Smartphones, virtual reality and streaming services such as Netflix – maker of Orange is the New Black – are huge revenue generators
PwC’s latest Global Entertainment & Media Outlook finds the market will grow by £8bn over the next four years making it the second largest in Europe
By Rosemary Gallagher 05:52, 6 JUN 2018
The UK’s multi-billion entertainment and media industry is set to grow in the coming years, making it one of the largest markets in Europe, according to research published today.
The entertainment and media (E&M) sector will be worth £76 billion by 2021, up from £68bn this year, according to accountancy giant PwC’s latest Global Entertainment & Media (E&M) Outlook 2018-2022.
It found that, overall, the market will grow by £8bn over the next four years, making the UK the second largest market in Europe, the Middle East and Africa (EMEA), after Germany.
Other findings include: the UK will account for a third of all western European internet advertising spend; the UK is now Europe’s largest video games market and podcast listeners in the UK are to grow 29 per cent year-on-year to reach 27 million by 2022.
This is PwC’s 19th annual edition of its outlook which is a global analysis for consumer and advertising spending.
Mark Maitland, UK head of entertainment and media at PwC, said: “The UK’s entertainment and media sector is forecast to grow at a healthy rate over the next four years with some of the largest and fastest growing markets in digital and technology, reflecting its location as a place for innovation.
“To stay ahead of the curve, entertainment and media companies must revisit how they envision their business generates revenues and how they build and retain trust. Given the pace and scale of change underway, speed is key.”
Looking at the biggest revenue generators, consumer spending on internet access will bring in the most revenue over the forecast period rising from £13bn this year to £16bn by 2022.
Last year, for the first time, consumers spent more on mobile internet access than fixed broadband access. PwC now expects smartphone ownership in the UK to hit more than 70 million and, as a result, mobile internet access is forecast to account for more than half of overall internet access revenue in four years’ time.
PwC said advertising revenue will account for a quarter of total E&M revenue by 2022, with digital spend continuing to dominate growth. Internet advertising spend will grow from £10.5bn in 2018 to £14.3bn by 2022.
Mobile is forecast to become the dominant segment this year, accounting for half of all internet advertising.
Maitland added: “Data consumption in the UK will grow by 22 per cent year-on-year till 2022 and we expect the UK’s internet access revenue to overtake France in 2021 to become the biggest market in Western Europe.”
The report also found that The UK’s virtual reality sector remains the fastest growing E&M segment with 34 per cent CAGR forecast over the next four years. With more than 7.8m VR headsets forecast to be cumulatively sold in the UK by 2022, PwC expects the virtual reality industry will be worth £1.2bn.
E-sports is also forecast for double-digit growth of 21 per cent compound annual growth rate (CAGR) over the next four years with total revenue growing from £23m in 2018 to £45m. The UK’s e-sports market is forecast to be the second largest in Europe.
The report identified a number of trends and “tipping points”. These include: digital music streaming revenue will almost double from £779m forecast for 2018 to £1.3bn by 2022; digital game purchases for consoles is forecast to reach £725m by 2022 overtaking physical game purchases for consoles for the first time; total video games revenue (£5.1bn) is set to overtake total spend on books (£4.9bn) in 2020 and UK consumers will remain the biggest spenders on streaming services such as Netflix and Amazon Prime than any other country in Europe – £1.9bn by 2022.