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Global E&M Outlook 2020-2024: Hong Kong summary
Global Entertainment & Media Outlook 2020-2024: Hong Kong summary
October 2020
Global E&M Outlook 2020-2024: Hong Kong summary
Contents
Overview: Entertainment & Media Outlook - Global and Hong Kong
New trend
Segment deep dive
01
02
03
03
15
32
2
Global E&M Outlook 2020-2024: Hong Kong summary
Overview: Entertainment & Media Outlook –Global and Hong Kong
3Global E&M Outlook 2020-2024: Hong Kong summary
Global E&M Outlook 2020-2024: Hong Kong summary
Overview: Entertainment & Media Outlook
4
Hong Kong Projected industry growth
2019-2024:1.1%
GlobalProjected industry growth
2019-2024:2.8%
PlayListenWatchReadAccess
Internet access Books Cinema Music, Radio
& PodcastsVideo games and eSports
B2B
Newspaper & magazines
Out-of-home
Traditional TV & home video
OTT video
TV advertising
Internet advertising
Virtual reality
Consumer/end-user & advertising spending
5 year historical & 5 year forecast data
53 Territories 14 segments
Wired mobile
Subscription video-on demand (SVOD) Transactional video-on-demand (TVOD)
Public licence feesPhysical homeTV Subscription
Data consumption
4Global E&M Outlook 2020-2024: Hong Kong summary
Hong Kong Projected industry growth
2020-2024:4.4%
GlobalProjected industry growth
2020-2024:5.0%
COVID-19 caused severe impact on the E&M industry, which have been taken into account in Outlook, but is expected to rebound from 2020 onwards.
Global E&M Outlook 2020-2024: Hong Kong summary
Pulling the future forward: The entertainment and media industry reconfigures amid recovery
5
• Consumer habits can take a lifetime to learn—but just a lockdown to lose. In only a few short months, COVID-19 accelerated ongoing changes in consumers’ behaviour, pulling forward a series of digital disruptions that would have occurred in future years
• New opportunities for new business models present themselves to meet consumers who are predominantly at home and online – businesses are creating new arrangements and combinations aimed at opening up new revenue opportunities
• Consumer spending trumps advertising – E&M companies are increasingly in the business of delivering experiences and content directly to consumers, not delivering audiences and eyeballs to advertisers
• Reconfiguration is underway as consumers and businesses adapt. Although there will still be challenges for E&M companies as we move beyond the pandemic, the digital migration that it has pulled forward will also generate opportunities in all segments
Global Entertainment & Media Outlook perspectives
Overview: Entertainment & Media Outlook – Global and Hong Kong
Global E&M Outlook 2020-2024: Hong Kong summary
Shifting patterns of consumer behaviour
6
The pandemic has propelled consumers even faster towards digital behaviours in many areas of their lives
Overview: Entertainment & Media Outlook – Global and Hong Kong
From To
Attending live music events(e.g., concerts, festivals)
Viewing movies in the cinema
Attending fitness classes at studios
• Live performances streamed online • Viewing concerts on gaming platform event
• Viewing films on over-the-top (OTT) platforms (e.g., myTV SUPER, Netflix, ViuTV)
• On-demand online fitness classes• Live-streamed fitness classes
Attending B2B trade shows • Virtual events, online digital tours and multimedia
Global E&M Outlook 2020-2024: Hong Kong summary
Innovative E&M companies are identifying and adopting new ways to seek out growth and adapt to consumers’ preferences
7
Overview: Entertainment & Media Outlook – Global and Hong Kong
Companies shift from advertisers to subscriptions
• Drive towards subscriptions reflects a wider attribute of the accelerated digital future: the power of direct-to consumer connections
• A company charging for subscriptions can provide either very focused content, sector-specific content, or it can focus on volume
Digital event spaces present new opportunities
• Companies are exploring different ways to bring live experiences into the home in a more personalised and engaging way, some examples during the pandemic includes:
– Live music: Live streaming performances, recorded VR performances– B2B: Virtual events, online digital tour and multimedia (e.g. Trade shows,
Expos)– Gaming: Gaming platforms have transformed into concert venues and event
spaces
Data takes off• 5G rollout from CSL, China Mobile, SmarTone and 3HK and the pandemic have
accelerated data consumption growth – fixed broadband is projected to see its 3 million household in 2020 while unique mobile internet subscribers will grow to 7 million by the end of the year
Global E&M Outlook 2020-2024: Hong Kong summary
Global and Hong Kong digital revenue as % of total revenue
8
Overview: Entertainment & Media Outlook – Global and Hong Kong
• Digital revenue will continue to make up more of the industry’s income – over 60% in 2020.
