PWC_Global Entertainment and Media Outlook

11th annual edition

Global entertainment and media outlook: 2010–2014Industry overview

Each year, PricewaterhouseCoopers’ global team of entertainment and media experts generates unbiased, in-depth forecasts for 13 industry segments. Incorporating data from 4 principal regions comprising 48 countries and areas around the world, Global entertainment and media outlook: 2010–2014 combines deep knowledge of local markets with a truly global perspective—a powerful tool for understanding critical business issues.

To learn more about the challenges and opportunities ahead for the entertainment and media industry, please visit pwc.com/e&m.

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Each year, PricewaterhouseCoopers’ global team of entertainment

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Each year, PricewaterhouseCoopers’ global team of entertainment Each year, PricewaterhouseCoopers’ global team of entertainment and media experts generates unbiased, in-depth forecasts for 13

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and media experts generates unbiased, in-depth forecasts for 13 and media experts generates unbiased, in-depth forecasts for 13 industry segments. Incorporating data from 4 principal regions

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industry segments. Incorporating data from 4 principal regions industry segments. Incorporating data from 4 principal regions comprising 48 countries and areas around the world,

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comprising 48 countries and areas around the world, comprising 48 countries and areas around the world, entertainment and media outlook: 2010–2014

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entertainment and media outlook: 2010–2014entertainment and media outlook: 2010–2014knowledge of local markets with a truly global perspective—

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knowledge of local markets with a truly global perspective—knowledge of local markets with a truly global perspective—a powerful tool for understanding critical business issues.FOR P

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a powerful tool for understanding critical business issues.a powerful tool for understanding critical business issues.

2 PricewaterhouseCoopers | Global entertainment and media outlook: 2010–2014

Prepared and edited by:PricewaterhouseCoopers, which provides industry-focused assurance, tax, and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 163,000 people in 151 countries across our network share their thinking, experience, and solutions to develop fresh perspectives and practical advice.

PricewaterhouseCoopers LLP300 Madison AvenueNew York, NY 10017+1-646-471-4000www.pwc.com

Authored by:Wilkofsky Gruen Associates Inc., a provider of global research and analysis of the media, entertainment, and telecommunications industries. www.wilkofskygruen.com

Global entertainment and media outlook: 2010–2014

Outlook editorial board:For the PricewaterhouseCoopers Entertainment & Media Practice:

Deborah Bothun, PrincipalJames DePonte, PartnerSean DeWinter, PartnerMarcel Fenez, Global Entertainment & Media LeaderNick George, PartnerStefanie Kane, PartnerAlexandra Maclean, Global E&M Marketing ManagerPauline Orchard, Global E&M Marketing LeaderKenneth Sharkey, PartnerPhil Stokes, Partner

Many other professionals from the PricewaterhouseCoopers Entertainment & Media Practice reviewed and added local expertise to this publication.

For Wilkofsky Gruen Associates Inc.:

David Wilkofsky, PartnerArthur Gruen, Partner Norman D. Eisenberg, Vice PresidentVictor Teppeh, Senior Economist

Use of Outlook dataThis document is provided by PricewaterhouseCoopers for general guidance only and does not constitute the provision of legal advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation.

The information is provided as is, with no assurance or guarantee of completeness, accuracy, or timeliness of the information and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fi tness for a particular purpose.

Permission to citeNo part of this publication may be excerpted, reproduced, stored in a retrieval system, or distributed or transmitted in any form or by any means—including electronic, mechanical, photocopying, recording, or scanning—without the prior written permission of PricewaterhouseCoopers.

Requests should be submitted in writing to Radhika Nanda at [email protected] outlining the excerpts you wish to use along with a draft copy of the full report that the excerpts will appear in. Provision of this information is necessary for every citation request to enable PricewaterhouseCoopers to assess the context in which the excerpts are being presented.

Without limiting the foregoing, you may not use excerpts from the publication in fi nancial prospectus documents, public offerings, private placement memoranda, fi lings with the US Securities and Exchange Commission, annual reports, or similar fi nancial, investment, or regulatory documents.

Copyright © 2010 PricewaterhouseCoopers. All rights reserved.PricewaterhouseCoopers refers to the network of member fi rms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

ISBN 978-1-931684-21-7 Global entertainment and media outlook: 2010–2014, Industry overview

ISBN 978-1-931684-22-4 Global entertainment and media outlook: 2010–2014

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Pauline Orchard, Global E&M Marketing Leader

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Pauline Orchard, Global E&M Marketing Leader

Many other professionals from the PricewaterhouseCoopers

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Entertainment & Media Practice reviewed and added local expertise

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For Wilkofsky Gruen Associates Inc.:

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For Wilkofsky Gruen Associates Inc.:For Wilkofsky Gruen Associates Inc.:

David Wilkofsky, Partner

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David Wilkofsky, PartnerArthur Gruen, Partner

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Arthur Gruen, Partner Norman D. Eisenberg, Vice President

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Norman D. Eisenberg, Vice PresidentVictor Teppeh, Senior Economist

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Victor Teppeh, Senior Economist

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This document is provided by PricewaterhouseCoopers for general

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This document is provided by PricewaterhouseCoopers for general This document is provided by PricewaterhouseCoopers for general guidance only and does not constitute the provision of legal advice,

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guidance only and does not constitute the provision of legal advice, guidance only and does not constitute the provision of legal advice, accounting services, investment advice, or professional consulting of any

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accounting services, investment advice, or professional consulting of any accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute

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kind. The information provided herein should not be used as a substitute kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other

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for consultation with professional tax, accounting, legal, or other for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, FOR P

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competent advisers. Before making any decision or taking any action, competent advisers. Before making any decision or taking any action, FOR PRESS U

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you should consult a professional adviser who has been provided with FOR PRESS U

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you should consult a professional adviser who has been provided with you should consult a professional adviser who has been provided with

Industry overview 3

Contents: Industry overview

†Key to symbols used in the tables and chartsp = preliminaryNA = not available— = no spending that year

Totals in tables and charts may not total arithmetically due to rounding.

Obtaining the full publication • Obtain the full, 600-plus page Global entertainment and media

outlook: 2010-2014, with detailed data for 13 industry segments across 48 countries and areas

• Access Outlook data and commentary online

pwc.com/outlook

PricewaterhouseCoopers Entertainment & Media Practice—country contacts . . . . . . . . . . 4

Introduction letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Viewpoint: the global entertainment and media outlookIntroduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Toward 2014: the search for position in the digital value chain . . . . . . . . . . . . . . . . . . 11

Summaries by segment and regionGlobal industry summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Global market by segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Global market by region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

Index of tables and charts†. . . . . . . . . . . . . . . . . . . 100

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Global Marcel Fenez [email protected]

North AmericaUnited States Kenneth Sharkey [email protected]

Canada Tracey Jennings [email protected]

EMEAWestern Europe

Austria Johannes Mörtl [email protected]

Belgium Eddy Dams [email protected]

Denmark John Gabriel Sørensen [email protected]

Finland Harri Valkonen harri.valkonen@fi .pwc.com

France François Antarieu [email protected]

Germany Frank Mackenroth [email protected]

Greece Dinos Michalatos [email protected]

Ireland Susan Kilty [email protected]

Italy Andrea Samaja [email protected]

Netherlands Sander Kranenburg [email protected]

Norway Eivind Nilsen [email protected]

Portugal José Vitorino [email protected]

Spain Virginia Arce [email protected]

Sweden Nicklas Kullberg [email protected]

Switzerland Patrick Balkanyi [email protected]

United Kingdom Phil Stokes [email protected]

Central and Eastern Europe

Czech Republic Petr Zmatlik [email protected]

Hungary Manfred Krawietz [email protected]

Poland Pawel Ozarowski [email protected]

Romania Dinu Bumbacea [email protected]

Russia Chris Monteleone [email protected]

Turkey Coskun Sen [email protected]

Middle East/Africa

Israel Joseph Fellus [email protected]

Saudi Arabia/Pan Arab† Ian Sanders [email protected]

South Africa Vicky Myburgh [email protected]

†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates.

PricewaterhouseCoopers Entertainment & Media Practice—country contacts

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[email protected]

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[email protected]

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[email protected]

harri.valkonen@fi .pwc.com

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harri.valkonen@fi .pwc.com

[email protected]

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[email protected]

[email protected]

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[email protected]

Virginia Arce

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Virginia Arce

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Nicklas Kullberg

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Nicklas Kullberg

Patrick Balkanyi

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Patrick Balkanyi

Phil Stokes

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Phil Stokes

Petr ZmatlikFOR PRESS U

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Petr Zmatlik

Industry overview 5

Asia Pacifi cAustralia Steven Bosiljevac [email protected]

China Marcel Fenez [email protected]

Hong Kong Marcel Fenez [email protected]

India Timmy Kandhari [email protected]

Indonesia Rizal Satar [email protected]

Japan Hideaki Zenba [email protected]

Malaysia Uthaya Kumar [email protected]

New Zealand Grant Dennis [email protected]

Pakistan Sohail Hasan [email protected]

Philippines Mary Jade T. Roxas [email protected]

Singapore Greg Unsworth [email protected]

South Korea Hum-Seok Park [email protected]

Taiwan Han Wu [email protected]

Thailand Kajornkiet Aroonpirodkul [email protected]

Vietnam Ian Lydall [email protected]

Latin AmericaArgentina Ariel Vidan [email protected]

Brazil Estela Vieira [email protected]

Chile Rafael Ruano [email protected]

Colombia Diego Henao [email protected]

Mexico Luis Roberto Martínez del Barrio [email protected]

Venezuela Estela Vieira [email protected]

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Ariel Vidan

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Ariel Vidan

Estela Vieira

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Estela Vieira

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Rafael Ruano

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Rafael Ruano

Diego Henao

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Diego Henao

Luis Roberto Martínez del Barrio

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Luis Roberto Martínez del Barrio

Estela Vieira

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Estela Vieira


June 2010

To our clients and friends both in and beyond the entertainment and media industry:

Welcome to the 11th annual edition of PricewaterhouseCoopers’ Global entertainment and media outlook, covering the forecast period of 2010–2014. Our forecasts and analyses for this edition focus on 13 major entertainment and media (E&M) industry segments. To refl ect the ever-changing nature of the industry, as well as ever-emerging digital revenue streams, we have again increased the depth of data for each of the 48 countries and areas covered in the Outlook. We have this year also introduced an online version of the Outlook in order to provide more fl exibility for the user of the underlying data.

During 2009, the economy took center stage. With only a few exceptions, economic recession translated into steep declines in advertising as well as reduced consumer spending. Against that backdrop, it became clear that the speed with which consumers were transitioning to digital was accelerating beyond the industry’s expectations.

This year’s Outlook focuses on the pervasive impact of this changing consumer behavior on all segments of the E&M industry as companies search for position in the digital value chain that is now taking shape. With the business models that will deliver success in the digital future yet to emerge, that search for positioning is characterized by widespread experimentation and innovation, involving a widening diversity of service offerings, revenue models, technology platforms, and collaborative structures.

Notwithstanding our forecast that the E&M industry’s growth will be concentrated in digital services, nondigital revenue streams are much larger and will still account for two-thirds of total global spending in 2014. This means that the way forward for E&M companies lies in using digital technologies to generate revenues from the ongoing changes in consumer behavior while simultaneously maintaining and supporting legacy nondigital offerings as a valuable source of cash and customers.

We continue to see that the impact of digital migration differs between segments and geographies during the forecast period, due in large part to the relative availability and affordability of broadband and mobile infrastructure. The emerging-market growth story remains as valid an opportunity as ever.

All of us at PricewaterhouseCoopers continue to stay on top of trends and developments that may impact your business now and in the future, and we look forward to further sharing our thoughts with you. We appreciate your feedback and ask that you continue to tell us what we can do to make the Outlook more useful to you. If you wish additional clarifi cation on any matters included in the Outlook or you believe we can be of service to your business in any way, please either contact one of the PricewaterhouseCoopers E&M professionals listed on pages 4 and 5 or visit our Web site (www.pwc.com/e&m) for details of the contact in your territory.

Finally, we thank you for your support and wish you an exciting and rewarding year ahead.

Sincerely,

Marcel FenezGlobal LeaderEntertainment & Media Practice

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Global entertainment and media outlook

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Global entertainment and media outlook, covering the forecast period of

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, covering the forecast period of 2010–2014. Our forecasts and analyses for this edition focus on 13 major entertainment and media (E&M) industry segments. To refl ect

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2010–2014. Our forecasts and analyses for this edition focus on 13 major entertainment and media (E&M) industry segments. To refl ect the ever-changing nature of the industry, as well as ever-emerging digital revenue streams, we have again increased the depth of data for

FOR PRESS U

SE ONLYthe ever-changing nature of the industry, as well as ever-emerging digital revenue streams, we have again increased the depth of data for

. We have this year also introduced an online version of the

FOR PRESS U

SE ONLY. We have this year also introduced an online version of the

During 2009, the economy took center stage. With only a few exceptions, economic recession translated into steep declines in

FOR PRESS U

SE ONLY

During 2009, the economy took center stage. With only a few exceptions, economic recession translated into steep declines in advertising as well as reduced consumer spending. Against that backdrop, it became clear that the speed with which consumers were

FOR PRESS U

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advertising as well as reduced consumer spending. Against that backdrop, it became clear that the speed with which consumers were

focuses on the pervasive impact of this changing consumer behavior on all segments of the E&M industry as

FOR PRESS U

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focuses on the pervasive impact of this changing consumer behavior on all segments of the E&M industry as companies search for position in the digital value chain that is now taking shape. With the business models that will deliver success in

FOR PRESS U

SE ONLY

companies search for position in the digital value chain that is now taking shape. With the business models that will deliver success in the digital future yet to emerge, that search for positioning is characterized by widespread experimentation and innovation, involving a

FOR PRESS U

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the digital future yet to emerge, that search for positioning is characterized by widespread experimentation and innovation, involving a widening diversity of service offerings, revenue models, technology platforms, and collaborative structures.

FOR PRESS U

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widening diversity of service offerings, revenue models, technology platforms, and collaborative structures.

Notwithstanding our forecast that the E&M industry’s growth will be concentrated in digital services, nondigital revenue streams are much

FOR PRESS U

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Notwithstanding our forecast that the E&M industry’s growth will be concentrated in digital services, nondigital revenue streams are much larger and will still account for two-thirds of total global spending in 2014. This means that the way forward for E&M companies lies in

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larger and will still account for two-thirds of total global spending in 2014. This means that the way forward for E&M companies lies in using digital technologies to generate revenues from the ongoing changes in consumer behavior while simultaneously maintaining and

FOR PRESS U

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using digital technologies to generate revenues from the ongoing changes in consumer behavior while simultaneously maintaining and supporting legacy nondigital offerings as a valuable source of cash and customers.

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supporting legacy nondigital offerings as a valuable source of cash and customers.

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We continue to see that the impact of digital migration differs between segments and geographies during the forecast period, due in large

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We continue to see that the impact of digital migration differs between segments and geographies during the forecast period, due in large part to the relative availability and affordability of broadband and mobile infrastructure. The emerging-market growth story remains as

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part to the relative availability and affordability of broadband and mobile infrastructure. The emerging-market growth story remains as

All of us at PricewaterhouseCoopers continue to stay on top of trends and developments that may impact your business now and in the

FOR PRESS U

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All of us at PricewaterhouseCoopers continue to stay on top of trends and developments that may impact your business now and in the future, and we look forward to further sharing our thoughts with you. We appreciate your feedback and ask that you continue to tell us

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future, and we look forward to further sharing our thoughts with you. We appreciate your feedback and ask that you continue to tell us Outlook

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Outlook more useful to you. If you wish additional clarifi cation on any matters included in the

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more useful to you. If you wish additional clarifi cation on any matters included in the Outlook more useful to you. If you wish additional clarifi cation on any matters included in the Outlook

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Outlook more useful to you. If you wish additional clarifi cation on any matters included in the Outlook

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believe we can be of service to your business in any way, please either contact one of the PricewaterhouseCoopers E&M professionals

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believe we can be of service to your business in any way, please either contact one of the PricewaterhouseCoopers E&M professionals listed on pages 4 and 5 or visit our Web site (www.pwc.com/e&m) for details of the contact in your territory.

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listed on pages 4 and 5 or visit our Web site (www.pwc.com/e&m) for details of the contact in your territory.

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Finally, we thank you for your support and wish you an exciting and rewarding year ahead.FOR PRESS U

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Finally, we thank you for your support and wish you an exciting and rewarding year ahead.

Viewpoint: the global entertainment and media outlook

Introduction

Toward 2014: the search for position in the digital value chain

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We are pleased to present the 11th edition of PricewaterhouseCoopers’ Global entertainment and media outlook.

The information in this publication refl ects the collective wisdom of our large team of professionals who work with entertainment and media (E&M) companies around the world. It is a unique resource for the industry, offering a fi ve-year outlook for global consumer spending and advertising revenues, as well as insights into the technology, government, political, and business trends driving those forecasts.

The purpose of this Industry Overview is to provide a synopsis of the data presented in the 2010–2014 Outlook and to present a thought piece on ideas generated by the data in the full book.

New additions to the 2010–2014 Outlook

A number of data breakouts are included in this year’s Outlook that were not provided in the past. In Internet advertising, we provide country-by-country breakouts of search and display/classifi ed/other advertising. In TV advertising, we provide country-by-country breakouts of online advertising, mobile advertising, and number of mobile TV users. In TV subscriptions, we provide country-

by-country breakouts of number of video-on-demand homes and number of mobile TV subscribers. In Internet access, we provide country-by-country breakouts of mobile Internet subscribers.

Categories covered

• Internet access spending: wired and mobile

• Internet advertising: wired and mobile

• Television subscriptions and license fees

• Television advertising

• Recorded music

• Filmed entertainment

• Video games

• Radio

• Out-of-home advertising

• Consumer magazine publishing

• Newspaper publishing

• Consumer and educational book publishing

• Business-to-business

Introduction

North America

CanadaUnited States

Regions/countries covered

EMEA

Western EuropeAustriaBelgiumDenmarkFinlandFranceGermanyGreeceIrelandItalyNetherlandsNorwayPortugalSpainSwedenSwitzerlandUnited Kingdom

Central and Eastern EuropeCzech RepublicHungaryPolandRomaniaRussiaTurkey

Middle East/AfricaIsraelSaudi Arabia/Pan Arab†

South Africa

Asia Pacifi c

AustraliaChinaHong KongIndiaIndonesiaJapanMalaysiaNew ZealandPakistanPhilippinesSingaporeSouth KoreaTaiwanThailandVietnam

Latin America

ArgentinaBrazilChileColombiaMexicoVenezuela

†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates.

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advertising, we provide country-by-country breakouts of

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advertising, we provide country-by-country breakouts of online advertising, mobile advertising, and number of

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online advertising, mobile advertising, and number of mobile TV users. In TV subscriptions, we provide country-

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mobile TV users. In TV subscriptions, we provide country-

Internet advertising: wired and mobile

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Television subscriptions and license fees

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Television advertising

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Filmed entertainment

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Video games

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Video games

Radio

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Radio

Out-of-home advertising

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•

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• Consumer magazine publishing

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Consumer magazine publishing

•

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• Newspaper publishing

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Newspaper publishing

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•

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Western Europe

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Western EuropeWestern Europe Central and Eastern Europe

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Central and Eastern EuropeCentral and Eastern Europe

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Industry overview | Introduction 9

In 2009, the economy took center stage

The major driver in 2009 was the economy. With some notable exceptions, particularly China and India, severe recession in most countries led to steep declines in advertising—the category most sensitive to the economy—and to reductions in consumer/end-user spending. Global advertising fell by 11.8 percent, virtually matching our projected 12.0 percent decline for 2009. Consumer/end-user spending decreased by 0.5 percent, a more modest decline than the 1.2 percent downturn we projected last year for 2009. We expected that Internet access spending would continue to increase in 2009 despite the downturn, and that expectation proved to be correct, although we underestimated the strength of that market. Access spending rose by 8.2 percent in 2009, outpacing the projected 5.4 percent increase. As a whole, the global E&M market declined by 3.0 percent in 2009, a somewhat smaller decrease compared with the 3.9 percent drop we had projected.

Projected and actual global 2009 E&M growth by category (%) Category Projected Actual

Advertising –12.1 –11.8

Consumer/end user –1.2 –0.5

Internet access: wired and mobile 5.4 8.2

Total –3.9 –3.0

Projected and actual global 2009 E&M growth by segment (%)Segment Projected Actual

Internet access spending: wired and mobile 5.4 8.2

Internet advertising: wired and mobile –2.7 4.3

TV subscriptions and license fees 3.1 4.3

TV advertising† –11.4 –10.0

Recorded music –7.7 –3.2

Filmed entertainment 1.1 3.0

Video games 7.2 2.5

Consumer magazine publishing –9.4 –10.6

Newspaper publishing –10.2 –11.4

Radio –6.7 –9.0

Out-of-home advertising –6.7 –13.2

Consumer and educational book publishing –2.1 –1.2

Business-to-business –11.7 –10.4

Total –3.9 –3.0

† Broadcast advertising only.FOR P

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by segment (%)

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Internet access spending: wired and mobile

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Internet access spending: wired and mobile


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TV subscriptions and license fees

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TV subscriptions and license fees

TV advertising

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TV advertising

Recorded music

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Recorded music


market, nondigital spending growth will remain modest, and digital will continue to be the principal driver. During the next fi ve years, digital spending will increase at a projected 12.1 percent compound annual rate compared with 2.6 percent compound annual growth for nondigital spending.

The impact of the migration to digital spending is of course more pronounced in markets where broadband access is most ubiquitous. In such markets as India, where broadband is less widely available and is relatively expensive, nondigital spending such as on newspapers continues to grow.

In addition to the impact of the economy, the E&M market continued to migrate to digital formats. In 2009, digital accounted for 24 percent of spending, up from 21 percent in 2008. In absolute terms, digital spending increased by 10.2 percent despite the recession, while nondigital spending fell by 6.4 percent. In last year’s Outlook, we projected the digital market to constitute 31 percent of total spending by 2013. We now expect that share to be nearly 32 percent in 2013, rising to 33 percent by 2014.

Nondigital spending began declining in 2008, and we expect a further drop in 2010. While the economic recovery will help the nondigital components of the

Note: Digital spending consists of broadband and mobile access; wired and mobile Internet advertising; video on demand; mobile TV subscriptions; online and mobile TV advertising; digital recorded music distribution; online movie subscription rentals and digital downloads; online and wireless video games; digital advertising in newspapers and consumer magazines; satellite radio subscriptions and online radio advertising; electronic consumer and educational and professional books; digital directory advertising; and trade magazine digital advertising.

33.131.729.928.1

26.124.0

21.218.4

15.512.2

0

10

20

30

40

2014201320122011201020092008200720062005

Digital share of global E&M spending (%) Global digital and nondigital spending growth (%)

–10

0

10

20

30

40

50

60

201320122011201020092008200720062005 2014

DigitalNondigital

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates.

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access is most ubiquitous. In such markets as India,

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access is most ubiquitous. In such markets as India, where broadband is less widely available and is relatively

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where broadband is less widely available and is relatively expensive, nondigital spending such as on newspapers

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Digital spending consists of broadband and mobile access; wired and mobile Internet advertising; video on demand; mobile TV subscriptions; online and mobile TV advertising;

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Digital spending consists of broadband and mobile access; wired and mobile Internet advertising; video on demand; mobile TV subscriptions; online and mobile TV advertising; digital recorded music distribution; online movie subscription rentals and digital downloads; online and wireless video games; digital advertising in newspapers and consumer

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digital recorded music distribution; online movie subscription rentals and digital downloads; online and wireless video games; digital advertising in newspapers and consumer magazines; satellite radio subscriptions and online radio advertising; electronic consumer and educational and professional books; digital directory advertising; and trade magazine FOR P

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magazines; satellite radio subscriptions and online radio advertising; electronic consumer and educational and professional books; digital directory advertising; and trade magazine FOR PRESS U

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2014

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Global digital and nondigital spending growth (%)

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Global digital and nondigital spending growth (%)Global digital and nondigital spending growth (%)

10

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30

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Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates.

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Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates.

Industry overview | Toward 2014 11

The coming fi ve years will see digital technologies progressively increase their dominance across all segments of entertainment and media as digital transformation continues to expand and escalate. While the industry has a long history of experimenting and fragmenting in response to change, the current advances in technologies and consumer behavior are unprecedented in both their speed and their simultaneous impact across all segments.

No clear and sustainable path to success in this changed environment has yet emerged. Companies across the industry are still in the process of embedding digital strategies and skills into their organizations, and many providers of comparable services are pursuing widely differing revenue models—with the jury still out on which ones will be successful.

In this Industry Overview, we look to set the context for the detailed forecasts in the Outlook. In part one, we outline three key issues at the heart of industry developments: the accelerating pace of digital transformation, increased fragmentation, and the need to sustain nondigital revenues. These issues all point to the major driver currently emerging as companies’ core focus: ongoing evolution in consumer behavior. In part two of this overview, we examine three themes through which consumer change is making itself felt. In part three, we analyze the impact of evolving consumer behavior on the industry’s business models. Finally, we focus on what all of it means for E&M companies in the long term, and we highlight the imperatives created by the new digital value chain.

Part one:Core industry developments

The increasing pace of change

We predicted in last year’s Outlook that the recession would accelerate and intensify the industry’s ongoing migration toward end-to-end digital value chains, but in fact the pace of change has proved to be even quicker than we anticipated. Today’s E&M environment is one in which it is very easy to get surprised by the pace of developments, even if you’ve already predicted the direction of travel correctly.

To pick an example from our research, we projected in last year’s Outlook that the value of global physical sell-

through of fi lmed entertainment DVDs would decline by 3.9 percent in 2009 and 0.3 percent in 2010. Those declines accelerated sharply to 5.9 percent in 2009, and we expect an additional 1.5 percent in 2010, with consumers switching to digital downloading and on-demand consumption much more quickly than we had expected just one year ago.

Other ongoing developments also highlight the often-unexpected speed with which consumers are embracing new media experiences. In the fi rst three months of 2010, 428,000 subscribers to UK satellite pay-TV service BSkyB paid to upgrade their service to high defi nition (HD)—a take-up rate about one-third faster than many analysts’ forecasts. This gave Sky 2.5 million HD households, more than a quarter of its total customer base.

Fragmentation reaches a new level

The rapidly advancing digital transformation is driving industry and audience fragmentations to levels not previously seen. E&M has always tended to fragment under the impact of shifts in technology and consumption habits. However, the current wave of change is of different magnitude from previous ones, in both its speed and its simultaneous impact across all segments.

For example, in recent decades, television has progressed from a handful of analog channels to a multiplicity of niche and themed channels, fragmenting the audience in the process. Now, with digitization, those niche content experiences are becoming available across a widening array of platforms and devices, driving audience fragmentation both further and faster.

Another aspect of the fragmentation is that consumers’ media consumption and purchasing decisions differ widely at different times in different markets. In every segment

Toward 2014: the search for position in the digital value chain

“The idea of getting a TV schedule and watching things when they are on is getting alien to my kids. They tend to do it on demand or buy DVDs. Yes, things are changing.”

—London, 45-year-old

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unexpected speed with which consumers are embracing

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unexpected speed with which consumers are embracing new media experiences. In the fi rst three months of 2010,

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new media experiences. In the fi rst three months of 2010, 428,000 subscribers to UK satellite pay-TV service BSkyB

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paid to upgrade their service to high defi nition (HD)—a

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fragmentation, and the need to sustain nondigital revenues.

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fragmentation, and the need to sustain nondigital revenues. These issues all point to the major driver currently emerging

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These issues all point to the major driver currently emerging as companies’ core focus: ongoing evolution in consumer

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as companies’ core focus: ongoing evolution in consumer behavior. In part two of this overview, we examine three

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behavior. In part two of this overview, we examine three themes through which consumer change is making itself

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themes through which consumer change is making itself felt. In part three, we analyze the impact of evolving

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felt. In part three, we analyze the impact of evolving consumer behavior on the industry’s business models.

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consumer behavior on the industry’s business models. Finally, we focus on what all of it means for E&M companies

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Finally, we focus on what all of it means for E&M companies in the long term, and we highlight the imperatives created

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in the long term, and we highlight the imperatives created by the new digital value chain.

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by the new digital value chain.

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Core industry developmentsCore industry developments

take-up rate about one-third faster than many analysts’

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forecasts. This gave Sky 2.5 million HD households, more

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forecasts. This gave Sky 2.5 million HD households, more than a quarter of its total customer base.

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than a quarter of its total customer base.

Fragmentation reaches a new level

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Fragmentation reaches a new levelFragmentation reaches a new level

The rapidly advancing digital transformation is driving

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The rapidly advancing digital transformation is driving industry and audience fragmentations to levels not

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industry and audience fragmentations to levels not previously seen. E&M has always tended to fragment

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previously seen. E&M has always tended to fragment under the impact of shifts in technology and consumption

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under the impact of shifts in technology and consumption


Part two:The consumer in the driver’s seat

As companies try to map out and navigate their way through this evolving landscape, their strategies and responses will be shaped by one factor more than any other: consumer behavior. Following the turmoil of recent years, economic environments vary widely in different countries, and they remain very fragile in many of them. Yet that uncertain economic background has done nothing to slow down the E&M industry’s ongoing structural change, which is continuing to accelerate.

As we highlighted last year, that structural change is manifesting itself across three parallel dimensions: economic, advertising, and consumer behavior. With economic confi dence remaining subdued and advertising showing a modest but uncertain return to stability, we are currently in an environment where consumer feedback and consumer usage provide the only reliable guides to the commercial viability of products and services. As a result, consumer behavior will be an important driver of industry developments over the coming fi ve years.

Consumers’ rising infl uence is underlined by several developments. As digital transformation drives the E&M industry ever deeper into uncharted territory, companies are increasingly listening to their consumers and involving them in product development. The effect is to turn the global consumer base into a huge test bed for new offerings and new consumption modes.

This trend is refl ected in and supported by the rise of social networking, which represents not just a profound behavioral shift but also a dramatic illustration of the power of shared information and communication. Social networking itself is now being embraced by traditional media and viewed as complementary to existing offerings. That increased relevance enriches the overall consumer experience.

there are regional and country variations in current market size and future growth, refl ecting local factors around infrastructure, access availability, and consumer behavior. The mobile Internet explosion has already happened in Japan, which accounted for some 53 percent of global spending on mobile Internet access in 2009. Other markets are still at the bottom of their growth curves.

While perceived by many as a threat, inevitable and ongoing fragmentation will need to be seized upon as an opportunity: creative partnerships and innovative products will be required to cater to the prospect.

The importance of nondigital revenues

Not surprisingly, digital services will provide most of the industry’s future growth—a prospect refl ected by the fact that digital technologies are now effectively a given in all segments. But it is vital to remember that legacy off-line revenue streams are still signifi cantly larger than digital revenues and will remain so throughout the fi ve-year forecast period. This means the industry needs to ensure it embraces digital not as a competitor to traditional analog services but as a complement.

So, E&M companies need to strike the right balance between old and new, by nurturing and sustaining their cash-generative traditional offerings while using these revenues to identify and seize the right role and positioning for their businesses within the emerging digital value chains. The challenge of striking the right balance is increased by the fact that the growth potential of different online and off-line offerings varies in different markets. For example, newspaper print advertising will rise in India at 12.8 percent compounded annually through the forecast period, while it will be fl at globally.

In many cases, digital revenues are also relatively small, even if they are where the growth is. Electronic educational books will grow at a compound annual growth rate (CAGR) of 36.5 percent globally through the forecast period (and at 70.7 percent compounded annually in Asia Pacifi c), yet they will still account for less than 6 percent of global spend on educational books in 2014. Interestingly, the key role that was initially played by the Amazon Kindle in driving this growth could be taken up and accelerated by the Apple iPad or similar devices.

“I love my TV series, and we leave Facebook status comments: ‘Watch this, don’t watch that.’ I’ve introduced a lot of my friends to the series Californication.”

—Capetown, 19-year-old

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Yet that uncertain economic background has done nothing

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Yet that uncertain economic background has done nothing to slow down the E&M industry’s ongoing structural

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to slow down the E&M industry’s ongoing structural change, which is continuing to accelerate.

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As we highlighted last year, that structural change is

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manifesting itself across three parallel dimensions:

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manifesting itself across three parallel dimensions: economic, advertising, and consumer behavior. With

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economic, advertising, and consumer behavior. With economic confi dence remaining subdued and advertising

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economic confi dence remaining subdued and advertising showing a modest but uncertain return to stability, we are

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showing a modest but uncertain return to stability, we are currently in an environment where consumer feedback and

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currently in an environment where consumer feedback and consumer usage provide the only reliable guides to the

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consumer usage provide the only reliable guides to the commercial viability of products and services. As a result,

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commercial viability of products and services. As a result, consumer behavior will be an important driver of industry

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consumer behavior will be an important driver of industry developments over the coming fi ve years.

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developments over the coming fi ve years.

Consumers’ rising infl uence is underlined by several

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Consumers’ rising infl uence is underlined by several developments. As digital transformation drives the E&M

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developments. As digital transformation drives the E&M

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between old and new, by nurturing and sustaining their

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between old and new, by nurturing and sustaining their cash-generative traditional offerings while using these

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cash-generative traditional offerings while using these revenues to identify and seize the right role and positioning

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revenues to identify and seize the right role and positioning for their businesses within the emerging digital value

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for their businesses within the emerging digital value chains. The challenge of striking the right balance is

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chains. The challenge of striking the right balance is increased by the fact that the growth potential of different

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increased by the fact that the growth potential of different online and off-line offerings varies in different markets. For

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online and off-line offerings varies in different markets. For example, newspaper print advertising will rise in India at FOR P

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example, newspaper print advertising will rise in India at FOR PRESS U

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12.8 percent compounded annually through the forecast FOR PRESS U

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12.8 percent compounded annually through the forecast


• Digital consumption extends across generations: More-mature demographics are becoming increasingly enthusiastic adopters of new modes of digital consumption. Recent industry fi gures show that people over 45 years old account for 42 percent of users on Facebook. The rise of the older digital community is taking the revenue and market potential of new services into new demographic and content areas.

Three themes of consumer infl uence

With consumers’ responses still evolving, it’s up to companies in the industry to anticipate and identify where they’re heading, and give consumers what they want—or what they will want once they experience it. Over the coming fi ve years, we believe, the force exerted by changing consumer behavior will make itself felt through three themes:

• Theme 1: The rising power of mobility and mobile devices

• Theme 2: The growing dominance of the Internet experience over all content consumption

• Theme 3: Increasing engagement and readiness to pay for content—driven by improved consumption experiences and convenience

In the rest of this Industry Overview, we examine those three themes in greater detail, drawing on fi ndings from PricewaterhouseCoopers’ Global entertainment and media outlook: 2010–2014, together with other insights from our varied experience and ongoing research across the E&M industry.

It is also signifi cant that, following the launch of each new wave of technological innovation—smartphones a few years ago, and tablets or netbooks today—the industry must fi rst establish how consumers respond to and use these new offerings, before it can be certain about the right service, pricing, and revenue models.

Consumer responses are still evolving

The challenges are increased by the fact that consumers’ responses to new offerings and experiences have yet to stabilize and in fact are continuing to evolve. Following are three examples.

• Boosting content consumption: Far from undermining existing and traditional content, advances in digital technology can actually reestablish and restore content’s value for consumers. For example, consumers who are early adopters of tablets have told PricewaterhouseCoopers that these devices are prompting them to read more and to access more content, thereby suggesting we could see a revival in book reading. Similarly, HDTV is supporting television revenues, 3-D is boosting fi lm, and authorized music sites are steadily restoring the value of recorded music that was lost to illegal peer-to-peer downloading. In each case, digital innovation in devices and applications is enhancing the experience of the consumption of content.

• Willingness to pay: Similarly, many users of previously free ad-funded online content services have proved ready and willing to switch to paying for an ad-free variant under a so-called freemium model (a business model that works by offering basic services for free while charging a premium for advanced or special features). Pioneered by the likes of Flickr, freemium is now used by such online music services as Pandora. The success of Zynga’s well-known social games such as Farmville and Mafi a Wars lies in Zynga’s ability to create consumer stickiness by offering the games for free while earning revenue from microtransactions for virtual goods. The rise of freemium confi rms that high-quality, licensed services can be more attractive to consumers than unlicensed peer-to-peer alternatives are.

“The devices I own are the computer, the Wii that I love to play with my grandchildren, and of course I have a cell phone, TV, and DVD. I’m planning on buying a netbook that I can carry for traveling.”

—Chicago, 60-year-old

FOR PRESS U

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More-mature demographics are becoming increasingly

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More-mature demographics are becoming increasingly enthusiastic adopters of new modes of digital

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enthusiastic adopters of new modes of digital consumption. Recent industry fi gures show that people

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consumption. Recent industry fi gures show that people over 45 years old account for 42 percent of users on

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over 45 years old account for 42 percent of users on Facebook. The rise of the older digital community is

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Facebook. The rise of the older digital community is taking the revenue and market potential of new services

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taking the revenue and market potential of new services into new demographic and content areas.

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into new demographic and content areas.

Three themes of consumer infl uence

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Three themes of consumer infl uenceThree themes of consumer infl uencebook reading. Similarly, HDTV is supporting television

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book reading. Similarly, HDTV is supporting television revenues, 3-D is boosting fi lm, and authorized music

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revenues, 3-D is boosting fi lm, and authorized music sites are steadily restoring the value of recorded music

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sites are steadily restoring the value of recorded music that was lost to illegal peer-to-peer downloading.

