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Global Entertainment & Media Outlook 2012 -2016
The end of the digital beginning Association of Canadian Advertisers August 27, 2012 Michael Paterson & Aurélie Olives

The end of the digital beginning
Mobile advertising coming to your device Digital is business as usual Location based advertising Mobile distribution of content The value of social networks
PwC LLP

pwc.com/ca/emoutlook

Slide 2

What we said 5 years ago about 2012 “2012 will see a broad scale roll out of IPTV and VOD will steal revenue from Pay-Per-View” “Sports rights and sponsorship deals will become more lucrative. PwC LLP “Mobile television will be available in 2008 and become a $100m market by 2011 as new technology enables faster download speeds” “The Internet will constitute 19 % of advertising in 2012” Slide 3 . Value of online and mobile rights will also rise significantly”.

12.2011 Actual Vs Forecasted Segments with Strong Growth % Growth Internet Advertising 22.8% Vs 18.5% Vs.1% TV Advertising TV Subscriptions Radio Actual Growth Projected Growth Out-of-Home Advertising 0% PwC LLP 5% 10% 15% 20% Slide 4 25% .2% Internet Access 17.

0% Vs.2011 Actual Vs Forecasted Segments with Weak Growth % Growth Filmed Entertainment Video Games Consumer and Educational Book Publishing -3.6% Actual Growth Projected Growth Recorded Music -8% PwC LLP -6% -4% -2% 0% 2% 4% 6% Slide 5 .7% Consumer Magazine Publishing Newspaper Publishing -3. 0.5% Vs 1.

4% China 12.2% France 3.8% Slide 6 .6% India 14.Entertainment and media growth rates 2012–2016 Canada 6.8% Brazil 10.3% Mature: 4.1% US 5.1% PwC LLP BRIC: 11.0% Japan 2.5% UK 3.7% Russia 10.1% Germany 2.

Poll Question What will be the fastest growing segment over next five years? a) Out of home advertising b) Television Subscriptions c) Television advertising d) Video Games Spending e) Filmed Entertainment PwC LLP Slide 7 .

3% +5..0% Video Video Game Game Spending Spending +5.5% PwC LLP Text emoutlook and your question to 37607 or Tweet #EMOutlook to @eusisdm Slide 8 .6% Out-of-Home Out-of-Home Advertising Advertising +6.4% Television Television Advertising Advertising Filmed Filmed Entertainment Entertainment +2...and the answer is Television Subscriptions +8.

3% + 11.4% Radio Advertising +6.1% PwC LLP Slide 9 .7% Out of Home Advertising + 5.0% Online Newspaper Advertising +4.Money Makers: Advertising Segments Internet Advertising Television Advertising +15.

Global advertising spending segment 2011 Global advertising CAGR to 2016: 6.4% 2016 Internet Advertising 18% Television 36% Internet Advertising 27% Other 10% Television 36% Out-of-Home 6% Other 7% Out-ofHome 6% Newspapers 18% Consumer Magazines 5% Radio 5% Consumer Magazines 6% Radio 6% Newspapers 14% Segment data here includes online/mobile advertising in the segments and excludes it from the Internet Advertising total PwC LLP Slide 10 .

6% Canada 2016 Television advertising 28% Internet advertising 33% Television advertising 27% Others 10% Newspapers 18% Radio 13% Out-of-home 4% Consumer magazine 4% Newspapers 13% Others 8% Radio 11% Out-of-home 4% Consumer magazine 5% Segment data here includes online/mobile advertising in the segments and excludes it from the Internet Advertising total PwC LLP Slide 11 .Canadian advertising spending by segment Canada 2011 Internet advertising 22% Canadian advertising CAGR to 2016: 6.

8% Satellite Radio +12% PwC LLP Slide 12 .Money Makers: Consumer Segments Mobile TV +38% Over-the-top Streaming +18% eBooks +46% Recorded Digital Music +12.

Digital spending drives global growth 2500000 Digital is defined as: • online and mobile Internet advertising • mobile TV subscriptions • digital music • electronic home video • online and wireless video games • digital consumer magazine circulation spending • digital newspaper circulation spending • digital trade magazine circulation spending • electronic consumer. and professional books • satellite radio subscriptions • broadband and mobile Internet access 2000000 39% 1500000 $ million 18% 32% 1000000 82% 500000 68% 61% 0 2007 2008 2009 2010 2011 2012 Digital 2013 2014 2015 2016 Non-digital PwC LLP . educational.

Digital spending will grow at a CAGR of 13.000 36% $ million 40.000 2007 PwC LLP 2008 2009 2010 2011 2012 2013 2014 2015 2016 Non-digital Digital .Canada.000 85% 20.000 60.000 15% 30.000 29% 71% 64% 10.000 50.7% from 2012-2016 70.

Key Trends Social Mobile Local PwC LLP Slide 15 .

Social Social Local Mobile PwC LLP Slide 16 .

Mobile Unit Sale of Smart Devices Social Mobile Local 2011 2016 23M 65M 355M ebooks Tablets Smartphones 88M ebooks 330M Tablets 940M Smartphones PwC LLP Slide 17 .

000 $2. Mobile internet access in Canada $5.000 $4.000 $1.000 $3.Mobile Internet access spending & advertising Mobile is still an underutilized advertising medium given the time people spend with the mobile devices on uses other than calling.000 $0 2012 2013 2014 2015 2016 $500 $400 $300 $200 $100 $0 2012 2013 2014 Social Mobile Local Mobile internet advertising 2015 2016 PwC LLP Slide 18 .

Local Location-Based Marketing Social Local Mobile PwC LLP Slide 19 .

The Entertainment & Media Value Chain PwC LLP Slide 20 .

Integrating digital across the business -Key Priorities Cost optimisation and process integration Rights and royalty optimisation Metadata modelling Back catalogue consolidation and commercialisation Digital content and publishing integration Talent . . . PwC LLP Slide 21 .

resources or systems not adequate b) Consumers believe they should pay less or not pay for digitally distributed content c) Piracy d) Finding the “right” business model(s) e) The general economy PwC LLP Slide 22 .Poll Question What will be your biggest challenge to monetize digital content or earn digital advertising revenue in next five years? a) Internal skills.

talent and innovation The proportion of E&M CEOs who told us talent constraints have caused them to cancel or delay a key strategic initiative in the past year: Text emoutlook and your question to 37607 or Tweet #EMOutlook to @eusisdm PwC LLP Slide 23 .The raw materials .

The ‘Millennials’ challenge Talent and innovation… ..set free by leaders who understand behavior PwC LLP ..

Time for Questions PwC LLP Slide 25 .

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