Media & Entertainment: Growth Amid Digital Evolution
In an era defined by rapid digitalisation and shifting consumer preferences, the global entertainment and media (E&M) industry is experiencing unprecedented growth. The latest PwC Global Entertainment & Media Outlook report unveils a compelling narrative of resilience and innovation within the sector. The industry is forecasted to surge to a monumental US$2.8tn market by 2027, underpinned by pivotal factors such as advertising prowess, digital transformation and the rise of emerging technologies.
Werner Ballhaus, Global Entertainment & Media Industry Leader at PwC Germany says: "We have seen impressive growth in the entertainment and media industry over the past two years following a surge in demand for digital products during COVID-19. However, macroeconomic challenges, increased industry competition and a reduction in production costs – particularly in digital services and experiences – have reduced revenues and consumers' willingness to pay. If companies in the EM industry are to successfully engage consumers and drive growth, they need to transform their service offerings and tap into new and emerging markets and technologies, such as Asia and generative AI."
The PwC Outlook report paints a vivid picture of an industry undergoing a profound digital transformation. By 2027, digital revenue is projected to command nearly three-quarters of total industry revenue, marking a significant shift from 55.2% in 2018. Concurrently, global internet access is poised to ascend to a monumental US$1tn market, buoyed by a tripling in annual data consumption between 2022 and 2027. This digital revolution not only reshapes consumer behaviour but also redefines the contours of content creation and distribution strategies across the industry.
Gaming's enduring dominance
With global gaming revenues forecasted to soar to US$312bn by 2027, gaming remains vital to the E&M industry growth. Werner Ballhaus emphasises the sector's significance: “Gaming remains one of the powerhouses of the global E&M industry, embracing emerging technologies such as generative AI to drive innovation, scale, and efficiency.”
Following a hiatus during the COVID-19 pandemic, live sectors are also experiencing a renaissance, outpacing the overall E&M industry. Live experience revenues are slated to grow at a robust 9.6% CAGR through 2027, according to the report, highlighting the allure of immersive live experiences. From cinematic box office revenues to the burgeoning e-sports phenomenon, the live sector heralds a vibrant resurgence on the horizon.
The MENA’s E&M growth
The Middle East and North Africa (MENA) region is witnessing a remarkable surge in its media and entertainment sector, driven by cultural transformations and technological advancements. The industry's value is expected to soar to US$49.9bn in the region by 2029, according to a report by Mordor Intelligence.
The burgeoning youth population in the MENA region is at the forefront of driving change, with a growing appetite for digital content and entertainment. The increasing adoption of mobile internet services, projected to reach around 357 million users by 2025, is providing a crucial impetus to the market's growth. Moreover, the average of 3.5 hours spent daily on social media platforms by individuals in the MENA region underscores the significant role of social media in shaping media consumption habits.
Saudi Arabia, with its ambitious Vision 2030, is also spearheading the transformation of the media industry in the MENA. With nearly 30% market share in the MENA media industry, Saudi Arabia is strategically investing in developing the sector to offer more entertainment options, enhance media quality, and promote its national heritage and ideals. The recent lifting of the 35-year ban on cinemas in 2018 has propelled the kingdom's cinema and filmmaking industry, with significant investments fostering local productions.
Digital media giants like Netflix, Amazon and Intigral are reshaping audience engagement with entertainment through over-the-top platforms. The preference for OTT services, coupled with advancements in mobile technology and internet connectivity, is propelling the sector's expansion. Platforms like Jawwy TV and Dawri Plus are catering to the digitally savvy populace, offering immersive content experiences across various devices.
The convergence of mobile technology with media and entertainment has unleashed a wave of innovation, with streaming services, augmented reality (AR), virtual reality (VR), mobile gaming, and Gaming as a Service (GaaS) emerging as key trends. These trends are not only reshaping how content is consumed but also offering new avenues for engagement and revenue generation.
News consumption in the MENA
A report by Strategy& Middle East and Google News has revealed that this wave of innovation is also creating an evolving landscape of news consumption in the MENA region.
According to the report, a significant 68% of consumers in the MENA region now rely on social media as their primary source of news. This reflects a notable shift in traditional news consumption habits. Furthermore, 90% of respondents prefer accessing news through their mobile phones.
The report, entitled ‘Building a Vibrant News Industry in the Middle East and North Africa,’ analysed three of the largest news markets in the MENA region: Egypt, Saudi Arabia, and the UAE. Together, the three markets account for 80% of advertising spending in the region’s entertainment and media industry.
The report highlights a decline in newspaper and magazine revenues in the MENA region since 2018. The forecasted compound annual growth rate (CAGR) for their revenues is expected to reach -4% by 2027. Print advertising revenues are also expected to decline sharply by 11.3% by 2027. This further exacerbates the financial pressure on traditional media outlets.
Karim Sarkis, Partner at Strategy&, part of the PwC network and the leader of the media and entertainment sector in the Middle East says: “The rapid changes in the news media industry in the MENA region have created real avenues for growth. To successfully capitalise on these opportunities, news organisations will need to digitally transform, adopt sustainable business models, and pursue operational agility, innovation, and productivity.”
The future
The trajectory of the global E&M industry shows a narrative of resilience, innovation and transformation. Despite facing macroeconomic challenges and evolving consumer dynamics, the industry is poised for monumental growth, propelled by advertising prowess, digitalization and the ascent of emerging technologies.
As the global E&M industry charts its course towards the US$2.8tn market milestone by 2027, stakeholders must embrace innovation, adaptability and creativity to unlock the industry's boundless growth potential and navigate the evolving contours of media and entertainment consumption in the digital age.
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