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that was lost to illegal peer-to-peer downloading. In each case, digital innovation in devices and

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In each case, digital innovation in devices and

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applications is enhancing the experience of the

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applications is enhancing the experience of the

Similarly, many users of previously

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Similarly, many users of previously free ad-funded online content services have proved

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free ad-funded online content services have proved ready and willing to switch to paying for an ad-free

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ready and willing to switch to paying for an ad-free variant under a so-called freemium model (a business FOR P

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variant under a so-called freemium model (a business model that works by offering basic services for free FOR P

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model that works by offering basic services for free while charging a premium for advanced or special FOR P

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while charging a premium for advanced or special FOR PRESS U

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Theme 1:The rising power of mobility and mobile devices

Mobile comes of age in 2010–11

The rising penetration by smartphones and other Internet-enabled devices—supported by advanced infrastructure and enriched by a growing array of mobile applications, or apps—means the tipping point is fast approaching at which mobile content will explode as a revenue generator. In some markets this has already happened. In Japan, for example, more than 60 percent of total Internet access spending in 2009 was generated through mobile devices.

But even in less-mature mobile markets, consumer expectations of what a mobile device can do have soared beyond basic cell phone functionality and will continue to escalate, driving the ongoing convergence of a wide array of functions and media consumption choices on handheld devices. In the next fi ve years, the industry will need to meet and surpass consumers’ demand for sophisticated, multifunctional devices that keep them connected, entertained, and informed in markets across the world.

Working together, device, application, and content providers will meet that demand by embedding and progressively enhancing a growing array of features—including offering Internet connectivity at ever-higher bandwidths, supporting an ever-wider array of content, and gaining rising functionality through design advances and the increasing range of apps available for smartphones and other mobile devices. In South Korea, more than 20 million people watched television on mobile devices in 2009. By 2014, the number will exceed 30 million. Today’s consumers are already eagerly anticipating the day when their mobile devices can function as all-encompassing, multifunctional mini PCs or TVs, and by 2014 or earlier—in some markets at least—consumers will get their wish.

The accompanying chart illustrates the potential of mobile revenues by comparing fi ve-year compound annual growth in mobile Internet subscribers in various countries with fi ve-year CAGR for mobile Internet content and advertising revenues in the same markets. As shown, mobile content and advertising revenues are rapidly outpacing subscriber growth in markets where mobile Internet access is mature, such as Japan and South Korea. We would expect to see this pattern repeating itself in other markets as mobile Internet infrastructure and penetration advance. Globally, nearly 500 million people were accessing the Internet through mobile devices in 2009, up from only 100 million as recently as 2005. We project that by 2014, that total will rise to 1.4 billion.

Mobile will be driven further and faster by NGNs

As mobile revenues take off, we believe each market will eventually reach a tipping point where usage, subscription, and advertising revenues for content services migrate quickly toward mobile platforms. PricewaterhouseCoopers’ ongoing focus-group-based consumer research underlines the changes in behaviors and aspirations that will drive that migration. As well as wanting greater functionality in their mobile devices, consumers tell us they want apps that make their lives easier in three ways:

Mobile markets in selected countries, CAGR 2010–2014 (%)

0

10

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30

40

50

60

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Mobile Internet access subscribers

Mobile content/advertising spending Wireless subscribers

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

“Personally, I use my iPhone all the time for everything. It’s sort of changed my life, really.”


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The accompanying chart illustrates the potential of mobile

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The accompanying chart illustrates the potential of mobile revenues by comparing fi ve-year compound annual growth

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revenues by comparing fi ve-year compound annual growth in mobile Internet subscribers in various countries with

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in mobile Internet subscribers in various countries with fi ve-year CAGR for mobile Internet content and advertising

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fi ve-year CAGR for mobile Internet content and advertising


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“Personally, I use my iPhone all the time

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“Personally, I use my iPhone all the time “Personally, I use my iPhone all the time

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Working together, device, application, and content FOR PRESS U

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Working together, device, application, and content providers will meet that demand by embedding and FOR P

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providers will meet that demand by embedding and FOR PRESS U

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for everything. It’s sort of changed my life,

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for everything. It’s sort of changed my life, for everything. It’s sort of changed my life,


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—London, 45-year-old—London, 45-year-old


viewpoints of many consumers today, what matters more than an open or closed system is the availability of third-party apps and superfast mobile broadband on a device they fi nd easy to use. With those elements in place, investment in innovation by third-party app developers helps build loyalty and usage for the device itself—a win-win for the device manufacturers.

Theme 2:The growing dominance of the Internet experience over all content consumption

Using the Internet—by clicking on hyperlinks, searching, communicating, socializing, and displaying content—has now become one of the great unifying experiences shared by billions of people across the world. Increasingly, the consumer has moved beyond thinking of the Internet as an end in itself and expects all forms of media to embed the convenience, immediacy, and interactivity of the Internet.

With the emergence of new generations of tablets and netbooks, the unifi ed Internet-based consumption experience has taken another step forward. While Amazon’s Kindle was initially aimed at displaying

• Personally: by providing compelling entertainment and useful information and offering personal lifestyle, productivity, and well-being benefi ts

• Professionally: by interfacing with their work computers and helping them manage both their workplace and fi nancial needs

• Prudently: by consumers believing the technology is readily available and that the applications should be free or at least inexpensive

A particular driver that will enable mobile device and content providers to generate revenues by meeting those requirements is the ongoing rollout of high-bandwidth next-generation networks (NGNs) for mobile—third generation and higher. As markets with huge second-generation subscriber bases move to third generation, NGNs will continue driving mobile take-up because of the superior user experience that they enable, in turn accelerating mobile data and advertising and blurring the distinction between online and mobile apps.

Loyalty shifts from service provider to device, and, ultimately, to the brand

The expanding functionality of mobile devices is also fueling another signifi cant shift. The focus of consumers’ brand loyalty and trust is moving away from the service or content provider and attaching itself ever more closely to the device itself and the device’s underlying content.

The importance of the device brand represents a break from previous waves of consumer technology. Consumers today relate to iPods, not generic portable music players; to iPhones or BlackBerrys, not generic smartphones; and to Kindles and iPads, not generic electronic readers. In previous generations, the device itself was more important than the brand of the device. Moreover, those systems were open and interoperable; VCRs could play all VHS cassettes, and CD players could play any CD recording.

Open or closed systems?

In contrast, many of the current generations of devices—and, notably, the iPod and iPhone—are proprietary systems. The competition between the iPhone and Google’s open-system Android-based Droid will provide a pointer as to whether closed or open systems will ultimately prevail. Our ongoing research with focus groups suggests that consumers will want to share content and applications across all their devices. However, from the

“Every time they bring out a new phone, I think I would probably upgrade, because battery life, processor speed, and a better interface are a benefi t to me. It’s all about what it does for me and how well it works.”


“I basically think that movies are going to be stored in one location at your home and you can just transmit them to any media that you own, whether it be a laptop or a PC, desktop, or your TV or your cell phone, wireless. You can just push a button and the movie shows up on whatever you send it to.”

—Los Angeles, 28-year-old

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than an open or closed system is the availability of third-

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party apps and superfast mobile broadband on a device

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they fi nd easy to use. With those elements in place,

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they fi nd easy to use. With those elements in place, investment in innovation by third-party app developers

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investment in innovation by third-party app developers helps build loyalty and usage for the device itself—a win-

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helps build loyalty and usage for the device itself—a win-win for the device manufacturers.

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win for the device manufacturers.

Theme 2:

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Theme 2:Theme 2:The growing dominance of the Internet

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The growing dominance of the Internet The growing dominance of the Internet experience over all content consumption

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experience over all content consumptionexperience over all content consumption

The expanding functionality of mobile devices is also

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The expanding functionality of mobile devices is also fueling another signifi cant shift. The focus of consumers’

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fueling another signifi cant shift. The focus of consumers’ brand loyalty and trust is moving away from the service or

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brand loyalty and trust is moving away from the service or content provider and attaching itself ever more closely to

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content provider and attaching itself ever more closely to the device itself and the device’s underlying content.

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the device itself and the device’s underlying content.

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The importance of the device brand represents a break

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The importance of the device brand represents a break from previous waves of consumer technology. Consumers

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from previous waves of consumer technology. Consumers today relate to iPods, not generic portable music players; FOR P

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today relate to iPods, not generic portable music players; to iPhones or BlackBerrys, not generic smartphones; and FOR P

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to iPhones or BlackBerrys, not generic smartphones; and to Kindles and iPads, not generic electronic readers. In FOR P

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to Kindles and iPads, not generic electronic readers. In FOR PRESS U

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electronic books, such devices as the Apple iPad have the functionality needed to attract magazine readers, with capabilities like color and support for WiFi and third generation. A growing number of news and magazine publishers have already put content apps on the US iPad store. And in December 2009, Time, Inc.; Condé Nast; Meredith; Hearst; and News Corp. jointly created a digital storefront for their magazine titles.

No segment of E&M will be immune to blurring with the Internet. This trend will be further accentuated with the deployment of various national NGNs around the world. With theoretical speeds of up to 100 megabits per second,

NGN initiatives around the world

United KingdomDigital Britain

United StatesNational Broadband

FranceFTTx policies

SingaporeNGNBN

New ZealandUFB Initiative

AustraliaFTTx policies

this upgrade in infrastructure will not only provide greater access to video and interactive content but also accelerate digital migration.

This trend is becoming more evident in television with the new generation of Web-enabled TV. The advancement of the device itself coupled with upgrades in the infrastructure will be the catalyst for new forms of television consumption that will enable consumers to stream or download content whenever they want it, run applications, play games, and, ultimately, view content on any device.

Similarly, the trends will also migrate to other forms of content: fi lms, radio, books, and video games. NGN will not only increase the volume of content accessible through the Internet but also potentially eliminate the need to maintain a physical library of content. Convergence of devices will therefore be accompanied by convergence of content through a digital locker.

The move to a digital locker may ultimately be hampered by the industry’s concerns over piracy; however, our view is that over time, the convenience and quality of authorized services may reduce the attractiveness of pirated content in most markets, though the process will clearly take a long time in such countries as China. A further factor is that content that is currently charged for via authorized sites may be offered for free, as different revenue models get brought in.

TV and Internet: complementary consumption

With Internet-enhanced television gaining momentum and with TV and the Internet being used together in a growing number of contexts, Internet and television are becoming complementary rather than competitive or substitutional. Many of the people who are watching TV are simultaneously online and access content or participate in social networks related to the programs they’re viewing. Television is also one of the most popular online subjects, generating active discussions among fans of specifi c programs. Essentially, the Internet has created a virtual watercooler around which people gather to chat with each other about TV.

Further pointers to the future of Internet-enhanced television are being provided by such tools as Yahoo! TV Widgets, and digital product delivery from Amazon.com, Blockbuster, and Netfl ix. The Internet experience is also shaping the foundation for a new TV commercial format, as some advertisers think that a 5- or 10-second spot will replace the more traditional 30-second spot, in order to mirror consumer Internet behavior. Furthermore, advertisers are experimenting with different TV advertising models, such as branded entertainment and interactive TV.

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this upgrade in infrastructure will not only provide greater

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this upgrade in infrastructure will not only provide greater access to video and interactive content but also accelerate

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access to video and interactive content but also accelerate digital migration.

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digital migration.

This trend is becoming more evident in television

FOR PRESS U

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This trend is becoming more evident in television with the new generation of Web-enabled TV. The

FOR PRESS U

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with the new generation of Web-enabled TV. The advancement of the device itself coupled with upgrades

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advancement of the device itself coupled with upgrades in the infrastructure will be the catalyst for new forms of

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in the infrastructure will be the catalyst for new forms of television consumption that will enable consumers to

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television consumption that will enable consumers to

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advertisers are experimenting with different TV

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advertisers are experimenting with different TV advertisers are experimenting with different TV

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electronic books, such devices as the Apple iPad have FOR PRESS U

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electronic books, such devices as the Apple iPad have the functionality needed to attract magazine readers, FOR P

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the functionality needed to attract magazine readers, FOR PRESS U

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advertising models, such as branded entertainment

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advertising models, such as branded entertainment advertising models, such as branded entertainment


Theme 3:Increasing engagement and readiness to pay for content—driven by improved consumption experiences and convenience

Experience drives revenue

In a media world of expanding choice and rising speed, the quality, convenience, and pricing of the consumption experience will be the key determinants of the consumer’s level of engagement with a content service. That engagement will in turn shape the provider’s ability to charge the consumer for accessing the service. Experience shows that consumers will pay for easy-to-use, high-quality, relevant services, even if there are free, less-reliable alternatives available. A key trigger in achieving critical-mass take-up is hitting the right price point—such as the 99-cent track from iTunes. The content proposition

becomes all the more compelling when it delivers an experience that cannot easily be reproduced elsewhere, such as movies in 3-D, sport on HDTV, or a live concert.

Consumers will increasingly accept that personal engagement with content demands a premium, and they’ll be willing to pay for it. The recorded music industry has evolved within a few years from a segment dominated by physical products and supply chains to one whose rising share of revenues is generated by live concerts. Record labels have responded by participating in live-concert revenue streams through full-service 360-degree deals with artists. However, as ever, generalizations are dangerous. In 2009, sales of recorded music in Asia Pacifi c staged a stunning reversal, turning a 3.4 percent decrease in 2008 into a 9.0 percent gain in 2009, as authorized spending on digital music surged in South Korea and Japan.


0

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Global advertising shares (%)

Advertising: migrating from being on a medium to through content

While advertising revenues in the markets hardest hit by the recent turbulence have steadied and even staged a modest rebound, their recovery remains fragile and will generally not see advertising spend return to former levels. In the United States, for example, advertising in 2014 will still be 9 percent below its level in 2006. Such projections refl ect the fact that the behavioral changes seen among consumers in recent years—such as migration toward mobile news and entertainment, increasing use of online shopping and price comparison sites, and enthusiastic engagement with online communities—have been matched by advertisers, which are trying to keep pace with consumers’ shifting attention.

While brands will continue to use traditional advertising platforms such as magazines, radio, and TV, they are also actively seeking new ways to engage with consumers. So, advertising spend is undergoing a long-term shift toward total marketing or total brand communication, with companies changing their focus from advertising on a medium to marketing through and with content. For example, the James Bond movie Quantum of Solace reportedly earned a record $75 million from product placement, and industry estimates put product placement in movies globally at $1.8 billion in 2010, more than double its level in 2005.

Going forward, the introduction of cross-platform services such as TV Everywhere—an offering from the US cable industry, enabling subscribers to access TV content over multiple platforms—will further blur the division between television and Internet advertising while supporting their combined domination of the advertising market. In 2005, television and the Internet together constituted 40.7 percent of total global advertising spend, but by 2014 they will account for 56.3 percent, largely at the expense of print advertising.

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share of revenues is generated by live concerts. Record

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share of revenues is generated by live concerts. Record labels have responded by participating in live-concert

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labels have responded by participating in live-concert revenue streams through full-service 360-degree deals with

FOR PRESS U

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artists. However, as ever, generalizations are dangerous.

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SE ONLYartists. However, as ever, generalizations are dangerous.

In 2009, sales of recorded music in Asia Pacifi c staged a

FOR PRESS U

SE ONLYIn 2009, sales of recorded music in Asia Pacifi c staged a

stunning reversal, turning a 3.4 percent decrease in 2008

FOR PRESS U

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stunning reversal, turning a 3.4 percent decrease in 2008 into a 9.0 percent gain in 2009, as authorized spending on

FOR PRESS U

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into a 9.0 percent gain in 2009, as authorized spending on digital music surged in South Korea and Japan.

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digital music surged in South Korea and Japan.

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a medium to

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a medium to a medium to through

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throughthrough

While advertising revenues in the markets hardest hit by

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While advertising revenues in the markets hardest hit by While advertising revenues in the markets hardest hit by the recent turbulence have steadied and even staged a

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the recent turbulence have steadied and even staged a the recent turbulence have steadied and even staged a modest rebound, their recovery remains fragile and will

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modest rebound, their recovery remains fragile and will modest rebound, their recovery remains fragile and will generally not see advertising spend return to former levels.

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generally not see advertising spend return to former levels. generally not see advertising spend return to former levels.

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In the United States, for example, advertising in 2014 will

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In the United States, for example, advertising in 2014 will In the United States, for example, advertising in 2014 will still be 9 percent below its level in 2006. Such projections

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still be 9 percent below its level in 2006. Such projections still be 9 percent below its level in 2006. Such projections refl ect the fact that the behavioral changes seen among

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refl ect the fact that the behavioral changes seen among refl ect the fact that the behavioral changes seen among consumers in recent years—such as migration toward

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consumers in recent years—such as migration toward consumers in recent years—such as migration toward mobile news and entertainment, increasing use of online

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mobile news and entertainment, increasing use of online mobile news and entertainment, increasing use of online shopping and price comparison sites, and enthusiastic

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shopping and price comparison sites, and enthusiastic shopping and price comparison sites, and enthusiastic engagement with online communities—have been FOR P

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engagement with online communities—have been engagement with online communities—have been matched by advertisers, which are trying to keep pace FOR P

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matched by advertisers, which are trying to keep pace matched by advertisers, which are trying to keep pace


More generally, pervasive Internet-based distribution and location-based services will increase interactivity, measurement, and addressability. In combination, these will enable more-accurate capture and segmentation of the audience for a piece of content and will support more-targeted and more-customized advertising campaigns that can command premium rates.

However, rising usage of addressable advertising may intensify some consumers’ concerns and sensitivities around privacy. This is a major reputational challenge for E&M companies globally but is generally more of an issue for consumers in more-mature demographic groups. Experience and research in many markets suggest that younger consumers are generally more accepting of the idea of providing personal information in return for a better, more relevant, and more convenient service experience.

Media consumption returns to being a collective social experience

A parallel trend around engagement is the growing resocialization of the media consumption experience. Reading books or newspapers has historically been something people do alone. Television has headed the same way in recent years, with the advent of multichannel fragmentation and multiset households. But now the combination of digital access, mobility, and social networking is seeing consumption of all forms of media migrate from being solo activities toward being social experiences, as viewers discuss and share content via their social networks and mobile devices as well as in physical groups. Going forward, this activity will increasingly take place on a single device, such as a Web-enabled TV.

More generally, companies across all segments of E&M are seeking to create and then monetize richer and more-compelling consumer experiences that cannot be reproduced in other environments. Movies have shifted to 3-D, thereby sustaining box offi ce attendance, enabling theaters to charge higher prices, and countering the threat from online downloading onto PCs. Television broadcasters are fi ghting off the threat from the wide availability of free and pervasive online video content by launching HD services—and in some cases monetizing HD successfully as a paid-for upgrade.

Convenience pays off

A further important driver in convincing consumers to pay is convenience. In that regard, the fl exibility, scale, and accessibility of cloud computing are proving to be powerful assets for E&M offerings. In March 2010, online music service MOG launched new mobile applications offering US mobile subscribers the ability to stream songs on both iPhones and Android devices for $10 a month—twice the price of its desktop-only service. In offering ubiquitous on-demand access to a large library of songs, MOG joined competitors Thumbplay and Rhapsody in the US. Spotify offers a similar service in Europe.

As this shows, many content services are now focusing on models that are end-user supported via either pure subscription or hybrid models such as freemium, which limits exposure to any one model by uniting different revenue streams. A further example of innovative hybrid models is the growth in social gaming on such sites as Facebook and MySpace, where the games are given free and the developers gain revenues through microtransactions and advertising.

Going hyperlocal to boost engagement

Location-based services will represent a further element of the drive to boost convenience and increase consumers’ engagement with content services, thereby enhancing providers’ ability to charge. Hyperlocal services—made possible by the addressability of Internet-based distribution or by using location-based mobile technology—will give consumers access to valuable local news and information while also enabling businesses to promote advertising to consumers who either live locally or happen to be in the area at the time.

“I’d rather chat on the Xbox online with friends. Sometimes, if there’s a TV program we like, we keep the Xbox on, and we can talk to each other in the chatroom while we’re watching it. So it feels like we’re watching it together.”


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intensify some consumers’ concerns and sensitivities

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intensify some consumers’ concerns and sensitivities around privacy. This is a major reputational challenge

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around privacy. This is a major reputational challenge for E&M companies globally but is generally more of an

FOR PRESS U

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issue for consumers in more-mature demographic groups.

FOR PRESS U

SE ONLYissue for consumers in more-mature demographic groups.

Experience and research in many markets suggest that

FOR PRESS U

SE ONLYExperience and research in many markets suggest that

younger consumers are generally more accepting of the

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younger consumers are generally more accepting of the idea of providing personal information in return for a better,

FOR PRESS U

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idea of providing personal information in return for a better, more relevant, and more convenient service experience.

FOR PRESS U

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more relevant, and more convenient service experience.

Media consumption returns to being

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Media consumption returns to being a collective social experience

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a collective social experience

A parallel trend around engagement is the growing

FOR PRESS U

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A parallel trend around engagement is the growing resocialization of the media consumption experience.

FOR PRESS U

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resocialization of the media consumption experience. Reading books or newspapers has historically been

FOR PRESS U

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Reading books or newspapers has historically been something people do alone. Television has headed the

FOR PRESS U

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something people do alone. Television has headed the same way in recent years, with the advent of multichannel

FOR PRESS U

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same way in recent years, with the advent of multichannel

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MOG joined competitors Thumbplay and Rhapsody in the

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MOG joined competitors Thumbplay and Rhapsody in the

As this shows, many content services are now focusing

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As this shows, many content services are now focusing on models that are end-user supported via either pure

FOR PRESS U

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on models that are end-user supported via either pure subscription or hybrid models such as freemium, which

FOR PRESS U

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subscription or hybrid models such as freemium, which limits exposure to any one model by uniting different

FOR PRESS U

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limits exposure to any one model by uniting different revenue streams. A further example of innovative

FOR PRESS U

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revenue streams. A further example of innovative hybrid models is the growth in social gaming on such

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hybrid models is the growth in social gaming on such sites as Facebook and MySpace, where the games are

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sites as Facebook and MySpace, where the games are

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given free and the developers gain revenues through FOR PRESS U

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given free and the developers gain revenues through


result can be a net decline in revenue. Digital end-user prices tend also to be lower than those on traditional platforms, so a move from traditional to digital has a similarly negative impact.

This means companies are fi ghting for a larger slice of a shrinking pie, and the challenge for content providers is to monetize rising digital consumption more effectively. While digital distribution provides a number of cost savings—lower manufacturing costs, savings on shipping, and reduced inventory management and returns costs—the continuing need to support a traditional infrastructure limits the overall benefi t. In the book industry, for example, as long as a print market remains, the print infrastructure needs to be maintained. This means the digital savings apply to only a small slice of the market.

Future hope for digital ad revenues?

However, there is hope that some digital revenues could exceed previous expectations—supported by addressability of online advertising and an expansion in advertising around online content. Some research suggests that the shift toward blended cross-platform TV and Internet ad campaigns could result in Internet advertising’s actually becoming more valuable than TV ads—potentially twice as valuable.

In addition, other media will gain similar social interaction capabilities. Video games’ dedicated core audience has already made this leap. With the right secure-payment models in place, such content as movies and books will be shared, consumed, and discussed simultaneously via online communities by people in different places. Magazines and newspapers—which will increasingly offer online video as part of their experience—can also build strong social networks, with consumers interacting and discussing within the context of the content.

Part three:Experimentation in business models

Changing consumer behavior around the three themes we have highlighted has caused entertainment and media businesses to radically rethink their approaches to monetization of content, as participants across the industry strive to identify and secure their optimal positioning and revenues in the digital value chain. With consumption habits continuing to change, businesses are experimenting and testing out new ways of monetizing the new behaviors while looking to maintain their off-line revenues and realize synergies with digital offerings.

Digital migration puts revenues under pressure

As they continue this experimentation with business models, companies know that digital transformation will not necessarily benefi t overall industry revenues. For example, online and mobile ad rates are currently lower than ad rates on traditional platforms—so when usage shifts from traditional platforms to digital platforms, the

Global Internet advertising (US$ millions)

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“Until now, I haven’t paid to get news. If I had to choose between a paper and an online subscription, I would defi nitely opt for the latter. But it’s tricky, because even with serious articles and information, I can always fi nd similar content for free.”

—Paris, 49-year-old

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lower manufacturing costs, savings on shipping, and

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lower manufacturing costs, savings on shipping, and reduced inventory management and returns costs—the

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reduced inventory management and returns costs—the continuing need to support a traditional infrastructure

FOR PRESS U

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limits the overall benefi t. In the book industry, for example,

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SE ONLYlimits the overall benefi t. In the book industry, for example,

as long as a print market remains, the print infrastructure

FOR PRESS U

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needs to be maintained. This means the digital savings

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needs to be maintained. This means the digital savings apply to only a small slice of the market.

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apply to only a small slice of the market.

Future hope for digital ad revenues?

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Future hope for digital ad revenues?Future hope for digital ad revenues?

However, there is hope that some digital revenues

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However, there is hope that some digital revenues could exceed previous expectations—supported by

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could exceed previous expectations—supported by addressability of online advertising and an expansion

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addressability of online advertising and an expansion in advertising around online content. Some research

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in advertising around online content. Some research consumption habits continuing to change, businesses are

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consumption habits continuing to change, businesses are experimenting and testing out new ways of monetizing

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experimenting and testing out new ways of monetizing the new behaviors while looking to maintain their off-line

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the new behaviors while looking to maintain their off-line

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revenues and realize synergies with digital offerings.

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revenues and realize synergies with digital offerings.

Digital migration puts revenues under pressure

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Digital migration puts revenues under pressureDigital migration puts revenues under pressure

As they continue this experimentation with business

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As they continue this experimentation with business models, companies know that digital transformation will

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models, companies know that digital transformation will not necessarily benefi t overall industry revenues. For

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not necessarily benefi t overall industry revenues. For example, online and mobile ad rates are currently lower

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example, online and mobile ad rates are currently lower than ad rates on traditional platforms—so when usage

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than ad rates on traditional platforms—so when usage shifts from traditional platforms to digital platforms, the FOR P

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shifts from traditional platforms to digital platforms, the


Gartner says consumers will spend $6.2 billion in mobile application stores in 2010

In January 2010, Gartner estimated that consumers will spend $6.2 billion in mobile application stores in 2010, while advertising revenue is expected to generate $0.6 billion worldwide. It also said mobile application stores will exceed 4.5 billion in downloads during the year, with 8 out of 10 of them free to end users. According to Gartner’s estimates, worldwide mobile application stores’ download revenue exceeded $4.2 billion in 2009 and will grow to $29.5 billion by the end of 2013, including end-user spending on paid-for applications and advertising-sponsored free applications. Advertising-sponsored mobile applications will generate almost 25 percent of mobile application stores’ revenue by 2013.

To date, there has been a widespread view that consumers will not accept as many ads when consuming content online as when watching TV. However, consumers’ tolerance of online ads has yet to be really tested and may be signifi cantly greater than thought, especially given Internet ads’ greater interactivity and the potential for increased relevance through better targeting.

Combine the potential for higher volumes of online advertising with its additional addressability—enabling ads to target specifi c customers in specifi c places at specifi c times—and the outlook for digital ad revenues becomes much brighter. The drawback for the industry is that this scenario may take some time to come about. While the technologies to support addressability are mature, their market penetration is still at an early stage, so the impact on Internet ad revenues is not yet signifi cant.

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To date, there has been a widespread view that consumers

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To date, there has been a widespread view that consumers will not accept as many ads when consuming content

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will not accept as many ads when consuming content online as when watching TV. However, consumers’

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online as when watching TV. However, consumers’ tolerance of online ads has yet to be really tested and

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tolerance of online ads has yet to be really tested and may be signifi cantly greater than thought, especially given

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may be signifi cantly greater than thought, especially given Internet ads’ greater interactivity and the potential for

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Internet ads’ greater interactivity and the potential for

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increased relevance through better targeting.FOR PRESS U

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increased relevance through better targeting.

Combine the potential for higher volumes of online FOR PRESS U

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Combine the potential for higher volumes of online


in doubt because of the relatively small size of digital advertising spend, particularly if we discount search—the fastest-growing component of online advertising.

In 2009, nonsearch online advertising totaled less than $30 billion globally, and mobile added only $2 billion more. To put that fi gure into context, the relevant digital advertising market in 2009 was only 40 percent as large as print newspaper advertising, a market that itself may not be large enough to support the traditional newspaper business at historical levels.

However, within the digital advertising mix are some important current developments whose impact it is too early to assess. For example, many developers of third-party apps for the Apple iPod have begun embedding ads into their apps to generate additional revenues. In April 2010 Apple launched iAd to help developers incorporate compelling ads and keep free apps free. The industry is watching the development of in-app advertising with interest. Recent estimates by research fi rm Gartner suggest the market for app-based advertising is substantial—and growing. (See information panel.)

With the shift away from pure ad-funded models, a growing proportion of business models look to generate revenues from consumers. However, the ability to monetize transactions depends on a range of issues, including who is involved in any partnership to deliver the service and where the balance of ownership lies in terms of the consumer relationship and brand loyalty.

A further question has to do with how to collect the money. Micropayment can be a valuable tool, as demonstrated by social media sites that gain a mix of ad revenues and transactional micropayments from their social gaming applications. In China, for example, microtransactions account for virtually all of the online market and will boost spending to a projected $18 billion by 2014, representing more than 90 percent of that country’s total video game market. Despite the dramatic growth in micropayments in some markets, there is growing evidence that many consumers are happier paying a subscription or a small number of larger bills than making an ongoing series of very small payment decisions. However, these differing spending patterns are refl ective of demographic, cultural, and infrastructural differences.

A related issue going forward is the business model for social networking sites—a key question being whether they can generate ad revenues without alienating their

Testing the limits of paid-for content

In the meantime, experimentation is continuing around business and pricing models. Some newspaper and magazine publishers are testing out the limits of what consumers will pay for. While established fi nancial publications such as the Wall Street Journal, the Financial Times, and The Economist have protected their online content behind pay walls for some time, it has been widely regarded as virtually impossible for newspapers and magazines to charge consumers for general online content.

However, in March 2010, News International broke ranks when it said two of its fl agship UK newspapers—The Times and The Sunday Times—would start charging for the general news coverage on their Web sites from June 2010, although existing subscribers to the print editions would still have free online access. Some other newspaper publishers have committed to continuing to offer general news content free online, while all are eagerly tracking their readers’ responses to developments in electronic readers.

Similar divergence and innovation in business models is evident across the industry. Variable pricing is being introduced for music downloads, and the industry is still experimenting with moving from a pay-per-song downloading model to a monthly subscription for streamed music. Publishers are raising electronic book prices, reducing the differential between electronic and print, and delaying electronic distribution to give print a dedicated window.

From ad supported to hybrid

It does not appear that advertising alone can fully support the shift from traditional to digital platforms, thereby putting the focus on hybrid ad-funded models blended with subscription and/or transaction revenues. True, digital advertising will grow faster than nondigital advertising during the next fi ve years, but relevant digital advertising in 2014 will still be a relatively modest, $53 billion, made up of $45 billion for nonsearch wired advertising and $8 billion for mobile advertising. This will still be a third lower than projected print newspaper advertising in 2014.

The fragmentation of approach is very different from one or two years ago, when content providers were focusing largely on ad-supported models. The economic turbulence in many markets led to a decline in overall global advertising that also impacted growth rates in digital advertising in many countries. Even once the economy recovers, the sustainability of pure ad-supported business models is

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not be large enough to support the traditional newspaper

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not be large enough to support the traditional newspaper business at historical levels.

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business at historical levels.

However, within the digital advertising mix are some

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important current developments whose impact it is too

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early to assess. For example, many developers of third-

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early to assess. For example, many developers of third-party apps for the Apple iPod have begun embedding

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party apps for the Apple iPod have begun embedding ads into their apps to generate additional revenues.

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ads into their apps to generate additional revenues. In April 2010 Apple launched iAd to help developers

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In April 2010 Apple launched iAd to help developers incorporate compelling ads and keep free apps free.

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incorporate compelling ads and keep free apps free. The industry is watching the development of in-app

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The industry is watching the development of in-app advertising with interest. Recent estimates by research

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advertising with interest. Recent estimates by research fi rm Gartner suggest the market for app-based advertising

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fi rm Gartner suggest the market for app-based advertising is substantial—and growing. (See information panel.)

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is substantial—and growing. (See information panel.)is evident across the industry. Variable pricing is being

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is evident across the industry. Variable pricing is being introduced for music downloads, and the industry is

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introduced for music downloads, and the industry is

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still experimenting with moving from a pay-per-song

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still experimenting with moving from a pay-per-song downloading model to a monthly subscription for

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downloading model to a monthly subscription for streamed music. Publishers are raising electronic book

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streamed music. Publishers are raising electronic book prices, reducing the differential between electronic and

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prices, reducing the differential between electronic and print, and delaying electronic distribution to give print a

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print, and delaying electronic distribution to give print a

From ad supported to hybrid

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From ad supported to hybridFrom ad supported to hybrid

It does not appear that advertising alone can fully support FOR PRESS U

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It does not appear that advertising alone can fully support the shift from traditional to digital platforms, thereby FOR P

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the shift from traditional to digital platforms, thereby


legacy revenue streams while investing in their digital services and creating complementary and synergistic relationships between their physical and digital offerings.

These dynamics will drive the emergence of a new value chain for the industry. Media companies will need to establish clarity about their role or roles in it and their relationships with the other participants, which may include competing in some layers and partnering in others. To optimize their positioning, two important dimensions that media companies should focus on are scale and diversifi cation.

Lower costs, higher fl exibility enabled by cloud computing

Both of those attributes are being supported by emerging technologies. On the supply side, cloud computing is rapidly reducing the operating and capital costs of editing, storage, search, and distribution. Cloud providers are queuing up to support media companies across the world, causing many activities traditionally conducted in-house by integrated media companies to be reinvented, outsourced, or restructured.

As a result, technology has become a CEO issue, providing the answer to the simple question, How do I monetize my content and inventory profi tably? Infrastructure assets such as storage, bandwidth, and servers, as well as customer relationship management databases can be provided on a service-for-a-charge or rental basis rather than as a capital cost. This more fl exible model allows for more risk taking—for example, through new product or service launches, given there is no capital outlay. The ability to expand and contract the core cost base is clearly a big advantage; it also facilitates collaboration across projects, especially for smaller entities.

user base. In April 2010, Twitter announced it intended to start running advertising, or so-called promoted tweets, at the top of search pages to generate revenues from companies. Such a move appears to open up clear potential for a hybrid freemium model that would blend advertising, subscription, and transactional revenues, including a paid-for ad-free premium service.

Part four:Imperatives in the search for position

Overall, the migration from traditional platforms to digital platforms is changing the underlying commercial dynamics of the E&M industry. Historically, E&M’s profi tability as an industry was supported by the high costs of content creation and content distribution, which represented high barriers to entry. The migration to digital production and distribution has lowered those barriers—making the overall E&M market more competitive and putting downward pressure on profi t margins.

Combined with the increasing pace of migration, those commercial pressures mean companies have no time to waste in identifying, pursuing, and occupying their optimal and rightful positions in the digital value chain. In the past fi ve years, much of the E&M industry’s collective experience on business models, revenue streams, and organizational structures has been torn up. Companies now need to reassemble the pieces into a viable model—one that puts them in a sustainable, defensible, and, ultimately, profi table place in the new value chain.

A new value model

As we have pointed out, social and consumer dynamics are at the heart of change—and media companies ignore these trends at their peril. Time-starved individuals want both to use multiple, connected devices and to have personal experiences, often with others. The explosion in media choices also means individuals face a growing set of trade-offs between the availability, quality, and price of content.

Free may mean lower quality and convenience, while paid may mean higher-quality, more-personalized, and more-engaging content services. A polarization will emerge between these options. At the same time, many people will continue with traditional habits such as reading a physical book or newspaper. Companies need to maintain these

“If the price for a download and the theater is the same for a new movie, then I would probably download it because then I can share it with my family. But going to the movies is still best for action movies.”

—Delhi, 39-year-old

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services and creating complementary and synergistic

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relationships between their physical and digital offerings.

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relationships between their physical and digital offerings.

These dynamics will drive the emergence of a new value

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These dynamics will drive the emergence of a new value chain for the industry. Media companies will need to establish

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chain for the industry. Media companies will need to establish clarity about their role or roles in it and their relationships with

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clarity about their role or roles in it and their relationships with the other participants, which may include competing in some

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the other participants, which may include competing in some layers and partnering in others. To optimize their positioning,

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layers and partnering in others. To optimize their positioning, two important dimensions that media companies should

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two important dimensions that media companies should focus on are scale and diversifi cation.

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focus on are scale and diversifi cation.

Lower costs, higher fl exibility enabled

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Lower costs, higher fl exibility enabled Lower costs, higher fl exibility enabled by cloud computing

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by cloud computingby cloud computingoptimal and rightful positions in the digital value chain. In

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optimal and rightful positions in the digital value chain. In the past fi ve years, much of the E&M industry’s collective

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the past fi ve years, much of the E&M industry’s collective experience on business models, revenue streams, and

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experience on business models, revenue streams, and

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organizational structures has been torn up. Companies

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organizational structures has been torn up. Companies now need to reassemble the pieces into a viable model—

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now need to reassemble the pieces into a viable model—one that puts them in a sustainable, defensible, and,

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one that puts them in a sustainable, defensible, and, ultimately, profi table place in the new value chain.

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ultimately, profi table place in the new value chain.

As we have pointed out, social and consumer dynamics are FOR PRESS U

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As we have pointed out, social and consumer dynamics are FOR PRESS U

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What does all this mean for market dynamics and structure? In an environment where media revenues are undergoing fl at to low growth, companies must create new commercial arrangements, collaborations, and operating models that facilitate more-agile and lower-cost bases. After a period of experimentation, a fi ght for partners will ensue, combined with unprecedented competition for capital—fi nancial, intellectual, and human. Consolidation may also result in the long term, as companies search for economies of scale and scope.

Addressing legacy challenges

In all, we think that seven capabilities will be key to operating successfully in the digital E&M value chain that is now emerging. (See information panel.) In developing or acquiring those capabilities, companies will also need to keep a close eye on the impact of four legacy challenges created by digital.

The fi rst is intellectual property rights. We have already highlighted how digital innovation can boost the value of established content, be it classic novels or 1970s progressive rock tracks. But often, the digital rights to such content are at best uncertain, and at worst impossible to untangle.

