It's not all doom and gloom. Despite lost revenue as companies shift from analog to digital models and the sector downturn of certain businesses like DVDs, there are still bright spots in the global entertainment industry. Pricewaterhouse Coopers released its Global Entertainment and Media Outlook: 2009-2013. According to PWC, the industries that are sure to maintain sustainable revenue growth are those that offer an experience that can't be duplicated -- like video games, or 3-D movies. And according to the report, people are willing to pay or watch ads, as long as the content is unique. Another key trend is digital: companies are looking for more efficient ways to distribute and consumers are looking for easier, cheaper ways to consume. PWC projects that digital spending will drive industry growth, comprising 25 percent of total revenues by 2013.
Video games are a distinct bright spot, with a projected 5.8 percent compound annual growth rate over the next five years, more than any other media with the exception of online ads or Internet access. The video game industry -- just the games, not the hardware -- will generate $17.2 billion in sales this year, growing to $21.6 billion in 2013, which will make it three times the size of the recorded music industry. That's great for the companies like Electronic Arts (ERTS) and Activision/Blizzard (ATVI), which dominate the market. And it's not just the same old revenue streams; advertising in video games is expected to hit $886 million this year, and grow to $1.4 billion in 2013.
The good news is that there is growth elsewhere, though not as much as we've seen in recent years, or as much as the media conglomerates would like. TV subscriptions, which include everything from satellite, cable, and now even live TV on mobile phones, is expected to grow by a 5.5 percent rate over the next five years, to over $90 billion in 2013. Video-on-demand is expected to steal business from pay-per-view, and the development of a mobile TV standard should help make live TV on the go accessible and prevalent.
And then there's the bad news: newspaper publishing is expected to show a negative 6 percent compound annual growth, and that even seems optimistic to me. PwC projects negative 4.7 percent for recorded music and negative 2.2 percent for radio over the next five years. The question remains whether there will be some amazing technological innovation (like the iPod) that will boost the sale of recorded music or radio ads.
There are also some very small niches that are booming. Monday, the Cinema Advertising Council reported that in-theater advertising grew 5.8 percent to over $571 million last year. It makes sense: the box office is up, people are spending more time in theaters. Plus, when you're waiting in a movie theater you're a captive audience, while traditional TV commercials are easily ignored or skipped. Plus, cinema ads can be tailored to zip code and demographic. This is still a step down from the industry's 21.5 percent average growth over the past six years. The industry leader, National CineMedia (NCMI) has seen its stock grow 30 percent since the beginning of the year, while the Dow is flat.
