The global pandemic spurred increased connectivity and a 30% increase in data traffic, according to PwC report
The media and entertainment industry is seeing major shifts as a result of the Covid-19 pandemic, with connectivity, mobility and on-demand flexibility emerging as primary consumer desires, according to a new report from PwC. People turned to digital options for entertainment, music, shopping and fueled a 30% increase in total data consumption, the report said.
Moreover, “the central role that the ever-expanding array of media experiences plays in consumers’ lives is set not just to endure but to strengthen over time,” says PwC’s annual Global Entertainment & Media Outlook report.
Overall, PwC says, “2020 was a year of immense and dramatic power shifts” and the impacts of the pandemic were uneven across the different sectors of the entertainment and media (E&M) industry: Some benefitted greatly from the consumer shift toward digitalization, while others (like movie production and theaters) were among the most negatively impacted by shutdowns.
Broadband access was one of the few sectors that saw growth in 2020, rising 2.1% to $14 billion and accounting for 34.1% of all E&M spending, according to the report. Fixed broadband penetration rose 3.4% globally last year, hitting the two-thirds mark for the first time. And, PwC, more than 75% of those connections were considered “high speed”, or at least 30 Mbps.
PwC said that smartphone connections were up 6.5% from 2019 to 4.6 billion, with that number expected to rise at a compound annual growth rate of 4% through 2025. And the combination of more devices, higher available network speeds and more internet activity due to the pandemic drove that 30% growth in total data consumption — which PwC expects to back off slightly in the next few years, for a CAGR of 26.9% through 2025. However, PwC says, revenues aren’t expected to increase at the same pace, and in fact, “the concept of a widespread premium going to consumers is a fundamental aspect of our age.”
One of the most significant emerging trends, the report concludes, is that it’s “vital to meet consumers where they are now and where they will be in the future. Increasingly, that means online, on mobile devices, at home, and at the time and place of their own choosing.” Along those lines, PwC expects to see more than 10% CAGR for streaming-video-on-demand through 2025, but also noted that there is “likely a limit” on the number of individual streaming services that a household will subscribe to, and streaming services are relatively easy to cancel. “We may be moving into a new phase of streaming growth—one that is more measured, more focused on improving the experience of customers, and more intent on retaining and creating value from the immense subscriber bases that have materialized,” PwC said. “At the heart of it lies an arms race for content.” That has fueled new content-centric megadeals, such as AT&T’s deal to spin off Warner Media and combine it with Discovery.
In terms of formats, virtual reality is gaining ground — which may have broader implications for the use of low-latency, high-speed 5G connectivity. VR was the fastest-growing digital format of those covered in the report, although it is starting from a much smaller base than other formats. Still, 2020 revenues for VR were $1.8 billion, up nearly 32% from 2019, PwC said, and it’s expected to continue to be the fastest-growing segment over the next few years. 2020 saw sales of VR headsets increase, but so did engagement with existing ones, PwC said.
The report is available here.
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