Growth in digital revenue
在过去21年历史中,从未出现过如此糟糕的年份
Digital revenue Digital revenue (projected data)
44.8%2015 48.0%
2016 51.4%2017 54.1%
2018 56.5%2019 61.7%
2020 61.5%2021 61.8%
2022 63.0%2023
64.0%2024
Global Reaching over 60% in 2020
43.9%2015 47.5%
2016 51.3%2017 52.4%
2018 55.1%2019 62.6%
2020 60.7%2021 61.1%
2022 62.2%2023 63.3%
2024
Hong Kong Reaching over 60% in 2020
Global
Hong Kong
Note: 2019 is the latest available data. 2020-2024 values are forecast projections Source: PwC Global Entertainment & Media Outlook 2019-2024, www.pwc.com/outlook
Global E&M Outlook 2020-2024: Hong Kong summary
Entertainment and media revenue 2015 – 2024:Global (2019: US$2.14trn; 2020: US$2.02trn) vs. Hong Kong (2019:US$8.5bn; 2020: US$7.5bn)
9
Overview: Entertainment & Media Outlook – Global and Hong Kong
Entertainment and media revenue in Hong Kong dropped 11.8% from 2019 ($8.5 billion) to $7.5 billion in 2020 due to the COVID-19 pandemic. Hong Kong revenue was the worst hit compared to global and Asia Pacific markets.
2019至2024年复合年均增长率(有/无互联网接入)
1,500,000
2,000,000
2,500,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Global
7,000
8,000
9,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Hong Kong
Note: 2019 is the latest available data. 2020-2024 values are forecast projections Source: PwC Global Entertainment & Media Outlook 2019-2024, www.pwc.com/outlook
200,000
300,000
400,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024China
300,000
350,000
400,000
450,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Asia Pacific (Without China)
Global E&M Outlook 2020-2024: Hong Kong summary
Individual segment market size as % of Global E&M revenue, Internet access will see the largest % gain
10
Overview: Entertainment & Media Outlook – Global and Hong Kong
Source: PwC Global Entertainment & Media Outlook 2020-2024, www.pwc.com/outlookNote: 2019 is the latest available data. 2020-2024 values are forecast projections
Segment 2018 actual 2019 actual Pre-COVID 2024 forecast
2024 forecast
Internet access 28.8% 31.8% 33.7% 34.5%Internet advertising 13.2% 14.5% 17.9% 15.9%TV and home video 12.2% 11.3% 8.7% 9.4%B2B 9.4% 8.5% 7.6% 8.0%Video games and esports 5.8% 6.1% 6.5% 7.3%TV advertising 8.0% 7.2% 6.0% 6.1%Newspapers and consumer magazines 9.0% 7.4% 5.0% 4.9%
Music, radio and podcasts 4.9% 4.3% 4.0% 4.2%OTT video 1.9% 2.2% 3.1% 3.5%Books 2.9% 2.8% 2.4% 2.6%OOH 1.8% 1.8% 1.7% 1.8%Cinema 2.1% 2.1% 2.0% 1.6%VR 0.1% 0.1% 0.2% 0.2%
Share of E&M revenue by segment: 2018 vs. 2024• Internet access rises 2.7%
• Newspapers and consumer magazines decline 2.5%
• 5G network is catalyst to enable emerging technologies like AI, AR / VR to improve the user experience
• When comparing pre-COVID 2024 forecast market size share of E&M revenue, some segments saw acceleration in growth while some declined
– Winners: Video games and esports, OTT video, Music, radio and podcasts, OOH
– Losers: Cinema, Newspapers and consumer magazines, Internet advertising
COVID impact on market size
Global E&M Outlook 2020-2024: Hong Kong summary
Individual segment market size as % of Hong Kong E&M revenue, Internet access will see the largest gain
11
Overview: Entertainment & Media Outlook – Global and Hong Kong
Source: PwC Global Entertainment & Media Outlook 2020-2024, www.pwc.com/outlookNote: 2019 is the latest available data. 2020-2024 values are forecast projections
Segment 2018 actual 2019 actual Pre-COVID 2024 forecast
2024 forecast
