A comprehensive new report released today by PricewaterhouseCoopers predicts that the Australian entertainment and media industry will grow by 28 percent over the next five years, at a predicted compound annual growth rate of 5.1 percent. This means that the industry is forecast to increase its revenue to $36.2 billion by 2014.
Newspapers and the changing media landscape
Unsurprisingly, magazines, newspapers and radio aren’t expected to lead the way in terms of growth. In fact, in 2009 the Australian newspaper market shrank by 11.4 percent. However, the PwC report expects that a compound annual growth rate of 1.8 percent will be sustained through to 2014. This includes revenues from newspaper websites of course.
However you look at it, the future for traditional newspapers doesn’t look particularly great. Clearly, major changes are taking place in the media landscape and media organisations running newspapers are (somewhat desperately) attempting to figure out how to continue to remain viable into the future. Everywhere you look people are taking about what’s going to happen. Just yesterday I was reading an interesting blog post by Malcolm Turnbull on the subject: Twitter, Newspapers, New Media – Some Observations.
Increasing national broadband speeds and access?
David Wiadrowski, head of technology, information, communications and entertainment at PwC, states that, “With machines in homes becoming smarter, people sharing information through social networks and data being stored in clouds the appetite for content and speed strengthens. High-speed broadband connectivity is an opportunity to satisfy consumers’ growing appetites”.
I have no argument with this, however, given that the federal Opposition’s policy going into the imminent federal election is to call a halt to the building of the new National Broadband Network if elected, it remains to be seen whether broadband speeds in Australian will actually get the boost that is required. We’ll have to wait and see on that one. Personally, I’d like to see the new network built as soon as possible.
In any case, the report expects the local internet industry to grow from $7 billion in 2009 to $10.6 billion in 2014. Wireless broadband is the fastest growing kind of internet access.
Online social networking is also making a large contribution to growth in Australia. As I pointed out recently, Australians spend the most time social networking in the world. When I mentioned this on Twitter, a couple of people (only half jokingly) pointed out that “it’s because our TV is so crap”.
High growth in interactive gaming
The report observes that interactive gaming was the strongest performer of the industry sectors during 2009, and bucked the global financial crisis to grow by 7.7 percent. The prediction here is that gaming will continue to grow by a compound annual growth rate of 9.4 percent, to reach $2.5 billion in 2014. Growth from both online and mobile games is expected to account for the highest growth. Annual compound growth rates for online games and mobile games are expected to rise by 20.4 percent and 15.7 percent respectively.
Digital downloading expected to go ballistic
While filmed entertainment in general bucked the local economic slowdown to grow by 7.1 percent during 2009, in-home digital downloading is forecast to grow by a huge 117.8 percent per year to reach $126 million in 2014. Obviously, this only counts paid-for downloads. $126 million is surely only the tip of the iceberg in terms of potential future revenue from digital downloads.
Demand for DVDs is still expected to be strong for a few years until we see significant improvements in internet speeds and data download limits. Again, we’ll have to wait and see what happens with the roll out of the National Broadband Network. There will be a lot of people in the industry hoping this goes ahead as soon as possible, and that when it does, prices are not steep.
Are these predictions in line with your expectations of the next few years on the Australian media and entertainment scene? Let me know your thoughts.