The second is release windows. In a world of pervasive multichannel digital contests—often available for free for those who care to look for them—the old approach of basing release windows on geography and platforms no longer works. Content released in one place or platform is effectively released everywhere—and content owners will need to adjust their strategies to fi t this new reality.

The third is regulation. The rapid rise of globally available, ubiquitous digital content has seen policy makers and regulators worldwide struggling to keep pace. With the disappearance of the traditional industry silos that used to defi ne regulators’ remits, content regulation has blurred across communications, broadcasting, privacy, and competition. E&M companies will need a fi rm grasp of the regulatory trends across all of the jurisdictions they operate in, together with the confi dence and ability to argue their cases when needed.

The fourth is the operational step-change required by businesses to deliver their strategic intent. Organizations

Partnering becomes a key capability

Irrespective of the choice of business models, one element is consistent: the need to partner with other organizations in order to create viable commercial offerings is increasing all the time. The proliferation of platforms and rising consumer expectations mean companies can no longer “be everything” and own their entire value chain. So strategic partnering is critical, characterized particularly by revenue sharing.

Our experience shows today’s strategic partnerships in E&M typically focus on two areas:

• Revenue growth through access to intellectual property (e.g., technology, content, brands, reputation, payment systems) and customers (e.g., entry into new demographics or geographic markets)

• Sharing costs and/or risks such as to reduce costs (e.g., of print production, network sharing) or to launch new, often risky platforms (e.g., mobile and intellectual property distribution of TV programs)

With both objectives, partnering is increasingly important for experimentation—for example, as a way of gaining access to billing platforms. As a result, potential partners are being found in an increasingly diverse set of industries—such as retail brands offering access to new demographics and such as technology companies providing the infrastructure to support increasingly targeted content and advertising.

Whatever the nature and objective of the partnership, success demands full commitment from top management, complete clarity on the strategy, careful structuring, detailed negotiation of any potential sticking points, and thorough implementation. Clear and robust governance is also vital to keep the partnership on track once it has become operational.

We believe that cross-sector partnering will continue to escalate further over the coming fi ve years. Current models include Classifi ed Ventures—a collaboration between Tribune Co., Gannett McClatchy, the Washington Post, and Belo Corp., which operates Web portals for classifi ed advertising for autos and real estate. Given the pressure on print circulation and advertising, striking the right online partnerships may be critical to some news organizations’ survival in the years to come.

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economies of scale and scope.

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economies of scale and scope.

Addressing legacy challenges

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In all, we think that seven capabilities will be key to

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operating successfully in the digital E&M value chain that

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operating successfully in the digital E&M value chain that is now emerging. (See information panel.) In developing or

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is now emerging. (See information panel.) In developing or acquiring those capabilities, companies will also need to

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acquiring those capabilities, companies will also need to keep a close eye on the impact of four legacy challenges

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keep a close eye on the impact of four legacy challenges created by digital.

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created by digital.

The fi rst is

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The fi rst is highlighted how digital innovation can boost the value

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highlighted how digital innovation can boost the value of established content, be it classic novels or 1970s

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of established content, be it classic novels or 1970s With both objectives, partnering is increasingly important

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With both objectives, partnering is increasingly important for experimentation—for example, as a way of gaining

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for experimentation—for example, as a way of gaining

partners are being found in an increasingly diverse set

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partners are being found in an increasingly diverse set of industries—such as retail brands offering access to

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of industries—such as retail brands offering access to

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new demographics and such as technology companies

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new demographics and such as technology companies providing the infrastructure to support increasingly

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providing the infrastructure to support increasingly

Whatever the nature and objective of the partnership,

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Whatever the nature and objective of the partnership, success demands full commitment from top management,

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success demands full commitment from top management,

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complete clarity on the strategy, careful structuring,

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complete clarity on the strategy, careful structuring, detailed negotiation of any potential sticking points, and FOR P

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detailed negotiation of any potential sticking points, and thorough implementation. Clear and robust governance FOR P

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thorough implementation. Clear and robust governance


A defi ning moment

The past two years of turbulence and uncertainty have been tough for E&M companies. But the most lasting legacy of the downturn may well prove to be its role in accelerating the pace of digital transformation, bringing with it new—and more-profound—challenges.

The industry is currently at a defi ning moment of reevaluation and redefi nition of its business models in ways that will ultimately redraw the value chain. Media companies that identify their optimal places in that network and that move quickly to diversify their revenues, to increase scale when appropriate, and to reshape their operating models in order to realize that positioning will be well-placed to succeed.

will need to clarify and deepen their understanding of their own operating models. This means focusing on the aspects within their models that are essential to the success of their businesses and that support alignment with strategies. In some cases, radical overhaul will be needed, including a review of existing skill sets and the alignment of rewards and strategic intent through revised key performance indicators. In almost all cases, the complexity that has been built up over a number of years of acquisitions and cost reduction initiatives will need to be removed for those ambitious—and vital—strategic aims to be fully realized.

Seven critical success factors for operating in the new value chain

While desirable content, a cohesive strategy, and stringent execution will always be important, we have identifi ed seven success factors we believe will facilitate each organization’s transition to its optimal place in the new digital value chain.

1. Strategic fl exibility. In practice, the ability to identify and realize opportunities for diversifying revenue whether by service, model, customer, geographic market, and/or maturity of proposition.

2. Delivery of engagement and relationship with the customer through the consumption experience. For example, in cinema or DVD rental, the relationship defi ned around experience with fi lm across platforms, which was previously defi ned by channel.

3. Economies of scale and scope. Driving synergies hard between different activities in conglomerates and using digital standards to exploit scale.

4. Speed of decision making and execution, with the appetite to experiment and fail. Requiring the inspiring and empowering of individuals, the devolving of more accountability, and the streamlining of governance to accelerate decisions.

5. Agility in talent management. Attracting and retaining key talent and then aligning and incentivizing individuals to deliver the strategy through objective setting, rewards, and performance management.

6. Ability to monetize brand/rights across platforms. For example, music labels that monetize music events, independent producers who go into talent management, and broadcasters who go into Web TV, leveraging the expertise, branding, and customer data they own and/or can collect.

7. Strong capabilities in partnership structuring and mergers and acquisitions targeting and integration. Amid greater competition for strategic assets than ever before.

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ultimately redraw the value chain. Media companies that

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ultimately redraw the value chain. Media companies that identify their optimal places in that network and that move

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identify their optimal places in that network and that move quickly to diversify their revenues, to increase scale when

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appropriate, and to reshape their operating models in order

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to realize that positioning will be well-placed to succeed.

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to realize that positioning will be well-placed to succeed.

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Seven critical success factors for operating in the new value chain

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Seven critical success factors for operating in the new value chainSeven critical success factors for operating in the new value chain

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In practice, the ability to identify

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In practice, the ability to identify In practice, the ability to identify and realize opportunities for diversifying revenue

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and realize opportunities for diversifying revenue and realize opportunities for diversifying revenue whether by service, model, customer, geographic

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whether by service, model, customer, geographic whether by service, model, customer, geographic market, and/or maturity of proposition.

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market, and/or maturity of proposition.market, and/or maturity of proposition.

Delivery of engagement and relationship

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Delivery of engagement and relationship Delivery of engagement and relationship with the customer through the consumption

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with the customer through the consumption with the customer through the consumption For example, in cinema or DVD rental, FOR P

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For example, in cinema or DVD rental, For example, in cinema or DVD rental, the relationship defi ned around experience with fi lm FOR P

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the relationship defi ned around experience with fi lm the relationship defi ned around experience with fi lm

Speed of decision making and execution, with

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Speed of decision making and execution, with Speed of decision making and execution, with the appetite to experiment and fail.

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the appetite to experiment and fail. the appetite to experiment and fail. the inspiring and empowering of individuals,

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the inspiring and empowering of individuals, the inspiring and empowering of individuals, the devolving of more accountability, and the

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the devolving of more accountability, and the the devolving of more accountability, and the


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Summaries by segment and region

Global industry summary

Global market by segment

Global market by region

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in 2009. We expect spending to increase by 4.6 percent compounded annually to $581 billion in 2014. Spending in Asia Pacifi c increased by 1.3 percent in 2009 and will average 6.4 percent compounded annually through 2014, rising to $475 billion in 2014 from $348 billion in 2009. Excluding Japan, Asia Pacifi c will increase at a projected 9.2 percent compound annual rate during the next fi ve years. The market in Latin America rose by 3.9 percent in 2009 and will expand at an 8.8 percent compound annual rate during the next fi ve years from $50 billion to $77 billion in 2014.

There were 12 countries in 2009 with E&M spending above $20 billion, led by the United States at $428 billion and Japan at $164 billion. Germany, the People’s Republic of China (PRC), and the United Kingdom were each above $70 billion. Of the leading countries, the PRC will be by far the fastest growing, with a projected 12.0 percent compound annual increase, fueled by a vibrant economy and large gains in broadband that in turn will propel other segments. The PRC will pass Germany in 2011 to become the third-largest country and will reach the $100-billion level in 2012. Germany will become the only other country to generate $100 billion in E&M spending by 2014. Brazil will be the next fastest-growing country of the top 12, with a projected 8.7 percent compound annual increase,

The next three sections provide a brief overview of the overall entertainment and media (E&M) industry, spending by segment, and spending by region. These sections summarize the data provided in the full Global entertainment and media outlook: 2010–2014 but do not approach the depth or granularity of the full Outlook. The full Outlook contains around 500 tables and more than 100,000 data points that go well beyond the data provided in the Industry Overview.

In addition to the full range of data not available elsewhere, each chapter in the full Outlook provides an analysis of the industry drivers for each region, including developments in selected countries that illustrate the drivers and trends.

Industry size and expected growth

We project the entertainment and media industry in North America, EMEA (Europe, Middle East, Africa), Asia Pacifi c, and Latin America will increase from $1.3 trillion in 2009 to $1.7 trillion in 2014, growing at a compound annual rate of 5.0 percent. North America will be the slowest-growing region, with a 3.9 percent compound annual increase. After falling by 6.8 percent to $460 billion in 2009, spending will rise to $558 billion in 2014. EMEA, the largest region, at $463 billion in 2009, declined by 2.8 percent

Global industry summary

Global entertainment and media market by region (US$ millions)

Region 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

North America 461,873 484,406 500,920 494,203 460,457 465,880 479,989 503,923 527,406 557,756

% Change 3.9 4.9 3.4 –1.3 –6.8 1.2 3.0 5.0 4.7 5.8 3.9

EMEA 405,277 430,440 461,715 475,951 462,772 471,602 489,715 515,853 547,932 580,814

% Change 5.5 6.2 7.3 3.1 –2.8 1.9 3.8 5.3 6.2 6.0 4.6

Asia Pacifi c 273,701 295,875 322,009 343,579 348,172 365,656 388,223 414,574 443,878 474,913

% Change 11.3 8.1 8.8 6.7 1.3 5.0 6.2 6.8 7.1 7.0 6.4

Latin America 33,410 37,982 43,930 48,616 50,489 53,436 57,680 63,463 69,706 76,815

% Change 12.3 13.7 15.7 10.7 3.9 5.8 7.9 10.0 9.8 10.2 8.8

Total 1,174,261 1,248,703 1,328,574 1,362,349 1,321,890 1,356,574 1,415,607 1,497,813 1,588,922 1,690,298

% Change 6.3 6.3 6.4 2.5 –3.0 2.6 4.4 5.8 6.1 6.4 5.0


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annual rate during the next fi ve years from $50 billion to

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annual rate during the next fi ve years from $50 billion to

There were 12 countries in 2009 with E&M spending above

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$20 billion, led by the United States at $428 billion and

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Japan at $164 billion. Germany, the People’s Republic of

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Japan at $164 billion. Germany, the People’s Republic of China (PRC), and the United Kingdom were each above

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China (PRC), and the United Kingdom were each above $70 billion. Of the leading countries, the PRC will be by

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$70 billion. Of the leading countries, the PRC will be by far the fastest growing, with a projected 12.0 percent

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far the fastest growing, with a projected 12.0 percent compound annual increase, fueled by a vibrant economy

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compound annual increase, fueled by a vibrant economy and large gains in broadband that in turn will propel other

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and large gains in broadband that in turn will propel other segments. The PRC will pass Germany in 2011 to become

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segments. The PRC will pass Germany in 2011 to become the third-largest country and will reach the $100-billion

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the third-largest country and will reach the $100-billion level in 2012. Germany will become the only other country

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level in 2012. Germany will become the only other country to generate $100 billion in E&M spending by 2014. Brazil

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to generate $100 billion in E&M spending by 2014. Brazil will be the next fastest-growing country of the top 12,

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will be the next fastest-growing country of the top 12, spending will rise to $558 billion in 2014. EMEA, the largest

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spending will rise to $558 billion in 2014. EMEA, the largest

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region, at $463 billion in 2009, declined by 2.8 percent

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region, at $463 billion in 2009, declined by 2.8 percent

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Global entertainment and media market by region (US$ millions)

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Global entertainment and media market by region (US$ millions)Global entertainment and media market by region (US$ millions)

2006

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2006

484,406FOR PRESS U

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484,406

4.9FOR PRESS U

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4.9

Industry overview | Global industry summary 29

also the result of a strong economy. Japan will be the slowest growing of the leading countries, at 2.8 percent compounded annually.

Both advertising—which consists of ad spending in media but does not include other brand spending—and consumer/end-user spending are affected by the economy. Advertising is more sensitive to the economy than end-user spending is, and it fell at much steeper rates as the economy weakened. Advertising grew faster than consumer/end-user spending during 2005–06, and we expect it will do so again during 2012–14, when we expect a return to healthy economic growth.

Both E&M components have been growing more slowly than has nominal gross domestic product (GDP) during the past fi ve years, in large part because of the growing share of digital in the overall spending mix. Digital media are less expensive than traditional media. Online ad rates are lower, as are end-user prices. Consequently, the shift in usage from traditional to digital generally leads to a decrease in spending. As a result, growth in the digital share of the market is dampening spending growth, which is why

E&M will continue to grow more slowly than nominal GDP growth during the next fi ve years even once the economy recovers. We expect that pattern to continue until the digital/traditional mix reaches equilibrium.

Top 12 entertainment and media markets (US$ millions)

Country 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

United States 433,842 454,572 469,096 460,997 428,140 433,007 445,756 467,777 488,774 516,515 3.8

Japan 150,975 160,716 166,999 169,298 164,337 166,300 171,202 177,331 183,241 188,873 2.8

Germany 80,563 84,336 87,797 89,089 88,526 89,905 92,359 95,790 99,972 104,054 3.3

China 41,297 47,245 57,496 69,166 75,815 85,268 94,868 106,207 118,989 133,375 12.0

United Kingdom 70,532 72,084 76,269 76,154 73,245 74,187 76,426 79,726 83,768 87,733 3.7

France 55,455 57,938 61,694 63,190 61,938 62,723 64,266 66,748 69,909 72,743 3.3

Italy 38,707 40,591 43,191 43,714 41,989 42,025 43,012 44,868 47,158 49,736 3.4

Canada 28,031 29,834 31,824 33,206 32,317 32,873 34,233 36,146 38,632 41,241 5.0

South Korea 21,634 24,047 26,273 28,076 28,836 30,094 31,822 33,385 34,947 36,501 4.8

Spain 27,126 29,070 30,765 30,248 28,632 28,925 30,461 32,336 34,749 37,395 5.5

Brazil 14,691 16,875 19,776 22,080 23,049 24,317 26,356 29,057 31,791 34,959 8.7

Australia 18,245 18,874 20,815 22,234 21,796 22,576 23,744 24,922 26,356 27,934 5.1


–15

–10

–5

0

5

10

Global consumer/end-user spending

Global advertising

Global nominal GDP

2014201320122011201020092008200720062005

Global E&M advertising, consumer/end-user spending and nominal GDP growth (%)


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the market is dampening spending growth, which is why

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the market is dampening spending growth, which is why

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Top 12 entertainment and media markets (US$ millions)

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Top 12 entertainment and media markets (US$ millions)Top 12 entertainment and media markets (US$ millions)

2006

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2006 2007

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2007

454,572

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454,572 469,096

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469,096

150,975

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150,975 160,716

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160,716

80,563

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80,563 84,336

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84,336

41,297FOR PRESS U

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41,297

70,532FOR PRESS U

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70,532FOR PRESS U

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–15

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2005

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2005


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are projected as the economy improves. Increased broadband penetration will boost wired access, while growing smartphone penetration and wireless network upgrades will drive mobile access. Spending will rise from $228 billion in 2009 to $351 billion in 2014, a 9.0 percent compound annual increase.

Asia Pacifi c had the largest Internet access market, at $93 billion, in 2009, boosted by its large mobile access totals in Japan and South Korea. Because its mobile access market is far more mature than in any other region, Asia Pacifi c will be the slowest-growing region, with a 6.2 percent compound annual increase to $126 billion in 2014. As the mobile market develops in EMEA, that region will overtake Asia Pacifi c in 2013, rising to $135 billion in 2014 from $80 billion in 2009.

Internet access

Internet access is not an entertainment and media segment in itself but is a fee that is paid in order to access content and is a key driver of entertainment and media spending in most segments. Figures do not include purchases of E&M content such as music, videos, or electronic books. Spending on E&M content downloaded over the Internet or through mobile phones is included in the respective entertainment and media segments.

The Internet access market rose by 8.2 percent in 2009, the fi rst single-digit increase in years as the recession slowed growth. With broadband approaching maturity in some countries, we expect growth to remain at high-single-digit levels, although faster increases

Global Internet access spending market: wired and mobile (US$ millions)

Segment 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Internet access: wired and mobile 137,582 161,487 187,324 210,788 228,060 247,453 269,977 295,819 324,129 351,095

% Change 23.9 17.4 16.0 12.5 8.2 8.5 9.1 9.6 9.6 8.3 9.0


Global Internet access spending market: wired and mobile by region (US$ millions)

Region 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

North America 29,380 33,553 38,398 41,355 44,941 49,499 54,614 59,740 64,572 69,426

% Change 9.9 14.2 14.4 7.7 8.7 10.1 10.3 9.4 8.1 7.5 9.1

EMEA 47,195 55,768 64,634 72,674 79,907 87,212 96,410 107,956 121,781 134,578

% Change 18.8 18.2 15.9 12.4 10.0 9.1 10.5 12.0 12.8 10.5 11.0

Asia Pacifi c 57,202 67,208 77,666 88,299 93,433 99,788 106,137 112,882 119,802 126,172

% Change 37.7 17.5 15.6 13.7 5.8 6.8 6.4 6.4 6.1 5.3 6.2

Latin America 3,805 4,958 6,626 8,460 9,779 10,954 12,816 15,241 17,974 20,919

% Change 27.0 30.3 33.6 27.7 15.6 12.0 17.0 18.9 17.9 16.4 16.4

Total 137,582 161,487 187,324 210,788 228,060 247,453 269,977 295,819 324,129 351,095

% Change 23.9 17.4 16.0 12.5 8.2 8.5 9.1 9.6 9.6 8.3 9.0


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totals in Japan and South Korea. Because its mobile

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totals in Japan and South Korea. Because its mobile access market is far more mature than in any other region,

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access market is far more mature than in any other region, Asia Pacifi c will be the slowest-growing region, with a

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6.2 percent compound annual increase to $126 billion in

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2014. As the mobile market develops in EMEA, that region

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will overtake Asia Pacifi c in 2013, rising to $135 billion in

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will overtake Asia Pacifi c in 2013, rising to $135 billion in 2014 from $80 billion in 2009.

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2014 from $80 billion in 2009.

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Global Internet access spending market: wired and mobile (US$ millions)

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Global Internet access spending market: wired and mobile (US$ millions)Global Internet access spending market: wired and mobile (US$ millions)

2009p

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2009p

210,788

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210,788

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228,060

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228,060

12.5

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12.5

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Global Internet access spending market: wired and mobile by region (US$ millions)Global Internet access spending market: wired and mobile by region (US$ millions)

2006

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2006 2007

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2007

33,553

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33,553

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55,768


Except for the small video game advertising market, the Internet and television will be the fastest-growing advertising segments during the next fi ve years, with the Internet overtaking newspapers in 2012 to become the second-largest advertising category, reaching $104 billion by 2014 from $61 billion in 2009. Internet advertising growth slowed to 4.3 percent in 2009. We expect a return to double-digit increases by 2011, with growth averaging 11.4 percent compounded annually for the fi ve-year

Advertising

Advertising is the most cyclically sensitive of the E&M categories, and the recession led to an 11.8 percent decline in 2009. Except for Internet advertising and a developing video game advertising market, each segment declined by double-digit or high-single-digit rates in 2009. We expect a relatively fl at market in 2010, improved growth in 2011, and a return to mid-single-digit gains during 2012–14.

Global advertising by segment (US$ millions)

Segment 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Internet: wired and mobile 25,758 36,734 48,849 58,068 60,558 66,176 73,642 82,535 92,664 103,843

% Change 48.9 42.6 33.0 18.9 4.3 9.3 11.3 12.1 12.3 12.1 11.4

Television 146,170 155,868 162,042 164,189 148,560 156,271 161,901 173,294 181,897 195,689

% Change 3.5 6.6 4.0 1.3 –9.5 5.2 3.6 7.0 5.0 7.6 5.7

Video games 173 655 1,021 1,337 1,554 1,843 2,135 2,388 2,598 2,845

% Change 476.7 278.6 55.9 31.0 16.2 18.6 15.8 11.9 8.8 9.5 12.9

Consumer magazines 32,434 33,582 35,055 34,142 27,573 26,521 26,608 27,264 28,217 29,429

% Change 6.6 3.5 4.4 –2.6 –19.2 –3.8 0.3 2.5 3.5 4.3 1.3

Newspapers 111,634 114,360 113,205 104,307 85,150 80,024 79,700 81,422 84,377 88,105

% Change 3.8 2.4 –1.0 –7.9 –18.4 –6.0 –0.4 2.2 3.6 4.4 0.7

Radio 32,924 33,878 34,123 32,582 27,925 28,440 29,419 30,660 32,131 33,740

% Change 3.0 2.9 0.7 –4.5 –14.3 1.8 3.4 4.2 4.8 5.0 3.9

Out-of-home 24,051 25,758 27,686 27,756 24,079 24,086 24,994 26,377 28,012 29,939

% Change 6.0 7.1 7.5 0.3 –13.2 0.0 3.8 5.5 6.2 6.9 4.5

Directories 31,114 32,828 34,070 33,240 30,037 28,761 28,534 28,595 28,933 29,479

% Change 3.9 5.5 3.8 –2.4 –9.6 –4.2 –0.8 0.2 1.2 1.9 –0.4

Trade magazines 18,708 19,576 20,055 18,945 15,293 13,977 13,710 14,184 14,948 15,982

% Change 8.4 4.6 2.4 –5.5 –19.3 –8.6 –1.9 3.5 5.4 6.9 0.9

Total 418,747 445,085 464,406 459,882 405,582 409,278 421,282 444,091 467,150 497,648

% Change 5.6 6.3 4.3 –1.0 –11.8 0.9 2.9 5.4 5.2 6.5 4.2

Note: Each of television, radio, newspaper, consumer magazine, trade magazine, and directory Web site and mobile advertising is included in the respective segments and in the Internet advertising segment but only once in the overall total.Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

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2010

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20102010 2011

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66,176

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66,17666,176 73,642

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73,64273,642

9.3

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9.39.3

148,560

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148,560 156,271

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156,271156,271

–9.5

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–9.5

1,337

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1,337 1,554

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1,554

31.0

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31.0

35,055

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35,055 34,142

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34,142

4.4

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4.4 –2.6

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–2.6

113,205

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113,205 104,307

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104,307

2.4

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2.4 –1.0

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–1.0

33,878

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33,878 34,123

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34,123

3.0

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3.0 2.9

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2.9

24,051

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24,051 25,758

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25,758

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6.0

31,114FOR PRESS U

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31,114


forecast period as a whole. Television will grow by a projected 5.7 percent compounded annually, benefi ting from an improved economy and share gains from the print media. Advertisers are increasingly using television and the Internet together, and television is often used for driving traffi c to advertisers’ Web sites.

The print media, by contrast, experienced the largest decreases in 2009, with declines in excess of 18 percent for newspapers and 19 percent for consumer and trade magazines. We expect slow growth in the print media during the next fi ve years.

A small video game advertising sector will increase at a 12.9 percent compound annual rate to $2.8 billion in 2014. Out-of-home will grow at an above-average 4.5 percent compound annual rate. Digital billboards are expanding the effective inventory by allowing the same display to be

sold to multiple advertisers. We look for a rebound in radio beginning in 2010 and project a 3.9 percent compound annual increase, while directories will be the only category to be smaller in 2014 than in 2009.

Overall global advertising will increase at a 4.2 percent compound annual rate from $406 billion in 2009 to $498 billion in 2014.

Latin America was the only region to expand advertising spend in 2009, in large part because of high infl ation. North America and EMEA declined at double-digit rates, while Asia Pacifi c fell by 6.3 percent. We expect Asia Pacifi c to rebound in 2010 and to increase at a 6.6 percent compound annual rate. North America and EMEA will remain the weakest segments, while high infl ation will continue to buttress advertising in Latin America.

Global advertising by region (US$ millions)

Region 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

North America 197,899 207,736 208,033 197,526 167,996 167,039 168,275 175,641 181,039 191,080

% Change 3.2 5.0 0.1 –5.1 –14.9 –0.6 0.7 4.4 3.1 5.5 2.6

EMEA 119,251 128,910 139,922 141,620 123,122 123,284 126,539 132,382 139,336 147,863

% Change 6.3 8.1 8.5 1.2 –13.1 0.1 2.6 4.6 5.3 6.1 3.7

Asia Pacifi c 88,644 93,527 98,923 101,785 95,414 98,652 104,801 112,494 121,397 131,138

% Change 8.1 5.5 5.8 2.9 –6.3 3.4 6.2 7.3 7.9 8.0 6.6

Latin America 12,953 14,912 17,528 18,951 19,050 20,303 21,667 23,574 25,378 27,567

% Change 19.6 15.1 17.5 8.1 0.5 6.6 6.7 8.8 7.7 8.6 7.7

Total 418,747 445,085 464,406 459,882 405,582 409,278 421,282 444,091 467,150 497,648

% Change 5.6 6.3 4.3 –1.0 –11.8 0.9 2.9 5.4 5.2 6.5 4.2


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spend in 2009, in large part because of high infl ation.

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spend in 2009, in large part because of high infl ation. North America and EMEA declined at double-digit rates,

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North America and EMEA declined at double-digit rates, while Asia Pacifi c fell by 6.3 percent. We expect Asia

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Pacifi c to rebound in 2010 and to increase at a 6.6 percent

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compound annual rate. North America and EMEA will

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compound annual rate. North America and EMEA will remain the weakest segments, while high infl ation will

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remain the weakest segments, while high infl ation will continue to buttress advertising in Latin America.

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continue to buttress advertising in Latin America.

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2009p

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2009p

197,526

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197,526 167,996

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167,996

–5.1

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–5.1

139,922

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139,922 141,620

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141,620

8.5

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8.5

93,527

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93,527 98,923

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98,923

5.5

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5.5 5.8

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5.8

14,912

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14,912

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Consumer/end-user spending

Global consumer/end-user spending fell by 0.5 percent in 2009 as declines in recorded music, consumer magazines, newspapers, consumer and educational books, and business-to-business publishing offset gains in TV subscriptions and license fees, fi lmed entertainment, and video games. Newspapers will continue to decline in 2010,

and recorded music, consumer magazines, and business-to-business publishing will continue to fall through 2011.

Video games will be the fastest-growing segment during the next fi ve years, with a 10.5 percent compound annual increase, boosted by growth in online and wireless games. TV subscriptions and license fees will be the next fastest, with a projected 6.8 percent increase compounded

Global consumer/end-user spending by segment (US$ millions)

Segment 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

TV subscriptions and license fees 141,885 152,972 166,700 178,320 185,901 195,029 208,205 224,207 240,836 258,130

% Change 8.6 7.8 9.0 7.0 4.3 4.9 6.8 7.7 7.4 7.2 6.8

Recorded music 34,525 33,090 30,579 27,240 26,372 25,919 26,041 26,353 26,965 27,873

% Change –2.9 –4.2 –7.6 –10.9 –3.2 –1.7 0.5 1.2 2.3 3.4 1.1

Filmed entertainment 79,717 81,470 83,282 82,619 85,137 87,385 91,425 96,171 101,829 107,531

% Change –2.7 2.2 2.2 –0.8 3.0 2.6 4.6 5.2 5.9 5.6 4.8

Video games 29,229 33,208 41,851 49,866 50,953 56,325 61,716 68,219 75,493 83,911

% Change 6.3 13.6 26.0 19.2 2.2 10.5 9.6 10.5 10.7 11.2 10.5


% Change 2.9 0.0 0.9 –1.7 –4.1 –2.0 –0.3 0.8 1.3 1.6 0.3

Newspapers 67,785 68,275 69,263 70,416 69,737 69,293 69,652 70,409 71,372 72,528

% Change 1.3 0.7 1.4 1.7 –1.0 –0.6 0.5 1.1 1.4 1.6 0.8

Radio 12,563 13,382 14,242 14,905 15,265 15,772 16,218 16,655 17,240 17,620

% Change 7.4 6.5 6.4 4.7 2.4 3.3 2.8 2.7 3.5 2.2 2.9

Consumer and educational books 102,467 103,653 109,111 109,485 108,201 108,516 110,104 112,613 115,591 118,833

% Change 4.5 1.2 5.3 0.3 –1.2 0.3 1.5 2.3 2.6 2.8 1.9

Business-to-business 103,590 109,922 115,247 113,039 102,780 98,577 98,073 100,016 104,478 110,583

% Change 4.3 6.1 4.8 –1.9 –9.1 –4.1 –0.5 2.0 4.5 5.8 1.5

Total 617,932 642,131 676,844 691,679 688,248 699,843 724,348 757,903 797,643 841,555

% Change 3.6 3.9 5.4 2.2 –0.5 1.7 3.5 4.6 5.2 5.5 4.1


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195,029

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195,029195,029 208,205

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208,205208,205

4.9

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4.94.9

26,372

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26,372 25,919

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25,91925,919

–3.2

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–3.2

82,619

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82,619 85,137

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85,137

–0.8

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–0.8

41,851

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41,851 49,866

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49,866

26.0

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26.0 19.2

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19.2

46,569

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46,569

0.0

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0.0 0.9

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0.9

68,275

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68,275 69,263

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69,263

1.3

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1.3 0.7

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0.7

12,563

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12,563 13,382

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13,382

7.4

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102,467FOR PRESS U

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102,467


rise from $688 billion in 2009 to $842 billion in 2014, a 4.1 percent compound annual increase.

Although lagging North America in advertising, EMEA had the largest consumer/end-user market, at $260 billion, in 2009. Public broadcast license fees contribute to the total in EMEA while cutting into advertising, as a number of the major public broadcasters do not accept advertising. Declines in North America and EMEA in 2009 offset increases in Asia Pacifi c and Latin America. Asia Pacifi c was the fastest-growing region in 2009 and will continue to be the fastest growing during the next fi ve years, with a projected 6.4 percent compound annual increase.

annually, fueled by growth in subscription households, the entrance of telephone companies into TV distribution, and an expanding video-on-demand market once the economy improves. Filmed entertainment will grow at a 4.8 percent compound annual rate, boosted by the proliferation of digital cinemas and 3-D fi lms and by an emerging high-defi nition video market. Radio will rise at a 2.9 percent compound annual rate, the result of an expanding satellite radio market in North America and growing public radio license fees.

The remaining segments will each grow by less than 2 percent compounded annually. Overall spending will

Global consumer/end-user spending by region (US$ millions)

Region 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

North America 234,594 243,117 254,489 255,322 247,520 249,342 257,100 268,542 281,795 297,250

% Change 3.7 3.6 4.7 0.3 –3.1 0.7 3.1 4.5 4.9 5.5 3.7

EMEA 238,831 245,762 257,159 261,657 259,743 261,106 266,766 275,515 286,815 298,373

% Change 2.9 2.9 4.6 1.7 –0.7 0.5 2.2 3.3 4.1 4.0 2.8

Asia Pacifi c 127,855 135,140 145,420 153,495 159,325 167,216 177,285 189,198 202,679 217,603

% Change 4.6 5.7 7.6 5.6 3.8 5.0 6.0 6.7 7.1 7.4 6.4

Latin America 16,652 18,112 19,776 21,205 21,660 22,179 23,197 24,648 26,354 28,329

% Change 4.5 8.8 9.2 7.2 2.1 2.4 4.6 6.3 6.9 7.5 5.5

Total 617,932 642,131 676,844 691,679 688,248 699,843 724,348 757,903 797,643 841,555

% Change 3.6 3.9 5.4 2.2 –0.5 1.7 3.5 4.6 5.2 5.5 4.1

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen AssociatesFOR PRESS U

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increases in Asia Pacifi c and Latin America. Asia Pacifi c

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increases in Asia Pacifi c and Latin America. Asia Pacifi c was the fastest-growing region in 2009 and will continue

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was the fastest-growing region in 2009 and will continue to be the fastest growing during the next fi ve years, with a

FOR PRESS U

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projected 6.4 percent compound annual increase.

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2010

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20102010

247,520

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247,520 249,342

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249,342249,342

–3.1

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259,743

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259,743 261,106

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261,106261,106

1.7

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1.7 –0.7

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153,495

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153,495 159,325

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159,325

7.6

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7.6 5.6

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19,776

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19,776 21,205

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21,205

9.2

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642,131

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642,131 676,844

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676,844

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This section provides a snapshot of trends and forecasts for the 13 industry segments covered in the full Outlook. For each category and subcategory, as well as for

Global market by segment

supplemental categories not shown here, data on a country-by-country basis as well as a discussion of the key drivers can be found in the full Outlook.

Global entertainment and media market (US$ millions)

Segment 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR


% Change 23.9 17.4 16.0 12.5 8.2 8.5 9.1 9.6 9.6 8.3 9.0

Internet advertising: wired and mobile 25,758 36,734 48,849 58,068 60,558 66,176 73,642 82,535 92,664 103,843

% Change 48.9 42.6 33.0 18.9 4.3 9.3 11.3 12.1 12.3 12.1 11.4


% Change 8.6 7.8 9.0 7.0 4.3 4.9 6.8 7.7 7.4 7.2 6.8

TV advertising 146,170 155,868 162,042 164,189 148,560 156,271 161,901 173,294 181,897 195,689

% Change 3.5 6.6 4.0 1.3 –9.5 5.2 3.6 7.0 5.0 7.6 5.7

Recorded music 34,525 33,090 30,579 27,240 26,372 25,919 26,041 26,353 26,965 27,873

% Change –2.9 –4.2 –7.6 –10.9 –3.2 –1.7 0.5 1.2 2.3 3.4 1.1


% Change –2.7 2.2 2.2 –0.8 3.0 2.6 4.6 5.2 5.9 5.6 4.8

Video games 29,402 33,863 42,872 51,203 52,507 58,168 63,851 70,607 78,091 86,756

% Change 6.8 15.2 26.6 19.4 2.5 10.8 9.8 10.6 10.6 11.1 10.6

Consumer magazine publishing 78,605 79,741 81,624 79,931 71,475 69,548 69,522 70,524 72,056 73,975

% Change 4.4 1.4 2.4 –2.1 –10.6 –2.7 0.0 1.4 2.2 2.7 0.7

Newspaper publishing 179,419 182,635 182,468 174,723 154,887 149,317 149,352 151,831 155,749 160,633

% Change 2.8 1.8 –0.1 –4.2 –11.4 –3.6 0.0 1.7 2.6 3.1 0.7

Radio 45,487 47,260 48,365 47,487 43,190 44,212 45,637 47,315 49,371 51,360

% Change 4.2 3.9 2.3 –1.8 –9.0 2.4 3.2 3.7 4.3 4.0 3.5

Out-of-home advertising 24,051 25,758 27,686 27,756 24,079 24,086 24,994 26,377 28,012 29,939

% Change 6.0 7.1 7.5 0.3 –13.2 0.0 3.8 5.5 6.2 6.9 4.5

Consumer and educational book publishing 102,467 103,653 109,111 109,485 108,201 108,516 110,104 112,613 115,591 118,833

% Change 4.5 1.2 5.3 0.3 –1.2 0.3 1.5 2.3 2.6 2.8 1.9


% Change 4.7 5.8 4.3 –2.4 –10.4 –4.6 –0.7 1.8 3.9 5.2 1.0

Total 1,174,261 1,248,703 1,328,574 1,362,349 1,321,890 1,356,574 1,415,607 1,497,813 1,588,922 1,690,298

% Change 6.3 6.3 6.4 2.5 –3.0 2.6 4.4 5.8 6.1 6.4 5.0


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295,819

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295,819295,819

9.6

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9.69.6

73,642

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11.3

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11.311.3

195,029

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195,029195,029 208,205

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208,205208,205

4.9

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4.94.9

156,271

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26,372

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26,372

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82,619

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82,619 85,137

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85,137

2.2

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2.2 –0.8

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–0.8

42,872

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42,872 51,203

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51,203

26.6

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26.6

79,741

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79,741 81,624

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81,624

1.4

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1.4

179,419

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179,419 182,635

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2.8

Industry overview | Global market by segment 37

Internet access

Global Internet access, which includes both wired and mobile access, rose by 8.2 percent in 2009. Penetration by the broadband infrastructure into underserved areas will expand the broadband household base. Broadband pricing will be affected by opposing trends: (1) increased competition that leads to lower prices and (2) proliferation of high-speed broadband options at premium fees that leads to higher prices. On balance, the rate of broadband price declines will moderate.

Approaching broadband saturation in many countries will lead to slower growth in broadband households. Wireless network upgrades, the further rollout of enhanced third-generation cellular wireless services, the launch of fourth-

generation wireless services, and increased penetration by smartphones with touch-screen capabilities will stimulate demand for mobile Internet access.