Internet access 29.4% 29.9% 29.1% 30.6%Internet advertising 7.1% 7.9% 9.1% 8.3%TV and home video 5.2% 4.9% 3.8% 3.9%B2B 11.1% 10.9% 11.8% 11.1%Video games and esports 9.3% 9.7% 11.5% 12.1%TV advertising 4.9% 4.0% 4.5% 3.7%Newspapers and consumer magazines 16.7% 15.8% 12.0% 12.0%Music, radio and podcasts 3.6% 3.7% 3.8% 3.5%OTT video 2.1% 2.4% 3.7% 4.0%Books 1.1% 1.0% 0.8% 0.9%OOH 6.7% 6.9% 6.9% 7.4%Cinema 2.9% 2.8% 2.9% 2.4%
Share of E&M revenue by segment: 2018 vs. 2024
• Internet access rises 1.5%
• Newspapers and consumer magazines declines 0.9%
• 5G network is catalyst to enable emerging technologies like AI, AR / VR to improve the user experience
• When comparing pre-COVID 2024 forecast market size share of E&M revenue, some segments saw decline
– Winner: Internet access, video games and esports, OTT video
– Losers: Cinema, Newspapers and consumer magazines, Internet advertising
COVID impact on market size
Global E&M Outlook 2020-2024: Hong Kong summary
The Global and APAC live E&M sector will be hit hard by COVID-19 obviously
12
Overview: Entertainment & Media Outlook – Global and Hong Kong
Source: PwC Global Entertainment & Media Outlook 2020-2024, www.pwc.com/outlookNote: 2019 is the latest available data. 2020-2024 values are forecast projections
Global selected live revenue metrics, 2019-2024 (US$mn)
• Lockdowns have kept cinemas, concert halls, exhibition centres and stadiums closed for most of 2020
• By April 2020, over 750 music festivals globally had already been cancelled or postponed
• Some events have started to innovate and shift online. For example, in the gaming sector, Epic Games’ Fornite has transformed itself into an event space that is able to put on major attractions
Physical events disrupted
-
20,000
40,000
60,000
80,000
100,000
120,000
2019 2020 2021 2022 2023 2024
Rev
enue
(US$
mn)
Trade shows revenue Box office revenue Live music revenue Esports ticket sales revenue
Asia Pacific selected live revenue metrics, 2019-2024 (US$mn)
-
5,000
10,000
15,000
20,000
25,000
30,000
2019 2020 2021 2022 2023 2024
Rev
enue
(US$
mn)
Trade shows revenue Box office revenue Live music revenue Esports ticket sales revenue
55.9%
2020-24 CAGR
25.4%
28.7%
22.8%
62.7%
2020-24 CAGR
31.4%
26.7%
26.7%
Global E&M Outlook 2020-2024: Hong Kong summary
Hong Kong live E&M sector will continue to be disrupted by COVID-19
13
Overview: Entertainment & Media Outlook – Global and Hong Kong
Source: PwC Global Entertainment & Media Outlook 2020-2024, www.pwc.com/outlookNote: 2019 is the latest available data. 2020-2024 values are forecast projections
Hong Kong selected live revenue metrics, 2019-2024 (US$mn)
-
100
200
300
400
500
600
700
800
900
1,000
2019 2020 2021 2022 2023 2024
Rev
enue
(US$
mn)
Trade shows revenue Box office revenue Live music revenue
23.3%
2020-24 CAGR
19.9%
26.8%
• Cancelled events in 2020 include: Rugby Sevens, Clockenflap music festival, Esports and music festival
• B2B events: Hong Kong Book Fair, HKTDC trade shows, expos, industry conferences and more.
Physical events disrupted
Global E&M Outlook 2020-2024: Hong Kong summary
Segment CAGR 2020 - 2024
Note: 2019 is the latest available data. 2020-2024 values are forecast projections Source: PwC Global Entertainment & Media Outlook 2019-2024, www.pwc.com/outlook
14
Overview: Entertainment & Media Outlook – Global and Hong Kong
• Resilient segments are those leveraging digital platforms, as evident for Hong Kong, Mainland China and global - OTT video, video games and Internet advertising.
