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Australia's leading industry forecasting report into consumer and advertising spend, macro trends and revenue forecasts for the next five years across how Australians watch, read, listen to, play and access entertainment and media.
Welcome to the 21st edition of PwC’s annual Australian Entertainment and Media Outlook. Our most recent editions have focused on the COVID-19 pandemic’s immediate impact on the entertainment and media (E&M) industry, which was a period of never before seen uncertainty and accelerated change. Given this rapidly evolving environment, we introduced a range of forecasts — based on a high, expected (mid-point) and low ongoing sector performance — rather than a single forecast. This approach is continued this year, and provides our audience with a range of potential outcomes, based on Australia’s progress against factors largely outside the control of the industry. These factors include the ongoing challenges of COVID-19, regional and overseas geo political instability, and their effects on supply chains, plus the impact of macro economic turbulence in Australia having the potential to affect business and consumer confidence.
In 2021, Australians spent more on entertainment, media and internet access services than ever before. Supercharged by subscription services and gaming, and boosted by the return of in-person entertainment, by the end of 2022 each household will be spending A$510 more per year than in 2019 before the pandemic hit. This was despite being a period when in many parts of the economy it was reported that discretionary consumer spending was being held. It is expected a further A$7.2 billion, in consumer spend will be on the table for entertainment, media and internet access companies to challenge for.
Similarly, in the second half of 2021 advertising revenue accelerated beyond all predictions as marketers sought to capitalise on positive consumer sentiment as lock down measures eased, reaching A$19.7 billion, an increase of 20.3 percent.
This year’s Entertainment and Media Outlook examines where this growth is being delivered, where it will and will not continue, and how market participants — be they entertainment and media business, marketer or regulator — can capitalise on the growth to come.
Additionally, our special feature in this year’s report looks at Retailer Media: a breakout area of the industry which has been gaining increased attention in recent times. This special report explores what is covered under the umbrella of retailer media — across both eCommerce and physical retail media assets — the drivers of growth and how retailers of all kinds might generate new revenue. As a market first we have also created a market size and five year growth forecast. While our research has found a broad range of views and approaches to retailer media, we have aimed to create a concise view of the market as it currently operates and as it will evolve over time.
As digitisation continues to blur the lines between many channels, marketers and media companies are also evolving how they describe and define channels. This year, we too have evolved the Entertainment and Media Outlook. For the first time, we have regrouped our traditional 12 sectors, and the sub-sectors therein, into a new format, more accurately describing how consumers consume the content and advertising provided. Introducing: Watch - Read - Listen - Play - Access.
2021 was a year of unprecedented growth in the E&M industry with consumer spending up 6.23 percent from the prior year, reaching A$45.6 billion. The highest single year leap in the history of the E&M Outlook. The largest contributor to consumer spending remains internet access followed by Games and Subscription TV which made up nearly 60 percent of the remaining A$14.0 billion, both of which are expected to see significant continued growth through the forecast period.
Where the initial wave of the pandemic may have been characterised by households reigning in spending and being unable to visit in-person entertainment, the second wave into 2021 saw consumers turn to entertainment and media to help alleviate the boredom of extended lockdowns, taking a more confident approach to spending.
Our forecast indicates that growth will continue through the 2022 calendar year at 5.5 percent, reaching A$48.3 billion. This represents a lift since the height of the pandemic in annual household spend into the E&M sector of A$512 per annum with households in 2022 spending over A$4,500 on average annually – a 12 percent increase on pre-pandemic times.
Consumer spending is forecast to continue to grow at a compound annual growth rate (CAGR) of 4.0 percent over the next 5 years, reaching a total of A$55.5 billion in 2026 based on PwC’s midpoint forecast. This equates to a further A$7.2 billion in consumer spend per year by the end of the period.
Whilst we may have thought we were saving during lockdowns, that was certainly not the case in terms of entertainment & media, and this was despite in-person and live events only slowly returning.
Note: Internet advertising spend covered within ‘traditional’ channels has been deduplicated from the Internet Advertising total for visualisation and accuracy purposes in this chart
While 2021 saw a return to the lockdowns first experienced in 2020, the response from Australian advertisers was very different. The rebuilding, change to greater flexibility, digitisation and growth in eCommerce that took place in 2020 laid the foundation for advertiser confidence, and with it spending accelerated as 2021 progressed. This acceleration, ultimately took advertising spend to A$19.7 billion, a year-on-year increase of 20.3 percent and 17.3 percent up compared to 2019’s previous ‘normality’. This was a year of advertiser spending growth like no other seen in the history of the Outlook.
Our forecast indicates that this spending will continue throughout the 2022 calendar year, with advertising spend growing a further 8.3 percent to reach A$21.5 billion based on the mid-point forecast scenario. Where the first half of the year was supported by government and election-related revenue, as the year progresses other pandemic-hit sectors such as travel are expected to boost the market. As such, 2022 would then be the second-highest annual growth in the history of the Entertainment and Media Outlook swiftly following the 2021 growth.
While the rebound of advertising spending was at a markedly higher rate than consumer spending provides positivity for the sector, our projections indicate that consumer spending will continue to grow solidly until 2026, whereas ad spend growth will flatten across this period.
By the end of this year, each Australian household will have increased their spending by
vs. before the pandemic.
By 2026 there will be a further
on offer for all in the sector to complete for.
Coming out of COVID, advertisers roared back into the market spending $4bn more to win in 2021, a +20% – while slowing there will still be 8.4 percent more in 2022, for a further $1.8bn – a $4.7bn increase since before the pandemic.
in new revenue in gaming – low friction consumer revenue and in-game ad revenue
further growth in subscription television – transitioning from box, plus new business models and new audiences
Mobile access – new smaller entrants, satellite and 5G power
Video as the driver for the ads market
Changing business models, adding new revenue streams Premiumisation of traditional channels particularly cinema
Retailer media, led by a combination of traditional retailers and Amazon will build a $2bn segment in the coming 5 years, placing further pressure on traditional media.
Macro economic factors of inflation and potential pressure on discretionary spending as interest rates riset
The changing face of privacy leads to a review of practices
How can you ride this wave of entertainment and media growth?
Partner, PwC Australia
Tel: +61 386 032 151
Director, CMO Advisory, PwC Australia
Tel: +61 439 531 447
Partner, PwC Australia
Tel: 61 2 8266 7458
PwC Chief Economist, PwC Australia
Tel: +61 416 245 535
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