Wired broadband access will increase at a 7.3 percent compound annual rate to $241 billion in 2014. Global mobile Internet access spending totaled $58.6 billion in 2009, with 66 percent of that total generated by Japan, the People’s Republic of China, and South Korea. Japan alone accounted for 53 percent of global mobile Internet access spending. We expect mobile access will increase to $110.3 billion in 2014, a 13.5 percent compound annual increase. The overall access market will increase at a 9.0 percent compound annual rate to $351 billion in 2014.


Region 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

North America 29,380 33,553 38,398 41,355 44,941 49,499 54,614 59,740 64,572 69,426

% Change 9.9 14.2 14.4 7.7 8.7 10.1 10.3 9.4 8.1 7.5 9.1

EMEA 47,195 55,768 64,634 72,674 79,907 87,212 96,410 107,956 121,781 134,578

% Change 18.8 18.2 15.9 12.4 10.0 9.1 10.5 12.0 12.8 10.5 11.0

Asia Pacifi c 57,202 67,208 77,666 88,299 93,433 99,788 106,137 112,882 119,802 126,172

% Change 37.7 17.5 15.6 13.7 5.8 6.8 6.4 6.4 6.1 5.3 6.2

Latin America 3,805 4,958 6,626 8,460 9,779 10,954 12,816 15,241 17,974 20,919

% Change 27.0 30.3 33.6 27.7 15.6 12.0 17.0 18.9 17.9 16.4 16.4

Total 137,582 161,487 187,324 210,788 228,060 247,453 269,977 295,819 324,129 351,095

% Change 23.9 17.4 16.0 12.5 8.2 8.5 9.1 9.6 9.6 8.3 9.0


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alone accounted for 53 percent of global mobile Internet

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alone accounted for 53 percent of global mobile Internet access spending. We expect mobile access will increase

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access spending. We expect mobile access will increase to $110.3 billion in 2014, a 13.5 percent compound annual

FOR PRESS U

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increase. The overall access market will increase at a

FOR PRESS U

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9.0 percent compound annual rate to $351 billion in 2014.

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Global Internet access spending market: wired and mobile by region (US$ millions)Global Internet access spending market: wired and mobile by region (US$ millions)

2008

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2008 2009p

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2009p

41,355

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41,355 44,941

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44,941

7.7

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7.7

64,634

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64,634 72,674

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72,674

15.9

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15.9

67,208

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67,208 77,666

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77,666

17.5

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17.5

3,805

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3,805 4,958

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4,958

27.0

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27.0

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30.3

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30.3

137,582FOR PRESS U

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137,582 161,487FOR PRESS U

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161,487

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23.9


by contrast, declined by 2.5 percent in 2009, hurt by a drop in classifi ed advertising, the most cyclically sensitive of all advertising categories. Although gaining share from print, online classifi ed advertising was not immune to the effects of the recession. During the next fi ve years, display, classifi ed, and other advertising will advance at an 8.9 percent compound annual rate to $46.2 billion in 2014.

Total global wired Internet advertising will reach $96.2 billion in 2014, a 10.5 percent compound annual increase. Mobile advertising will rise to $7.7 billion in 2014, a 27.7 percent compound annual increase.

Internet advertising will join television in 2014 as the only medium with spending in excess of $100 billion. The Internet is gaining share from the print media and is being used in conjunction with television in advertising campaigns. North America, which has a well-developed broadband market, will be the only region that will not expand at double-digit annual rates during the next fi ve years.

Global Internet access spending market: wired and mobile by component (US$ millions)

Component 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Dial-up 37,064 30,935 28,508 26,526 23,828 20,833 17,741 14,671 11,735 9,633

% Change –10.2 –16.5 –7.8 –7.0 –10.2 –12.6 –14.8 –17.3 –20.0 –17.9 –16.6

Broadband 74,896 94,952 115,245 132,020 145,667 160,244 176,838 195,119 213,947 231,154

% Change 33.3 26.8 21.4 14.6 10.3 10.0 10.4 10.3 9.6 8.0 9.7

Total wired Internet access 111,960 125,887 143,753 158,546 169,495 181,077 194,579 209,790 225,682 240,787

% Change 14.9 12.4 14.2 10.3 6.9 6.8 7.5 7.8 7.6 6.7 7.3

Mobile access 25,622 35,600 43,571 52,242 58,565 66,376 75,398 86,029 98,447 110,308

% Change 89.6 38.9 22.4 19.9 12.1 13.3 13.6 14.1 14.4 12.0 13.5

Total 137,582 161,487 187,324 210,788 228,060 247,453 269,977 295,819 324,129 351,095

% Change 23.9 17.4 16.0 12.5 8.2 8.5 9.1 9.6 9.6 8.3 9.0


Internet advertising

Global Internet advertising, including advertising on Web sites accessed by a computer and mobile sites intended for access by mobile phones, rose by 4.3 percent in 2009, a slowdown from 18.9 percent growth in 2008 and annual gains in excess of 30 percent during 2005–07 but still the best-performing advertising segment in 2009.

Broadband household growth will be the principal driver of wired Internet advertising. Paid search, a format not available in other media, will attract spending to the Internet. In the mobile market, wireless network upgrades, growth in numbers of mobile access subscribers, and increasing penetration by Internet-enabled smartphones will drive mobile advertising.

Paid-search advertising rose by 10.1 percent in 2009, overriding the effects of the recession, and will account for a majority of global wired Internet advertising from 2012, rising to $50 billion in 2014, a 12.2 percent compound annual increase. Display, classifi ed, and other advertising,

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by contrast, declined by 2.5 percent in 2009, hurt by a

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by contrast, declined by 2.5 percent in 2009, hurt by a drop in classifi ed advertising, the most cyclically sensitive

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drop in classifi ed advertising, the most cyclically sensitive of all advertising categories. Although gaining share from

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of all advertising categories. Although gaining share from print, online classifi ed advertising was not immune to

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print, online classifi ed advertising was not immune to

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225,682225,682

7.8

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75,398

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13.6

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13.613.6 14.1

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14.114.1

269,977

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269,977269,977

8.5

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9.19.1

Global Internet advertising, including advertising on Web

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Global Internet advertising, including advertising on Web sites accessed by a computer and mobile sites intended

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sites accessed by a computer and mobile sites intended for access by mobile phones, rose by 4.3 percent in 2009,

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for access by mobile phones, rose by 4.3 percent in 2009, a slowdown from 18.9 percent growth in 2008 and annual

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a slowdown from 18.9 percent growth in 2008 and annual gains in excess of 30 percent during 2005–07 but still the

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gains in excess of 30 percent during 2005–07 but still the best-performing advertising segment in 2009.

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best-performing advertising segment in 2009.

Broadband household growth will be the principal driver

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Broadband household growth will be the principal driver of wired Internet advertising. Paid search, a format not

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of wired Internet advertising. Paid search, a format not available in other media, will attract spending to the

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available in other media, will attract spending to the Internet. In the mobile market, wireless network upgrades, FOR P

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Internet. In the mobile market, wireless network upgrades, growth in numbers of mobile access subscribers, and FOR P

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growth in numbers of mobile access subscribers, and


Global Internet advertising market: wired and mobile by region (US$ millions)

Region 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

North America 13,034 17,726 22,423 25,149 24,646 25,942 27,921 30,303 33,147 36,129

% Change 31.1 36.0 26.5 12.2 –2.0 5.3 7.6 8.5 9.4 9.0 7.9

EMEA 6,561 10,734 15,250 18,686 19,837 22,029 24,793 28,237 32,014 36,247

% Change 58.3 63.6 42.1 22.5 6.2 11.1 12.5 13.9 13.4 13.2 12.8

Asia Pacifi c 5,929 7,977 10,707 13,548 15,261 17,272 19,850 22,732 26,035 29,763

% Change 94.0 34.5 34.2 26.5 12.6 13.2 14.9 14.5 14.5 14.3 14.3

Latin America 234 297 469 685 814 933 1,078 1,263 1,468 1,704

% Change 50.0 26.9 57.9 46.1 18.8 14.6 15.5 17.2 16.2 16.1 15.9

Total 25,758 36,734 48,849 58,068 60,558 66,176 73,642 82,535 92,664 103,843

% Change 48.9 42.6 33.0 18.9 4.3 9.3 11.3 12.1 12.3 12.1 11.4


Global Internet advertising market: wired and mobile by component (US$ millions)

Category 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Wired Internet advertising

Search 10,115 15,232 20,727 25,472 28,049 30,909 34,725 39,286 44,428 49,962

% Change 64.8 50.6 36.1 22.9 10.1 10.2 12.3 13.1 13.1 12.5 12.2

Display, classifi ed, other 15,395 21,046 27,321 31,023 30,253 32,460 35,236 38,574 42,225 46,230

% Change 38.7 36.7 29.8 13.6 –2.5 7.3 8.6 9.5 9.5 9.5 8.9

Total wired Internet advertising 25,510 36,278 48,048 56,495 58,302 63,369 69,961 77,860 86,653 96,192

% Change 48.0 42.2 32.4 17.6 3.2 8.7 10.4 11.3 11.3 11.0 10.5

Mobile advertising 248 456 801 1,573 2,256 2,807 3,681 4,675 6,011 7,651

% Change 293.7 83.9 75.7 96.4 43.4 24.4 31.1 27.0 28.6 27.3 27.7

Total 25,758 36,734 48,849 58,068 60,558 66,176 73,642 82,535 92,664 103,843

% Change 48.9 42.6 33.0 18.9 4.3 9.3 11.3 12.1 12.3 12.1 11.4


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19,850

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19,85019,850 22,732

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22,73222,732

14.9

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1,078

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14.6

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14.614.6 15.5

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66,176

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66,17666,176 73,642

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73,64273,642

4.3

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4.3 9.3

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9.39.3

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Global Internet advertising market: wired and mobile by component (US$ millions)

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Global Internet advertising market: wired and mobile by component (US$ millions)Global Internet advertising market: wired and mobile by component (US$ millions)

2007

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2007 2008

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2008

15,232

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15,232 20,727

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20,727

50.6

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50.6 36.1

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36.1

21,046

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21,046

38.7

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38.7 36.7

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36.7

25,510

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25,510 36,278

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36,278

48.0FOR PRESS U

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48.0



The global television subscription and license fee market increased by 4.3 percent in 2009 to $186 billion. People stayed home to watch television in 2009 and continued to spend on TV subscriptions, which rose by 4.6 percent. Pay-per-view and video-on-demand, by contrast, suffered from the recession because they are the most discretionary aspects of the market. Video-on-demand will benefi t when the economy improves. Public TV license fees are not affected by the economy, and rate hikes led to a 3.9 percent advance in 2009.

Improved economic conditions and enhanced premium services will boost multichannel take-up rates and spending on premium services and video-on-demand during 2012–14. The migration to digital will drive the video-on-demand market, which will cannibalize pay-per-view, although satellite growth will sustain pay-per-view spending. Increased availability of mobile TV will boost the subscriber base, although the market will evolve principally as an advertiser-supported service that will be free to users. Internet protocol television—which contributes to subscription spending, video-on-demand, and pay-per-view—will be the fastest-growing subscription technology in each region. In EMEA, free digital terrestrial television services will limit subscription spending.

Subscription spending will increase at a 7.5 percent compound annual rate to $210.8 billion in 2014. Pay-per-view will total $4.8 billion in 2014, a 0.9 percent compound annual increase. Video-on-demand will rise to $8.3 billion in 2014, a 15.4 percent compound annual increase. Public TV license fees will grow by 1.1 percent annually to $30.9 billion.

The mobile TV market is grappling with whether it should be a subscription-supported service, an ad-supported service, or a hybrid. Although the number of mobile TV subscribers is only a fraction of the number of mobile TV users, growth in that market will drive spending. Mobile TV subscription spending will be the fastest-growing category from a small base, reaching $3.4 billion in 2014. Despite that advance, mobile TV subscriptions will constitute only 1.3 percent of TV subscription and license fee spending in 2014.

We expect the total market, including public TV license fees in EMEA and Asia Pacifi c, to reach $258 billion in 2014, a 6.8 percent compound annual increase from 2009. Fueled principally by large increases in subscription households in India and the PRC, Asia Pacifi c will be the fastest-growing region during the next fi ve years, with a 10.0 percent compound annual increase.

Global TV subscription and license fee market by region (US$ millions)

Region 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

North America 64,139 68,479 73,016 77,071 79,344 82,833 88,339 95,168 101,625 108,827

% Change 7.0 6.8 6.6 5.6 2.9 4.4 6.6 7.7 6.8 7.1 6.5

EMEA 52,902 56,817 62,231 66,325 68,804 71,303 75,092 79,647 84,910 89,646

% Change 8.6 7.4 9.5 6.6 3.7 3.6 5.3 6.1 6.6 5.6 5.4

Asia Pacifi c 19,318 21,453 24,267 26,685 29,223 32,041 35,348 39,095 42,986 47,135

% Change 13.6 11.1 13.1 10.0 9.5 9.6 10.3 10.6 10.0 9.7 10.0

Latin America 5,526 6,223 7,186 8,239 8,530 8,852 9,426 10,297 11,315 12,522

% Change 10.4 12.6 15.5 14.7 3.5 3.8 6.5 9.2 9.9 10.7 8.0

Total 141,885 152,972 166,700 178,320 185,901 195,029 208,205 224,207 240,836 258,130

% Change 8.6 7.8 9.0 7.0 4.3 4.9 6.8 7.7 7.4 7.2 6.8


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view—will be the fastest-growing subscription technology

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view—will be the fastest-growing subscription technology in each region. In EMEA, free digital terrestrial television

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in each region. In EMEA, free digital terrestrial television

be a subscription-supported service, an ad-supported

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be a subscription-supported service, an ad-supported service, or a hybrid. Although the number of mobile TV

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service, or a hybrid. Although the number of mobile TV subscribers is only a fraction of the number of mobile TV

FOR PRESS U

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users, growth in that market will drive spending. Mobile TV

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subscription spending will be the fastest-growing category

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from a small base, reaching $3.4 billion in 2014. Despite

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from a small base, reaching $3.4 billion in 2014. Despite that advance, mobile TV subscriptions will constitute only

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that advance, mobile TV subscriptions will constitute only 1.3 percent of TV subscription and license fee spending

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1.3 percent of TV subscription and license fee spending

We expect the total market, including public TV license

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We expect the total market, including public TV license fees in EMEA and Asia Pacifi c, to reach $258 billion in

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fees in EMEA and Asia Pacifi c, to reach $258 billion in 2014, a 6.8 percent compound annual increase from

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2014, a 6.8 percent compound annual increase from 2009. Fueled principally by large increases in subscription

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2009. Fueled principally by large increases in subscription households in India and the PRC, Asia Pacifi c will be the

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households in India and the PRC, Asia Pacifi c will be the

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fastest-growing region during the next fi ve years, with a

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fastest-growing region during the next fi ve years, with a 10.0 percent compound annual increase.

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10.0 percent compound annual increase.

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Global TV subscription and license fee market by region (US$ millions)

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Global TV subscription and license fee market by region (US$ millions)Global TV subscription and license fee market by region (US$ millions)

2006

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2006

68,479FOR PRESS U

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68,479


Broadcast advertising will rise to $187 billion, a 5.1 percent increase compounded annually. Online television advertising will increase at a 20.4 percent compound annual rate to $6.1 billion in 2014, while mobile television advertising will increase to $2.5 billion, a 34.7 percent increase compounded annually. Total online and mobile television advertising will average 23.6 percent compounded annually, growing to $8.5 billion by 2014.

Television is the largest advertising medium and will gain share from print during the next fi ve years. Television is being used in conjunction with the Internet and will benefi t from broadband expansion and growth in Internet advertising.

Global TV subscription and license fee market by component (US$ millions)

Component 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Subscriptions 110,060 119,217 130,684 140,585 147,097 155,210 166,881 180,973 195,318 210,796

% Change 9.1 8.3 9.6 7.6 4.6 5.5 7.5 8.4 7.9 7.9 7.5

Pay-per-view 3,566 3,995 4,339 4,680 4,560 4,474 4,490 4,565 4,661 4,764

% Change 15.3 12.0 8.6 7.9 –2.6 –1.9 0.4 1.7 2.1 2.2 0.9

Video-on-demand 1,734 2,380 3,258 4,059 4,085 4,557 5,450 6,499 7,417 8,343

% Change 43.1 37.3 36.9 24.6 0.6 11.6 19.6 19.2 14.1 12.5 15.4

Public TV license fees 26,525 27,112 27,801 28,071 29,167 29,629 29,959 30,293 30,857 30,859

% Change 4.1 2.2 2.5 1.0 3.9 1.6 1.1 1.1 1.9 0.0 1.1

Mobile TV — 268 618 925 992 1,159 1,425 1,877 2,583 3,368

% Change — — 130.6 49.7 7.2 16.8 23.0 31.7 37.6 30.4 27.7

Total 141,885 152,972 166,700 178,320 185,901 195,029 208,205 224,207 240,836 258,130

% Change 8.6 7.8 9.0 7.0 4.3 4.9 6.8 7.7 7.4 7.2 6.8


Television advertising

TV advertising fell by 9.5 percent in 2009, the result of the recession and the absence of advertising associated with the Beijing Olympics. A stabilizing economic environment in 2010 will lead to a rebound in television advertising. In addition to the economy, broadcast advertising will benefi t from more channels coming from new or expanded multichannel platforms and rising levels of viewing based on growing high-defi nition penetration. The introduction of Web-enabled TV sets in North America and EMEA and the expansion of online streaming in all regions will fuel online television advertising. Mobile TV rollouts and the shift from subscriber-supported to advertiser-supported services will expand the mobile television advertising market.

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6,4996,499

19.6

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29,959

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1.6

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1.61.6 1.1

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1.11.1

1,159

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1,1591,159

7.2

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7.2 16.8

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16.816.8

185,901

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185,901 195,029

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195,029195,029

4.3

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4.3

TV advertising fell by 9.5 percent in 2009, the result of the

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TV advertising fell by 9.5 percent in 2009, the result of the recession and the absence of advertising associated with

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recession and the absence of advertising associated with the Beijing Olympics. A stabilizing economic environment

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the Beijing Olympics. A stabilizing economic environment in 2010 will lead to a rebound in television advertising.

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in 2010 will lead to a rebound in television advertising. In addition to the economy, broadcast advertising will

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In addition to the economy, broadcast advertising will benefi t from more channels coming from new or expanded

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benefi t from more channels coming from new or expanded multichannel platforms and rising levels of viewing based

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multichannel platforms and rising levels of viewing based on growing high-defi nition penetration. The introduction of FOR P

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on growing high-defi nition penetration. The introduction of FOR PRESS U

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Web-enabled TV sets in North America and EMEA and the FOR PRESS U

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Global television advertising market by region (US$ millions)

Region 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

North America 68,242 72,840 72,610 72,756 64,916 69,062 70,281 75,575 77,554 83,700

% Change 0.3 6.7 –0.3 0.2 –10.8 6.4 1.8 7.5 2.6 7.9 5.2

EMEA 37,251 39,939 43,544 44,315 38,646 39,439 40,440 42,356 44,580 47,417

% Change 6.1 7.2 9.0 1.8 –12.8 2.1 2.5 4.7 5.3 6.4 4.2

Asia Pacifi c 33,919 35,183 36,390 36,841 34,513 36,512 39,186 42,232 45,657 49,226

% Change 4.1 3.7 3.4 1.2 –6.3 5.8 7.3 7.8 8.1 7.8 7.4

Latin America 6,758 7,906 9,498 10,277 10,485 11,258 11,994 13,131 14,106 15,346

% Change 21.9 17.0 20.1 8.2 2.0 7.4 6.5 9.5 7.4 8.8 7.9

Total 146,170 155,868 162,042 164,189 148,560 156,271 161,901 173,294 181,897 195,689

% Change 3.5 6.6 4.0 1.3 –9.5 5.2 3.6 7.0 5.0 7.6 5.7


Global television advertising market by component (US$ millions)

Component 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Broadcast television advertising

Terrestrial television advertising 107,104 113,653 116,084 115,321 101,691 105,665 107,589 113,894 117,080 124,584

% Change –3.2 6.1 2.1 –0.7 –11.8 3.9 1.8 5.9 2.8 6.4 4.1

Multichannel television advertising 33,252 35,626 38,632 40,745 38,983 42,043 44,811 48,651 52,506 56,894

% Change 10.6 7.1 8.4 5.5 –4.3 7.8 6.6 8.6 7.9 8.4 7.9

Total broadcast television advertising† 145,820 154,999 160,494 161,677 145,609 152,692 157,516 167,828 175,029 187,164

% Change 3.3 6.3 3.5 0.7 –9.9 4.9 3.2 6.5 4.3 6.9 5.1

Online and mobile television advertising

Online television advertising 350 852 1,446 2,161 2,397 2,838 3,399 4,100 4,976 6,070

% Change 133.3 143.4 69.7 49.4 10.9 18.4 19.8 20.6 21.4 22.0 20.4

Mobile television advertising NA 17 102 351 554 741 986 1,366 1,892 2,455

% Change — — 500.0 244.1 57.8 33.8 33.1 38.5 38.5 29.8 34.7

Total online and mobile television advertising 350 869 1,548 2,512 2,951 3,579 4,385 5,466 6,868 8,525

% Change 133.3 148.3 78.1 62.3 17.5 21.3 22.5 24.7 25.6 24.1 23.6

Total 146,170 155,868 162,042 164,189 148,560 156,271 161,901 173,294 181,897 195,689

% Change 3.5 6.6 4.0 1.3 –9.5 5.2 3.6 7.0 5.0 7.6 5.7

†Germany is not included in the terrestrial and multichannel fi gures but is included in the total.Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

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45,65745,657

7.8

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11,994

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6.5

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6.56.5

161,901

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161,901161,901

5.2

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5.25.2

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Global television advertising market by component (US$ millions)

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Global television advertising market by component (US$ millions)Global television advertising market by component (US$ millions)

2008

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2008

116,084

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116,084 115,321

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115,321

6.1

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6.1 2.1

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2.1

35,626

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35,626 38,632

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38,632

7.1

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7.1

145,820FOR PRESS U

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145,820 154,999FOR PRESS U

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154,999


Recorded music

The global recorded music market fell by 3.2 percent in 2009, the smallest decline since 2005. In a stunning reversal, Asia Pacifi c reversed a 3.4 percent decrease in 2008 with a 9.0 percent gain in 2009. That gain was due principally to a surge in digital spending in Japan and South Korea. South Korea instituted a new antipiracy program that threatened to cut off Internet access from infringers, leading to a jump in digital spending, which Japan’s digital market doubled. Additionally, because of high piracy rates in a number of countries, legitimate physical spending has been reduced to the point where ongoing declines play less of a role in the total market.

Overall spending on physical formats fell by 12.9 percent, offsetting a 29.3 percent rise in digital formats. Physical distribution will decline in each region because of competition from legitimate digital services and piracy. Declines will moderate as the physical market begins to approach a core level, because many people still prefer music in physical formats.

The digital market will be fueled by new services. In North America and EMEA, streaming services supported by subscriptions or advertising will become important drivers of growth. In Asia Pacifi c and Latin America, new digital stores and online and mobile streaming services will expand the market. Smartphones are driving growth in all regions as users purchase music through app stores and

online digital stores while bypassing wireless carriers to access music. Broadband growth also is expanding the potential digital market.

Digital distribution will increase to $17 billion in 2014, a 16.0 percent compound annual advance. Physical distribution will decline at a 9.8 percent compound annual rate to $10.9 billion in 2014. Globally, digital distribution will pass physical distribution in 2012 and will account for 61 percent of spending in 2014.

The global recorded music market is approaching a turning point. Spending will decrease in 2010 and then begin to rebound as increases in the digital market offset ongoing declines in physical-format spending. Spending for the forecast period as a whole will increase at a 1.1 percent compound annual rate to $28 billion in 2014. Despite that advance, the market in 2014 will remain 19 percent below its level in 2005. Spending on physical distribution will have fallen by a cumulative 66.4 percent from 2005 to 2014.

Asia Pacifi c will continue to be the fastest-growing region, with a 4.3 percent projected increase compounded annually. We expect gains in EMEA during 2012–14 to offset near-term declines, leading to an increase during the next fi ve years. In North America and Latin America, near-term decreases will lead to lower spending in 2014 than in 2009 despite a modest rebound during the latter part of the forecast period.

Global recorded music market by region (US$ millions)

Region 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

North America 13,045 12,390 11,184 9,188 8,016 7,351 7,090 6,965 6,979 7,112

% Change –3.5 –5.0 –9.7 –17.8 –12.8 –8.3 –3.6 –1.8 0.2 1.9 –2.4

EMEA 12,585 11,826 10,635 9,648 9,296 9,111 9,077 9,192 9,414 9,745

% Change –2.9 –6.0 –10.1 –9.3 –3.6 –2.0 –0.4 1.3 2.4 3.5 0.9

Asia Pacifi c 7,996 8,000 7,998 7,727 8,419 8,837 9,263 9,584 9,952 10,384

% Change –1.4 0.1 0.0 –3.4 9.0 5.0 4.8 3.5 3.8 4.3 4.3

Latin America 899 874 762 677 641 620 611 612 620 632

% Change –6.2 –2.8 –12.8 –11.2 –5.3 –3.3 –1.5 0.2 1.3 1.9 –0.3

Total 34,525 33,090 30,579 27,240 26,372 25,919 26,041 26,353 26,965 27,873

% Change –2.9 –4.2 –7.6 –10.9 –3.2 –1.7 0.5 1.2 2.3 3.4 1.1


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61 percent of spending in 2014.

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61 percent of spending in 2014.

The global recorded music market is approaching a turning

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The global recorded music market is approaching a turning point. Spending will decrease in 2010 and then begin to

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rebound as increases in the digital market offset ongoing

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declines in physical-format spending. Spending for the

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declines in physical-format spending. Spending for the forecast period as a whole will increase at a 1.1 percent

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forecast period as a whole will increase at a 1.1 percent compound annual rate to $28 billion in 2014. Despite

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compound annual rate to $28 billion in 2014. Despite that advance, the market in 2014 will remain 19 percent

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that advance, the market in 2014 will remain 19 percent

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The digital market will be fueled by new services. In North

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The digital market will be fueled by new services. In North America and EMEA, streaming services supported by

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America and EMEA, streaming services supported by subscriptions or advertising will become important drivers

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subscriptions or advertising will become important drivers of growth. In Asia Pacifi c and Latin America, new digital

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of growth. In Asia Pacifi c and Latin America, new digital stores and online and mobile streaming services will

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stores and online and mobile streaming services will expand the market. Smartphones are driving growth in all

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expand the market. Smartphones are driving growth in all regions as users purchase music through app stores and

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regions as users purchase music through app stores and

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below its level in 2005. Spending on physical distribution

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below its level in 2005. Spending on physical distribution will have fallen by a cumulative 66.4 percent from 2005

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will have fallen by a cumulative 66.4 percent from 2005 to 2014.

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to 2014.

Asia Pacifi c will continue to be the fastest-growing region,

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Asia Pacifi c will continue to be the fastest-growing region, with a 4.3 percent projected increase compounded

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with a 4.3 percent projected increase compounded

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Global recorded music market by region (US$ millions)

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Global recorded music market by region (US$ millions)Global recorded music market by region (US$ millions)

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2005


Global recorded music market by component (US$ millions)

Component 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Physical distribution 32,398 29,480 25,367 20,971 18,269 16,119 14,371 12,987 11,824 10,885

% Change –6.0 –9.0 –14.0 –17.3 –12.9 –11.8 –10.8 –9.6 –9.0 –7.9 –9.8

Digital distribution 2,127 3,610 5,212 6,269 8,103 9,800 11,670 13,366 15,141 16,988

% Change 96.9 69.7 44.4 20.3 29.3 20.9 19.1 14.5 13.3 12.2 16.0

Total 34,525 33,090 30,579 27,240 26,372 25,919 26,041 26,353 26,965 27,873

% Change –2.9 –4.2 –7.6 –10.9 –3.2 –1.7 0.5 1.2 2.3 3.4 1.1


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DVDs. Meanwhile growing penetration of high-defi nition TV sets will fuel demand for high-defi nition videos, which will buttress physical sell-through.

Growth in kiosks and low-cost rentals will boost rental spending in each region except EMEA. Rental growth will ultimately moderate as competition from video-on-demand and online distribution increases. The convenience of online rental services will boost spending.

Faster broadband speeds, rising levels of broadband penetration, and devices that allow TV viewing will propel a small digital download market. We expect moderating growth in digital downloads during the next two years and then a pickup in growth in 2012, refl ecting the movement in the market—from early adopters to mainstream use, which signifi cantly expands the market.

Piracy will continue to hold down spending, particularly in Asia Pacifi c and Latin America as well as a number of countries in EMEA. During the next fi ve years, we expect the market to expand at a 4.8 percent compound annual rate to $108 billion in 2014.


Filmed entertainment rose by 3.0 percent in 2009, reversing the 0.8 percent decline in 2008 and the only segment to show improvement in 2009. Growth was driven by a 12 percent increase in box offi ce spending that offset a 1.4 percent decline in home video. Box offi ce benefi ted from a strong roster of fi lms and the expansion of 3-D, which attracted large numbers of patrons who were willing to pay premium prices. Key factors affecting the market in any given year are the quality of releases and their appeal to consumers, which are developments we cannot predict. Box offi ce spending will be enhanced by continued growth in 3-D screens and 3-D releases that are proving to be very popular.

The sell-through market, by contrast, fell by 5.9 percent, hurt (1) by the recession, which cut into discretionary spending but not into box offi ce, which appears to benefi t during diffi cult economic times, and (2) by diminished demand for fi lm libraries. We expect the sell-through market to turn around beginning in 2011 as economic conditions improve and as the popular Blu-ray format, the bright spot in sell-through in 2009, offsets declines in

Global fi lmed entertainment market by region (US$ millions)

Region 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

North America 37,155 37,992 38,762 37,845 37,761 38,384 39,711 41,336 43,288 45,301

% Change –1.6 2.3 2.0 –2.4 –0.2 1.6 3.5 4.1 4.7 4.7 3.7

EMEA 23,377 23,422 23,477 23,221 24,261 24,414 25,427 26,747 28,272 29,835

% Change –5.9 0.2 0.2 –1.1 4.5 0.6 4.1 5.2 5.7 5.5 4.2

Asia Pacifi c 17,255 17,922 18,766 19,373 20,684 22,160 23,731 25,372 27,355 29,266

% Change –0.6 3.9 4.7 3.2 6.8 7.1 7.1 6.9 7.8 7.0 7.2

Latin America 1,930 2,134 2,277 2,180 2,431 2,427 2,556 2,716 2,914 3,129

% Change –0.4 10.6 6.7 –4.3 11.5 –0.2 5.3 6.3 7.3 7.4 5.2

Total 79,717 81,470 83,282 82,619 85,137 87,385 91,425 96,171 101,829 107,531

% Change –2.7 2.2 2.2 –0.8 3.0 2.6 4.6 5.2 5.9 5.6 4.8


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Faster broadband speeds, rising levels of broadband

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Faster broadband speeds, rising levels of broadband penetration, and devices that allow TV viewing will propel

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penetration, and devices that allow TV viewing will propel a small digital download market. We expect moderating

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growth in digital downloads during the next two years and

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then a pickup in growth in 2012, refl ecting the movement

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then a pickup in growth in 2012, refl ecting the movement in the market—from early adopters to mainstream use,

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in the market—from early adopters to mainstream use, which signifi cantly expands the market.

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which signifi cantly expands the market.

Piracy will continue to hold down spending, particularly

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Piracy will continue to hold down spending, particularly in Asia Pacifi c and Latin America as well as a number of

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in Asia Pacifi c and Latin America as well as a number of countries in EMEA. During the next fi ve years, we expect

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countries in EMEA. During the next fi ve years, we expect the market to expand at a 4.8 percent compound annual

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the market to expand at a 4.8 percent compound annual rate to $108 billion in 2014.

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rate to $108 billion in 2014. conditions improve and as the popular Blu-ray format,

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conditions improve and as the popular Blu-ray format, the bright spot in sell-through in 2009, offsets declines in

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the bright spot in sell-through in 2009, offsets declines in

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Global fi lmed entertainment market by region (US$ millions)

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Global fi lmed entertainment market by region (US$ millions)Global fi lmed entertainment market by region (US$ millions)

2006

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2006 2007

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2007

37,992

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37,992

–1.6

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–1.6 2.3

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2.3

23,377

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23,377

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23,422

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23,422

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–5.9


important component of the online market, helping expand the demographic base and stimulate spending, which will increase by 21.3 percent compounded annually.

The growth of smartphones with improved graphic capabilities will drive demand for wireless games. At the same time, new application stores that make the purchasing of games more user-friendly will increase the number of gamers willing to purchase games. The growth of third-generation networks, with their faster speeds, will provide an environment that enables wireless games to approach the quality of console games. Wireless games will increase at a 12.3 percent compound annual rate.

The market for PC games fell by 7.4 percent in 2009 and will continue to deteriorate, declining at a 1.8 percent compound annual rate as consumers turn their attention to newer technologies. The growth of massively multiplayer online games, which usually require the retail purchase of a PC game, will partially offset the continuing decline of the retail PC game market.

Video game advertising is emerging as an additional revenue stream. The dynamic in-game advertising

Global fi lmed entertainment market by component (US$ millions)

Component 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Box offi ce 23,888 25,390 26,410 27,377 30,656 32,097 34,226 36,432 39,062 41,665

% Change –4.2 6.3 4.0 3.7 12.0 4.7 6.6 6.4 7.2 6.7 6.3

Home video

Physical sell-through 36,843 36,685 36,530 34,583 32,559 32,065 32,803 34,109 35,928 37,892

% Change –1.8 –0.4 –0.4 –5.3 –5.9 –1.5 2.3 4.0 5.3 5.5 3.1

In-store rentals 17,774 17,855 18,013 17,547 17,939 18,425 18,799 19,154 19,502 19,849

% Change –4.6 0.5 0.9 –2.6 2.2 2.7 2.0 1.9 1.8 1.8 2.0

Online rental subscriptions 1,210 1,510 2,196 2,822 3,550 4,205 4,788 5,277 5,686 6,014

% Change 46.1 24.8 45.4 28.5 25.8 18.5 13.9 10.2 7.8 5.8 11.1

Digital downloads 2 30 133 290 433 593 809 1,199 1,651 2,111

% Change — 1400.0 343.3 118.0 49.3 37.0 36.4 48.2 37.7 27.9 37.3

Home video total 55,829 56,080 56,872 55,242 54,481 55,288 57,199 59,739 62,767 65,866

% Change –2.0 0.4 1.4 –2.9 –1.4 1.5 3.5 4.4 5.1 4.9 3.9

Total 79,717 81,470 83,282 82,619 85,137 87,385 91,425 96,171 101,829 107,531

% Change –2.7 2.2 2.2 –0.8 3.0 2.6 4.6 5.2 5.9 5.6 4.8


Video games

Video games rose by 2.5 percent in 2009, well below the double-digit increases during the prior three years as the recession cut into spending. Console games fell by 5.9 percent, a 24.1-percentage-point reversal from the 18.2 percent increase in 2008. In addition to the impact of the recession, which affected both DVD games and video games, a number of developers delayed releases of high-profi le games that had been previously scheduled for 2009. The games will be released in 2010, which, along with a stronger economy, will contribute to a rebound. We expect that by 2014, the next generation of consoles will begin to be introduced, which will spur renewed growth in console games. Console games will expand at a 5.5 percent compound annual rate.

The online market continues to expand due to the increase in penetration of broadband households and to the increasing popularity of massively multiplayer online games. Microtransactions, whereby gamers buy enhanced tools to improve their performance, are becoming major drivers of online game spending. Casual games are also an

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4.0

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4.04.0

19,154

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SE ONLY19,50219,502

2.0

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SE ONLY2.02.0 1.9

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4,788

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4,7884,788 5,277

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5,2775,277

13.9

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13.913.9

593

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593593 809

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809809

37.0

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37.037.0

54,481

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54,481 55,288

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55,28855,288

–1.4

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–1.4

85,137

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85,137

–0.8

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–0.8 3.0

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3.0

Video games rose by 2.5 percent in 2009, well below the

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Video games rose by 2.5 percent in 2009, well below the

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double-digit increases during the prior three years as

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double-digit increases during the prior three years as the recession cut into spending. Console games fell by

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the recession cut into spending. Console games fell by 5.9 percent, a 24.1-percentage-point reversal from the FOR P

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5.9 percent, a 24.1-percentage-point reversal from the 18.2 percent increase in 2008. In addition to the impact FOR P

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18.2 percent increase in 2008. In addition to the impact of the recession, which affected both DVD games and FOR P

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of the recession, which affected both DVD games and


years, with a 16.3 percent compound annual increase. Online games, the fastest-growing category, constitute 35 percent of the total video game market in Asia Pacifi c compared with only 11 percent for the rest of the world. In the PRC, online games represent 84 percent of the market. Growth in online games in the PRC will account for 40 percent of the total global increase in video game spending during the next fi ve years.

segment is increasing in importance and is being fueled by the growth of the online game market. Advertising will increase by 12.9 percent compounded annually.