• OTT video growth in Mainland China is faster than Global and Hong Kong
• Global entertainment and media revenue will rise at a 2.8% CAGR from 2020-2024 at US$2.45trn
OTT video maintains rapid growth at 10.2%, with Mainland China at 12.2% by 2024
-0.65%
-2.53%
-4.22%
2.90%
13.88%
9.24%
10.58%
19.89%
6.23%
3.46%
10.06%
0.2%
5.2%
2.3%
1.8%
8.0%
10.4%
15.3%
37.4%5.5%
7.7%
12.2%
-1.3%
0.4%
1.2%
3.5%
6.7%
10.4%
13.2%
26.7%
6.0%
6.6%
10.4%
-10% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40%
Newspaper and consumer magazine
Traditional TV and home video
Books
TV advertising
Business-to-business
Music, radio and podcasts
Out-of-home advertising
Cinema
Video games and esports
Internet advertising
OTT video
2020-2024 CAGR
GlobalChinaHong Kong
Global E&M Outlook 2020-2024: Hong Kong summary
Segment deep dives
15Global E&M Outlook 2020-2024: Hong Kong summary
Global E&M Outlook 2020-2024: Hong Kong summary
Segment deep diveInternet advertising
16Global E&M Outlook 2020-2024: Hong Kong summary
Global E&M Outlook 2020-2024: Hong Kong summary
Relentless shift to Internet
17
Hong Kong advertising revenues vs. Asia Pacific advertising revenues, in terms of digital and non digital, 2015 vs. 2024 (%)
Segment deep dive: Internet advertising
• Advertising revenue in Hong Kong continues to dominate the non-digital market. However, continued growth in digital advertising will reach 43.9% of the market by 2024.
• Digital advertising pie grows steadily to 43.9% but still lags behind Asia Pacific with 64.9% of digital revenues
• Growth in digital advertising in Asia Pacific will reach 65% of the market by 2024, which is dominant to the market.
• High speed mobile internet penetration reaches 87% in Hong Kong.
Digital advertising revenue steadily moves to digital, in line with digital content consumption rates
17
2015 2024
Digital advertising18.8%
Non-digital advertising
81.2%
Digital advertising43.9%
Non-digital advertising
56.1%
Note: 2019 is the latest available data. 2020-2024 values are forecast projections Source: PwC Global Entertainment & Media Outlook 2019-2024, www.pwc.com/outlook
Digital advertising37.0%
Non-digital advertising
63.0%
2015 2024
Digital advertising64.9%
Non-digital advertising
35.1%
Hong Kong
Asia Pacific
Global E&M Outlook 2020-2024: Hong Kong summary
• Growing smartphone penetration is driving mobile ad spend significantlyfaster than the wired sub-segment.
• New types of connected devices are changing the way consumersinteract with digital media services and content.
Internet advertising segment revenue 2015-2024: APAC vs. Hong Kong
308
689 674772
0
200
400
600
800
1000
2015 2019 2020 2024
Rev
enue
$m
n U
SD
Hong Kong
51
107 106
141
0
50
100
150
2015 2019 2020 2024
Rev
enue
$bn
USD
APAC
Segment deep dive: Internet advertising
18
• Hong Kong is a middle-sized market in terms of total Internet advertising revenue in the Asia Pacific region, with revenue of US$689mn in 2019.
• The people of Hong Kong are active on social media with Facebook, the most widely used network, followed by YouTube and Instagram.
• Media players and advertisers shift greater attention to influencer marketing (KOLs), powered by e-commerce and live streaming. (網紅帶貨).
Internet advertising in Hong Kong continues to grow at 3.5% CAGR, reaching US$772mn in 2024 from US$674mn in 2020
Note: 2019 is the latest available data. 2020-2024 values are forecast projections Source: PwC Global Entertainment & Media Outlook 2019-2024, www.pwc.com/outlook
Global E&M Outlook 2020-2024: Hong Kong summary
至 2024年来自中国 OTT 视频市场的收入
Segment deep dive: Internet advertising
19
• Hong Kong wired internet advertising remains stagnant.
• Mobile internet advertising is growing at 7.62% CAGR and gaining market share.
• In line with 5G uptake and rising consumption of OTT video, this will spur growth in mobile internet advertising.
Mobile Internet advertising growth at 7.62% CAGR to reach US$377mn in 2024, bypassing wired paid search
0
50
100
150
200
250
300
350
400
HK Mobile Internet advertisingHK Wired paid search Internet advertising
0
50
100
150
200
250
300
350
400
450
HK Mobile Internet advertisingHK Wired Internet advertising
Hong Kong mobile vs. wired Internet advertising revenue (US$ mn)
Hong Kong mobile Internet advertising vs. wired paid search Internet advertising revenue(US$ mn)
7.62%
2020--24 CAGR
0.13%
2020--24 CAGR
7.62%
2020--24 CAGR
-0.92%
2020--24 CAGR
Note: 2019 is the latest available data. 2020-2024 values are forecast projections Source: PwC Global Entertainment & Media Outlook 2019-2024, www.pwc.com/outlook
Rev
enue
$m
n U
SD
Rev
enue
$m
n U
SD
Global E&M Outlook 2020-2024: Hong Kong summary 20
Segment deep dive: Internet advertising
Hong Kong mobile video Internet advertising vs total wired display Internet advertising 2015-2024 (US$ mn)
Video will become an increasingly important part of the mobile display mix due to:
• Continued focus on video by mobile social platforms;
• Shifts towards out-stream video inventory on publishers’ mobile sites and apps;
• Increased mobile video consumption driven by faster and more reliable mobile connectivity.
