Global Entertainment and Media Revenues Surge to $2.3 Trillion

The global entertainment and media industry surged ahead last year, strongly outpacing overall global economic growth, according to PwC. Following a pandemic-related 2.3% decline in 2020, E&M revenue rose a strong 10.4% in 2021, from $2.12 trillion to $2.34 trillion.

With the industry becoming more digital, more mobile, and more youth-oriented, VR and gaming are powerful growth drivers, while digital advertising permeates all of the industry. Global video games and esports revenue totaled $215.6 billion in 2021 and is forecast to grow at an 8.5% CAGR to $323.5 billion in 2026. The Asia Pacific generated the lion’s share of revenues in 2021 with $109.4 billion, almost double North America, the second-highest region. Gaming is now the third-largest data-consuming E&M content category, behind video and communications.

VR continues to be the fastest-growing E&M segment, albeit from a relatively small base. Global VR spending rose by 36% y-o-y in 2021 to $2.6 billion, following the hot 39% growth in 2020. Growth between 2021 and 2026 is expected at 24% CAGR, bringing the segment to $7.6 billion. Gaming content is the primary contributor to VR revenue, taking in $1.9 billion in 2021. This should increase to $6.5 billion in 2026, 85% of total VR revenue.

Advertising’s spread throughout the digital world has made it a dominant industry category. After a decline of nearly 7% in 2020, advertising grew an impressive 22.6% in 2021 to $747.2 billion. Driven almost entirely by digital, advertising is set to grow at a 6.6% CAGR through 2026. Internet advertising revenue is seen growing even faster, expanding at 9.1% CAGR. In 2026, advertising is projected to be a $1 trillion market and the largest E&M revenue stream, having surpassed consumer spending and internet access.

After growing by 35.4% in 2020, Over-the-top (OTT) video surged another 22.8% in 2021, pushing revenues to $79.1 billion. The pace of OTT revenue growth will moderate somewhat; it is expected to grow at a 7.6% CAGR through 2026, pushing revenues to $114.1 billion. Traditional TV, beset by competition from OTT streaming services, still generates considerable revenues, but its inexorable decline will continue, with global revenues projected to shrink at a -0.8% CAGR from $231 billion in 2021 to $222.1 billion in 2026.

Global cinema revenue is bouncing back, reversing its pandemic-driven losses, and is expected to reach a new high of $46.4 billion in 2023. Box office revenue is projected to reach $49.4 billion in 2026 from $20.8 billion in 2021, an 18.9% CAGR. China surpassed the US to become the world’s biggest cinema market in 2020 and is expected to retain this leadership through 2026. Live music revenue is projected to exceed pre-pandemic levels in 2024. Digital music- streaming subscriptions are driving growth in the recorded music sector where revenues are forecast to rise from $36.1 billion in 2021 to $45.8 billion in 2026.

The growth of content is fueling massive data consumption - 2.6 million petabytes (PB) of data were consumed in 2021, and it is expected to rise at a 26% CAGR to reach 8.1 million PB by 2026. Gaming will be the fastest-growing data consumer over the forecast period, with a 29.6% CAGR expected. Mobile handsets will be the fastest-growing device category between 2021 and 2026, increasing at a 28.8% CAGR and expected to push mobile data consumption up from 1.1 million PB to 3.8 million PB.

At a regional level, North America commands by far the highest E&M spend per capita, at $2,229, nearly double Western Europe’s $1,158. By contrast, the Asia Pacific, which was the largest E&M region by revenue in 2021 at $844.7 billion, has a per capita spending of $224. The Middle East and Africa have the lowest per capita E&M spend of any region globally, at $82. The top ten growth markets by CAGR, meanwhile, are focused in Latin America, the Middle East, Africa, and Asia, with OTT video and gaming providing the majority of revenue growth, and esports and cinema seeing fast growth as well. Turkey (estimated 14.2% CAGR), Argentina (10.4%), India (9.1%), and Nigeria (8.8%) are top-ranked for E&M consumer spend growth prospects over the five-year forecast period.

In the not-too-distant future, the metaverse could become a stunningly realistic world where individuals access immersive virtual experiences, through a VR headset or other connecting device. Because the metaverse is an evolution that may profoundly change how businesses and consumers interact with products, services, and each other, its potential financial and economic value goes far beyond VR. In time, much of the revenues associated with video games, music performances, advertising, and even e-commerce could migrate into the metaverse.