My entertainment and media,
connected

In entertainment and media markets we’ve seen a shift from audiences in their millions consuming the same content to millions of audiences of one at the centre of their own, personalised digital media world. They’re consuming the content they want, when, where and how they want it.

We predict that the connected entertainment and media market will be worth US$135 billion globally by 2020, representing 20% average annual growth over the period.

It’s clear that some consumers are no longer content to be passive recipients of broadcasters’ programming and schedules, with 62% of respondents to our ‘connected living’ survey agreeing that technology gives them greater control over the media they consume.

As digital players find out more and more about consumers’ likes, dislikes and habits, they’re using the insights from their relationships with consumers not simply to manage content but also to make it. Amazon Prime Instant Video, for example, reaches out to consumers to find out which of the pilots they run should move into full production. Netflix uses advanced analytics of consumer data to make decisions about actors, directors and content for its ‘House of Cards’ series.

Younger consumers are more willing to share their information with entertainment and media companies. Our survey shows that 65% of consumers between 18 and 34 years old are willing to share, compared to less than half that number (27%) in the 55+ age range.

While it is clear that connected entertainment and media provides a massive opportunity to both incumbents and innovators, one of the biggest challenges they’re likely to face is around the growing awareness that personal data and information has a real value – there’s really no such thing as ‘free’ content for the audience, who are providing their data to these companies. So how much are consumers prepared to tell entertainment and media companies about themselves in exchange for the content they offer? And how much more are they prepared to pay for greater personalisation, which in turn funds the investment required to deliver these new technology-driven solutions?

Read more about the market potential for connected entertainment and media.

  • $67bn

    Social media ad spend market

  • $35bn

    Electronic home video market

  • $22bn

    Digital news market

  • $11bn

    Online music market

Did you know?

  1. 75% of Netflix users select movies based on the company’s recommendations through personal recommendation analytics
  2. By 2018, there will be 9 billion connected devices
  3. Mobile advertising revenues increased by 58% in 2014
  4. Over 40% of US homes now have access to a subscription based on demand video service
  5. Streaming revenue increased by $1.9 billion in 2014, whilst music downloads revenue declined by $2.6 billion

35%

of our survey respondents are happy to share their data with entertainment providers, if it was held securely. #mylifeconnected

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Where is the market potential for ‘connected entertainment’?

We developed our projections based on an ‘S-curve’, a frequent empirical observation of revenue patterns particularly observable in products and services which are consumed over technological platforms and where strong network effects play out.

In entertainment and media, over-the-top delivery of music, film and TV have already grown rapidly, as disruptive technologies have enabled new services in addition to existing subscription services. Physical home video will continue its downward trajectory, as connected devices that can receive over-the-top data dominate, and digital consumption of filmed entertainment via connected technology is growing at an unprecedented rate. Streaming has already transformed the way music is consumed, but despite the increasing number of consumers taking up music subscription services, the range of paid-for options remains limited. However, in a number of northern European countries, streaming already accounts for the vast majority of spending on recorded music. Consumers are using digital platforms to access news, but many are unwilling to pay for these services. Social networks are well established among internet users, but ad-revenues are still expected to grow further as we see greater penetration of mobile devices. While the ‘monetisation’ of digital news is still developing, online music is a relatively mature market and those operating in it must ensure that their propositions remain relevant in an increasingly mobile and multi-device world. We project the market to grow to US$135 billion in 2020.

Social media ad-spend

US$67bn2020

25%

US$17bn2014

Social media has become a staple of online activity in the developed world over the last decade. A survey of 50,000 internet users suggests that time on social networks accounts for 28% of time spent on the internet. While social media is maturing, mobile advertising on social media is likely to continue to grow as smartphone penetration increases further in emerging markets (e.g. India, Nigeria), and more sophisticated monetisation strategies are developed. We forecast the market size will grow at a rate of 25% during 2014 to 2020, reaching US$67 billion in 2020.

Digital news

US$22bn2020

11%

US$12bn2014

Digital news will be the next connected breakthrough. Consumers are using digital platforms to access the news, and with 76% of 18–24 year olds in the UK stating that their main source of news is online [1], the trend seems set to continue. Two-thirds of smartphone users now use their devices for news each week, with the majority accessing news through browsers rather than apps. However, the willingness to pay for news online has not increased in line with growing use. We project the global daily circulation of digital newspapers to grow at an annual rate of 35.8% between 2014 and 2019. We expect the digital news market to reach over US$22 billion in 2020.

Electronic home video

US$35bn2020

15%

US$15bn2014

Electronic home video has already become mainstream and will fully dominate the market by the end of this decade. We forecast that market size will grow at an annual rate of 15% during 2014 to 2020, reaching US$35 billion in 2020.

Online music

US$11bn2020

3%

US$9bn2014

Online music has moved into a mature growth stage. Despite strong growth up to 2013, digital recorded music growth will moderate, and we expect the sharp decline in global physical recorded music sales will no longer be offset by total digital recorded music sales growth in the next five years. Streaming has already transformed and will continue to transform how music is consumed. We forecast the market size to grow at an annual of 3% during 2014 to 2020, reaching over US$11 billion in 2020.

 

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My life, connected

My life, connected, explores the collision between changing demographic and social patterns and today’s vast technological breakthroughs that are evident in how we adopt technology.

 

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The megatrends, what are they and how are they affecting you? We want to participate in the wider debate and are keen to understand how these megatrends and the collisions between them are reshaping the economic and commercial landscape. What are the implications that they have for our clients, for us and for society?

 
Sources
  1. Digital News Report 2015, Reuters Institute for the Study of Journalism