Slowing economic times and fragmenting audiences will have an impact on the Australian entertainment and media sector.
Slowing economic times and fragmenting audiences will have an impact on the Australian entertainment and media sector. However sectors are responding with collaborative ventures, new content, new business models and new delivery channels.
Although growth this calendar year will slow from 8.7% to 5.7%, the longer term outlook is solid, with the sector set to enjoy a 5.8% compounded annual growth in the medium term, taking it to $31.2 billion in 2012.
The forecasts are contained in the Australian Entertainment and Media Outlook 2008-2012 report from by PricewaterhouseCoopers.
The report says that the shift from traditional media to digital is continuing, with the profound social change made more interesting by the abundance and popularity of user-generated content online.
David Wiadrowski, lead partner for technology, information, communication and entertainment at PWC, says that media that can aggregate mass audiences will still remain a powerful force in this time of audience fragmentation, with traditional platforms of radio, newspapers and free-to-air TV comprising 75% of the market in 2007 falling to 64% in 2012.
Snapshot sector by sector:
Internet revenue is expected to double from $3520 million in 2007 to $6742 million by 2012, a compounded annual growth rate of 13%. However the report says online advertising growth is slowing as the base gets bigger and more advertisers seek performance or pay-per-click pricing models.
Key challenges are a robust broadband service and monetising social networking sites while maintaining consumer privacy.
Newspapers continue to be under threat by the internet with growth crawling from $5458 million to $5852 million in 2012.
Weekend circulation of printed products increased as reading the newspaper has migrated from a week day consumption to a leisure activity.
Glossy inserts are targeting advertiser’s dollars such as Boss and Melbourne/Sydney magazines. The strategy is to grow display advertising to replace classifieds.
Smartcode barcoding could revolutionise newspapers, providing an interactive element and increasing consumer engagement with advertisers. The challenge is to capitalise on the internet’s presence.
This is now regarded as a tough market ($1677 million in 2007 to $1870 in 2012) and may be considered by households as a discretionary or luxury spend in tough economic times. Business magazines are having a tough time competing with online. And the challenge is for magazines to stat making money from their online presence.
Small growth is expected in this industry, from $2652 million to $3438 million in 2012. The provision of quality content has given consumers a good reason to go to the cinema, but piracy equates to 10% of the market and the credit crunch may affect production through an increased cost of finance.
Another low growth sector with revenue expected to increase from $3475 million to $4179 million by 2012. Despite a 45% decline in audience, free-to-air TV is still better placed to ride out market uncertainty because it has the largest aggregator of audiences.
Multi-channeling presents a significant risk with audience fragmentation.
Radio will grow slowly from $984 million in 2007 to $1143 million in 2012, with audiences and listeners increasing but radio stations not getting the benefit. The report says that could be due to outdated diary-based audience measurement systems.
New products and clever innovations have massively expanded audiences with revenue expected to grow from $651 million in 2007 to $845 million in 2012.