Importance of mobile video advertising rises
020406080
100120140160180
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Mobile other display Internet advertisingMobile video Internet advertisingMobile paid search Internet advertising
5.33%
2020--24 CAGR
11.47%
2020--24 CAGR
8.23%
2020--24 CAGR
Hong Kong mobile video Internet advertising grows at 11.47% to US$57mn in 2020, similar to Asia Pacific growth of 19.24%
Note: 2019 is the latest available data. 2020-2024 values are forecast projections Source: PwC Global Entertainment & Media Outlook 2019-2024, www.pwc.com/outlook
Global E&M Outlook 2020-2024: Hong Kong summary
Segment deep diveOTT video
21Global E&M Outlook 2020-2024: Hong Kong summary
Global E&M Outlook 2020-2024: Hong Kong summary
OTT video segment revenue 2015-2024: APAC vs. Hong Kong
Segment deep dive: OTT video
22
OTT video revenue in Hong Kong will increase at a 10% CAGR from US$254mn in 2020 to US$373mn in 2024
• Hong Kong OTT video maintains strong growth at 77% CAGR from 2014 -2019 with expected CAGR 10% growth from 2020 to 2024.
• Increasing broadband speeds and penetration are fuelling the growing demand for OTT video• Homegrown player ViuTV increased its strategy in 2019 in response to moves by Netflix to target
Asia Pacific.• TVB’s own OTT service, myTV SUPER, continues to grow with weekly time spent watching
exceeding 20mn man-hours at the end of June 2019. The service had turned profitable during 2018.
Note: 2019 is the latest available data. 2020-2024 values are forecast projections Source: PwC Global Entertainment & Media Outlook 2019-2024, www.pwc.com/outlook
2.7
15.019.6
31.9
- 5
10 15 20 25 30 35
2015 2019 2020 2024
Rev
enue
$bn
USD
APAC
49
209254
373
050
100150200250300350400
2015 2019 2020 2024
Rev
enue
$m
n U
SD
Hong Kong
Global E&M Outlook 2020-2024: Hong Kong summary
OTT revenue 2015 – 2024 and 2020-2024 CAGR: Hong Kong
Segment deep dive: OTT video
23
OTT video to bypass traditional TV and video by 2024 reaching US$373mn
• OTT video in Hong Kong will see significant growth of 10% CAGR from 2020 to 2024, with expected revenue of US$373mn by 2024.
• This is driven by behaviour shift around consumer preference to access content at anytime and anywhere) and over 80% penetration rate.
• OTT video will grow at +10 CAGR, which is slightly lower than Asia Pacific +13% CAGR. Hong Kong OTT will bypass traditional TV and video by 2024.
• 5G will hasten existing trends toward personalisation and enable more consumption and higher quality video entertainment on mobile devices.
• Hong Kong OTT video segments will experience significant growth of US$119 million from 2020 to 2024.
• Hong Kong traditional TV and video will see a drop of -2.5% CAGR from 2020-2024, while Asia Pacific will have a flat growth .
Note: 2019 is the latest available data. 2020-2024 values are forecast projections Source: PwC Global Entertainment & Media Outlook 2019-2024, www.pwc.com/outlook
0
100
200
300
400
500
600
700
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Rev
enue
$m
n U
SD
OTT Traditional TV, video
-2.5%
+10%
Global E&M Outlook 2020-2024: Hong Kong summary
Revenue growth (2020-24 CAGR): OTT video Asia Pacific vs. Global vs. Hong Kong
Segment deep dive: OTT video
24
OTT video on a rapid growth path for Hong Kong, Asia Pacific and Global with more premium services
Note: 2019 is the latest available data. 2020-2024 values are forecast projections Source: PwC Global Entertainment & Media Outlook 2019-2024, www.pwc.com/outlook
• OTT video revenue in Hong Kong will grow at a 10.1% CAGR of US$254mn in 2020 to US$373mn in 2024
• Asia Pacific will grow at a 12.9% CAGR of US$19.6bn in 2020 to US$31.9bn in 2024. And Global will grow at a 10.4% CAGR of US$58.5bn in 2020 to US$86.8bnin 2024.
