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According to PricewaterHouseCoopers research, revenue generated by over-the-top (OTT) video streaming services is to grow at an annual rate of 28.1 per cent.
Electronic home video over-the-top (OTT)/streaming and digital music streaming are two of the fastest-growing consumer sub-segments cited in the Outlook, set to rise at annual rates of 28.1% and 13.4% respectively. Monetising the digital consumer:
Spending on digitally delivered content will account for only 17% of total consumer spending in 2018 (excluding spending on Internet access), compared to 33% of total advertising spending. However, the growth of ‘24/7 access’ and micro-transactions suggest that the key to monetising the digital consumer is to adopt flexible business models that offer more choices and better experiences.
Nine high-growth markets are powering global entertainment and media revenue. China, Brazil, Russia, India, Mexico, South Africa, Turkey, Argentina and Indonesia collectively are forecast to account for 21.7% of global entertainment and media revenue in 2018, up from just 12.4% in 2009. Also in 2018, China will overtake Japan as the world’s second-largest entertainment and media market, behind only the US.
Marcel Fenez, PwC’s Global leader, entertainment and media, said:
“What all these markets have in common is a growing middle class boosting spending in entertainment and media. But the similarities stop there. Realising the revenue potential of these markets demands a deep understanding of the local context.Given their intimate local market knowledge, domestic organisations are in prime position to realise the opportunity of the emerging middle class The optimal approach for international players will most certainly be to collaborate with local partners.
The study predicts that internet TV advertising will double its share of total TV advertising revenue in the next five years from 2.2% in 2013 to 4.5% in 2018. Internet TV ad revenue from traditional broadcasters will grow from US$3.7bn in 2013 to US$9.7bn in 2018, said PwC.
“Traditional broadcasters still dominate and are adapting to the Internet video opportunity, creating a significant new revenue stream despite competition from Internet rivals,” according to the study.
However, profiting from the migration by increasing revenue from digital consumers will not just be about the application of digital technology. It will be about applying a ‘digital mindset’ to build the right behaviours, advancing from a digital strategy to a business strategy fit for a digital age, according to PwC’s Global entertainment and media outlook 2014-2018 (Outlook).
Marcel Fenez, PwC’s Global leader, entertainment & media, said:
“The bedrock of a strategy fit for the digital age ias the digital mindset: getting ever closer to the customer – across the entire organisation, and in everything it does. We now see that mindset embedded in many entertainment and media companies. But the industry needs to get even closer to the consumer and adopt more flexible business models. To do this, companies must exhibit three behaviours: forging trust with consumers; creating the confidence to move with speed and agility; and empowering innovation. This will be an important step in monetising the digital consumer.”