Wednesday, June 15, 2011

Digital is the hot ticket globally, says PwC outlook, but non-digital (like print) is two-thirds of revenue

Growth in advertising revenue across all media in the next 5 years will predominantly be digital, according to the annual global entertainment and media outlook prepared by the consulting firm PricewaterhouseCoopers. Overall entertainment and media revenues worldwide are forecast by the firm to increase by about 5.7% annually. Advertising, which slumped 11% in 2009 as the result of the recession,will increase 5.5% annually to $578 billion by 2015. Of that, digital advertising (which accounts now for about 26% of all spending, will see its share increase to 33.9% by 2015.
"Despite the faster growth in digital spend, non-digital revenues will still be predominant through the forecast period," [a summary reported]. "While digital’s share of overall E&M spending will rise from 26 percent in 2010 to 33.9 percent by 2015, this means non-digital will still account for almost two-thirds of the global total by the end of our forecast period. [emphasis added]"
PwC says that digital will be an integrated part of collaborative business models for all entertainment and media companies, what it calls "the new normal". 
"By 2015, most E&M companies will have digital collaboration infused into their DNA." 
Looking at the aggressive investment of magazine companies in digital, there is no reason to disagree with this. The smart money is on serving audiences and delivering content across multiple platforms to meet customer demand. But magazine publishers need to pay attention to the still dominant contribution by printed product, which still pays most of the bills. 
Jeff Bercovici, the Mixed Media columnist for Forbes, drills down into the PwC outlook and points out that magazine publishers appear to be right about investing in digital. North American print circulation is predicted to slide only slightly and, with digital contributions, circulation revenues for magazines will actually increase somewhat (a net gain of $162 million) by 2015.
Over the next five years, both magazines and newspapers will enjoy large gains in paid digital circulation, PwC forecasts. But the revenue generated will grow far faster for magazines than it will for newspapers and climb considerably higher, even though it starts from a lower base. PwC estimates that consumer magazines in North America collectively took in about $4 million last year in digital  circulation revenues; by 2015, that will climb to $611 million. For newspapers, the growth curve is flatter: from $150 million in 2010 to $331 million in 2015.

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