Our prediction in our 2020 Global Entertainment & Media (E&M) Outlook was that E&M revenues would see a compound annual growth rate of 2.8%, hence by 2024 the figure of $79.8bn would be reached. This will most definitely be a strong recovery from 2020s expected decline of -6.7% due to the effect of lockdown, as well as the recession that has been caused by COVID-19.
Trends and Forecasts
We have delayed the publishing of Outlook this year so that we can first get a more accurate understanding of how the pandemic has impacted the situation. Hence, we have two main points we want to clarify related to our analysis and forecasts. Firstly, we certainly feel that the projections that we have made are robust; however, the constantly changing circumstances of the pandemic could make future accuracy unclear, including how the Government will lead policy responses. This means that if you want our latest view you need to talk to us directly.
Secondly, it is true that the impact of the pandemic on the UK media industry as a whole is very significant; however, the impact on specific sub-sectors has varied. Laws on social distancing and self-isolation have meant that in general. the UK consumer has been indoors, making in-home content; for instance over-the-top (OTT) video services, as well as podcasts, gaming and music have been positively impacted. However, for the time being, it has meant that the likes of cinema, live music, and live events, as well as impulse purchases of magazines and outdoor advertising, have taken a nosedive.
That said, all sub-sectors have found that the pandemic has opened the door to new revenue models and innovative ways to engage with their audiences; we have seen various posts broadcast that have gone free to air, B2B events that have gone virtual and the list goes on. As well as this, the UK media industry of 2020 is in a much better position to cope with disruption like the current pandemic than it would have been at the turn of the century. Print is not relied on so heavily and subscriptions are more popular than ad-funded models, pretty much everyone streams and a lot of media companies are able to provide remote working so that they continue to create content.
It is our expectation that the media sector will continue to show how flexible it can be and that the re-bound will be strong as the economy starts to re-open. Our revenue forecasts up to 2024 reflect this.
The pandemic has been tough on the global advertising market. The fall for advertising has been much more negative than that of consumer spending on E&M, especially for companies that need the consumer to leave the home who subsequently stopped their advertising on various media. It is true that digital advertising was impacted; however, the impact was not a lot when compared to print newspapers and other forms of out-of-home. It is our estimate that total UK internet advertising (including display, search, and classified) will have a 2020 fall of c.5%. We can compare this to print newspaper advertising where we expect to see a crash of 24%, and an even more significant crash of 30% in out-of-home (including digital and physical).
As we start to see ad revenues making a recovery, we expect that digital advertising will continue in the outperformance of its advertising counterparts; this means it will have a more secure rebound. Just as we saw in consumer spending, the current pandemic has given the switch to digital in the advertising market a real boost and accelerated the change. As we come out of COVID-19 brands are going to have an ever-greater need to invest in their digital platforms and ensure that they engage with the consumers over digital media channels. This will result, over time, in a rebound in digital advertising revenues. Employing a video production agency may help.