising as one of the fastest growing revenues for M & E companies in the US.

The VR market is rapidly turning into an entertainment and productivity platform. In fact, stores such as USA Today, Washington Post and The New York Times are aboard the VR journalism trends. The US is currently the world's leading VR market with sales of $ 1.5 billion in 2017, an increase of 250% over the previous year. By the year 2022, a total volume of $ 7.2 billion is expected.

In the United States, OTT video for media and entertainment (see HBO Go, Hulu, Netflix) generated $ 20.1 billion in revenue in 2017, an increase of 15.2% over the previous year. PwC predicts that growth rates will slow as they become more mature on the market. However, sales in this area are expected to reach $ 30.6 billion in 2022.

In addition, the US continues to lead the global Internet advertising market with total revenues of $ 88 billion in 2017. According to the report, the market will continue to grow over the forecast period, reaching an annualized annual growth rate of 7.7% between 2017 and 2022, reaching $ 127.4 billion.

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Convergence across the industry

Convergence will be a big M & E theme over the next five years, according to PwC.

For example, streaming services, TV companies and social networks are now competing for both conventional sports and electronic sports rights, the report said. In addition, television companies, telecommunications companies, technology companies, OTT operators and film studios compete for the delivery of TV content. Radio stations, podcast companies and streaming services are competing for radio and podcast content. Brands are also on the rise, creating content to appeal to the same audience as M & E companies.

"We see regions converge, convergence of access, and many M & A and transactions aimed at content consolidation and content base growth," McCaffrey said. "There is a lot of emphasis on usability and loyalty as companies try to establish a more direct relationship with content consumers."

5G to develop what content is

Switching to 5G mobile networks will affect telecom operators, but it also changes the possibilities that faster broadband can offer. Just think of T-Mobile's recent acquisition of the broadband video starter Layer3, which will allow the company to launch a 5G-equipped Internet television service in the US.

Sprint, for its part, has already made Hulu available in several packages, which will certainly boost consumption once 5G comes into play. In addition, 5G continues to advance its advances in artificial intelligence, the worldwide adoption of IoT devices, the evolution of virtual and augmented reality, and location-based services. From a content perspective, the opportunities for innovation over the next five years - and beyond - seem limitless.

M & A continues
A ton of mergers and acquisitions made headlines at M & E. Take the approved merger of AT & T and Time Warner worth $ 85.4 billion. And let's not forget Disney's intent to acquire most of 21st Century Fox's assets.

The bigger picture? These deals will set a precedent for future M & E consolidation.

"We expect to see more and more content consolidation in the US as traditional media companies compete for newcomers like Netflix, Amazon Prime, and Google for market share," said McCaffrey. "And I think the impact of these deals, regardless of the decision, may cause a cascade of events in the industry."

Data usage will continue to increase

PwC expects traffic to increase by 22.3% CAGR over the next five years, reaching 397.8 trillion megabytes by 2022.

PwC attributes the increase in data consumption to the growing consumer demand for video content, which in 2022 will account for 85.6% of total data usage. 5G will contribute to this increase as mentioned above.