• Premium services include higher definition content, niche content types and commercial free.
10.50%
6.00%
10.10%
11.00%
6.70%
10.40%
13.20%
7.80%
12.90%
0% 2% 4% 6% 8% 10% 12% 14%
Subscription VOD
Transactional VOD
Total OTT Video
Growth rate (%)Asia Pacific Global Hong Kong
Global E&M Outlook 2020-2024: Hong Kong summary
Hong Kong SVOD revenue will overtake box office spend in 2020 to hit US$231mn in 2020
25
Segment deep dive: OTT video
Source: PwC Global Entertainment & Media Outlook 2020-2024, www.pwc.com/outlookNote: 2019 is the latest available data. 2020-2024 values are forecast projections
0
50
100
150
200
250
300
350
400
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Rev
enue
(US$
mn)
Subscription VOD revenue Box office revenue
Hong Kong SVOD vs box office revenue, 2015-2024 (US$mn)
• COVID-19 has accelerated OTT platform adoption
• In 2015, total box office revenue was 7 times more than that of SVOD revenue (US$35mn vs US$ 255mn)
• Box office revenue is expected to see a strong rebound but revenue will not return to pre-COVID levels.
SVOD slides past box office
SVOD to overtake box office revenue in 2020
10.5%
19.9%
2020-24 CAGR
Global E&M Outlook 2020-2024: Hong Kong summary
Segment deep diveVideo games
26Global E&M Outlook 2020-2024: Hong Kong summary
Global E&M Outlook 2020-2024: Hong Kong summary 27
Segment deep dive: Video games
Video games is the third fastest growing segment in Hong Kong to hit US$1.1bn by 2024 at 6.2% CAGR (2020 to 2024)
• Mainland China and Hong Kong has almost full smartphone penetration and mobile games developers are increasingly successful in taking advantage of this market through highly popular free-to-play games with in-game purchases.
• Mainland China and Singapore still experience a high growth rate in the coming years.
• As Hong Kong is a regional distribution centre for games, gaming revenue per person is much higher than in Mainland China. Hong Kong’s unrestricted access to global game titles and growth trajectory boost advantages as a regional gaming hub.
Video games is the third fastest growing segment in Hong Kong
Mainland China gaming revenue 2020 vs. 2024
US$31.2bn vs. US$38.5bn
0
5
10
15
20
25
30
35
40
45
2019 2020 2021 2022 2023 2024
Rev
enue
US$
bn
Note: 2019 is the latest available data. 2020-2024 values are forecast projections Source: PwC Global Entertainment & Media Outlook 2019-2024, www.pwc.com/outlook
Hong Kong gaming revenue 2020 vs. 2024 US$0.8bn vs. US$1.1bn
0
200
400
600
800
1,000
1,200
2019 2020 2021 2022 2023 2024
Rev
enue
US$
mn
Singapore gaming revenue 2020 vs. 2024 US$0.6bn vs. US$0.9bn
0
100
200
300
400
500
600
700
800
900
1,000
2019 2020 2021 2022 2023 2024
Rev
enue
US$
mn
Video game revenue per capita in 2019
Mainland China: US$22 per person
Hong Kong: US$107 per person Singapore: US$105 per person
Global E&M Outlook 2020-2024: Hong Kong summary 28
Segment deep dive: Video games
Mainland China and Hong Kong video game revenue will grow at a similar rate from 2020 to 2024 and reaching US$38.5bn and US$1.1bn in 2024
• Mainland China and Hong Kong are few markets where traditional gaming is growing marginally faster than social/casual. This represents traditional gaming will grow at 8.7% and 8.5% CAGR from 2020 to 2024 respectively.
• Social/casual games will account for 70.4% and 46% of total video games revenue in Mainland China and Hong Kong in 2024 at US$26.8bn and US$518mn respectively.
• Traditional gaming has been helped by recent hardware releases – Nintendo’s innovative, semi-portable Switch, PS5 and Xbox One from Sony and Microsoft.