We project the overall video game market to expand to $87 billion in 2014, a 10.6 percent compound annual increase. Asia Pacifi c, the largest region in 2009, at $19 billion, will be the fastest growing during the next fi ve

Global video game market by region (US$ millions)

Region 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

North America 8,986 10,235 13,227 16,127 15,142 16,317 17,231 18,249 19,415 20,710

% Change 1.0 13.9 29.2 21.9 –6.1 7.8 5.6 5.9 6.4 6.7 6.5

EMEA 10,433 11,696 14,423 17,013 16,827 18,123 19,151 20,327 21,590 22,953

% Change 8.6 12.1 23.3 18.0 –1.1 7.7 5.7 6.1 6.2 6.3 6.4

Asia Pacifi c 9,436 11,245 14,332 16,961 19,411 22,474 26,087 30,528 35,452 41,337

% Change 11.6 19.2 27.5 18.3 14.4 15.8 16.1 17.0 16.1 16.6 16.3

Latin America 547 687 890 1,102 1,127 1,254 1,382 1,503 1,634 1,756

% Change –5.4 25.6 29.5 23.8 2.3 11.3 10.2 8.8 8.7 7.5 9.3

Total 29,402 33,863 42,872 51,203 52,507 58,168 63,851 70,607 78,091 86,756

% Change 6.8 15.2 26.6 19.4 2.5 10.8 9.8 10.6 10.6 11.1 10.6


Global video game market by component (US$ millions)

Component 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Console games 18,324 19,751 25,344 29,951 28,169 30,000 31,334 32,873 34,674 36,774

% Change –2.9 7.8 28.3 18.2 –5.9 6.5 4.4 4.9 5.5 6.1 5.5

Online games 3,887 5,274 7,270 9,608 11,655 14,127 17,068 20,781 25,258 30,593

% Change 50.7 35.7 37.8 32.2 21.3 21.2 20.8 21.8 21.5 21.1 21.3

Wireless games 2,558 3,603 4,799 6,188 7,313 8,467 9,642 10,957 12,021 13,061

% Change 68.8 40.9 33.2 28.9 18.2 15.8 13.9 13.6 9.7 8.7 12.3

PC games 4,460 4,580 4,438 4,119 3,816 3,731 3,672 3,608 3,540 3,483

% Change –1.8 2.7 –3.1 –7.2 –7.4 –2.2 –1.6 –1.7 –1.9 –1.6 –1.8

Total end-user spending 29,229 33,208 41,851 49,866 50,953 56,325 61,716 68,219 75,493 83,911

% Change 6.3 13.6 26.0 19.2 2.2 10.5 9.6 10.5 10.7 11.2 10.5

Advertising 173 655 1,021 1,337 1,554 1,843 2,135 2,388 2,598 2,845

% Change 476.7 278.6 55.9 31.0 16.2 18.6 15.8 11.9 8.8 9.5 12.9

Total 29,402 33,863 42,872 51,203 52,507 58,168 63,851 70,607 78,091 86,756

% Change 6.8 15.2 26.6 19.4 2.5 10.8 9.8 10.6 10.6 11.1 10.6


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SE ONLY2011

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SE ONLY20112011

16,317

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16,31716,317 17,231

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17,23117,231

7.8

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7.87.8

18,123

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18,12318,123

–1.1

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–1.1 7.7

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7.77.7

19,411

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19,411 22,474

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22,47422,474

18.3

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18.3 14.4

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14.4

1,102

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1,102 1,127

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1,127

23.8

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23.8

42,872

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42,872 51,203

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51,203

26.6

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26.6


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Global video game market by component (US$ millions)

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Global video game market by component (US$ millions)Global video game market by component (US$ millions)

2005

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2005

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18,324FOR PRESS U

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18,324


Broadband household growth and an expanding mobile access market will fuel digital advertising. Rising discretionary income during the latter part of the forecast period will lead to a rebound in circulation spending. We expect digital advertising to rise at an 18.5 percent compound annual rate to $3 billion in 2014, while print advertising will edge up at a 0.1 percent compound annual rate to $26.4 billion in 2014. Total advertising will increase by 1.3 percent compounded annually during the next fi ve years. Circulation spending will decline through 2011 and then will expand to $44.5 billion by 2014, a 0.3 percent compound annual increase.

We project consumer magazine publishing to expand at a 0.7 percent compound annual rate to $74 billion in 2014. Latin America will be the fastest-growing region during the next fi ve years, with a projected 5.1 percent compound annual increase. Magazines face less competition from the Internet in Latin America than they do in other regions, which will help publishers hold on to their market.

Consumer magazine publishing

Consumer magazine publishing, a cyclically sensitive segment, declined by 10.6 percent in 2009, hurt by the recession as print advertising plunged by 20 percent. We expect the market to remain weak during the next two years. Improved economic conditions will lead to a modest recovery during 2012–14.

Migration of readers to the Internet will hurt print advertising, particularly news and gossip titles where real-time information available online reduces demand for print. Special-interest titles will be less vulnerable to online competition. Print advertising will not approach prior levels during the forecast period because of the ongoing shift of readers and advertisers to the Internet. Electronic readers and the establishment of digital newsstands will generate incremental circulation revenue during the latter part of the forecast period. Magazines are losing advertising share to television and the Internet.

Global consumer magazine publishing market by region (US$ millions)

Region 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

North America 24,533 24,394 25,308 24,478 21,375 20,513 20,160 20,204 20,496 20,948

% Change 3.8 –0.6 3.7 –3.3 –12.7 –4.0 –1.7 0.2 1.4 2.2 –0.4

EMEA 35,037 35,695 36,387 35,614 32,014 31,214 31,113 31,447 31,951 32,636

% Change 2.6 1.9 1.9 –2.1 –10.1 –2.5 –0.3 1.1 1.6 2.1 0.4

Asia Pacifi c 16,477 16,841 16,811 16,598 15,025 14,660 14,937 15,367 15,902 16,465

% Change 8.6 2.2 –0.2 –1.3 –9.5 –2.4 1.9 2.9 3.5 3.5 1.8

Latin America 2,558 2,811 3,118 3,241 3,061 3,161 3,312 3,506 3,707 3,926

% Change 10.3 9.9 10.9 3.9 –5.6 3.3 4.8 5.9 5.7 5.9 5.1

Total 78,605 79,741 81,624 79,931 71,475 69,548 69,522 70,524 72,056 73,975

% Change 4.4 1.4 2.4 –2.1 –10.6 –2.7 0.0 1.4 2.2 2.7 0.7


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years. Circulation spending will decline through 2011 and

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years. Circulation spending will decline through 2011 and then will expand to $44.5 billion by 2014, a 0.3 percent

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then will expand to $44.5 billion by 2014, a 0.3 percent compound annual increase.

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We project consumer magazine publishing to expand at a

FOR PRESS U

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0.7 percent compound annual rate to $74 billion in 2014.

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0.7 percent compound annual rate to $74 billion in 2014. Latin America will be the fastest-growing region during the

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Latin America will be the fastest-growing region during the next fi ve years, with a projected 5.1 percent compound

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next fi ve years, with a projected 5.1 percent compound annual increase. Magazines face less competition from

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annual increase. Magazines face less competition from the Internet in Latin America than they do in other regions,

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the Internet in Latin America than they do in other regions, which will help publishers hold on to their market.

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which will help publishers hold on to their market.

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Global consumer magazine publishing market by region (US$ millions)

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Global consumer magazine publishing market by region (US$ millions)Global consumer magazine publishing market by region (US$ millions)

2008

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2008 2009p

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2009p

25,308

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25,308 24,478

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24,478

3.7

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3.7 –3.3

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–3.3

36,387

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36,387

1.9

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1.9 1.9

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1.9

16,841

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16,841 16,811

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16,811

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2,811


distribution to mobile devices will generate incremental revenue streams in North America, EMEA, and Asia Pacifi c. Overall circulation spending will increase at an 0.8 percent compound annual rate.

Rising Web site traffi c will boost digital advertising by 7.6 percent compounded annually. The overall newspaper market will rise to $161 billion in 2014, a 0.7 compound annual increase. As with consumer magazines, newspaper publishers face less competition from the Internet in Latin America than they do in other regions. We expect Latin America to grow at a 5.1 percent compound annual rate. Asia Pacifi c also has a relatively healthy newspaper market, boosted by growth in unit circulation in India and the PRC. We project Asia Pacifi c to increase by 2.3 percent compounded annually during the next fi ve years.

Newspaper publishing

Newspaper publishing fell by 11.4 percent in 2009, the result of a 19.1 percent drop in print advertising. We expect a further, 7.4 percent decline in print advertising during the next two years. Print advertising in 2011 will be 32 percent lower than in 2006. Migration of readers to the Internet will cut into advertising and circulation growth even once the economy improves. Newspapers will continue to lose classifi ed advertising share to the Internet. Print advertising will be 0.1 percent higher on a compound annual basis in 2014 compared with 2009.

Declines in paid unit circulation in North America and EMEA will adversely affect circulation spending, while rising unit circulation in Latin America and Asia Pacifi c will boost paid circulation spending. Paid online content and

Global consumer magazine publishing market by component (US$ millions)

Component 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Print advertising 32,306 33,205 34,374 32,834 26,268 25,067 24,870 25,121 25,639 26,381

% Change 6.2 2.8 3.5 –4.5 –20.0 –4.6 –0.8 1.0 2.1 2.9 0.1

Digital advertising 128 377 681 1,308 1,305 1,454 1,738 2,143 2,578 3,048

% Change — 194.5 80.6 92.1 –0.2 11.4 19.5 23.3 20.3 18.2 18.5

Total advertising 32,434 33,582 35,055 34,142 27,573 26,521 26,608 27,264 28,217 29,429

% Change 6.6 3.5 4.4 –2.6 –19.2 –3.8 0.3 2.5 3.5 4.3 1.3

Circulation 46,171 46,159 46,569 45,789 43,902 43,027 42,914 43,260 43,839 44,546

% Change 2.9 0.0 0.9 –1.7 –4.1 –2.0 –0.3 0.8 1.3 1.6 0.3

Total 78,605 79,741 81,624 79,931 71,475 69,548 69,522 70,524 72,056 73,975

% Change 4.4 1.4 2.4 –2.1 –10.6 –2.7 0.0 1.4 2.2 2.7 0.7


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distribution to mobile devices will generate incremental

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distribution to mobile devices will generate incremental revenue streams in North America, EMEA, and Asia

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revenue streams in North America, EMEA, and Asia Newspaper publishing fell by 11.4 percent in 2009, the

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Newspaper publishing fell by 11.4 percent in 2009, the result of a 19.1 percent drop in print advertising. We

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result of a 19.1 percent drop in print advertising. We expect a further, 7.4 percent decline in print advertising

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expect a further, 7.4 percent decline in print advertising during the next two years. Print advertising in 2011 will

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during the next two years. Print advertising in 2011 will be 32 percent lower than in 2006. Migration of readers

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be 32 percent lower than in 2006. Migration of readers to the Internet will cut into advertising and circulation

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to the Internet will cut into advertising and circulation growth even once the economy improves. Newspapers will

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growth even once the economy improves. Newspapers will continue to lose classifi ed advertising share to the Internet.

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continue to lose classifi ed advertising share to the Internet. Print advertising will be 0.1 percent higher on a compound

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Print advertising will be 0.1 percent higher on a compound annual basis in 2014 compared with 2009.

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annual basis in 2014 compared with 2009.

Declines in paid unit circulation in North America and FOR PRESS U

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Declines in paid unit circulation in North America and FOR PRESS U

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26,608

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26,60826,608 27,264

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27,26427,264

0.3

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42,914

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–2.0

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–2.0–2.0 –0.3

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69,548

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69,54869,548 69,522

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69,52269,522

–10.6

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–10.6 –2.7

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–2.7–2.7


Global newspaper publishing market by region (US$ Millions)

Region 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

North America 63,268 62,951 58,865 50,999 39,181 34,564 33,154 32,958 33,483 34,295

% Change 1.7 –0.5 –6.5 –13.4 –23.2 –11.8 –4.1 –0.6 1.6 2.4 –2.6

EMEA 62,792 64,398 66,199 65,020 59,008 57,828 58,190 59,024 60,218 61,900

% Change 3.3 2.6 2.8 –1.8 –9.2 –2.0 0.6 1.4 2.0 2.8 1.0

Asia Pacifi c 48,842 50,351 51,893 52,874 50,840 50,831 51,646 53,142 54,978 56,931

% Change 3.1 3.1 3.1 1.9 –3.8 0.0 1.6 2.9 3.5 3.6 2.3

Latin America 4,517 4,935 5,511 5,830 5,858 6,094 6,362 6,707 7,070 7,507

% Change 8.8 9.3 11.7 5.8 0.5 4.0 4.4 5.4 5.4 6.2 5.1

Total 179,419 182,635 182,468 174,723 154,887 149,317 149,352 151,831 155,749 160,633

% Change 2.8 1.8 –0.1 –4.2 –11.4 –3.6 0.0 1.7 2.6 3.1 0.7


Global newspaper publishing market by component (US$ millions)

Component 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR


% Change 2.5 1.4 –2.1 –8.7 –19.1 –6.6 –0.9 1.7 3.1 3.7 0.1

Digital advertising 2,944 4,166 5,354 5,804 5,479 5,605 5,957 6,449 7,046 7,892

% Change 91.0 41.5 28.5 8.4 –5.6 2.3 6.3 8.3 9.3 12.0 7.6


% Change 3.8 2.4 –1.0 –7.9 –18.4 –6.0 –0.4 2.2 3.6 4.4 0.7

Circulation 67,785 68,275 69,263 70,416 69,737 69,293 69,652 70,409 71,372 72,528

% Change 1.3 0.7 1.4 1.7 –1.0 –0.6 0.5 1.1 1.4 1.6 0.8

Total 179,419 182,635 182,468 174,723 154,887 149,317 149,352 151,831 155,749 160,633

% Change 2.8 1.8 –0.1 –4.2 –11.4 –3.6 0.0 1.7 2.6 3.1 0.7


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2.9

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6,362

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4.4

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4.44.4

149,352

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149,352149,352

–3.6

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0.00.0

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Global newspaper publishing market by component (US$ millions)

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Global newspaper publishing market by component (US$ millions)Global newspaper publishing market by component (US$ millions)

2008

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2008 2009p

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2009p

98,503

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98,503

–2.1

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–2.1 –8.7

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–8.7

5,354

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5,354 5,804

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5,804

28.5

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28.5

114,360

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114,360 113,205

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113,205

2.4

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2.4

68,275FOR PRESS U

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68,275


maintain the radio markets in Asia Pacifi c and EMEA. Public radio license fees will rise at a 1.2 percent annual rate to $13.5 billion in 2014. Satellite radio subscriptions will be the fastest-growing component, averaging 10.0 percent compounded annually to $4.1 billion.

The market as a whole will total $51 billion in 2014, growing at a 3.5 percent compound annual rate from 2009. We expect India to have the fastest-growing radio market in the world, with a projected 17.0 percent compound annual increase. The government is expected to issue an additional 600 radio licenses. Listening is up, and advertising is surging.

Radio

The radio market fell by 9.0 percent in 2009 as the recession led to a 14.3 percent decrease in radio advertising. Advertising is beginning to turn around, and we project a 1.8 percent increase in 2010, with stronger gains thereafter. Global radio advertising will increase by 3.9 percent compounded annually to $33.7 billion in 2014. Many broadcasters are exploring ways to expand their exposure through digital radio and Internet radio, but these alternatives are not expected to be major sources of revenue for some years.

Satellite radio will boost spending in North America, while modest increases in public radio license fees will help

Global radio market by region (US$ millions)

Region 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

North America 21,743 22,498 22,674 21,390 18,174 18,913 19,772 20,696 21,691 22,721

% Change 3.6 3.5 0.8 –5.7 –15.0 4.1 4.5 4.7 4.8 4.7 4.6

EMEA 16,162 16,686 17,333 17,344 16,417 16,404 16,532 16,787 17,257 17,595

% Change 4.1 3.2 3.9 0.1 –5.3 –0.1 0.8 1.5 2.8 2.0 1.4

Asia Pacifi c 6,766 7,170 7,306 7,634 7,449 7,657 7,991 8,358 8,800 9,250

% Change 4.9 6.0 1.9 4.5 –2.4 2.8 4.4 4.6 5.3 5.1 4.4

Latin America 816 906 1,052 1,119 1,150 1,238 1,342 1,474 1,623 1,794

% Change 17.7 11.0 16.1 6.4 2.8 7.7 8.4 9.8 10.1 10.5 9.3

Total 45,487 47,260 48,365 47,487 43,190 44,212 45,637 47,315 49,371 51,360

% Change 4.2 3.9 2.3 –1.8 –9.0 2.4 3.2 3.7 4.3 4.0 3.5

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen AssociatesFOR P

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NLYin the world, with a projected 17.0 percent compound

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in the world, with a projected 17.0 percent compound annual increase. The government is expected to issue

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annual increase. The government is expected to issue an additional 600 radio licenses. Listening is up, and

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SE ONLYan additional 600 radio licenses. Listening is up, and

advertising is surging.

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2009p

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2009p

21,390

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21,390 18,174

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18,174

–5.7

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–5.7

17,333

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17,333 17,344

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17,344

3.9

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3.9

7,306

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7,306

6.0

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6.0 1.9

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1.9

906

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906

17.7

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17.7 11.0

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11.0

45,487

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45,487 47,260

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47,260

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4.2


generating greater revenues compared with traditional billboards—will spur the growth in the out-of-home market. Improved out-of-home audience measurement will attract advertisers, and the expansion of captive video networks will also fuel growth. We expect out-of-home advertising to expand at a 4.5 percent compound annual rate during the next fi ve years to $30 billion in 2014.

Global radio market by component (US$ millions)

Component 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Radio advertising 32,924 33,878 34,123 32,582 27,925 28,440 29,419 30,660 32,131 33,740

% Change 3.0 2.9 0.7 –4.5 –14.3 1.8 3.4 4.2 4.8 5.0 3.9

Public radio license fees 11,804 12,022 12,329 12,490 12,726 12,903 13,028 13,169 13,459 13,527

% Change 3.6 1.8 2.6 1.3 1.9 1.4 1.0 1.1 2.2 0.5 1.2

Satellite radio subscriptions 759 1,360 1,913 2,415 2,539 2,869 3,190 3,486 3,781 4,093

% Change 157.3 79.2 40.7 26.2 5.1 13.0 11.2 9.3 8.5 8.3 10.0

Total 45,487 47,260 48,365 47,487 43,190 44,212 45,637 47,315 49,371 51,360

% Change 4.2 3.9 2.3 –1.8 –9.0 2.4 3.2 3.7 4.3 4.0 3.5



Out-of-home advertising fell by 13.2 percent in 2009 as the recession led to cutbacks in spending. We expect the market to stabilize in 2010 and begin to expand in 2011 as economic conditions improve. Digital billboards that expand the effective out-of-home inventory—because multiple ads can be shown on the same display,

Global out-of-home advertising market by region (US$ millions)

Region 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

North America 6,602 7,129 7,694 7,395 6,366 6,121 6,305 6,625 7,022 7,465

% Change 8.2 8.0 7.9 –3.9 –13.9 –3.8 3.0 5.1 6.0 6.3 3.2

EMEA 8,287 9,025 9,709 9,907 8,127 8,161 8,317 8,635 9,005 9,503

% Change 6.9 8.9 7.6 2.0 –18.0 0.4 1.9 3.8 4.3 5.5 3.2

Asia Pacifi c 8,412 8,736 9,354 9,459 8,562 8,695 9,164 9,799 10,546 11,412

% Change 2.2 3.9 7.1 1.1 –9.5 1.6 5.4 6.9 7.6 8.2 5.9

Latin America 750 868 929 995 1,024 1,109 1,208 1,318 1,439 1,559

% Change 23.8 15.7 7.0 7.1 2.9 8.3 8.9 9.1 9.2 8.3 8.8

Total 24,051 25,758 27,686 27,756 24,079 24,086 24,994 26,377 28,012 29,939

% Change 6.0 7.1 7.5 0.3 –13.2 0.0 3.8 5.5 6.2 6.9 4.5


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generating greater revenues compared with traditional

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generating greater revenues compared with traditional billboards—will spur the growth in the out-of-home

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billboards—will spur the growth in the out-of-home market. Improved out-of-home audience measurement

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market. Improved out-of-home audience measurement will attract advertisers, and the expansion of captive video

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will attract advertisers, and the expansion of captive video networks will also fuel growth. We expect out-of-home

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networks will also fuel growth. We expect out-of-home advertising to expand at a 4.5 percent compound annual

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advertising to expand at a 4.5 percent compound annual rate during the next fi ve years to $30 billion in 2014.

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rate during the next fi ve years to $30 billion in 2014.

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3,486

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3,4863,486

9.3

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45,637

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SE ONLY45,63745,637 47,315

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SE ONLY47,31547,315

3.2

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because multiple ads can be shown on the same display,

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because multiple ads can be shown on the same display,

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Global out-of-home advertising market by region (US$ millions)

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Global out-of-home advertising market by region (US$ millions)Global out-of-home advertising market by region (US$ millions)

2006

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2006 2007

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2007

7,129

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7,129

8.0FOR PRESS U

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8.0


Global consumer and educational book publishing market by region (US$ millions)

Region 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

North America 32,110 31,544 33,670 32,484 32,665 33,099 33,823 34,830 35,887 36,943

% Change 7.3 –1.8 6.7 –3.5 0.6 1.3 2.2 3.0 3.0 2.9 2.5

EMEA 44,719 45,031 46,156 46,221 45,055 44,644 44,950 45,666 46,668 47,840

% Change 3.1 0.7 2.5 0.1 –2.5 –0.9 0.7 1.6 2.2 2.5 1.2

Asia Pacifi c 23,258 24,631 26,768 28,108 27,866 28,142 28,652 29,369 30,207 31,117

% Change 3.7 5.9 8.7 5.0 –0.9 1.0 1.8 2.5 2.9 3.0 2.2

Latin America 2,380 2,447 2,517 2,672 2,615 2,631 2,679 2,748 2,829 2,933

% Change 2.5 2.8 2.9 6.2 –2.1 0.6 1.8 2.6 2.9 3.7 2.3

Total 102,467 103,653 109,111 109,485 108,201 108,516 110,104 112,613 115,591 118,833

% Change 4.5 1.2 5.3 0.3 –1.2 0.3 1.5 2.3 2.6 2.8 1.9


while college textbooks have a countercyclical element and will benefi t from people returning to college to improve their job prospects while employment opportunities are limited. We expect print educational books to decrease in 2010 and then expand during the subsequent four years, rising to $41 billion in 2014, a 0.9 percent compound annual gain. Electronic books are growing at the college level, and we project a 36.5 percent compound annual increase during the next fi ve years to $2.4 billion in 2014, boosting overall educational book growth to 1.8 percent compounded annually.

We project total spending to increase at a 1.9 percent compound annual rate to $119 billion in 2014. In contrast with other segments, we expect North America to be the fastest-growing region during the next fi ve years, with a 2.5 percent compound annual increase. New school standards will lead to a rebound in elhi spending in the United States and a rental market for college books emerging in the US. Schools and colleges will also adopt electronic books. Also, in contrast to other segments, we expect educational book spending in the PRC to decline because of falling enrollment.

Consumer and educational book publishing

The consumer and educational book publishing market fell by 1.2 percent in 2009, hurt by the economic downturn that affected print books and audiobooks. An emerging electronic book market rose by 50.4 percent. Electronic books will be fueled by new portable readers in North America and growing smartphone penetration in Asia Pacifi c. EMEA and Latin America do not have signifi cant electronic book markets.

The print consumer market in North America and EMEA will benefi t from digitization projects that allow electronic browsing and that raise awareness of titles. In all regions, improving economic conditions will boost consumer and educational book spending. We expect print consumer books to increase by 1.3 percent compounded annually to $72 billion. Consumer electronic book sales will grow at a 23.3 percent compound annual rate from a small base to $3.6 billion in 2014, raising overall consumer book growth to 1.9 percent compounded annually.

Among educational books, elementary and high school textbooks are the most cyclically sensitive component,

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Global consumer and educational book publishing market by region (US$ millions)

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Global consumer and educational book publishing market by region (US$ millions)Global consumer and educational book publishing market by region (US$ millions)

2006

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2006 2007

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2007

31,544

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31,544 33,670

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33,670

7.3

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7.3 –1.8

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–1.8

44,719

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44,719 45,031

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45,031

3.1FOR PRESS U

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3.1

23,258FOR PRESS U

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23,258

boosting overall educational book growth to 1.8 percent

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boosting overall educational book growth to 1.8 percent compounded annually.

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compounded annually.

We project total spending to increase at a 1.9 percent

FOR PRESS U

SE ONLYWe project total spending to increase at a 1.9 percent

compound annual rate to $119 billion in 2014. In contrast

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SE ONLYcompound annual rate to $119 billion in 2014. In contrast

with other segments, we expect North America to be the

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with other segments, we expect North America to be the fastest-growing region during the next fi ve years, with

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fastest-growing region during the next fi ve years, with a 2.5 percent compound annual increase. New school

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a 2.5 percent compound annual increase. New school standards will lead to a rebound in elhi spending in the

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standards will lead to a rebound in elhi spending in the United States and a rental market for college books

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United States and a rental market for college books emerging in the US. Schools and colleges will also adopt

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emerging in the US. Schools and colleges will also adopt electronic books. Also, in contrast to other segments, we

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electronic books. Also, in contrast to other segments, we expect educational book spending in the PRC to decline

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expect educational book spending in the PRC to decline because of falling enrollment.

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because of falling enrollment. Among educational books, elementary and high school

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Among educational books, elementary and high school textbooks are the most cyclically sensitive component,

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textbooks are the most cyclically sensitive component,


Global consumer and educational book publishing market by component (US$ millions)

Component 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Print/audio consumer books 64,670 65,214 69,300 68,443 67,496 67,536 68,276 69,279 70,553 72,033

% Change 4.8 0.8 6.3 –1.2 –1.4 0.1 1.1 1.5 1.8 2.1 1.3

Print educational books 37,450 37,897 38,972 39,849 38,911 38,470 38,691 39,340 40,010 40,712

% Change 3.7 1.2 2.8 2.3 –2.4 –1.1 0.6 1.7 1.7 1.8 0.9

Total print/audio 102,120 103,111 108,272 108,292 106,407 106,006 106,967 108,619 110,563 112,745

% Change 4.4 1.0 5.0 0.0 –1.7 –0.4 0.9 1.5 1.8 2.0 1.2

Electronic consumer books 161 311 546 821 1,280 1,861 2,253 2,675 3,153 3,649

% Change 96.3 93.2 75.6 50.4 55.9 45.4 21.1 18.7 17.9 15.7 23.3

Electronic educational books 186 231 293 372 514 649 884 1,319 1,875 2,439

% Change 20.0 24.2 26.8 27.0 38.2 26.3 36.2 49.2 42.2 30.1 36.5

Total electronic 347 542 839 1,193 1,794 2,510 3,137 3,994 5,028 6,088

% Change 46.4 56.2 54.8 42.2 50.4 39.9 25.0 27.3 25.9 21.1 27.7

Total consumer 64,831 65,525 69,846 69,264 68,776 69,397 70,529 71,954 73,706 75,682

% Change 4.9 1.1 6.6 –0.8 –0.7 0.9 1.6 2.0 2.4 2.7 1.9

Total educational 37,636 38,128 39,265 40,221 39,425 39,119 39,575 40,659 41,885 43,151

% Change 3.8 1.3 3.0 2.4 –2.0 –0.8 1.2 2.7 3.0 3.0 1.8

Total 102,467 103,653 109,111 109,485 108,201 108,516 110,104 112,613 115,591 118,833

% Change 4.5 1.2 5.3 0.3 –1.2 0.3 1.5 2.3 2.6 2.8 1.9


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1.5

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2,253

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21.1

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21.121.1 18.7

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18.718.7

884

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26.3

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26.326.3 36.2

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36.236.2

2,510

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2,5102,510

50.4

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50.4 39.9

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39.939.9

68,776

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68,776 69,397

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69,39769,397

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–0.7

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–0.7

40,221

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40,221 39,425

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39,425

2.4

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2.4

109,111

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109,111 109,485

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109,485

5.3

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The overall business information market will rise at a 1.5 percent compound annual rate to $80 billion in 2014. Print directory advertising will fall by 4.6 percent compounded annually to $21 billion in 2014. Growth in digital directory advertising, projected at 19.1 percent on a compound annual basis, will lead to an overall increase beginning in 2012 but will not make up for declines in 2010–11, because online ad rates are much lower than print ad rates. Overall directory advertising will decrease at a 0.4 percent compound annual rate.

Print advertising in trade magazines will be affected by a shift of advertising to the Internet, some of which will be recaptured on trade magazine Web sites. The trade magazine advertising market as a whole will increase at a 0.9 percent compound annual rate, while end-user spending, including spending on paid online content, will increase by 1.3 percent compounded annually. The overall trade magazine market will grow at a 1.0 percent compound annual rate to $24 billion in 2014.

The overall professional book market will rise by a 1.5 percent rate compounded annually, as a 15.7 percent compound annual increase in electronic books augments a 0.5 percent increase compounded annually in print books.

We expect the total business-to-business publishing market to increase at a 1.0 percent compound annual rate to $156 billion in 2014.

Business-to-business

Business-to-business includes business information, trade magazines, professional books, and directory advertising. Spending fell by 10.4 percent in 2009 as a result of the economic downturn, because each segment of the market is sensitive to the economy. An improving economy during the latter part of the forecast period will lead to increases in each category during 2012–14.

A rebound in lending activity will boost demand for fi nancial information. Growth in consumer spending will revitalize advertising and marketing and generate gains in spending on marketing information. Increased investment will drive spending on industry information.

Directory advertising will be hurt in the near term by the recession and over the longer run by migration of advertising from print to the Internet.

Trade magazines will be adversely affected by the declining economy and falling employment but will improve as the economy strengthens. Print advertising will continue to be negatively affected by trade magazines’ ongoing shift to online distribution. The launch of sites with paid content will generate an incremental revenue stream for trade magazine publishers.

A rebound in professional employment will boost professional books, while electronic readers with color and graphic capabilities will support growth in spending on electronic books.

Global business-to-business market by region (US$ millions)

Region 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

North America 82,984 87,798 90,265 86,454 76,249 72,216 71,524 72,667 75,525 79,785

% Change 5.4 5.8 2.8 –4.2 –11.8 –5.3 –1.0 1.6 3.9 5.6 0.9

EMEA 48,624 51,634 54,876 54,143 49,089 46,927 46,374 47,060 48,749 50,931

% Change 2.8 6.2 6.3 –1.3 –9.3 –4.4 –1.2 1.5 3.6 4.5 0.7

Asia Pacifi c 19,114 19,958 21,069 21,348 19,621 19,023 19,189 19,688 20,507 21,499

% Change 6.0 4.4 5.6 1.3 –8.1 –3.0 0.9 2.6 4.2 4.8 1.8

Latin America 2,690 2,936 3,162 3,279 3,151 3,149 3,230 3,380 3,578 3,829

% Change 8.0 9.1 7.7 3.7 –3.9 –0.1 2.6 4.6 5.9 7.0 4.0

Total 153,412 162,326 169,372 165,224 148,110 141,315 140,317 142,795 148,359 156,044

% Change 4.7 5.8 4.3 –2.4 –10.4 –4.6 –0.7 1.8 3.9 5.2 1.0


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a 0.4 percent compound annual rate.

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a 0.4 percent compound annual rate.

Print advertising in trade magazines will be affected by

FOR PRESS U

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a shift of advertising to the Internet, some of which will

FOR PRESS U

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be recaptured on trade magazine Web sites. The trade

FOR PRESS U

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magazine advertising market as a whole will increase

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magazine advertising market as a whole will increase at a 0.9 percent compound annual rate, while end-user

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at a 0.9 percent compound annual rate, while end-user spending, including spending on paid online content,

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spending, including spending on paid online content, will increase by 1.3 percent compounded annually. The

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will increase by 1.3 percent compounded annually. The overall trade magazine market will grow at a 1.0 percent

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overall trade magazine market will grow at a 1.0 percent compound annual rate to $24 billion in 2014.

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compound annual rate to $24 billion in 2014.

The overall professional book market will rise by a

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The overall professional book market will rise by a 1.5 percent rate compounded annually, as a 15.7 percent

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1.5 percent rate compounded annually, as a 15.7 percent improve as the economy strengthens. Print advertising will

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improve as the economy strengthens. Print advertising will continue to be negatively affected by trade magazines’

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continue to be negatively affected by trade magazines’ ongoing shift to online distribution. The launch of sites with

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ongoing shift to online distribution. The launch of sites with

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paid content will generate an incremental revenue stream

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paid content will generate an incremental revenue stream

A rebound in professional employment will boost

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A rebound in professional employment will boost professional books, while electronic readers with color and

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professional books, while electronic readers with color and graphic capabilities will support growth in spending on

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graphic capabilities will support growth in spending on

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Global business-to-business market by region (US$ millions)Global business-to-business market by region (US$ millions)


Global business-to-business market by component (US$ millions)

Component 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Business information 77,106 82,560 86,105 83,940 74,646 70,791 70,095 71,469 75,171 80,329

% Change 5.9 7.1 4.3 –2.5 –11.1 –5.2 –1.0 2.0 5.2 6.9 1.5

Directory advertising

Print 30,829 31,186 31,591 30,109 26,473 24,516 23,426 22,531 21,712 20,930

% Change 3.0 1.2 1.3 –4.7 –12.1 –7.4 –4.4 –3.8 –3.6 –3.6 –4.6

Digital 285 1,642 2,479 3,131 3,564 4,245 5,108 6,064 7,221 8,549

% Change — 476.1 51.0 26.3 13.8 19.1 20.3 18.7 19.1 18.4 19.1

Total directory advertising 31,114 32,828 34,070 33,240 30,037 28,761 28,534 28,595 28,933 29,479

% Change 3.9 5.5 3.8 –2.4 –9.6 –4.2 –0.8 0.2 1.2 1.9 –0.4

Trade magazines


% Change 6.5 1.6 –0.1 –7.2 –20.4 –9.9 –3.7 1.5 3.3 4.9 –0.9

Digital advertising 324 891 1,391 1,632 1,506 1,554 1,747 2,037 2,398 2,821

% Change — 175.0 56.1 17.3 –7.7 3.2 12.4 16.6 17.7 17.6 13.4


% Change 8.4 4.6 2.4 –5.5 –19.3 –8.6 –1.9 3.5 5.4 6.9 0.9

End-user spending (print and online) 7,878 8,053 8,119 8,003 7,583 7,398 7,449 7,585 7,793 8,103

% Change 0.1 2.2 0.8 –1.4 –5.2 –2.4 0.7 1.8 2.7 4.0 1.3

Total trade magazines 26,586 27,629 28,174 26,948 22,876 21,375 21,159 21,769 22,741 24,085

% Change 5.8 3.9 2.0 –4.4 –15.1 –6.6 –1.0 2.9 4.5 5.9 1.0

Professional books

Print 18,066 18,655 20,219 20,102 19,482 19,212 19,176 19,359 19,616 19,932

% Change –0.7 3.3 8.4 –0.6 –3.1 –1.4 –0.2 1.0 1.3 1.6 0.5

Electronic 540 654 804 994 1,069 1,176 1,353 1,603 1,898 2,219

% Change 20.3 21.1 22.9 23.6 7.5 10.0 15.1 18.5 18.4 16.9 15.7

Total professional books 18,606 19,309 21,023 21,096 20,551 20,388 20,529 20,962 21,514 22,151

% Change –0.2 3.8 8.9 0.3 –2.6 –0.8 0.7 2.1 2.6 3.0 1.5


% Change 5.6 5.2 3.3 –3.6 –13.1 –5.7 –1.2 1.3 2.6 3.6 0.1

Total end user 103,590 109,922 115,247 113,039 102,780 98,577 98,073 100,016 104,478 110,583

% Change 4.3 6.1 4.8 –1.9 –9.1 –4.1 –0.5 2.0 4.5 5.8 1.5

Total 153,412 162,326 169,372 165,224 148,110 141,315 140,317 142,795 148,359 156,044

% Change 4.7 5.8 4.3 –2.4 –10.4 –4.6 –0.7 1.8 3.9 5.2 1.0


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–3.8

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–3.8–3.8

6,064

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20.3

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28,534

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28,53428,534 28,595

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28,59528,595

–4.2

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–4.2–4.2 –0.8

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–0.8–0.8

13,787

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13,787 12,423

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12,42312,423

–20.4

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1,506

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1,506

17.3

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–7.7

18,945

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18,945 15,293

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15,293

2.4

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–5.5

8,119

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8,119 8,003

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8,003

0.8

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0.8

27,629

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27,629 28,174

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28,174

3.9

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3.9

18,066FOR PRESS U

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18,066 18,655FOR PRESS U

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18,655


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totals by country for each of those categories. For selected countries in each region, we provide a breakout by segment for 2014 and those countries’ associated compound annual growth rates from 2009.

In this section, we provide fi gures on total entertainment and media spending by segment, total advertising spending, total consumer/end-user spending, and total Internet access spending for each region. We also provide


Entertainment and media market by segment (US$ millions)

North America 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR


% Change 9.9 14.2 14.4 7.7 8.7 10.1 10.3 9.4 8.1 7.5 9.1


% Change 31.1 36.0 26.5 12.2 –2.0 5.3 7.6 8.5 9.4 9.0 7.9


% Change 7.0 6.8 6.6 5.6 2.9 4.4 6.6 7.7 6.8 7.1 6.5

TV advertising 68,242 72,840 72,610 72,756 64,916 69,062 70,281 75,575 77,554 83,700

% Change 0.3 6.7 –0.3 0.2 –10.8 6.4 1.8 7.5 2.6 7.9 5.2

Recorded music 13,045 12,390 11,184 9,188 8,016 7,351 7,090 6,965 6,979 7,112

% Change –3.5 –5.0 –9.7 –17.8 –12.8 –8.3 –3.6 –1.8 0.2 1.9 –2.4


% Change –1.6 2.3 2.0 –2.4 –0.2 1.6 3.5 4.1 4.7 4.7 3.7

Video games 8,986 10,235 13,227 16,127 15,142 16,317 17,231 18,249 19,415 20,710

% Change 1.0 13.9 29.2 21.9 –6.1 7.8 5.6 5.9 6.4 6.7 6.5


% Change 3.8 –0.6 3.7 –3.3 –12.7 –4.0 –1.7 0.2 1.4 2.2 –0.4


% Change 1.7 –0.5 –6.5 –13.4 –23.2 –11.8 –4.1 –0.6 1.6 2.4 –2.6

Radio 21,743 22,498 22,674 21,390 18,174 18,913 19,772 20,696 21,691 22,721

% Change 3.6 3.5 0.8 –5.7 –15.0 4.1 4.5 4.7 4.8 4.7 4.6


% Change 8.2 8.0 7.9 –3.9 –13.9 –3.8 3.0 5.1 6.0 6.3 3.2


% Change 7.3 –1.8 6.7 –3.5 0.6 1.3 2.2 3.0 3.0 2.9 2.5


% Change 5.4 5.8 2.8 –4.2 –11.8 –5.3 –1.0 1.6 3.9 5.6 0.9

Total 461,873 484,406 500,920 494,203 460,457 465,880 479,989 503,923 527,406 557,756

% Change 3.9 4.9 3.4 –1.3 –6.8 1.2 3.0 5.0 4.7 5.8 3.9


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59,740

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59,74059,740

9.4

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27,921

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7.6

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7.67.6

82,833

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82,83382,833 88,339

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88,33988,339

4.4

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4.44.4

64,916

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64,916 69,062

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69,06269,062

–10.8

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–10.8

9,188

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9,188 8,016

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8,016

–17.8

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–17.8 –12.8

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–12.8

37,845

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37,845

2.0

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2.0 –2.4

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–2.4

13,227

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13,227 16,127

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16,127

13.9

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13.9 29.2

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29.2

24,394

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24,394 25,308

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25,308

3.8

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3.8 –0.6

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–0.6

63,268

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63,268 62,951

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62,951

1.7FOR PRESS U

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1.7

Industry overview | Global market by region 59

North America

Spending fell by 6.8 percent in 2009 with declines in each segment except Internet access, TV subscriptions and license fees, and consumer and educational books. We expect a modest, 1.2 percent increase in 2010, stronger growth in 2011, and mid-single-digit gains during 2012–14. We expect increases in excess of 5 percent compounded annually for Internet access, Internet advertising, video games, TV subscriptions, and TV advertising. Recorded

music, newspaper publishing, and consumer magazine publishing will each be lower in 2014 than in 2009. Overall growth will average 3.9 percent compounded annually to $558 billion in 2014 from $460 billion in 2009.

