PWC study: Media and entertainment industry ahead of growth

According to the study, telecoms companies and providers of search engines and online classifieds will be the main beneficiaries. This is because two thirds of the growth will come from higher expenditure on more powerful Internet connections, TV fees and subscriptions and increasing Internet advertising, regardless of the economic situation. On the other hand, the prospects for television and outdoor advertising as well as newspaper revenues are heavily dependent on the economy and are therefore currently uncertain, PwC reported on Thursday.

In recent years, it has taken economic growth of over 2 percent for advertising expenditure (excluding the Internet) to increase, said PWC sector head Patrick Balkanyi to journalists in Zurich. However, if the small recession of -0.4 percent recently forecast by a first economic research institute materializes, advertising expenditure is likely to fall by 9 percent. PWC's basic forecast is based on annual GDP growth of 2.5 percent. If it is only 0.9 percent, total sales will still rise by 4.4 percent annually to CHF 15.0 billion.

Newspapers still under pressure

While advertising on digital channels is becoming increasingly direct and selective in its approach to consumers, publishers' Internet advertising is still not growing into the sky. Although PWC predicts growth from 67 to 113 million dollars by 2015, it remains a small niche in terms of the overall advertising pie. According to the study, newspaper publishers will also only generate 22 million francs from fees for their portals in 2015. According to Balkanyi, some publishers are considering more flexible subscription models, such as digital access in the first half of the week and printed editions in letterboxes only in the second half. In 2010, however, publishers did better than expected, not least thanks to higher subscription fees.

Content producers are also having a hard time in the music business: product piracy is reducing growth to 1.7% per year. In 2015, sales from legal digital distribution (199 million) will have overtaken the declining sales of physical sound carriers (115 million).

The digital transformation is continuing in the media and entertainment market, said Balkanyi. A recession would only accelerate this. By 2015, expenditure on internet connections (CHF 2.7 billion) and TV fees and subscriptions (CHF 2.5 billion) will exceed that of newspapers (CHF 2.2 billion). In addition to broadband connections and fiber optic networks, smartphones and tablet computers are booming. The 299 cinemas still operating in Switzerland, on the other hand, need to upgrade, for example in 3D. Outdoor advertisers are also starting their first trials with 3D ads. And digital posters will enable fast-changing advertising: the coffee chain in the morning, the brewery at the end of the day. (SDA)