Hong Kong gaming growth 2020-2024
Traditional vs. social/casual
0
200
400
600
800
1,000
1,200
2019 2020 2021 2022 2023 2024
Rev
enue
US$
mn
Traditional gamingSocial/casual gaming
Note: 2019 is the latest available data. 2020-2024 values are forecast projections Source: PwC Global Entertainment & Media Outlook 2019-2024, www.pwc.com/outlook
Mainland China gaming growth 2020-2024
Traditional vs. social/casual
0
5
10
15
20
25
30
35
40
45
2019 2020 2021 2022 2023 2024
Rev
enue
US$
bn
Traditional gamingSocial/casual gaming
Singapore gaming growth 2020-2024
Traditional vs. social/casual
0
100
200
300
400
500
600
700
800
900
2019 2020 2021 2022 2023 2024
Rev
enue
US$
mn
Traditional gamingSocial/casual gaming
Global E&M Outlook 2020-2024: Hong Kong summary 29
Segment deep dive: Video games
Video games top countries by 2024 revenue and growth 2020-2024
US, Mainland China, Japan and South Korea dominates the video game market. They will represent 61% market share by 2024 t 61
Top 10 video game countries by revenue 20241. Mainland China2. US3. Japan4. South Korea5. UK
6. Germany7. France8. Italy9. India10.Canada
Country on both listsIndia
Top 10 countries with highestCAGR 2020-20241. Pakistan2. Nigeria3. India 4. Peru5. Egypt
6. Norway7. Philippines 8. Indonesia9. Kenya10.Brazil
Note: 2019 is the latest available data. 2020-2024 values are forecast projections Source: PwC Global Entertainment & Media Outlook 2019-2024, www.pwc.com/outlook
Global E&M Outlook 2020-2024: Hong Kong summary 30
Segment deep dive: Video games
Advantages of operating gaming businesses in Hong Kong
Overseas licensors of IP
Hong Kong company
Relatively low profits tax rate (generally 16.5%; 8.25% on first HK$2mn assessable profits if two-tiered rates apply) on HK sourced profitsLegal protection for
intellectual property
Free flow of money
No additional licence required for conducting gaming business
Self-developed / acquired IP
Hong Kong gamers Overseas gamers
Gaming revenue – may be subject to VAT / GST / Digital Services Tax in the overseas countries
Gaming revenue – No VAT / GST
Royalties / Licence fee payments – generally subject to relatively low withholding tax (4.95% or lower if two-tiered rates or tax treaty rate apply)
Global E&M Outlook 2020-2024: Hong Kong summary 31
Segment deep dive: Video games
What can we learn from other jurisdictions to increase our competitiveness in the region?
• Programmes to nurture / attract talents
e.g. universities in Mainland China and Singapore offer courses on gaming studies in order to build talent pipeline for the industry; incubation and mentorship programmes arranged by Singapore government
• Financial support
e.g. Singapore government’s funding schemes for games industry
• Relevant tax incentives
e.g. Mainland China’s preferential tax rates for High and New Technology Enterprises / software industries; various preferential schemes in Singapore
• Enhanced tax laws regarding IP
e.g. more friendly provisions for claiming deductions and double tax relief
Global E&M Outlook 2020-2024: Hong Kong summary
New trendSmart speakers, podcasts
32Global E&M Outlook 2020-2024: Hong Kong summary
Global E&M Outlook 2020-2024: Hong Kong summary
New trend
33
• A significant share of households will have smart speakers, but not any other form of installed smart home technology over next 5 years.
• Device ownership is set to rise at a 26.7% CAGR to hit US$543mn devices globally in 2024.
• In 2019, Apple launched its HomePod device in Mainland China, the first of a large US-based smart speaker company to launch a product in Mainland China.
• Smart speakers shall bring a new style of behaviour and provide more subscription and bundling products
Smart speakers, a new addition to the Outlook, will become the central smart home device.
Mainland China will overtake the US to become the world’s largest smart speakers market and reaching US$159mn devices by 2024
Note: 2019 is the latest available data. 2020-2024 values are forecast projections Source: PwC Global Entertainment & Media Outlook 2019-2024, www.pwc.com/outlook
Global, smart speaker markets by number of devices (mn) 2015-2024
0
20
40
60
80
100
120
140
160
180
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
US China
Mainland China will overtake the US to become the world’s
largest smart speakers market by 2020
Global E&M Outlook 2020-2024: Hong Kong summary
New trend
34
• Smartphone usage and smart speakers are driving consumption of podcasts.
• Chinese podcast revenue reached US$193mn in 2019. On the back of expanding listener numbers, revenue is set to rise strongly at a 37.3% CAGR from 2020 to 2024 to total US$689mn in 2024.
• Mainland China will remain as the fastest growing player in the podcast market.