Canada will be the faster-growing country, with a projected 5.0 percent compound annual increase compared with 3.8 percent compound annual growth in the United States.

Entertainment and media market by country (US$ millions)

North America 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

United States 26,894 30,744 35,157 37,829 41,110 45,345 49,931 54,471 58,557 62,661 8.8

Canada 2,486 2,809 3,241 3,526 3,831 4,154 4,683 5,269 6,015 6,765 12.0

Total 29,380 33,553 38,398 41,355 44,941 49,499 54,614 59,740 64,572 69,426 9.1


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45,345

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45,34545,345 49,931

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49,93149,931

4,154

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4,1544,154

44,941

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44,941 49,499

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49,49949,499

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United States

E&M spending in the United States fell by 7.1 percent in 2009. We expect a 1.1 percent rebound in 2010 and faster growth thereafter, averaging 3.8 percent compounded annually for the 2010–2014 period as a whole. Internet access at 8.8 percent compounded annually will be the fastest-growing segment during the next fi ve years. We also expect increases in excess of 5 percent compounded annually for Internet advertising, TV subscriptions, video

games, and TV advertising. Radio will grow by 4.6 percent compounded annually; fi lmed entertainment will increase at a 3.6 percent compound annual rate; and out-of-home advertising will grow at a 3.2 percent rate compounded annually. The remaining segments will either increase by less than 3 percent on a compound annual basis or decline. Overall consumer/end-user spending will grow by 3.7 percent compounded annually, while advertising will increase at a 2.6 percent compound annual rate.

Entertainment and media spending Consumer/end-user

spending Advertising Internet access:

wired and mobile Total

United States2014

(US$ millions)2010–14

CAGR2014


CAGR2014


CAGR2014


CAGR

Internet access: wired and mobile 62,661 8.8 62,661 8.8

Internet advertising: wired and mobile 33,400 7.7 33,400 7.7

TV subscriptions and license fees 99,687 6.5 99,687 6.5

TV advertising 80,278 5.3 80,278 5.3

Recorded music 6,656 –2.4 6,656 –2.4

Filmed entertainment 41,162 3.6 41,162 3.6

Video games 17,457 6.1 1,300 11.6 18,757 6.4

Consumer magazine publishing 9,184 –0.6 10,738 –0.3 19,922 –0.5

Newspaper publishing 8,643 –1.8 23,290 –3.1 31,933 –2.8

Radio 3,636 9.3 17,363 3.8 20,999 4.6

Out-of-home advertising 7,045 3.2 7,045 3.2

Consumer and educational book publishing 35,099 2.5 35,099 2.5


Trade magazines 1,525 –0.5 8,308 –0.5 9,833 –0.3

Professional books 7,375 2.0 7,375 2.0

Business information 43,250 1.5 43,250 1.5

Directory advertising 13,300 –0.4 13,300 –0.4

Business-to-business total 73,758 0.9

Total 273,674 3.7 180,180 2.6 62,661 8.8 516,515 3.8


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Internet access:

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Internet access:Internet access:wired and mobile

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wired and mobilewired and mobile

CAGR

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CAGRCAGR2014

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20142014(US$ millions)

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(US$ millions)(US$ millions)

7.7

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80,278

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80,278

3.6

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3.6

6.1

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6.1

–0.6

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–0.6

8,643

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8,643 –1.8

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–1.8

3,636

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3,636

35,099FOR PRESS U

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35,099





Canada2014


CAGR2014


CAGR2014


CAGR2014


CAGR




TV advertising 3,422 3.8 3,422 3.8

Recorded music 456 –1.1 456 –1.1


Video games 1,729 6.0 224 12.0 1,953 6.6

Consumer magazine publishing 422 –0.8 604 2.7 1,026 1.2

Newspaper publishing 553 –1.6 1,809 –0.4 2,362 –0.7

Radio 457 17.4 1,265 1.0 1,722 4.1

Out-of-home advertising 420 4.0 420 4.0



Trade magazines 67 0.6 180 1.8 247 1.4

Professional books 370 2.1 370 2.1




Total 23,576 4.3 10,900 3.1 6,765 12.0 41,241 5.0


Canada

The Canadian E&M market declined by 2.7 percent in 2009. We expect a rebound beginning in 2010, with growth averaging 5.0 percent compounded annually through 2014. Internet access at 12.0 percent compounded annually and Internet advertising at 11.7 percent on a compound annual basis will be major drivers. TV

subscriptions will grow at a 6.8 percent compound annual rate, and video games will increase by 6.6 percent compounded annually. The remaining segments will increase at rates averaging less than 5 percent on a compound annual basis or will decline. Overall consumer/end-user spending will increase at a 4.3 percent rate compounded annually, while advertising will rise at a 3.1 percent compound annual rate.

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FOR PRESS U

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wired and mobile

FOR PRESS U

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CAGR

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CAGRCAGR2014

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20142014(US$ millions)

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2,729

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2,729 11.7

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11.7

3,422

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3,422

4.4

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4.4

6.0

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6.0

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553

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457

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457


spending will rise from $45 billion in 2009 to $69 billion in 2014, a 9.1 percent compound annual increase.

Canada will increase at a 12.0 percent compound annualrate during the next fi ve years compared with 8.8 percentcompound annual growth for the United States.

Internet access

Internet access spending rose by 8.7 percent in 2009. We expect a return to double-digit growth during 2010–11 followed by moderating increases as the broadband market matures. For the forecast period as a whole,

Internet access spending market: wired and mobile (US$ millions)

North America 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR


% Change 9.9 14.2 14.4 7.7 8.7 10.1 10.3 9.4 8.1 7.5 9.1


Internet access spending market: wired and mobile by country (US$ millions)

North America 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

United States 26,894 30,744 35,157 37,829 41,110 45,345 49,931 54,471 58,557 62,661 8.8

Canada 2,486 2,809 3,241 3,526 3,831 4,154 4,683 5,269 6,015 6,765 12.0

Total 29,380 33,553 38,398 41,355 44,941 49,499 54,614 59,740 64,572 69,426 9.1


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SE ONLY

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SE ONLY

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SE ONLY2012

FOR PRESS U

SE ONLY20122012

54,614

FOR PRESS U

SE ONLY54,61454,614 59,740

FOR PRESS U

SE ONLY59,74059,740

10.3

FOR PRESS U

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10.310.3

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FOR PRESS U

SE ONLY

FOR PRESS U

SE ONLY

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FOR PRESS U

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Internet access spending market: wired and mobile by country (US$ millions) Internet access spending market: wired and mobile by country (US$ millions)

2009p

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2009p

37,829

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37,829 41,110

FOR PRESS U

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41,110

3,526

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3,526 3,831

FOR PRESS U

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3,831

41,355

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41,355


television, radio, and out-of-home advertising, as well as a small video game market, will be larger in 2014 than in 2009, while consumer magazines, newspapers, directories, and trade magazines will be smaller. Overall advertising will increase at a 2.6 percent compound annual rate from $168 billion in 2009 to $191 billion in 2014.

Advertising

Advertising fell by 14.9 percent in 2009 following a 5.1 percent decrease in 2008. We anticipate an additional 0.6 percent decline in 2010. Although advertising will increase during the subsequent four years, spending in 2014 will remain 8 percent lower than in 2007. Internet,

Advertising by segment (US$ millions)

North America 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Internet: wired and mobile 13,034 17,726 22,423 25,149 24,646 25,942 27,921 30,303 33,147 36,129

% Change 31.1 36.0 26.5 12.2 –2.0 5.3 7.6 8.5 9.4 9.0 7.9

Television 68,242 72,840 72,610 72,756 64,916 69,062 70,281 75,575 77,554 83,700

% Change 0.3 6.7 –0.3 0.2 –10.8 6.4 1.8 7.5 2.6 7.9 5.2

Video games 115 346 580 758 877 1,031 1,172 1,289 1,396 1,524

% Change 283.3 200.9 67.6 30.7 15.7 17.6 13.7 10.0 8.3 9.2 11.7


% Change 5.8 3.1 6.1 –4.4 –19.3 –5.6 –2.0 0.8 2.5 3.5 –0.2

Newspapers 51,809 51,653 47,717 40,148 29,127 25,114 23,975 23,830 24,338 25,099

% Change 2.5 –0.3 –7.6 –15.9 –27.5 –13.8 –4.5 –0.6 2.1 3.1 –2.9

Radio 20,984 21,138 20,761 18,975 15,635 16,044 16,582 17,210 17,910 18,628

% Change 1.4 0.7 –1.8 –8.6 –17.6 2.6 3.4 3.8 4.1 4.0 3.6

Out-of-home 6,602 7,129 7,694 7,395 6,366 6,121 6,305 6,625 7,022 7,465

% Change 8.2 8.0 7.9 –3.9 –13.9 –3.8 3.0 5.1 6.0 6.3 3.2

Directories 15,571 16,242 16,574 15,675 14,607 14,151 14,020 13,970 14,079 14,311

% Change 3.6 4.3 2.0 –5.4 –6.8 –3.1 –0.9 –0.4 0.8 1.6 –0.4

Trade magazines 11,328 11,801 12,007 10,961 8,691 7,695 7,353 7,541 7,917 8,488

% Change 10.0 4.2 1.7 –8.7 –20.7 –11.5 –4.4 2.6 5.0 7.2 –0.5

Total 197,899 207,736 208,033 197,526 167,996 167,039 168,275 175,641 181,039 191,080

% Change 3.2 5.0 0.1 –5.1 –14.9 –0.6 0.7 4.4 3.1 5.5 2.6


FOR PRESS U

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SE ONLY

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SE ONLY

FOR PRESS U

SE ONLY

FOR PRESS U

SE ONLY

FOR PRESS U

SE ONLY2011

FOR PRESS U

SE ONLY20112011 2012

FOR PRESS U

SE ONLY20122012

27,921

FOR PRESS U

SE ONLY27,92127,921

5.3

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5.35.3 7.6

FOR PRESS U

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7.67.6

69,062

FOR PRESS U

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69,06269,062 70,281

FOR PRESS U

SE ONLY

70,28170,281

–10.8

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–10.8 6.4

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6.46.4

877

FOR PRESS U

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877 1,031

FOR PRESS U

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1,0311,031

15.7

FOR PRESS U

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15.7

14,197

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14,197 11,450

FOR PRESS U

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11,450

–4.4

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–4.4

47,717

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47,717 40,148

FOR PRESS U

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40,148

–7.6

FOR PRESS U

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–7.6 –15.9

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–15.9

20,761

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20,761

0.7

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0.7 –1.8

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–1.8

7,129

FOR PRESS U

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7,129

8.2

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8.2 8.0

FOR PRESS U

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8.0

15,571

FOR PRESS U

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15,571 16,242

FOR PRESS U

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16,242

3.6FOR PRESS U

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3.6

11,328FOR PRESS U

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11,328


radio market. TV subscriptions will grow at a 6.5 percent compound annual rate, and video games by 6.1 percent compounded annually. Filmed entertainment will increase at a 3.7 percent compound annual rate, and consumer and educational books will grow by 2.5 percent on a compound annual basis, with business-to-business edging up 1.5 percent compounded annually. The remaining segments will be lower in 2014 than in 2009.

The United States will increase at a 3.7 percent compoundannual rate, and Canada will grow by 4.3 percentcompounded annually.

compound annual rate for the forecast period as a whole. Advertising in Canada had been increasing through 2008 but declined by 9.7 percent in 2009. We project a 1.0 percent decrease in 2010 and a 3.1 percent compound annual increase through 2014.

Advertising in the United States has been declining since 2006 and fell by 15.2 percent in 2009. We expect a further, 0.5 percent decline in 2010, for a four-year cumulative decrease of 20.4 percent. We then expect advertising to increase beginning in 2011 and to rise at a 2.6 percent

Advertising by country (US$ millions)

North America 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

United States 189,135 198,294 198,092 187,154 158,630 157,768 158,827 165,816 170,715 180,180 2.6

Canada 8,764 9,442 9,941 10,372 9,366 9,271 9,448 9,825 10,324 10,900 3.1

Total 197,899 207,736 208,033 197,526 167,996 167,039 168,275 175,641 181,039 191,080 2.6



Consumer/end-user spending declined by 3.1 percent in 2009, led by double-digit decreases in recorded music and business-to-business and by declines in newspapers, video games, consumer magazines, and fi lmed entertainment. We expect a 0.7 percent increase in 2010 and progressively faster gains during 2011–14 that will boost spending to $297 billion in 2014, a 3.7 percent compound annual increase from $248 billion in 2009. Radio will be the fastest-growing component, with a 10.0 percent compound annual advance, boosted by a small but expanding satellite

FOR PRESS U

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radio market. TV subscriptions will grow at a 6.5 percent

FOR PRESS U

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radio market. TV subscriptions will grow at a 6.5 percent compound annual rate, and video games by 6.1 percent

FOR PRESS U

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compound annual rate, and video games by 6.1 percent compounded annually. Filmed entertainment will increase

FOR PRESS U

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compounded annually. Filmed entertainment will increase at a 3.7 percent compound annual rate, and consumer

FOR PRESS U

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at a 3.7 percent compound annual rate, and consumer and educational books will grow by 2.5 percent on a

FOR PRESS U

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and educational books will grow by 2.5 percent on a compound annual basis, with business-to-business edging

FOR PRESS U

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compound annual basis, with business-to-business edging

FOR PRESS U

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2012

FOR PRESS U

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20122012

165,816

FOR PRESS U

SE ONLY165,816165,816 170,715

FOR PRESS U

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170,715170,715

9,448

FOR PRESS U

SE ONLY9,4489,448 9,825

FOR PRESS U

SE ONLY9,8259,825

168,275

FOR PRESS U

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168,275168,275 175,641

FOR PRESS U

SE ONLY175,641175,641

increase in 2010 and progressively faster gains during

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increase in 2010 and progressively faster gains during 2011–14 that will boost spending to $297 billion in

FOR PRESS U

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2011–14 that will boost spending to $297 billion in

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2014, a 3.7 percent compound annual increase from

FOR PRESS U

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2014, a 3.7 percent compound annual increase from $248 billion in 2009. Radio will be the fastest-growing

FOR PRESS U

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$248 billion in 2009. Radio will be the fastest-growing component, with a 10.0 percent compound annual

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component, with a 10.0 percent compound annual advance, boosted by a small but expanding satellite

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advance, boosted by a small but expanding satellite


Consumer/end-user spending by segment (US$ millions)

North America 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR


% Change 7.0 6.8 6.6 5.6 2.9 4.4 6.6 7.7 6.8 7.1 6.5

Recorded music 13,045 12,390 11,184 9,188 8,016 7,351 7,090 6,965 6,979 7,112

% Change –3.5 –5.0 –9.7 –17.8 –12.8 –8.3 –3.6 –1.8 0.2 1.9 –2.4


% Change –1.6 2.3 2.0 –2.4 –0.2 1.6 3.5 4.1 4.7 4.7 3.7

Video games 8,871 9,889 12,647 15,369 14,265 15,286 16,059 16,960 18,019 19,186

% Change 0.1 11.5 27.9 21.5 –7.2 7.2 5.1 5.6 6.2 6.5 6.1


% Change 1.3 –5.1 0.5 –1.8 –3.5 –2.3 –1.5 –0.5 0.3 0.7 –0.7

Newspapers 11,459 11,298 11,148 10,851 10,054 9,450 9,179 9,128 9,145 9,196

% Change –1.9 –1.4 –1.3 –2.7 –7.3 –6.0 –2.9 –0.6 0.2 0.6 –1.8

Radio 759 1,360 1,913 2,415 2,539 2,869 3,190 3,486 3,781 4,093

% Change 157.3 79.2 40.7 26.2 5.1 13.0 11.2 9.3 8.5 8.3 10.0


% Change 7.3 –1.8 6.7 –3.5 0.6 1.3 2.2 3.0 3.0 2.9 2.5


% Change 5.0 6.5 3.2 –3.0 –11.5 –4.9 –0.4 2.0 4.6 6.5 1.5

Total 234,594 243,117 254,489 255,322 247,520 249,342 257,100 268,542 281,795 297,250

% Change 3.7 3.6 4.7 0.3 –3.1 0.7 3.1 4.5 4.9 5.5 3.7


Consumer/end-user spending (excluding Internet access) by country (US$ millions)

North America 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

United States 217,813 225,534 235,847 236,014 228,400 229,894 236,998 247,490 259,502 273,674 3.7

Canada 16,781 17,583 18,642 19,308 19,120 19,448 20,102 21,052 22,293 23,576 4.3

Total 234,594 243,117 254,489 255,322 247,520 249,342 257,100 268,542 281,795 297,250 3.7


FOR PRESS U

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FOR PRESS U

SE ONLY

FOR PRESS U

SE ONLY

FOR PRESS U

SE ONLY

FOR PRESS U

SE ONLY

FOR PRESS U

SE ONLY

FOR PRESS U

SE ONLY39,711

FOR PRESS U

SE ONLY39,71139,711 41,336

FOR PRESS U

SE ONLY

41,33641,336

3.5

FOR PRESS U

SE ONLY3.53.5

15,286

FOR PRESS U

SE ONLY15,28615,286 16,059

FOR PRESS U

SE ONLY16,05916,059

7.2

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7.27.2

9,700

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SE ONLY

9,7009,700

–3.5

FOR PRESS U

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–3.5 –2.3

FOR PRESS U

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–2.3–2.3

10,054

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10,054

–2.7

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–2.7 –7.3

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–7.3

2,415

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2,415 2,539

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2,539

40.7

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40.7 26.2

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26.2

33,670

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33,670 32,484

FOR PRESS U

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32,484

6.7

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6.7

59,755

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59,755 61,684

FOR PRESS U

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61,684

6.5

FOR PRESS U

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6.5

234,594

FOR PRESS U

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234,594 243,117

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243,117

FOR PRESS U

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3.7

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3.7


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compound annual basis. Filmed entertainment and TV advertising will each increase by a projected 4.2 percent compounded annually, and out-of-home advertising will expand by 3.2 percent on a compound annual basis. The remaining segments will grow at annual rates averaging less than 3 percent.

Entertainment and media spending fell by 2.8 percent in 2009. We expect a 1.9 percent rebound in 2010, with faster gains thereafter. Spending will rise to $581 billion in 2014, a 4.6 percent compound annual increase from $463 billion in 2009. Internet advertising, Internet access, video games, and TV subscriptions and license fees will each grow at rates averaging more than 5 percent on a

Europe, Middle East, Africa (EMEA)


EMEA 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR


% Change 18.8 18.2 15.9 12.4 10.0 9.1 10.5 12.0 12.8 10.5 11.0


% Change 58.3 63.6 42.1 22.5 6.2 11.1 12.5 13.9 13.4 13.2 12.8


% Change 8.6 7.4 9.5 6.6 3.7 3.6 5.3 6.1 6.6 5.6 5.4

TV advertising 37,251 39,939 43,544 44,315 38,646 39,439 40,440 42,356 44,580 47,417

% Change 6.1 7.2 9.0 1.8 –12.8 2.1 2.5 4.7 5.3 6.4 4.2

Recorded music 12,585 11,826 10,635 9,648 9,296 9,111 9,077 9,192 9,414 9,745

% Change –2.9 –6.0 –10.1 –9.3 –3.6 –2.0 –0.4 1.3 2.4 3.5 0.9


% Change –5.9 0.2 0.2 –1.1 4.5 0.6 4.1 5.2 5.7 5.5 4.2

Video games 10,433 11,696 14,423 17,013 16,827 18,123 19,151 20,327 21,590 22,953

% Change 8.6 12.1 23.3 18.0 –1.1 7.7 5.7 6.1 6.2 6.3 6.4


% Change 2.6 1.9 1.9 –2.1 –10.1 –2.5 –0.3 1.1 1.6 2.1 0.4


% Change 3.3 2.6 2.8 –1.8 –9.2 –2.0 0.6 1.4 2.0 2.8 1.0

Radio 16,162 16,686 17,333 17,344 16,417 16,404 16,532 16,787 17,257 17,595

% Change 4.1 3.2 3.9 0.1 –5.3 –0.1 0.8 1.5 2.8 2.0 1.4


% Change 6.9 8.9 7.6 2.0 –18.0 0.4 1.9 3.8 4.3 5.5 3.2


% Change 3.1 0.7 2.5 0.1 –2.5 –0.9 0.7 1.6 2.2 2.5 1.2


% Change 2.8 6.2 6.3 –1.3 –9.3 –4.4 –1.2 1.5 3.6 4.5 0.7

Total 405,277 430,440 461,715 475,951 462,772 471,602 489,715 515,853 547,932 580,814

% Change 5.5 6.2 7.3 3.1 –2.8 1.9 3.8 5.3 6.2 6.0 4.6


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SE ONLY

FOR PRESS U

SE ONLY

FOR PRESS U

SE ONLY

FOR PRESS U

SE ONLY

FOR PRESS U

SE ONLY

FOR PRESS U

SE ONLY

FOR PRESS U

SE ONLY2011

FOR PRESS U

SE ONLY20112011 2012

FOR PRESS U

SE ONLY20122012

96,410

FOR PRESS U

SE ONLY96,41096,410 107,956

FOR PRESS U

SE ONLY107,956107,956

10.5

FOR PRESS U

SE ONLY

10.510.5

22,029

FOR PRESS U

SE ONLY

22,02922,029 24,793

FOR PRESS U

SE ONLY

24,79324,793

11.1

FOR PRESS U

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11.111.1

68,804

FOR PRESS U

SE ONLY

68,804 71,303

FOR PRESS U

SE ONLY

71,30371,303

3.7

FOR PRESS U

SE ONLY

3.7

44,315

FOR PRESS U

SE ONLY

44,315 38,646

FOR PRESS U

SE ONLY

38,646

1.8

FOR PRESS U

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1.8 –12.8

FOR PRESS U

SE ONLY

–12.8

10,635

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10,635 9,648

FOR PRESS U

SE ONLY

9,648

–10.1

FOR PRESS U

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–10.1 –9.3

FOR PRESS U

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–9.3

23,422

FOR PRESS U

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23,422 23,477

FOR PRESS U

SE ONLY

23,477

0.2

FOR PRESS U

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0.2 0.2

FOR PRESS U

SE ONLY

0.2

11,696

FOR PRESS U

SE ONLY

11,696

8.6

FOR PRESS U

SE ONLY

8.6 12.1

FOR PRESS U

SE ONLY

12.1

35,037

FOR PRESS U

SE ONLY

35,037 35,695

FOR PRESS U

SE ONLY

35,695

2.6FOR PRESS U

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2.6


13.0 percent compound annual increase. Central and Eastern Europe will expand at an 8.3 percent compound annual rate, and Western Europe will average 3.6 percent growth compounded annually.

Germany had the largest E&M market in EMEA, at $89 billion, in 2009, with the UK next, at $73 billion. France at $62 billion was the only other country above $50 billion in 2009. Led by Saudi Arabia/Pan Arab, Middle East/Africa will be the fastest-growing area in EMEA, with a


EMEA 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Western Europe

Austria 9,105 9,723 10,502 10,923 10,564 10,719 10,927 11,258 11,685 12,042 2.7

Belgium 9,323 10,047 10,747 11,142 10,837 10,971 11,260 11,705 12,254 12,806 3.4

Denmark 7,671 8,158 8,566 8,637 8,304 8,352 8,497 8,762 9,154 9,487 2.7

Finland 5,482 5,757 6,164 6,337 6,097 6,132 6,288 6,526 6,802 7,107 3.1

France 55,455 57,938 61,694 63,190 61,938 62,723 64,266 66,748 69,909 72,743 3.3

Germany 80,563 84,336 87,797 89,089 88,526 89,905 92,359 95,790 99,972 104,054 3.3

Greece 5,381 5,793 6,490 6,715 6,364 6,417 6,561 6,788 7,121 7,497 3.3

Ireland 3,906 4,283 4,720 4,906 4,573 4,590 4,747 4,989 5,290 5,596 4.1

Italy 38,707 40,591 43,191 43,714 41,989 42,025 43,012 44,868 47,158 49,736 3.4

Netherlands 16,139 17,251 18,424 18,923 18,147 18,029 18,481 19,277 20,290 21,403 3.4

Norway 7,882 8,401 8,991 9,318 8,862 8,916 9,229 9,633 10,108 10,617 3.7

Portugal 4,153 4,447 4,744 4,951 4,734 4,837 5,076 5,436 5,895 6,306 5.9

Spain 27,126 29,070 30,765 30,248 28,632 28,925 30,461 32,336 34,749 37,395 5.5

Sweden 9,642 10,223 10,944 11,341 10,970 11,055 11,360 11,743 12,219 12,773 3.1

Switzerland 10,318 10,947 11,622 12,020 11,825 12,026 12,329 12,848 13,362 13,940 3.3

United Kingdom 70,532 72,084 76,269 76,154 73,245 74,187 76,426 79,726 83,768 87,733 3.7

Western Europe total 361,385 379,049 401,630 407,608 395,607 399,809 411,279 428,433 449,736 471,235 3.6


Czech Republic 4,212 4,452 4,664 5,069 4,920 4,888 5,059 5,433 5,864 6,312 5.1

Hungary 2,761 3,070 3,257 3,439 3,337 3,376 3,531 3,793 4,105 4,447 5.9

Poland 5,958 6,686 7,635 8,475 8,325 8,566 8,952 9,500 10,183 10,885 5.5

Romania 1,270 1,625 1,916 2,249 2,275 2,392 2,599 2,884 3,198 3,522 9.1

Russia 10,898 12,953 15,479 18,340 16,382 17,421 18,886 20,836 23,092 25,586 9.3

Turkey 3,477 4,152 4,944 5,316 5,264 5,862 6,525 7,467 8,527 9,682 13.0

Central and Eastern Europe total 28,576 32,938 37,895 42,888 40,503 42,505 45,552 49,913 54,969 60,434 8.3

Middle East/Africa

Israel 2,995 3,091 3,259 3,318 3,247 3,272 3,378 3,512 3,692 3,871 3.6

Saudi Arabia/Pan Arab† 7,471 9,667 12,564 15,107 16,431 18,534 21,657 25,534 30,320 35,209 16.5

South Africa 4,850 5,695 6,367 7,030 6,984 7,482 7,849 8,461 9,215 10,065 7.6

Middle East/Africa total 15,316 18,453 22,190 25,455 26,662 29,288 32,884 37,507 43,227 49,145 13.0

EMEA total 405,277 430,440 461,715 475,951 462,772 471,602 489,715 515,853 547,932 580,814 4.6

†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

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2012

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20122012

10,927

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10,971

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10,97110,971 11,260

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8,352

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8,3528,352 8,497

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6,132

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6,1326,132

61,938

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62,72362,723

88,526

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88,526 89,905

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89,90589,905

6,715

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6,715 6,364

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6,364

4,906

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4,906 4,573

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4,573

43,714

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18,424

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18,424 18,923

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8,991

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4,744

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29,070

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10,223

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10,318

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10,947

70,532

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70,532 72,084

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361,385FOR PRESS U

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years as a whole. Overall consumer/end-user spending will increase at a 2.8 percent compound annual rate, and advertising will advance by 3.8 percent compounded annually. The projected 7.4 percent compound annual gain in Internet access will contribute to an overall spending increase of 3.7 percent compounded annually to $88 billion in 2014.

United Kingdom

The UK declined by 3.8 percent in 2009. We expect a modest increase in 2010 and healthier growth during 2012–14. Internet advertising, Internet access, video games, and fi lmed entertainment will grow at compound annual rates of 5 percent or more during the next fi ve




United Kingdom2014


CAGR2014


CAGR2014


CAGR2014


CAGR




TV advertising 6,038 4.3 6,038 4.3

Recorded music 2,636 4.4 2,636 4.4


Video games 5,135 6.5 211 13.7 5,346 6.7

Consumer magazine publishing 3,182 0.2 995 –1.1 4,177 0.4

Newspaper publishing 4,723 0.3 4,585 1.3 9,308 0.1

Radio 1,218 0.9 650 –0.6 1,868 0.4




Trade magazines 1,521 0.9 1,287 1.0 2,808 1.0





Total 50,688 2.8 23,902 3.8 13,143 7.4 87,733 3.7


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Internet access:

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(US$ millions)

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13,143

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10.5

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211

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5,371

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5,371


and 9.7 percent for Internet access spending. Consumer/end-user spending will grow by 1.7 percent compounded annually, and advertising will increase at a 3.2 percent compound annual rate. Other than Internet advertising and Internet access, no other segment will average 5 percent growth on a compound annual basis.




Germany2014


CAGR2014


CAGR2014


CAGR2014


CAGR




TV advertising 5,915 3.3 5,915 3.3

Recorded music 2,092 –0.3 2,092 –0.3


Video games 3,236 4.7 122 12.7 3,358 4.9

Consumer magazine publishing 3,538 0.0 2,122 1.6 5,660 0.6


Radio 3,865 0.3 1,036 2.1 4,901 0.7




Trade magazines 1,404 2.8 1,522 3.0 2,926 2.9



Directory advertising 1,768 1.3 1,768 1.3


Total 60,339 1.7 25,346 3.2 18,369 9.7 104,054 3.3


Germany

In Germany, the decline in E&M spending in 2009 was a relatively mild, 0.6 percent. We expect spending to rise at a 3.3 percent compound annual rate during the next fi ve years to $104 billion in 2014, led by compound annual increases of 11.1 percent for Internet advertising

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(US$ millions)

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11.1

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5,915

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4.7

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6,330

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3,865

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10,685

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will expand at a 7.4 percent compound annual rate. Video games at 5.4 percent and TV subscriptions and license fees at 5.2 percent will be the only other segments to average more than 5 percent compound annual growth. Overall consumer/end-user spending will grow at a 2.4 percent compound annual rate, while advertising will increase by 2.0 percent compounded annually.




France2014


CAGR2014


CAGR2014


CAGR2014


CAGR




TV advertising 3,680 1.8 3,680 1.8

Recorded music 1,105 –1.2 1,105 –1.2


Video games 4,146 5.2 150 12.8 4,296 5.4

Consumer magazine publishing 4,888 –0.4 1,489 1.7 6,377 0.1


Radio 1,336 1.3 791 1.1 2,127 1.2




Trade magazines 820 –0.1 651 2.7 1,471 1.1





Total 45,185 2.4 12,549 2.0 15,009 7.4 72,743 3.3


France

We expect a comparable 3.3 percent increase in E&M spending in France during the next fi ve years, following a 2.0 percent decrease in 2009. Internet advertising will be the fastest-growing segment, with a projected 9.9 percent compound annual increase, and Internet access spending

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Internet access:

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(US$ millions)

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15,009

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9.9

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9.9

1.8

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1.8

150

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150

1,489

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1.3

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1.3

8,064

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8,064


advertising, TV subscriptions and license fees, Internet access spending, video games, and consumer magazine publishing. We also expect high-single-digit gains in TV advertising, out-of-home advertising, fi lmed entertainment, and radio. Consumer/end-user spending will increase at a 5.9 percent compound annual rate, while advertising will grow by 10.2 percent compounded annually.




Russia2014


CAGR2014


CAGR2014


CAGR2014


CAGR




TV advertising 5,168 9.5 5,168 9.5



Video games 1,275 11.1 12 14.9 1,287 11.1

Consumer magazine publishing 476 0.0 541 4.6 1,017 11.1

Newspaper publishing 1,428 1.4 447 9.1 1,875 3.0

Radio 0 420 8.2 420 8.2




Trade magazines 28 0.7 68 5.1 96 3.7


Business information 817 3.3 817 3.3

Directory advertising 239 0.2 239 0.2


Total 9,990 5.9 9,694 10.2 5,902 15.0 25,586 9.3


Russia

Russia experienced the steepest decline in E&M spending in the world in 2009, falling by 10.7 percent. We expect the market to begin to recover in 2010 and to grow at a 9.3 percent compound annual rate during the next fi ve years, led by double-digit increases in Internet

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Internet access:

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CAGR

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CAGRCAGR2014

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(US$ millions)

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24.4

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24.4

5,168

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5,168

11.1

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11.1

0.0

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0.0

1,428

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1,428 1.4

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1.4

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0


and the UK at $9.2 billion. Italy at $7.9 billion, Saudi Arabia/Pan Arab at $7.1 billion, and Spain at $6 billion were the only other countries above $5 billion in 2009. Western Europe will expand at an 8.4 percent compound annual rate during the next fi ve years; Central and Eastern Europe will grow by 14.9 percent compounded annually; and Middle East/Africa will increase at a 21.4 percent compound annual rate.


EMEA 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR


% Change 18.8 18.2 15.9 12.4 10.0 9.1 10.5 12.0 12.8 10.5 11.0


Internet access

Internet access spending rose by 10 percent in 2009 despite the recession, and we project an 11.0 percent compound annual increase during the next fi ve years. Overall spending will rise from $80 billion in 2009 to $135 billion in 2014.

Germany had the largest Internet access market in EMEA, at $11.6 billion, in 2009, followed by France at $10.5 billion

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2011

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20112011

87,212

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87,21287,212 96,410

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96,41096,410

9.1

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10.510.5



EMEA 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Western Europe

Austria 1,260 1,559 1,856 1,961 1,993 2,042 2,093 2,201 2,330 2,390 3.7

Belgium 1,325 1,499 1,701 1,889 2,003 2,090 2,179 2,317 2,492 2,639 5.7

Denmark 1,063 1,247 1,418 1,524 1,542 1,566 1,635 1,748 1,883 1,983 5.2

Finland 717 850 972 1,067 1,116 1,207 1,285 1,359 1,457 1,566 7.0

France 6,287 7,451 8,825 9,853 10,490 11,209 11,771 12,729 14,110 15,009 7.4

Germany 7,953 9,053 9,802 10,506 11,572 12,962 14,247 15,653 17,055 18,369 9.7

Greece 237 309 423 625 854 1,088 1,212 1,338 1,513 1,690 14.6

Ireland 174 209 292 374 419 466 532 591 672 728 11.7

Italy 5,886 6,448 7,138 7,545 7,878 8,263 8,837 9,546 10,443 11,338 7.6

Netherlands 2,138 2,305 2,608 2,739 2,784 2,829 2,933 3,119 3,367 3,598 5.3

Norway 998 1,105 1,208 1,307 1,368 1,446 1,516 1,633 1,736 1,847 6.2

Portugal 540 703 806 908 970 1,027 1,153 1,297 1,531 1,723 12.2

Spain 3,409 4,181 4,886 5,492 6,037 6,713 8,001 9,233 10,634 12,017 14.8

Sweden 1,526 1,615 1,817 2,005 2,060 2,100 2,184 2,303 2,442 2,609 4.8

Switzerland 1,350 1,547 1,691 1,777 1,861 1,929 2,029 2,143 2,276 2,406 5.3

United Kingdom 6,657 7,344 8,064 8,701 9,209 9,573 10,253 11,203 12,281 13,143 7.4



Czech Republic 911 860 878 1,047 1,126 1,147 1,229 1,418 1,642 1,851 10.5

Hungary 250 399 493 588 700 785 873 1,018 1,188 1,355 14.1

Poland 764 941 1,179 1,322 1,402 1,561 1,711 1,930 2,222 2,519 12.4

Romania 171 358 476 664 810 929 1,078 1,252 1,442 1,625 14.9

Russia 576 845 1,142 2,020 2,929 3,489 3,995 4,648 5,293 5,902 15.0

Turkey 359 522 761 1,014 1,457 1,739 2,112 2,554 3,073 3,638 20.1


Middle East/Africa

Israel 544 626 687 717 729 740 791 859 955 1,041 7.4


South Africa 728 1,025 1,138 1,376 1,540 1,695 1,884 2,129 2,443 2,767 12.4


EMEA total 47,195 55,768 64,634 72,674 79,907 87,212 96,410 107,956 121,781 134,578 11.0


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FOR PRESS U

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FOR PRESS U

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FOR PRESS U

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FOR PRESS U

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FOR PRESS U

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FOR PRESS U

SE ONLY1,285

FOR PRESS U

SE ONLY1,2851,285 1,359

FOR PRESS U

SE ONLY

1,3591,359

11,771

FOR PRESS U

SE ONLY11,77111,771 12,729

FOR PRESS U

SE ONLY12,72912,729

14,247

FOR PRESS U

SE ONLY14,24714,247

1,088

FOR PRESS U

SE ONLY

1,0881,088 1,212

FOR PRESS U

SE ONLY1,2121,212

466

FOR PRESS U

SE ONLY

466466

7,878

FOR PRESS U

SE ONLY

7,878 8,263

FOR PRESS U

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8,2638,263

2,784

FOR PRESS U

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2,784 2,829

FOR PRESS U

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2,8292,829

1,368

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SE ONLY

1,368

908

FOR PRESS U

SE ONLY

908 970

FOR PRESS U

SE ONLY

970

5,492

FOR PRESS U

SE ONLY

5,492

1,817

FOR PRESS U

SE ONLY

1,817 2,005

FOR PRESS U

SE ONLY

2,005

1,691

FOR PRESS U

SE ONLY

1,691 1,777

FOR PRESS U

SE ONLY

1,777

8,064

FOR PRESS U

SE ONLY

8,064

47,425

FOR PRESS U

SE ONLY

47,425 53,507

FOR PRESS U

SE ONLY

53,507

911

FOR PRESS U

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911 860

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860

250

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250

764FOR PRESS U

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764

171FOR PRESS U

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171


Germany had the largest advertising market in EMEA, at $22 billion, with the UK second, at $20 billion in 2009. France and Italy were next, at $11 billion each, followed by Spain at $8 billion, Russia at $6 billion, and Saudi Arabia/Pan Arab and the Netherlands at $5 billion each. Advertising in Western Europe will rise at a 2.4 percent compound annual rate during the next fi ve years; Central and Eastern Europe will average 8.5 percent on a compound annual basis; and Middle East/Africa will increase at a 10.3 percent compound annual rate.