• Mainland China’s leading platform is Ximalaya FM, which has a 50%-plus podcast market share. In 2016, it also began moving heavily into paid-for professional content.
Mainland China podcast revenue reached US$193mn in 2019 and is the second largest market in the world by 2024
Note: 2019 is the latest available data. 2020-2024 values are forecast projections Source: PwC Global Entertainment & Media Outlook 2019-2024, www.pwc.com/outlook
Podcasts revenue 2015-2024: US vs Mainland China (2020 – 2024 CAGR)
106
708 764
1,673
050
01,
000
1,50
02,
000
2015 2019 2020 2024
Rev
enue
US$
mn
2015 2019 2020 2024
15
193 194
689
020
040
060
080
0
2015 2019 2020 2024
Rev
enue
US$
mn
Mainland China
Global E&M Outlook 2020-2024: Hong Kong summary
New trend
35
• Mainland China Podcast revenue is growing at 37.3% CAGR and will reach US$689mn by 2024.
• The number of monthly listeners ran to 274mn in 2020, and will expand at a 15.3% CAGR to 485mn listeners in 2024, to make Mainland China the largest market in the world. While US monthly listeners ran to 153mn in 2020 and will expand at a 11.3% CAGR to 235mn listeners in 2024.
• Podcasts offer various content including music, books, news, user generated content to its listeners.
Mainland China is the second largest market in terms of revenue of US$689mn in 2024 in podcasts segment
Note: 2019 is the latest available data. 2020-2024 values are forecast projections Source: PwC Global Entertainment & Media Outlook 2019-2024, www.pwc.com/outlook
Top three podcasts market by territories (2024: US$2.6n): Total Global 2024 revenue US$3.6bn
1,673
689
192
0
200
400
600
800
1000
1200
1400
1600
1800
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
US China Germany
37.3%
2020--24 CAGR
23.3%
2020--24 CAGR
21.63%
2020--24 CAGR
Mainland China is the second largest market in terms of revenue in podcasts segment.
Global E&M Outlook 2020-2024: Hong Kong summary
How companies are adopting new innovation models to seize growth and adapt to new consumer preferences
36
Challenges and opportunities
41
23
Global polarisation looms
5G vision for the future of media experiences
Pandemic boosts virtualisation AI in the home
Global E&M Outlook 2020-2024: Hong Kong summary 37
About the Global Entertainment & Media Outlook and glossary
• PwC’s 21st annual edition of the Global Entertainment & Media Outlook is a comprehensive online source of global analysis for consumer and advertising spending. With like-for-like, five-year historical and five-year forecast data and commentary for 14 defined industry segments in 53 territories, the Outlook makes it easy to compare and contrast consumer and advertising spending across segments and territories. Find out more at www.pwc.com/outlook.
• A total of 53 countries are represented within the Outlook spread across North America, Western Europe, Central Europe, Middle East & Africa, Latin America and Asia Pacific.
Global Entertainment & Media Outlook
• Revenue includes: Advertising and consumer revenue streams
• Digital revenue - Digital is revenue delivered through the Internet. Internet access revenue is obviously included in, and the majority part of, “digital.” In advertising, this is effectively Internet advertising and digital OOH advertising. In consumer it's areas like OTT video revenue, digital forms of books/newspaper/magazine purchases, video game downloads and online/microtransaction revenue, VR revenue, and digital music revenue (downloads, streaming, ringtones).
Glossary
Global E&M Outlook 2020-2024: Hong Kong summary
Key contacts
38
Cecilia YauPwC Mainland China and Hong Kong Media [email protected]
Wilson ChowPwC Global TMT Industry [email protected]
Gwenda HoPwC Hong Kong TMT Tax [email protected]
pwc.com/outlook
Thank you.
The information contained in this presentation is of a general nature only. It is not meant to be comprehensive and does not constitute the rendering of legal, tax or otherprofessional advice or service by PricewaterhouseCoopers Ltd ("PwC"). PwC has no obligation to update the information as law and practices change. The applicationand impact of laws can vary widely based on the specific facts involved. Before taking any action, please ensure that you obtain advice specific to your circumstancesfrom your usual PwC client service team or your other advisers.
The materials contained in this presentation were assembled in Oct 2020 and were based on the law enforceable and information available at that time.
© 2020 PricewaterhouseCoopers Limited. All rights reserved. PwC refers to the Hong Kong member firm, and may sometimes refer to the PwC network. Each memberfirm is a separate legal entity. Please see www.pwc.com/structure for further details.