Advertising

Advertising plunged 13.1 percent in 2009, refl ecting the impact of the recession. We project the market to stabilize in 2010 and then turn around. During the next fi ve years, advertising will increase at a 3.7 percent compound annual rate to $148 billion in 2014 from $123 billion in 2009. A small video game segment will be the fastest-growing category, at 13.5 percent on a compound annual basis. Internet advertising will expand at a 12.8 percent compound annual rate; TV advertising will increase 4.2 percent compounded annually; and the remaining segments will grow by less than 4 percent annually or will decline.


EMEA 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR


% Change 58.3 63.6 42.1 22.5 6.2 11.1 12.5 13.9 13.4 13.2 12.8

Television 37,251 39,939 43,544 44,315 38,646 39,439 40,440 42,356 44,580 47,417

% Change 6.1 7.2 9.0 1.8 –12.8 2.1 2.5 4.7 5.3 6.4 4.2

Video games 38 195 286 370 426 509 598 679 737 802

% Change — 413.2 46.7 29.4 15.1 19.5 17.5 13.5 8.5 8.8 13.5


% Change 2.7 4.8 3.1 –1.8 –20.6 –2.7 0.7 2.7 3.5 4.4 1.7

Newspapers 33,480 34,847 36,395 35,055 29,323 28,347 28,527 29,096 29,939 31,141

% Change 4.9 4.1 4.4 –3.7 –16.4 –3.3 0.6 2.0 2.9 4.0 1.2

Radio 6,847 7,211 7,592 7,483 6,356 6,204 6,250 6,408 6,637 6,939

% Change 5.5 5.3 5.3 –1.4 –15.1 –2.4 0.7 2.5 3.6 4.6 1.8

Out-of-home 8,287 9,025 9,709 9,907 8,127 8,161 8,317 8,635 9,005 9,503

% Change 6.9 8.9 7.6 2.0 –18.0 0.4 1.9 3.8 4.3 5.5 3.2

Directories 9,641 10,453 10,905 10,823 9,512 8,912 8,775 8,730 8,763 8,844

% Change 3.3 8.4 4.3 –0.8 –12.1 –6.3 –1.5 –0.5 0.4 0.9 –1.4

Trade magazines 5,513 5,866 6,113 6,132 5,065 4,825 4,852 5,059 5,361 5,728

% Change 1.6 6.4 4.2 0.3 –17.4 –4.7 0.6 4.3 6.0 6.8 2.5

Total 119,251 128,910 139,922 141,620 123,122 123,284 126,539 132,382 139,336 147,863

% Change 6.3 8.1 8.5 1.2 –13.1 0.1 2.6 4.6 5.3 6.1 3.7


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increase at a 10.3 percent compound annual rate.

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increase at a 10.3 percent compound annual rate.

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2009p

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2009p 2010

FOR PRESS U

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20102010

19,837

FOR PRESS U

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19,837 22,029

FOR PRESS U

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22,02922,029

22.5

FOR PRESS U

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22.5 6.2

FOR PRESS U

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6.2

44,315

FOR PRESS U

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44,315 38,646

FOR PRESS U

SE ONLY

38,646

1.8

FOR PRESS U

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1.8

286

FOR PRESS U

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286 370

FOR PRESS U

SE ONLY

370

46.7

FOR PRESS U

SE ONLY

46.7

12,871

FOR PRESS U

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12,871 13,267

FOR PRESS U

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13,267

4.8

FOR PRESS U

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4.8

33,480

FOR PRESS U

SE ONLY

33,480 34,847

FOR PRESS U

SE ONLY

34,847

4.9

FOR PRESS U

SE ONLY

4.9

6,847FOR PRESS U

SE ONLY

6,847



EMEA 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Western Europe

Austria 1,822 1,993 2,184 2,367 2,027 2,069 2,127 2,189 2,254 2,330 2.8

Belgium 3,256 3,650 3,923 3,951 3,553 3,537 3,568 3,623 3,703 3,804 1.4

Denmark 2,012 2,226 2,278 2,154 1,775 1,697 1,666 1,667 1,685 1,720 –0.6

Finland 1,556 1,636 1,812 1,875 1,579 1,495 1,517 1,602 1,660 1,724 1.8

France 12,304 12,829 13,227 13,063 11,357 11,352 11,527 11,867 12,156 12,549 2.0

Germany 20,700 22,305 23,678 23,648 21,624 21,611 22,186 23,053 24,048 25,346 3.2

Greece 3,097 3,375 3,854 3,840 3,287 3,203 3,209 3,247 3,319 3,420 0.8

Ireland 1,285 1,452 1,599 1,619 1,282 1,216 1,221 1,269 1,328 1,399 1.8

Italy 12,147 12,607 13,118 12,855 11,217 10,874 10,856 11,046 11,349 11,790 1.0

Netherlands 4,729 5,371 5,757 5,788 5,017 4,776 4,772 4,905 5,135 5,430 1.6

Norway 2,333 2,507 2,732 2,806 2,315 2,208 2,294 2,394 2,500 2,658 2.8

Portugal 1,486 1,483 1,529 1,498 1,197 1,176 1,153 1,160 1,171 1,195 0.0

Spain 9,500 10,315 11,261 10,141 8,171 7,837 7,748 7,866 8,123 8,526 0.9

Sweden 2,480 2,786 3,001 3,149 2,724 2,694 2,781 2,876 3,000 3,152 3.0

Switzerland 3,854 4,132 4,577 4,727 4,372 4,400 4,505 4,684 4,862 5,099 3.1

United Kingdom 21,163 21,593 22,914 22,416 19,836 20,125 20,609 21,552 22,701 23,902 3.8



Czech Republic 1,520 1,730 1,821 2,005 1,798 1,732 1,765 1,855 1,947 2,063 2.8

Hungary 880 968 1,023 1,091 917 884 933 1,001 1,076 1,167 4.9

Poland 1,784 2,032 2,355 2,655 2,495 2,547 2,651 2,824 3,011 3,189 5.0

Romania 309 394 466 551 416 417 458 548 642 747 12.4

Russia 4,268 5,471 6,946 8,239 5,960 6,287 6,889 7,657 8,583 9,694 10.2

Turkey 1,535 1,870 2,282 2,249 1,741 2,005 2,152 2,471 2,796 3,148 12.6


Middle East/Africa

Israel 856 856 915 916 849 859 881 908 936 969 2.7


South Africa 1,894 2,228 2,591 2,794 2,446 2,594 2,670 2,900 3,154 3,470 7.2


EMEA total 119,251 128,910 139,922 141,620 123,122 123,284 126,539 132,382 139,336 147,863 3.7


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11,527

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11,52711,527 11,867

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11,86711,867

22,186

FOR PRESS U

SE ONLY22,18622,186 23,053

FOR PRESS U

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3,203

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SE ONLY3,2033,203 3,209

FOR PRESS U

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1,216

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1,2161,216 1,221

FOR PRESS U

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10,874

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10,87410,874

5,017

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5,017 4,776

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4,7764,776

2,315

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2,315 2,208

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2,2082,208

1,197

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1,197

10,141

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10,141 8,171

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8,171

3,149

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3,149

4,577

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4,577 4,727

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4,727

22,914

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22,914 22,416

FOR PRESS U

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22,416

117,444

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117,444

1,730

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1,730 1,821

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1,821

968

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968

1,784

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1,784 2,032

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309FOR PRESS U

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309

4,268FOR PRESS U

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4,268


increase at a 1.2 percent compound annual rate, while the remaining segments will grow by 1 percent or less. Consumer magazines will be lower in 2014 than in 2009.

Germany was the largest market in 2009, at $55 billion, and the UK and France were next, at $44 billion and $40 billion, respectively. Italy was a distant fourth, at $23 billion. We expect Western Europe to increase at a 2.6 percent compound annual rate during the next fi ve years; Central and Eastern Europe will expand at a rate of 4.6 percent compounded annually; and Middle East/Africa will average 3.8 percent on a compound annual basis.


Consumer/end-user spending fell by 0.7 percent in 2009. We look for a 0.5 percent increase in 2010 and faster growth in subsequent years. Spending will rise from $260 billion in 2009 to $298 billion in 2014, a 2.8 percent compound annual increase. Video games will be the fastest-growing category, with a projected 6.2 percent compound annual increase. TV subscriptions will expand by 5.4 percent compounded annually, and fi lmed entertainment will grow at a 4.2 percent compound annual rate. Radio and consumer and educational books will each


EMEA 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR


% Change 8.6 7.4 9.5 6.6 3.7 3.6 5.3 6.1 6.6 5.6 5.4

Recorded music 12,585 11,826 10,635 9,648 9,296 9,111 9,077 9,192 9,414 9,745

% Change –2.9 –6.0 –10.1 –9.3 –3.6 –2.0 –0.4 1.3 2.4 3.5 0.9


% Change –5.9 0.2 0.2 –1.1 4.5 0.6 4.1 5.2 5.7 5.5 4.2

Video games 10,395 11,501 14,137 16,643 16,401 17,614 18,553 19,648 20,853 22,151

% Change 8.2 10.6 22.9 17.7 –1.5 7.4 5.3 5.9 6.1 6.2 6.2


% Change 2.5 0.3 1.3 –2.3 –4.1 –2.4 –0.8 0.3 0.7 1.0 –0.3

Newspapers 29,312 29,551 29,804 29,965 29,685 29,481 29,663 29,928 30,279 30,759

% Change 1.6 0.8 0.9 0.5 –0.9 –0.7 0.6 0.9 1.2 1.6 0.7

Radio 9,315 9,475 9,741 9,861 10,061 10,200 10,282 10,379 10,620 10,656

% Change 3.0 1.7 2.8 1.2 2.0 1.4 0.8 0.9 2.3 0.3 1.2


% Change 3.1 0.7 2.5 0.1 –2.5 –0.9 0.7 1.6 2.2 2.5 1.2


% Change 2.9 5.5 7.2 –1.8 –7.2 –3.8 –1.3 1.6 4.1 5.0 1.0

Total 238,831 245,762 257,159 261,657 259,743 261,106 266,766 275,515 286,815 298,373

% Change 2.9 2.9 4.6 1.7 –0.7 0.5 2.2 3.3 4.1 4.0 2.8


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years; Central and Eastern Europe will expand at a rate of

FOR PRESS U

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years; Central and Eastern Europe will expand at a rate of 4.6 percent compounded annually; and Middle East/Africa

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4.6 percent compounded annually; and Middle East/Africa will average 3.8 percent on a compound annual basis.

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FOR PRESS U

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FOR PRESS U

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2010

FOR PRESS U

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20102010 2011

FOR PRESS U

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20112011

71,303

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71,30371,303

3.7

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3.7 3.6

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3.63.6

9,296

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9,296

–9.3

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–9.3 –3.6

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–3.6

23,221

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23,221 24,261

FOR PRESS U

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24,261

–1.1

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–1.1

14,137

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14,137 16,643

FOR PRESS U

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16,643

22.9

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22.9

22,824

FOR PRESS U

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22,824 23,120

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23,120

0.3

FOR PRESS U

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0.3

29,312

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29,312 29,551

FOR PRESS U

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29,551

1.6FOR PRESS U

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1.6

9,315FOR PRESS U

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9,315



EMEA 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Western Europe

Austria 6,023 6,171 6,462 6,595 6,544 6,608 6,707 6,868 7,101 7,322 2.3

Belgium 4,742 4,898 5,123 5,302 5,281 5,344 5,513 5,765 6,059 6,363 3.8

Denmark 4,596 4,685 4,870 4,959 4,987 5,089 5,196 5,347 5,586 5,784 3.0

Finland 3,209 3,271 3,380 3,395 3,402 3,430 3,486 3,565 3,685 3,817 2.3

France 36,864 37,658 39,642 40,274 40,091 40,162 40,968 42,152 43,643 45,185 2.4

Germany 51,910 52,978 54,317 54,935 55,330 55,332 55,926 57,084 58,869 60,339 1.7

Greece 2,047 2,109 2,213 2,250 2,223 2,126 2,140 2,203 2,289 2,387 1.4

Ireland 2,447 2,622 2,829 2,913 2,872 2,908 2,994 3,129 3,290 3,469 3.8

Italy 20,674 21,536 22,935 23,314 22,894 22,888 23,319 24,276 25,366 26,608 3.1

Netherlands 9,272 9,575 10,059 10,396 10,346 10,424 10,776 11,253 11,788 12,375 3.6

Norway 4,551 4,789 5,051 5,205 5,179 5,262 5,419 5,606 5,872 6,112 3.4

Portugal 2,127 2,261 2,409 2,545 2,567 2,634 2,770 2,979 3,193 3,388 5.7

Spain 14,217 14,574 14,618 14,615 14,424 14,375 14,712 15,237 15,992 16,852 3.2

Sweden 5,636 5,822 6,126 6,187 6,186 6,261 6,395 6,564 6,777 7,012 2.5

Switzerland 5,114 5,268 5,354 5,516 5,592 5,697 5,795 6,021 6,224 6,435 2.8

United Kingdom 42,712 43,147 45,291 45,037 44,200 44,489 45,564 46,971 48,786 50,688 2.8



Czech Republic 1,781 1,862 1,965 2,017 1,996 2,009 2,065 2,160 2,275 2,398 3.7

Hungary 1,631 1,703 1,741 1,760 1,720 1,707 1,725 1,774 1,841 1,925 2.3

Poland 3,410 3,713 4,101 4,498 4,428 4,458 4,590 4,746 4,950 5,177 3.2

Romania 790 873 974 1,034 1,049 1,046 1,063 1,084 1,114 1,150 1.9

Russia 6,054 6,637 7,391 8,081 7,493 7,645 8,002 8,531 9,216 9,990 5.9

Turkey 1,583 1,760 1,901 2,053 2,066 2,118 2,261 2,442 2,658 2,896 7.0


Middle East/Africa

Israel 1,595 1,609 1,657 1,685 1,669 1,673 1,706 1,745 1,801 1,861 2.2


South Africa 2,228 2,442 2,638 2,860 2,998 3,193 3,295 3,432 3,618 3,828 5.0


EMEA total 238,831 245,762 257,159 261,657 259,743 261,106 266,766 275,515 286,815 298,373 2.8


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40,968

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55,926

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2,126

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2,1262,126 2,140

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2,908

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2,9082,908

22,894

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22,894 22,888

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10,346

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10,346 10,424

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5,179

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5,179

2,545

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2,545 2,567

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2,567

14,615

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SE ONLY

14,615 14,424

FOR PRESS U

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14,424

6,126

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6,126 6,187

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6,187

5,354

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5,354 5,516

FOR PRESS U

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5,516

45,291

FOR PRESS U

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45,291

221,364

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221,364 230,679

FOR PRESS U

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230,679

1,781

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1,781 1,862

FOR PRESS U

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1,862

1,631

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1,631 1,703

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1,703

3,410FOR PRESS U

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3,410

790FOR PRESS U

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790


Entertainment and media spending in Asia Pacifi c rose by 1.3 percent in 2009, down from a 6.7 percent advance in 2008. We expect spending during the next fi ve years to increase at a 6.4 percent compound annual rate to $475 billion in 2014 from $348 billion in 2009. Double-digit compound annual increases are projected for video

games, Internet advertising, and TV subscriptions and license fees. TV advertising will expand at a 7.4 percent compound annual rate; fi lmed entertainment will grow by 7.2 percent compounded annually; and we expect increases in excess of 5 percent compounded annually for Internet access and out-of-home advertising.


Asia Pacifi c 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR


% Change 37.7 17.5 15.6 13.7 5.8 6.8 6.4 6.4 6.1 5.3 6.2


% Change 94.0 34.5 34.2 26.5 12.6 13.2 14.9 14.5 14.5 14.3 14.3


% Change 13.6 11.1 13.1 10.0 9.5 9.6 10.3 10.6 10.0 9.7 10.0

TV advertising 33,919 35,183 36,390 36,841 34,513 36,512 39,186 42,232 45,657 49,226

% Change 4.1 3.7 3.4 1.2 –6.3 5.8 7.3 7.8 8.1 7.8 7.4

Recorded music 7,996 8,000 7,998 7,727 8,419 8,837 9,263 9,584 9,952 10,384

% Change –1.4 0.1 0.0 –3.4 9.0 5.0 4.8 3.5 3.8 4.3 4.3


% Change –0.6 3.9 4.7 3.2 6.8 7.1 7.1 6.9 7.8 7.0 7.2

Video games 9,436 11,245 14,332 16,961 19,411 22,474 26,087 30,528 35,452 41,337

% Change 11.6 19.2 27.5 18.3 14.4 15.8 16.1 17.0 16.1 16.6 16.3


% Change 8.6 2.2 –0.2 –1.3 –9.5 –2.4 1.9 2.9 3.5 3.5 1.8


% Change 3.1 3.1 3.1 1.9 –3.8 0.0 1.6 2.9 3.5 3.6 2.3

Radio 6,766 7,170 7,306 7,634 7,449 7,657 7,991 8,358 8,800 9,250

% Change 4.9 6.0 1.9 4.5 –2.4 2.8 4.4 4.6 5.3 5.1 4.4


% Change 2.2 3.9 7.1 1.1 –9.5 1.6 5.4 6.9 7.6 8.2 5.9


% Change 3.7 5.9 8.7 5.0 –0.9 1.0 1.8 2.5 2.9 3.0 2.2


% Change 6.0 4.4 5.6 1.3 –8.1 –3.0 0.9 2.6 4.2 4.8 1.8

Total 273,701 295,875 322,009 343,579 348,172 365,656 388,223 414,574 443,878 474,913

% Change 11.3 8.1 8.8 6.7 1.3 5.0 6.2 6.8 7.1 7.0 6.4


Asia Pacifi c

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2012

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20122012

112,882

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6.4

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19,850

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19,85019,850

13.2

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13.213.2 14.9

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14.914.9

32,041

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32,04132,041

9.5

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9.5 9.6

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9.69.6

34,513

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34,513 36,512

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36,51236,512

–6.3

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7,727

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7,727 8,419

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8,419

–3.4

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–3.4

18,766

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18,766 19,373

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19,373

4.7

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4.7

14,332

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14,332

19.2

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19.2 27.5

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27.5

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compound annual rate. The People’s Republic of China is second, at $76 billion. South Korea at $29 billion, Australia at $22 billion, and India at $15 billion were other countries above $10 billion in 2009.


Asia Pacifi c 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Australia 18,245 18,874 20,815 22,234 21,796 22,576 23,744 24,922 26,356 27,934 5.1

China 41,297 47,245 57,496 69,166 75,815 85,268 94,868 106,207 118,989 133,375 12.0

Hong Kong 4,749 5,157 5,533 5,834 5,563 5,776 6,016 6,297 6,630 6,989 4.7

India 8,746 10,503 12,401 13,616 14,600 16,126 17,942 20,025 22,740 25,468 11.8

Indonesia 3,187 3,718 5,213 6,502 7,246 8,103 8,850 9,714 10,640 11,565 9.8

Japan 150,975 160,716 166,999 169,298 164,337 166,300 171,202 177,331 183,241 188,873 2.8

Malaysia 2,313 2,535 3,065 3,456 3,722 3,926 4,145 4,444 4,775 5,142 6.7

New Zealand 3,344 3,412 3,616 3,692 3,613 3,717 3,902 4,115 4,377 4,680 5.3

Pakistan 951 1,036 1,108 1,214 1,498 1,644 2,198 2,760 3,673 4,580 25.0

Philippines 1,895 2,102 2,405 2,872 3,014 3,273 3,661 4,185 4,814 5,486 12.7

Singapore 2,277 2,386 2,536 2,678 2,688 2,804 2,860 3,028 3,235 3,452 5.1

South Korea 21,634 24,047 26,273 28,076 28,836 30,094 31,822 33,385 34,947 36,501 4.8

Taiwan 7,964 7,989 8,120 8,206 8,515 8,687 8,980 9,293 9,644 10,037 3.3

Thailand 5,615 5,504 5,613 5,725 5,685 5,944 6,342 6,846 7,439 8,081 7.3

Vietnam 509 651 816 1,010 1,244 1,418 1,691 2,022 2,378 2,750 17.2

Total 273,701 295,875 322,009 343,579 348,172 365,656 388,223 414,574 443,878 474,913 6.4


Japan at $164 billion is by far the dominant country, accounting for 47 percent of total spending in Asia Pacifi c in 2009 and the second-largest country in the world, behind the United States. Excluding Japan, E&M spending in Asia Pacifi c will increase at a projected 9.2 percent

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5,776

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16,126

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7,246

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164,337

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164,337 166,300

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3,722

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3,722

3,692

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3,692 3,613

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3,613

1,214

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1,214

2,405

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2,405 2,872

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2,872

2,536

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2,536 2,678

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2,678

26,273

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26,273

7,989

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7,989 8,120

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8,120

5,504

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5,504

509

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509 651

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273,701

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273,701

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295,875

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SE ONLY



annual increases of 9.8 percent, 7.4 percent, and 6.4 percent, respectively. TV subscriptions and license fees will grow at a 4.6 percent compound annual rate; recorded music will increase at a 4.0 percent compound annual rate; and Internet access spending will advance by 3.8 percent compounded annually. Total consumer/end-user spending will grow at a 3.0 percent compound annual rate, while advertising will increase by 1.3 percent on a compound annual basis.

Japan

E&M spending in Japan declined by 2.9 percent in 2009. We look for a modest rebound in 2010, but we expect Japan to be the slowest-growing country in Asia Pacifi c during the next fi ve years, with a projected 2.8 percent increase compounded annually to $189 billion in 2014. Internet advertising, video games, and fi lmed entertainment will be relatively healthy, with compound




Japan2014


CAGR2014


CAGR2014


CAGR2014


CAGR




TV advertising 15,321 0.9 15,321 0.9

Recorded music 8,384 4.0 8,384 4.0


Video games 10,301 7.3 239 13.1 10,540 7.4

Consumer magazine publishing 5,553 –0.3 1,799 –2.9 7,352 –0.9

Newspaper publishing 13,607 –0.6 6,545 –3.6 20,152 –1.7

Radio 2,698 1.5 1,374 –1.8 4,072 0.3

Out-of-home advertising 4,015 –1.5 4,015 –1.5



Trade magazines 865 0.0 676 –2.4 1,541 –1.1


Business information 3,044 –1.3 3,044 –1.3


Business-to-business total 7,947 –1.4

Total 86,061 3.0 43,862 1.3 58,950 3.8 188,873 2.8


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wired and mobile

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2014

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2014 2014 (US$ millions)

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9.8

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15,321

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7.3

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–0.6

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2,698

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2,698 1.5

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10,833FOR PRESS U

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Internet advertising, TV subscriptions and license fees, TV advertising, recorded music, fi lmed entertainment, video games, radio, and out-of-home advertising. Overall consumer/end-user spending will increase at a 13.2 percent compound annual rate, and advertising will expand by 13.5 percent compounded annually.




China2014


CAGR2014


CAGR2014


CAGR2014


CAGR




TV advertising 15,147 14.6 15,147 14.6

Recorded music 286 13.3 286 13.3


Video games 18,974 33.5 91 25.7 19,065 33.5

Consumer magazine publishing 3,522 6.9 842 12.6 4,364 7.9


Radio 2,227 12.3 2,227 12.3




Trade magazines 329 7.6 178 13.6 507 9.5





Total 64,712 13.2 39,038 13.5 29,625 8.0 133,375 12.0


China

The PRC will continue to be among the faster-growing countries during the next fi ve years, with a projected 12.0 percent compound annual increase. Double-digit annual gains during the next fi ve years are projected for

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wired and mobile

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2014

FOR PRESS U

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(US$ millions)

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25.1

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25.1

15,147

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15,147 14.6

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14.6

33.5

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6.9

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6.9

6.0

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6.0

11,428

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magazines; consumer and educational book publishing; and business-to-business. Overall consumer/end-user spending will increase at a 9.7 percent compound annual rate, and advertising will grow by 13.5 percent compounded annually.




India2014


CAGR2014


CAGR2014


CAGR2014


CAGR


Internet advertising: wired and mobile 532 28.3 532 28.3


TV advertising 3,504 13.4 3,504 13.4



Video games 379 27.4 5 10.8 384 27.0

Consumer magazine publishing 146 6.4 508 9.3 654 8.6


Radio 440 17.0 440 17.0




Trade magazines 8 5.9 61 10.5 69 9.9




Business-to-business total 723 7.8

Total 14,276 9.7 9,050 13.5 2,142 21.8 25,468 11.8


India

We expect a comparable 11.8 percent compound annual increase in India during the next fi ve years. Double-digit annual growth is projected for each segment except recorded music, which we expect will decline; consumer

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Internet access:

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2014

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(US$ millions)

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2010–14

FOR PRESS U

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CAGR

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2,142

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2,142

13.4

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13.4

5

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5

508

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508

4.8

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4.8 3,465

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3,465

2,452

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2,452


Japan, the PRC, and South Korea were the dominant countries, with spending at $49 billion, $20 billion, and $11 billion, respectively, in 2009. Taiwan at $2.5 billion, Australia at $2.3 billion, and Indonesia at $2 billion were the only other countries above $1 billion. The top six countries in 2009 accounted for 93 percent of total access spending in Asia Pacifi c.


Asia Pacifi c 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR


% Change 37.7 17.5 15.6 13.7 5.8 6.8 6.4 6.4 6.1 5.3 6.2



Asia Pacifi c 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Australia 1,701 1,779 2,010 2,285 2,267 2,297 2,406 2,534 2,717 2,921 5.2

China 7,695 8,828 12,800 18,279 20,201 22,786 24,449 26,187 27,951 29,625 8.0

Hong Kong 691 770 836 863 870 897 941 988 1,061 1,136 5.5

India 281 385 649 653 799 917 1,087 1,351 1,735 2,142 21.8

Indonesia 168 227 1,057 1,609 1,956 2,337 2,532 2,747 3,008 3,251 10.7

Japan 34,623 41,780 45,399 47,965 48,842 50,988 53,314 55,716 57,604 58,950 3.8

Malaysia 323 392 506 651 787 886 939 1,023 1,111 1,215 9.1

New Zealand 501 505 567 622 672 742 825 948 1,086 1,234 12.9

Pakistan 365 396 378 408 464 558 1,047 1,541 2,391 3,229 47.4

Philippines 190 271 448 790 908 1,061 1,330 1,707 2,161 2,637 23.8

Singapore 442 452 442 494 599 672 629 680 752 826 6.6

South Korea 7,585 8,884 9,979 10,801 11,466 11,770 12,350 12,662 12,842 13,005 2.6

Taiwan 1,764 1,804 1,835 1,902 2,459 2,545 2,651 2,750 2,888 3,050 4.4

Thailand 704 485 438 540 617 728 881 1,093 1,324 1,561 20.4

Vietnam 169 250 322 437 526 604 756 955 1,171 1,390 21.5

Total 57,202 67,208 77,666 88,299 93,433 99,788 106,137 112,882 119,802 126,172 6.2


Internet access

Internet access growth dropped to 5.8 percent in 2009 from double-digit increases during the prior four years. We expect growth to remain at mid single digits, averaging 6.2 percent compounded annually to $126 billion from $93 billion in 2009.

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99,788

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6.8

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6.86.8

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2008

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2008 2009p

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2009p

2,285

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2,285

12,800

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12,800 18,279

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18,279

836

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836

385

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385 649

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649

227

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227

34,623

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34,623 41,780

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41,780

323

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323 392

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392

501FOR PRESS U

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501

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365


as a whole. We project a 15.8 percent compound annual increase for a small video game market and 14.3 percent growth compounded annually for Internet advertising. TV advertising will grow at a projected 7.4 percent compound annual rate, and out-of-home and radio advertising will each expand by 5.9 percent compounded annually.

Advertising

Advertising declined by 6.3 percent in 2009. We expect the market to increase by 3.4 percent in 2010 and then grow at mid- to high-single-digit rates through 2014, averaging 6.6 percent compounded annually for the forecast period


Asia Pacifi c 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR


% Change 94.0 34.5 34.2 26.5 12.6 13.2 14.9 14.5 14.5 14.3 14.3

Television 33,919 35,183 36,390 36,841 34,513 36,512 39,186 42,232 45,657 49,226

% Change 4.1 3.7 3.4 1.2 –6.3 5.8 7.3 7.8 8.1 7.8 7.4

Video games 18 102 141 188 227 275 331 382 422 472

% Change ––– 466.7 38.2 33.3 20.7 21.1 20.4 15.4 10.5 11.8 15.8


% Change 16.4 0.0 0.1 –2.4 –17.5 –4.5 2.9 3.8 4.4 4.5 2.2

Newspapers 23,855 25,081 25,961 25,772 23,379 23,057 23,490 24,531 25,863 27,285

% Change 4.1 5.1 3.5 –0.7 –9.3 –1.4 1.9 4.4 5.4 5.5 3.1

Radio 4,277 4,623 4,718 5,005 4,784 4,954 5,245 5,568 5,961 6,379

% Change 4.4 8.1 2.1 6.1 –4.4 3.6 5.9 6.2 7.1 7.0 5.9

Out-of-home 8,412 8,736 9,354 9,459 8,562 8,695 9,164 9,799 10,546 11,412

% Change 2.2 3.9 7.1 1.1 –9.5 1.6 5.4 6.9 7.6 8.2 5.9

Directories 5,222 5,365 5,697 5,817 5,043 4,836 4,857 4,973 5,108 5,266

% Change 4.4 2.7 6.2 2.1 –13.3 –4.1 0.4 2.4 2.7 3.1 0.9

Trade magazines 1,629 1,654 1,659 1,553 1,258 1,167 1,192 1,237 1,288 1,346

% Change 22.7 1.5 0.3 –6.4 –19.0 –7.2 2.1 3.8 4.1 4.5 1.4

Total 88,644 93,527 98,923 101,785 95,414 98,652 104,801 112,494 121,397 131,138

% Change 8.1 5.5 5.8 2.9 –6.3 3.4 6.2 7.3 7.9 8.0 6.6


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2012

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20122012

19,850

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SE ONLY19,85019,850 22,732

FOR PRESS U

SE ONLY22,73222,732

14.9

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14.914.9 14.5

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14.514.5

39,186

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39,18639,186

5.8

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5.85.8 7.3

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7.37.3

275

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275275

20.7

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20.7 21.1

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21.121.1

4,522

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4,522 4,320

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4,3204,320

–17.5

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25,772

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25,772 23,379

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23,379

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4,718

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4,718 5,005

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8,736

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8,736 9,354

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9,354

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3.9 7.1

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5,365

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4.4 2.7

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2.7

1,629FOR PRESS U

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growth for the remaining countries during the next fi ve years will average 10.0 percent on a compound annual basis.


Asia Pacifi c 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Australia 8,951 9,173 10,232 10,606 9,729 9,963 10,474 10,903 11,503 12,169 4.6

China 12,384 14,781 16,808 19,508 20,736 23,428 26,326 30,017 34,249 39,038 13.5

Hong Kong 2,282 2,511 2,679 2,799 2,519 2,644 2,756 2,894 3,049 3,220 5.0

India 2,711 3,340 4,019 4,551 4,810 5,281 5,996 6,893 7,944 9,050 13.5

Indonesia 2,054 2,436 2,908 3,487 3,797 4,160 4,568 5,028 5,512 6,009 9.6

Japan 47,446 48,153 48,679 47,177 41,217 39,942 40,499 41,569 42,686 43,862 1.3

Malaysia 588 615 701 778 739 761 807 878 967 1,063 7.5

New Zealand 1,338 1,333 1,399 1,379 1,254 1,278 1,336 1,365 1,414 1,480 3.4

Pakistan 114 141 199 241 266 277 288 301 311 327 4.2

Philippines 835 900 961 1,032 1,046 1,120 1,199 1,291 1,394 1,505 7.5

Singapore 763 795 850 880 765 776 822 881 958 1,041 6.4

South Korea 4,052 4,265 4,378 4,312 3,807 4,128 4,558 4,971 5,500 6,010 9.6

Taiwan 2,310 2,233 2,203 2,151 1,902 1,909 1,961 2,038 2,118 2,205 3.0

Thailand 2,608 2,612 2,612 2,546 2,462 2,577 2,754 2,952 3,217 3,513 7.4

Vietnam 208 239 295 338 365 408 457 513 575 646 12.1

Total 88,644 93,527 98,923 101,785 95,414 98,652 104,801 112,494 121,397 131,138 6.6


Japan at $41 billion in 2009 was the leading country, with the PRC second, at $21 billion, and Australia third, at $10 billion, together accounting for 75 percent of total advertising in Asia Pacifi c. Excluding Japan, advertising

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26,326

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2,756

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SE ONLY2,7562,756

5,281

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5,2815,281 5,996

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4,160

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41,217

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41,217 39,942

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739

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1,254

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1,254

241

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241 266

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1,032

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1,032

850

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850 880

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880

4,378

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4,378 4,312

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4,312

2,203

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2,203

2,612

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2,612 2,612

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2,612

239

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239

88,644

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88,644 93,527

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93,527

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fees by 10.0 percent compounded annually, and fi lmed entertainment by 7.2 percent on a compound annual basis. Growth in the remaining segments will be less than 5 percent compounded annually.

Japan at $74 billion in 2009 was more than twice that ofthe PRC, which was second, at $35 billion. South Koreatotaled $14 billion, with Australia at $10 billion and Indiaat $9 billion.


Consumer/end-user spending rose by 3.8 percent in 2009, down from a 5.6 percent increase in 2008. We expect a 5.0 percent advance in 2010, with growth of 6 percent or more during 2011–14. For the forecast period as a whole, growth will average 6.4 percent compounded annually from $159 billion in 2009 to $218 billion in 2014. We project video games to expand at a 16.3 percent compound annual rate, TV subscriptions and license


Asia Pacifi c 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR


% Change 13.6 11.1 13.1 10.0 9.5 9.6 10.3 10.6 10.0 9.7 10.0

Recorded music 7,996 8,000 7,998 7,727 8,419 8,837 9,263 9,584 9,952 10,384

% Change –1.4 0.1 0.0 –3.4 9.0 5.0 4.8 3.5 3.8 4.3 4.3


% Change –0.6 3.9 4.7 3.2 6.8 7.1 7.1 6.9 7.8 7.0 7.2

Video games 9,418 11,143 14,191 16,773 19,184 22,199 25,756 30,146 35,030 40,865

% Change 11.4 18.3 27.4 18.2 14.4 15.7 16.0 17.0 16.2 16.7 16.3


% Change 5.1 3.3 –0.3 –0.7 –5.5 –1.6 1.5 2.5 3.1 3.1 1.7

Newspapers 24,987 25,270 25,932 27,102 27,461 27,774 28,156 28,611 29,115 29,646

% Change 2.2 1.1 2.6 4.5 1.3 1.1 1.4 1.6 1.8 1.8 1.5

Radio 2,489 2,547 2,588 2,629 2,665 2,703 2,746 2,790 2,839 2,871

% Change 5.8 2.3 1.6 1.6 1.4 1.4 1.6 1.6 1.8 1.1 1.5


% Change 3.7 5.9 8.7 5.0 –0.9 1.0 1.8 2.5 2.9 3.0 2.2


% Change 4.8 5.5 6.0 1.9 –4.7 –2.3 0.9 2.6 4.7 5.5 2.2

Total 127,855 135,140 145,420 153,495 159,325 167,216 177,285 189,198 202,679 217,603

% Change 4.6 5.7 7.6 5.6 3.8 5.0 6.0 6.7 7.1 7.4 6.4


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2011

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20112011

32,041

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32,04132,041 35,348

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35,34835,348

9.6

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9.69.6

8,419

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8,419 8,837

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8,8378,837

9.0

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9.0

20,684

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20,684

3.2

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3.2 6.8

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6.8

16,773

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16,773 19,184

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19,184

27.4

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27.4 18.2

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18.2

11,197

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11,197 11,120

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11,120

3.3

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3.3 –0.3

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25,270

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25,270 25,932

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25,932

1.1

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2,489

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2,489 2,547

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5.8



Asia Pacifi c 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Australia 7,593 7,922 8,573 9,343 9,800 10,316 10,864 11,485 12,136 12,844 5.6

China 21,218 23,636 27,888 31,379 34,878 39,054 44,093 50,003 56,789 64,712 13.2

Hong Kong 1,776 1,876 2,018 2,172 2,174 2,235 2,319 2,415 2,520 2,633 3.9

India 5,754 6,778 7,733 8,412 8,991 9,928 10,859 11,781 13,061 14,276 9.7

Indonesia 965 1,055 1,248 1,406 1,493 1,606 1,750 1,939 2,120 2,305 9.1

Japan 68,906 70,783 72,921 74,156 74,278 75,370 77,389 80,046 82,951 86,061 3.0

Malaysia 1,402 1,528 1,858 2,027 2,196 2,279 2,399 2,543 2,697 2,864 5.5

New Zealand 1,505 1,574 1,650 1,691 1,687 1,697 1,741 1,802 1,877 1,966 3.1

Pakistan 472 499 531 565 768 809 863 918 971 1,024 5.9

Philippines 870 931 996 1,050 1,060 1,092 1,132 1,187 1,259 1,344 4.9

Singapore 1,072 1,139 1,244 1,304 1,324 1,356 1,409 1,467 1,525 1,585 3.7

South Korea 9,997 10,898 11,916 12,963 13,563 14,196 14,914 15,752 16,605 17,486 5.2

Taiwan 3,890 3,952 4,082 4,153 4,154 4,233 4,368 4,505 4,638 4,782 2.9

Thailand 2,303 2,407 2,563 2,639 2,606 2,639 2,707 2,801 2,898 3,007 2.9

Vietnam 132 162 199 235 353 406 478 554 632 714 15.1

Total 127,855 135,140 145,420 153,495 159,325 167,216 177,285 189,198 202,679 217,603 6.4


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77,389

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2,399

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1,697

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from $50 billion in 2009. We expect double-digit compound annual growth in Internet advertising and Internet access spending and a 9.3 percent compound annual gain in video games and radio. Out-of-home advertising will increase

Latin America was the fast-growing region in 2009, with a 3.9 percent increase. We expect Latin America to continue to be the fastest-growing region, with a projected 8.8 percent compound annual increase to $77 billion in 2014

Latin America


Latin America 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR


% Change 27.0 30.3 33.6 27.7 15.6 12.0 17.0 18.9 17.9 16.4 16.4

Internet advertising: wired and mobile 234 297 469 685 814 933 1,078 1,263 1,468 1,704

% Change 50.0 26.9 57.9 46.1 18.8 14.6 15.5 17.2 16.2 16.1 15.9


% Change 10.4 12.6 15.5 14.7 3.5 3.8 6.5 9.2 9.9 10.7 8.0

TV advertising 6,758 7,906 9,498 10,277 10,485 11,258 11,994 13,131 14,106 15,346

% Change 21.9 17.0 20.1 8.2 2.0 7.4 6.5 9.5 7.4 8.8 7.9

Recorded music 899 874 762 677 641 620 611 612 620 632

% Change –6.2 –2.8 –12.8 –11.2 –5.3 –3.3 –1.5 0.2 1.3 1.9 –0.3


% Change –0.4 10.6 6.7 –4.3 11.5 –0.2 5.3 6.3 7.3 7.4 5.2

Video games 547 687 890 1,102 1,127 1,254 1,382 1,503 1,634 1,756

% Change –5.4 25.6 29.5 23.8 2.3 11.3 10.2 8.8 8.7 7.5 9.3


% Change 10.3 9.9 10.9 3.9 –5.6 3.3 4.8 5.9 5.7 5.9 5.1


% Change 8.8 9.3 11.7 5.8 0.5 4.0 4.4 5.4 5.4 6.2 5.1

Radio 816 906 1,052 1,119 1,150 1,238 1,342 1,474 1,623 1,794

% Change 17.7 11.0 16.1 6.4 2.8 7.7 8.4 9.8 10.1 10.5 9.3

Out-of-home advertising 750 868 929 995 1,024 1,109 1,208 1,318 1,439 1,559

% Change 23.8 15.7 7.0 7.1 2.9 8.3 8.9 9.1 9.2 8.3 8.8


% Change 2.5 2.8 2.9 6.2 –2.1 0.6 1.8 2.6 2.9 3.7 2.3


% Change 8.0 9.1 7.7 3.7 –3.9 –0.1 2.6 4.6 5.9 7.0 4.0

Total 33,410 37,982 43,930 48,616 50,489 53,436 57,680 63,463 69,706 76,815

% Change 12.3 13.7 15.7 10.7 3.9 5.8 7.9 10.0 9.8 10.2 8.8


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2012

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20122012

15,241

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15,24115,241

17.0

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1,078

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14.6

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8,852

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9,4269,426

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10,485

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10,485 11,258

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11,25811,258

2.0

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2.0

677

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677 641

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2,277

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2,277 2,180

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2,180

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890

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25.6 29.5

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2,811

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2,811

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10.3 9.9

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compounded annually. The remaining segments will average 4 percent or less compounded annually.

Brazil and Mexico were the dominant countries, at $23 billion and $12 billion, respectively, in 2009, together accounting for 69 percent of total spending in Latin America.

by 8.8 percent compounded annually, TV subscriptions will expand at an 8.0 percent compound annual rate, and TV advertising will grow by 7.9 percent compounded annually. Filmed entertainment will increase at a 5.2 percent compound annual rate, and consumer magazines and newspapers will each expand at a rate of 5.1 percent


Latin America 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Argentina 3,908 4,558 5,347 6,084 6,425 6,979 7,621 8,355 9,241 10,206 9.7

Brazil 14,691 16,875 19,776 22,080 23,049 24,317 26,356 29,057 31,791 34,959 8.7

Chile 2,034 2,201 2,455 2,563 2,553 2,706 2,918 3,161 3,390 3,792 8.2

Colombia 3,356 3,817 4,439 4,956 5,370 5,731 6,239 7,151 8,131 9,104 11.1

Mexico 8,471 9,432 10,712 11,567 11,629 12,133 12,841 13,868 15,073 16,427 7.2

Venezuela 950 1,099 1,201 1,366 1,463 1,570 1,705 1,871 2,080 2,327 9.7

Total 33,410 37,982 43,930 48,616 50,489 53,436 57,680 63,463 69,706 76,815 8.8


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7,621

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24,317

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24,31724,317 26,356

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26,35626,356

2,706

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2,7062,706

5,370

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5,370 5,731

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5,7315,731

11,629

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11,629 12,133

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12,13312,133

1,463

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1,463

48,616

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during the entire forecast period, led by double-digit compound annual increases in Internet access, radio, Internet advertising, and video games. Consumer/end-user spending will expand at a 5.3 percent compound annual rate, and advertising will grow by 8.7 percent compounded annually.

Brazil

After increasing at double-digit annual rates through 2008, growth moderated to 4.4 percent in 2009. We expect a pickup in 2010 and high-single-digit gains during 2011–14. Growth will average 8.7 percent compounded annually




Brazil2014


CAGR2014


CAGR2014


CAGR2014


CAGR


Internet advertising: wired and mobile 988 12.7 988 12.7


TV advertising 8,426 9.8 8,426 9.8

Recorded music 233 4.4 233 4.4


Video games 487 10.0 11 12.9 498 10.0

Consumer magazine publishing 1,277 3.7 1,161 7.9 2,438 5.6


Radio 928 13.5 928 13.5




Trade magazines 82 3.5 209 8.8 291 7.2





Total 12,614 5.3 13,901 8.7 8,444 15.3 34,959 8.7


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Internet access:

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(US$ millions)

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2010–14

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CAGR

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8,444

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11

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1,161

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1,610

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Brazil was the leader at $4 billion in 2009, with Mexico and Argentina each at less than $2 billion.


Latin America 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR


% Change 27.0 30.3 33.6 27.7 15.6 12.0 17.0 18.9 17.9 16.4 16.4



Latin America 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Argentina 836 1,016 1,301 1,583 1,728 1,975 2,259 2,522 2,867 3,265 13.6

Brazil 1,647 2,238 3,025 3,698 4,140 4,370 5,134 6,152 7,247 8,444 15.3

Chile 183 222 279 313 339 372 430 510 598 694 15.4

Colombia 269 377 635 1,014 1,419 1,655 1,944 2,490 3,054 3,562 20.2

Mexico 795 1,004 1,250 1,671 1,942 2,330 2,756 3,202 3,742 4,377 17.6

Venezuela 75 101 136 181 211 252 293 365 466 577 22.3

Total 3,805 4,958 6,626 8,460 9,779 10,954 12,816 15,241 17,974 20,919 16.4


Internet access

Internet access spending will rise from $10 billion in 2009 to $21 billion in 2014, a 16.4 percent compoundannual increase.

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2009p

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1,583

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1,583 1,728

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3,698

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3,698 4,140

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313

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313

635

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635 1,014

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1,250

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6,626

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compound annual rate, and a tiny video game advertising market will increase by 14.4 percent on a compound annual basis.

Brazil was the leader in 2009, at $9 billion, with Mexiconext, at $4 billion, together constituting 71 percent of themarket in Latin America.

Advertising

Latin America was the only region where advertising increased in 2009, although growth slowed to 0.5 percent from 8.1 percent in 2008. Growth for the fi ve-year forecast period will average 7.7 percent compounded annually to $28 billion in 2014 from $19 billion in 2009. Internet advertising will expand at a projected 15.9 percent


Latin America 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Internet advertising: wired and mobile 234 297 469 685 814 933 1,078 1,263 1,468 1,704

% Change 50.0 26.9 57.9 46.1 18.8 14.6 15.5 17.2 16.2 16.1 15.9

Television 6,758 7,906 9,498 10,277 10,485 11,258 11,994 13,131 14,106 15,346

% Change 21.9 17.0 20.1 8.2 2.0 7.4 6.5 9.5 7.4 8.8 7.9

Video games 2 12 14 21 24 28 34 38 43 47

% Change ––– 500.0 16.7 50.0 14.3 16.7 21.4 11.8 13.2 9.3 14.4

Consumer magazines 985 1,121 1,331 1,438 1,255 1,323 1,424 1,549 1,668 1,800

% Change 18.0 13.8 18.7 8.0 –12.7 5.4 7.6 8.8 7.7 7.9 7.5

Newspapers 2,490 2,779 3,132 3,332 3,321 3,506 3,708 3,965 4,237 4,580

% Change 12.5 11.6 12.7 6.4 –0.3 5.6 5.8 6.9 6.9 8.1 6.6

Radio 816 906 1,052 1,119 1,150 1,238 1,342 1,474 1,623 1,794

% Change 17.7 11.0 16.1 6.4 2.8 7.7 8.4 9.8 10.1 10.5 9.3

Out-of-home 750 868 929 995 1,024 1,109 1,208 1,318 1,439 1,559

% Change 23.8 15.7 7.0 7.1 2.9 8.3 8.9 9.1 9.2 8.3 8.8

Directories 680 768 894 925 875 862 882 922 983 1,058

% Change 17.9 12.9 16.4 3.5 –5.4 –1.5 2.3 4.5 6.6 7.6 3.9

Trade magazines 238 255 276 299 279 290 313 347 382 420

% Change 15.0 7.1 8.2 8.3 –6.7 3.9 7.9 10.9 10.1 9.9 8.5

Total 12,953 14,912 17,528 18,951 19,050 20,303 21,667 23,574 25,378 27,567

% Change 19.6 15.1 17.5 8.1 0.5 6.6 6.7 8.8 7.7 8.6 7.7


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11,258

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24

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24 28

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2828

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1,438

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3,132

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3,132 3,332

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1,052

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and license fees at 8.0 percent compounded annually will be the fastest-growing categories, followed by fi lmed entertainment at 5.2 percent compounded annually. The remaining segments will grow by 3.3 percent or less compounded annually or will decline.

Brazil at $10 billion and Mexico at $5 billion were theleading countries in 2009, accounting for 70 percentof the total.


Consumer/end-user spending rose by 2.1 percent in 2009, down from a 7.2 percent increase in 2008. We expect growth to remain sluggish through 2011 and then return to increases of 6 percent or more. Spending will rise from $22 billion in 2009 to $28 billion in 2014, a 5.5 percent compound annual increase. Video games at 9.2 percent compounded annually and TV subscriptions


Latin America 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Argentina 912 1,166 1,379 1,663 1,832 2,057 2,270 2,522 2,795 3,110 11.2

Brazil 5,538 6,473 7,926 8,923 9,146 9,932 10,742 11,789 12,729 13,901 8.7

Chile 893 965 1,068 1,076 1,005 1,036 1,083 1,164 1,229 1,335 5.8

Colombia 1,766 1,970 2,166 2,152 2,147 2,239 2,383 2,611 2,861 3,140 7.9

Mexico 3,466 3,877 4,506 4,574 4,304 4,375 4,466 4,716 4,941 5,186 3.8

Venezuela 378 461 483 563 616 664 723 772 823 895 7.8

Total 12,953 14,912 17,528 18,951 19,050 20,303 21,667 23,574 25,378 27,567 7.7


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and license fees at 8.0 percent compounded annually

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and license fees at 8.0 percent compounded annually will be the fastest-growing categories, followed by fi lmed

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will be the fastest-growing categories, followed by fi lmed entertainment at 5.2 percent compounded annually. The

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entertainment at 5.2 percent compounded annually. The remaining segments will grow by 3.3 percent or less

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remaining segments will grow by 3.3 percent or less compounded annually or will decline.

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compounded annually or will decline.then return to increases of 6 percent or more. Spending

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then return to increases of 6 percent or more. Spending will rise from $22 billion in 2009 to $28 billion in 2014, a

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will rise from $22 billion in 2009 to $28 billion in 2014, a 5.5 percent compound annual increase. Video games at

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5.5 percent compound annual increase. Video games at 9.2 percent compounded annually and TV subscriptions

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9.2 percent compounded annually and TV subscriptions

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21,667

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Latin America 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR


% Change 10.4 12.6 15.5 14.7 3.5 3.8 6.5 9.2 9.9 10.7 8.0

Recorded music 899 874 762 677 641 620 611 612 620 632

% Change –6.2 –2.8 –12.8 –11.2 –5.3 –3.3 –1.5 0.2 1.3 1.9 –0.3


% Change –0.4 10.6 6.7 –4.3 11.5 –0.2 5.3 6.3 7.3 7.4 5.2

Video games 545 675 876 1,081 1,103 1,226 1,348 1,465 1,591 1,709

% Change –5.7 23.9 29.8 23.4 2.0 11.2 10.0 8.7 8.6 7.4 9.2


% Change 6.0 7.4 5.7 0.9 0.2 1.8 2.7 3.7 4.2 4.3 3.3

Newspapers 2,027 2,156 2,379 2,498 2,537 2,588 2,654 2,742 2,833 2,927

% Change 4.5 6.4 10.3 5.0 1.6 2.0 2.6 3.3 3.3 3.3 2.9


% Change 2.5 2.8 2.9 6.2 –2.1 0.6 1.8 2.6 2.9 3.7 2.3


% Change 3.9 8.0 4.1 3.2 –2.8 0.0 1.9 3.7 4.8 6.2 3.3

Total 16,652 18,112 19,776 21,205 21,660 22,179 23,197 24,648 26,354 28,329

% Change 4.5 8.8 9.2 7.2 2.1 2.4 4.6 6.3 6.9 7.5 5.5



Latin America 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Argentina 2,160 2,376 2,667 2,838 2,865 2,947 3,092 3,311 3,579 3,831 6.0

Brazil 7,506 8,164 8,825 9,459 9,763 10,015 10,480 11,116 11,815 12,614 5.3

Chile 958 1,014 1,108 1,174 1,209 1,298 1,405 1,487 1,563 1,763 7.8

Colombia 1,321 1,470 1,638 1,790 1,804 1,837 1,912 2,050 2,216 2,402 5.9

Mexico 4,210 4,551 4,956 5,322 5,383 5,428 5,619 5,950 6,390 6,864 5.0

Venezuela 497 537 582 622 636 654 689 734 791 855 6.1

Total 16,652 18,112 19,776 21,205 21,660 22,179 23,197 24,648 26,354 28,329 5.5


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2,716

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1,348

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10.0

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10.010.0

1,838

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1,8381,838 1,888

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1,8881,888

1.8

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1.81.8

2,588

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2,5882,588

1.6

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1.6 2.0

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2.02.0

2,615

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2,615

6.2

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6.2 –2.1

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–2.1

2,055

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2,055 1,997

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1,997

4.1

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4.1 3.2

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3.2

19,776

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19,776 21,205

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21,205

9.2

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9.2


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Consumer/end-user spending (excluding Internet access) by country (US$ millions)FOR PRESS U

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Consumer/end-user spending (excluding Internet access) by country (US$ millions)Consumer/end-user spending (excluding Internet access) by country (US$ millions)


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96 PricewaterhouseCoopers | Global Entertainment and Media Outlook: 2010–2014

How we report the data in each chapter

Segment spending consists of advertising and end-user spending related directly to entertainment and media content. Each chapter introduction begins with a defi nition of the spending streams that are included in that segment. We do not include spending on hardware or on services that may be needed to access content.

End-user spending is counted at the consumer or end-user level—not at the wholesale level—and includes retail markups when applicable.

Advertising spending is measured net of agency commissions in all territories except the United States and Russia, where gross advertising is measured to be consistent with the way advertising is generally reported.

In addition to annual spending fi gures, we also present data that are measured at a single point in time, such as TV subscriptions, Internet subscriptions, mobile subscriptions, and newspaper unit circulation. In those instances, we show annual averages rather than year-end totals because annual averages more accurately connect the impact of those fi gures to annual spending.

Infl ation

Across all chapters, fi gures are reported in nominal terms refl ecting actual spending transactions and therefore include the effects of infl ation.

Exchange rates

All fi gures are presented in US dollars based on the average 2009 exchange rate held constant for each historical year and forecast year. This means the fi gures refl ect industry trends and are not distorted by fl uctuations in international exchange rates.

The exchange rates used for the individual countries in each region are set forth in the following tables.

Nominal GDP growth

Because all fi gures are shown as actual spending, with the effects of infl ation included, nominal GDP growth has an important infl uence on entertainment and media spending. The tables on the following pages show historical and projected growth rates for nominal GDP for the individual countries in each region.

How we derive the data

Historical information

Historical information is obtained principally from confi dential and proprietary sources. In instances where third-party sources are consulted and their information is used directly—from such sources as government agencies, trade associations, or related entities that seek to have their data disseminated in the public domain—the sources of such information are explicitly cited. In instances where the information is used indirectly, as part of the calculus for the historical data, the sources are proprietary.

Forecast information

Recent trends in industry performance are analyzed, and the factors underlying those trends are identifi ed.

The factors considered are economic, demographic, technological, institutional, behavioral, competitive, and other drivers that may affect each of the entertainment and media markets.

Models are then developed to quantify the impact of each factor on industry spending. A forecast scenario for each causative factor is then created, and the contribution of each factor on a prospective basis is identifi ed.

These proprietary mathematical models and analytic algorithms are used in the process to provide an initial array of prospective values. Our professional expertise and institutional knowledge are then applied to review and adjust those values if required. The entire process is then examined for internal consistency and transparency vis-à-vis prevailing industry wisdom.

Forecasts for 2010–2014 are also based on an analysis of the dynamics of each segment in each region and on the factors that affect those dynamics. We provide compound annual growth rates (CAGRs) that cover the 2010–2014 forecast period. In the calculation of CAGRs, 2009 is the beginning year, with fi ve growth years during the forecast period: 2010, 2011, 2012, 2013, and 2014. The end year is 2014. The formula is:

CAGR = 100*((Value in 2014/Value in 2009)^(1/5)–1)

Methodology

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user level—not at the wholesale level—and includes retail

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user level—not at the wholesale level—and includes retail user level—not at the wholesale level—and includes retail

Advertising spending is measured net of agency

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commissions in all territories except the United States

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and Russia, where gross advertising is measured to be

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and Russia, where gross advertising is measured to be and Russia, where gross advertising is measured to be consistent with the way advertising is generally reported.

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consistent with the way advertising is generally reported. consistent with the way advertising is generally reported.

In addition to annual spending fi gures, we also present

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In addition to annual spending fi gures, we also present In addition to annual spending fi gures, we also present data that are measured at a single point in time, such

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data that are measured at a single point in time, such data that are measured at a single point in time, such as TV subscriptions, Internet subscriptions, mobile

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as TV subscriptions, Internet subscriptions, mobile as TV subscriptions, Internet subscriptions, mobile subscriptions, and newspaper unit circulation. In those

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subscriptions, and newspaper unit circulation. In those subscriptions, and newspaper unit circulation. In those instances, we show annual averages rather than year-end

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instances, we show annual averages rather than year-end instances, we show annual averages rather than year-end totals because annual averages more accurately connect

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totals because annual averages more accurately connect totals because annual averages more accurately connect the impact of those fi gures to annual spending.

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the impact of those fi gures to annual spending.the impact of those fi gures to annual spending.

Infl ation

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Infl ationInfl ationModels are then developed to quantify the impact of each

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Models are then developed to quantify the impact of each Models are then developed to quantify the impact of each

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factor on industry spending. A forecast scenario for each

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factor on industry spending. A forecast scenario for each factor on industry spending. A forecast scenario for each causative factor is then created, and the contribution of

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causative factor is then created, and the contribution of causative factor is then created, and the contribution of each factor on a prospective basis is identifi ed.

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each factor on a prospective basis is identifi ed.each factor on a prospective basis is identifi ed.

These proprietary mathematical models and analytic

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These proprietary mathematical models and analytic These proprietary mathematical models and analytic algorithms are used in the process to provide an initial

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algorithms are used in the process to provide an initial algorithms are used in the process to provide an initial array of prospective values. Our professional expertise

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array of prospective values. Our professional expertise array of prospective values. Our professional expertise and institutional knowledge are then applied to review and

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and institutional knowledge are then applied to review and and institutional knowledge are then applied to review and adjust those values if required. The entire process is then FOR P

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adjust those values if required. The entire process is then adjust those values if required. The entire process is then FOR PRESS U

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examined for internal consistency and transparency vis-à-examined for internal consistency and transparency vis-à-

Industry overview | Methodology 97

Exchange rates per US$ (2009 average)

North America Currency Exchange rate

United States Dollar 1.00000

Canada Dollar 1.14225

Exchange rates per US$ (2009 average)Asia Pacifi c Currency Exchange rate

Australia Dollar 1.28212

China Yuan (renminbi) 6.84090

Hong Kong Dollar 7.75216

India Rupee 48.86080

Indonesia Rupiah 10,434.41372

Japan Yen 93.62561

Malaysia Ringgit 3.53377

New Zealand Dollar 1.60003

Pakistan Rupee 81.75329

Philippines Peso 47.73896

Singapore Dollar 1.45472

South Korea Won 1,279.69000

Taiwan Dollar 33.07094

Thailand Baht 34.33510

Vietnam Dong 18,003.39614

Exchange rates per US$ (2009 average)Latin America Currency Exchange rate

Argentina Peso 3.73812

Brazil Real 2.00992

Chile Peso 558.91480

Colombia Peso 2,180.60601

Mexico Peso 13.52034

Venezuela Bolivar fuerte 2.15197

Exchange rates per US$ (2009 average)EMEA

Western Europe Currency Exchange rate

Austria Euro 0.71928

Belgium Euro 0.71928

Denmark Krone 5.35508

Finland Euro 0.71928

France Euro 0.71928

Germany Euro 0.71928

Greece Euro 0.71928

Ireland Euro 0.71928

Italy Euro 0.71928

Netherlands Euro 0.71928

Norway Krone 6.30052

Portugal Euro 0.71928

Spain Euro 0.71928

Sweden Krona 7.65450

Switzerland Franc 1.08549

United Kingdom Pound sterling 0.64115


Czech Republic Koruna 19.09387

Hungary Forint 202.43648

Poland Zloty 3.11750

Romania New lei 3.04930

Russia Ruble 31.82425

Turkey New lira 1.55692

Middle East/Africa

Israel New shekel 3.93284

Saudi Arabia/Pan Arab† US dollar 1.00000

South Africa Rand 8.45021

†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon,Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates.Figures are estimated in US$.

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Indonesia

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IndonesiaIndonesia

Japan

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JapanJapan

Malaysia

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MalaysiaMalaysia

New Zealand

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New ZealandNew Zealand

Pakistan

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PakistanPakistan

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0.71928

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0.719280.71928

7.65450

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1.08549

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1.085491.08549

0.64115

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0.641150.64115

Koruna

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KorunaKoruna

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Zloty

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98 PricewaterhouseCoopers | Global Entertainment and Media Outlook: 2010–2014

Nominal GDP growth by country in EMEA (%)

EMEA 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Western Europe

Austria 5.0 5.2 5.3 4.3 –3.3 1.3 2.5 3.6 4.7 5.1 3.4

Belgium 4.1 5.3 5.3 2.1 –3.1 1.5 2.9 3.2 3.8 4.6 3.2

Denmark 5.4 5.4 3.6 2.8 –4.5 1.8 3.5 4.2 4.3 4.6 3.7

Finland 3.2 6.3 7.6 3.7 –6.5 2.4 3.4 3.7 4.3 4.5 3.6

France 4.0 4.7 4.7 2.9 –2.1 1.9 3.0 3.4 4.0 4.4 3.3

Germany 1.4 3.7 4.4 2.8 –4.6 2.6 2.2 2.8 3.6 3.7 3.0

Greece 6.3 7.9 7.0 6.4 0.1 1.1 2.8 3.2 4.7 5.0 3.4

Ireland 8.8 9.4 7.5 1.0 –8.1 –1.2 2.0 3.1 4.2 5.2 2.6

Italy 2.7 3.9 4.0 1.6 –4.4 1.8 2.2 2.6 2.8 2.9 2.5

Netherlands 4.5 5.2 5.0 4.9 –3.3 1.0 2.4 3.4 3.9 4.8 3.1

Norway 11.7 11.0 5.4 11.5 0.4 3.0 3.7 4.8 5.0 5.7 4.4

Portugal 3.5 4.3 5.0 1.8 –3.6 1.5 2.1 3.3 4.0 4.2 3.0

Spain 7.8 8.5 7.8 4.2 –3.7 0.1 1.9 2.2 3.7 4.5 2.5

Sweden 4.2 6.0 5.6 3.1 –2.7 3.0 4.2 5.0 5.7 5.4 4.6

Switzerland 2.8 5.8 6.2 4.0 –2.1 1.4 2.6 2.9 2.9 2.8 2.5

United Kingdom 4.3 5.5 6.0 3.0 –2.6 1.7 3.8 4.5 5.0 5.3 4.1

Western Europe total 3.9 5.3 5.2 3.2 –3.4 1.8 2.7 3.3 4.0 4.3 3.2


Czech Republic 6.0 7.8 9.8 5.0 –3.4 2.5 3.7 5.4 6.4 8.0 5.2

Hungary 6.4 8.0 6.7 4.2 –4.4 3.1 5.0 5.7 6.0 6.2 5.2

Poland 6.4 7.8 10.9 7.7 4.4 4.8 5.7 6.1 7.0 7.2 6.2

Romania 30.7 22.5 27.6 12.0 –2.2 4.7 6.8 7.4 7.9 8.2 7.0

Russia 29.2 29.3 29.5 33.6 –5.9 9.9 10.2 10.5 10.2 9.9 10.1

Turkey 23.2 9.9 23.8 11.1 –3.8 9.7 10.4 10.0 9.1 8.8 9.6

Central and Eastern Europe total 19.0 17.0 21.9 19.6 –3.5 8.0 8.8 9.1 9.0 9.0 8.8

Middle East/Africa

Israel 6.0 7.2 5.1 6.3 3.5 4.1 4.7 6.2 6.7 5.9 5.5

Saudi Arabia/Pan Arab† 26.2 17.3 10.7 18.7 6.3 8.0 8.5 9.3 10.5 10.9 9.4

South Africa 10.4 13.0 14.8 14.3 4.8 8.0 9.3 11.1 11.8 10.6 10.2

Middle East/Africa total 19.8 15.0 10.6 16.2 5.7 7.5 8.2 9.3 10.3 10.3 9.1

EMEA total 6.2 7.1 7.6 6.3 –2.8 3.1 4.1 4.8 5.4 5.7 4.6

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3.7

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3.73.7

3.4

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2.2

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2.8

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2.82.8

–1.2

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2.02.0

1.8

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1.81.8 2.2

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1.0

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1.01.0

0.4

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0.40.4 3.0

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3.03.0

–3.6

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–3.6–3.6

4.2

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4.24.2 –3.7

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–3.7–3.7

3.1

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–2.7–2.7

4.0

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4.04.0

6.0

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6.06.0 3.0

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3.03.0

5.2

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7.8

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6.4

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Industry overview | Methodology 99

Nominal GDP growth by country in North America (%)

North America 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

United States 6.3 6.1 6.8 2.6 –1.3 3.3 4.6 4.9 5.2 5.3 4.7

Canada 6.1 5.2 6.4 4.6 –2.4 3.4 5.6 5.3 5.6 5.6 5.1

Total 6.3 6.0 6.8 2.8 –1.4 3.3 4.7 4.9 5.2 5.3 4.7

Nominal GDP growth by country in Asia Pacifi c (%)

Asia Pacifi c 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Australia 7.4 7.4 8.2 8.9 2.3 3.5 4.8 6.8 7.7 7.9 6.1

China 14.6 15.7 21.4 16.9 7.8 10.2 11.4 11.8 10.9 10.6 11.0

Hong Kong 7.1 6.6 9.5 4.0 –4.5 3.0 3.8 6.8 8.5 7.8 6.0

India 13.9 15.1 14.4 14.9 14.6 15.1 13.7 11.8 10.0 10.0 12.1

Indonesia 20.8 20.4 18.3 25.4 9.2 11.2 10.5 10.2 9.9 10.2 10.4

Japan 0.7 1.1 1.7 –1.6 –6.4 0.8 2.1 2.2 2.3 2.4 2.0

Malaysia 10.2 9.8 11.9 15.4 –3.7 2.9 4.5 6.5 8.2 9.4 6.3

New Zealand 4.9 5.3 7.4 4.2 –0.8 2.6 3.7 4.3 6.2 6.5 4.6

Pakistan 15.2 17.3 14.4 20.1 23.3 11.8 12.2 10.9 10.6 9.9 11.1

Philippines 11.8 10.8 10.3 12.8 3.8 7.4 10.6 11.1 10.4 9.8 9.9

Singapore 8.6 9.8 13.8 2.3 –3.5 5.4 5.9 7.1 9.5 10.9 7.7

South Korea 4.6 5.0 7.3 5.0 2.2 6.3 6.9 7.1 7.2 6.9 6.9

Taiwan 3.3 4.6 5.7 7.2 –4.6 5.2 6.0 6.3 5.7 5.0 5.6

Thailand 9.3 10.6 8.3 7.2 –2.5 6.0 6.6 7.0 8.0 8.0 7.1

Vietnam 17.3 16.1 17.4 32.1 11.9 15.7 16.7 12.1 11.5 10.3 13.2

Total 6.5 7.5 9.7 8.0 2.0 6.6 7.7 8.0 7.8 7.8 7.6

Nominal GDP growth by country in Latin America (%)

Latin America 2005 2006 2007 2008 2009p 2010 2011 2012 2013 20142010–14

CAGR

Argentina 19.7 17.0 22.5 25.8 3.6 12.0 11.5 12.2 12.3 12.5 12.1

Brazil 32.9 23.5 22.4 17.9 4.3 9.8 9.7 9.9 10.1 9.8 9.9

Chile 13.5 17.3 10.3 12.2 0.3 5.7 7.7 8.1 9.3 9.7 8.1

Colombia 25.3 10.4 26.8 15.9 –0.3 2.2 3.4 4.8 6.8 8.5 5.1

Mexico 11.3 12.0 8.4 6.1 –2.3 4.4 6.8 7.6 9.8 10.0 7.7

Venezuela 29.4 26.8 23.6 36.9 26.9 26.0 30.0 35.4 29.5 25.4 29.2

Total 21.5 18.0 17.2 15.7 3.7 9.6 11.1 12.8 13.3 13.0 12.0

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3.5

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4.84.8

10.2

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3.03.0

14.6

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–1.6

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–6.4–6.4

15.4

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7.4

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14.4

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10.3

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9.8

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13.813.8

5.0

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5.05.0

3.3

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9.3

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Industry overview

Viewpoint: the global entertainment and media outlook

IntroductionRegions/countries covered . . . . . . . . . . . . . . . . . . . . . . . 8

Projected and actual global 2009 E&M growth by category (%) . . . . 9

Projected and actual global 2009 E&M growth by segment (%). . . . . 9

Digital share of global E&M spending (%) . . . . . . . . . . . . . . . . 10

Global digital and nondigital spending growth (%) . . . . . . . . . . . 10

Toward 2014: the search for position in the digital value chainMobile markets in selected countries, CAGR 2010–2014 (%) . . . . . 14

NGN initiatives around the world . . . . . . . . . . . . . . . . . . . . 16

Global advertising shares (%) . . . . . . . . . . . . . . . . . . . . . . 17

Global Internet advertising . . . . . . . . . . . . . . . . . . . . . . . . 19

Summaries by segment and region

Global industry summaryGlobal entertainment and media market by region . . . . . . . . . . . 28

Global E&M advertising, consumer/end-user spending and nominal GDP growth (%) . . . . . . . . . . . . . . . . . . . . . . 29

Top 12 entertainment and media markets . . . . . . . . . . . . . . . . 29

Global Internet access spending market: wired and mobile. . . . . . . 30

Global Internet access spending market: wired and mobile by region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Global advertising by segment. . . . . . . . . . . . . . . . . . . . . . 31

Global advertising by region . . . . . . . . . . . . . . . . . . . . . . . 32

Global consumer/end-user spending by segment. . . . . . . . . . . . 33

Global consumer/end-user spending by region . . . . . . . . . . . . . 34

Global market by segmentGlobal entertainment and media market. . . . . . . . . . . . . . . . . 36

Global Internet access spending market: wired and mobile by region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Global Internet access spending market: wired and mobile by component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Global Internet advertising market: wired and mobile by region. . . . . 39

Global Internet advertising market: wired and mobile by component . . 39

Global TV subscription and license fee market by region . . . . . . . . 40

Global TV subscription and license fee market by component . . . . . 41

Global television advertising market by region . . . . . . . . . . . . . 42

Global television advertising market by component . . . . . . . . . . . 42

Global recorded music market by region . . . . . . . . . . . . . . . . 43

Global recorded music market by component. . . . . . . . . . . . . . 44

Global fi lmed entertainment market by region . . . . . . . . . . . . . . 45

Global fi lmed entertainment market by component . . . . . . . . . . . 46

Global video game market by region . . . . . . . . . . . . . . . . . . 47

Global video game market by component . . . . . . . . . . . . . . . . 47

Global consumer magazine publishing market by region . . . . . . . . 48

Global consumer magazine publishing market by component . . . . . 49

Global newspaper publishing market by region . . . . . . . . . . . . . 50

Global newspaper publishing market by component . . . . . . . . . . 50

Global radio market by region . . . . . . . . . . . . . . . . . . . . . . 51

Global radio market by component . . . . . . . . . . . . . . . . . . . 52

Global out-of-home advertising market by region . . . . . . . . . . . . 52

Global consumer and educational book publishing market by region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Global consumer and educational book publishing market by component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Global business-to-business market by region . . . . . . . . . . . . . 55

Global business-to-business market by component . . . . . . . . . . 56


North America

Entertainment and media market by segment . . . . . . . . . . . . . . 58

Entertainment and media market by country . . . . . . . . . . . . . . 59

Entertainment and media spending, United States . . . . . . . . . . . 60

Entertainment and media spending, Canada . . . . . . . . . . . . . . 61

Internet access spending market: wired and mobile . . . . . . . . . . 62

Internet access spending market: wired and mobile by country . . . . 62

Advertising by segment . . . . . . . . . . . . . . . . . . . . . . . . . 63

Advertising by country . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Consumer/end-user spending by segment . . . . . . . . . . . . . . . 65

Consumer/end-user spending (excluding Internet access) by country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Europe, Middle East, Africa (EMEA)



Entertainment and media spending, United Kingdom . . . . . . . . . . 68

Entertainment and media spending, Germany. . . . . . . . . . . . . . 69

Entertainment and media spending, France . . . . . . . . . . . . . . . 70

Entertainment and media spending, Russia . . . . . . . . . . . . . . . 71



Index of tables and charts†

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Global consumer magazine publishing market by component

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Global newspaper publishing market by region

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Global newspaper publishing market by component

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Global radio market by component

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Global out-of-home advertising market by region

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Global consumer and educational book publishing market

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Global consumer and educational book publishing market

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. . . . . . . . . . .

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. . . . . . . . . . . . . . . . . . . . . . 28

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2828

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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Global Internet access spending market: wired and mobile

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. . . . . . .. . . . . . .

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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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by component

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by componentby component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Global business-to-business market by region

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Global business-to-business market by component

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Global market by regionGlobal market by region

North America

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North AmericaNorth America

Index of tables and charts 101





Asia Pacifi c



Entertainment and media spending, Japan . . . . . . . . . . . . . . . 80

Entertainment and media spending, China . . . . . . . . . . . . . . . 81

Entertainment and media spending, India . . . . . . . . . . . . . . . . 82







Latin America



Entertainment and media spending, Brazil . . . . . . . . . . . . . . . 90







MethodologyExchange rates per US$ (2009 average). . . . . . . . . . . . . . . . . 97

Nominal GDP growth by country in EMEA (%) . . . . . . . . . . . . . 98

Nominal GDP growth by country in North America (%) . . . . . . . . . 99

Nominal GDP growth by country in Asia Pacifi c (%) . . . . . . . . . . . 99

Nominal GDP growth by country in Latin America (%) . . . . . . . . . 99

†Key to symbols used in the tables and chartsp = preliminaryNA = not available— = no spending that year

Totals in tables and charts may not total arithmetically due to rounding.

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Consumer/end-user spending (excluding Internet access)

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Methodology

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MethodologyMethodologyExchange rates per US$ (2009 average)

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Exchange rates per US$ (2009 average)Exchange rates per US$ (2009 average)

Nominal GDP growth by country in EMEA (%)

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Nominal GDP growth by country in EMEA (%)Nominal GDP growth by country in EMEA (%)

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In-depth, detailed data and analyses for 13 segments across 48 countries and regions can be found in the full 600-plus-page edition of the Global entertainment and media outlook: 2010–2014.

To order a copy, or access data and commentary online, please visit:pwc.com/outlook

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Documents

PWC_Global Entertainment and Media Outlook