Big growth for VR, not TV

Vir­tual re­al­ity, e-sports set to boost en­ter­tain­ment, me­dia rev­enue, PwC says.

Los Angeles Times - - BUSINESS BEAT - By Ethan Var­ian ethan.var­ian@la­times.com

The U.S. en­ter­tain­ment and me­dia busi­ness is ex­pected to see mod­est-toslow growth over the next five years, ac­cord­ing to a new re­port from Price­wa­ter­house­Coop­ers.

The re­port sin­gles out tra­di­tional sec­tors such as cinema and tele­vi­sion as ar­eas of slug­gish­ness, while point­ing to emerg­ing in­dus­tries in­clud­ing e-sports and vir­tual re­al­ity as sec­tors poised for the most growth.

To­tal do­mes­tic rev­enue for all me­dia and en­ter­tain­ment in­dus­tries is ex­pected to rise less than 4% an­nu­ally over the next five years, reach­ing $759 bil­lion in 2021.

The fore­cast data comes as me­dia com­pa­nies are scram­bling to find in­no­va­tive ways to reach con­sumers in a rapidly chang­ing en­vi­ron­ment.

“[En­ter­tain­ment and me­dia] com­pa­nies are op­er­at­ing amidst a wave of geopo­lit­i­cal tur­bu­lence, reg­u­la­tory changes and tech­no­log­i­cal dis­rup­tion,” Mark McCaf­frey, PwC’s leader for U.S. tech­nol­ogy, me­dia, and telecom­mu­ni­ca­tions, said in a state­ment. “These com­pa­nies are fac­ing sig­nif­i­cant pres­sures on growth.”

Vir­tual re­al­ity is set to ex­pand the most of any in­dus­try, with 68 mil­lion head­sets in use by 2021, ac­cord­ing to the study. VR is pro­jected to gen­er­ate $4.9 bil­lion in rev­enue, up from $421 mil­lion in 2016.

The re­port cites ad­vance­ments in the tech­nol­ogy of lower-cost head­sets, as well as VR’s ex­pand­ing re­la­tion­ship with video game mak­ers and dig­i­tal news and con­tent creators.

Video game mak­ers will see con­tin­ued, steady gains, fu­eled in part by the boom in e-sports — re­fer­ring to com­pet­i­tive on­line games. The U.S. has over­taken South Korea as the world’s largest e-sports mar­ket.

The video game in­dus­try is ex­pected to grow 6.2 % an­nu­ally to $28.5 bil­lion by 2021.

And thanks to the boom in sub­scrip­tion stream­ing ser­vices such as Spo­tify and Ap­ple Mu­sic, the mu­sic in­dus­try may be on the road to re­cov­ery. While rev­enue is still nowhere near the num­bers seen in the hey­day of the early 2000s, a nearly 100% in­crease in over­all stream­ing rev­enue in 2016 has record com­pa­nies op­ti­mistic about the fu­ture.

Ar­eas that will see the least growth in com­ing years in­clude cinema, ra­dio, pub­lish­ing, tra­di­tional TV — in­dus­tries that have been most af­fected by dig­i­tal dis­rup­tion. TV and cinema have been es­pe­cially hard hit as younger au­di­ences turn to on­line video ser­vices like Net­flix, Hulu and YouTube.

Box-of­fice rev­enue is fore­cast to grow a mod­est 1.3 % to $12.1 bil­lion in rev­enue by 2021, while TV is pro­jected to con­tinue its down­ward trend, los­ing 0.7 % an­nu­ally to $105 bil­lion.

TV ad rev­enue is ex­pected to rise about 1% an­nu­ally as ad­ver­tis­ers move on­line. In­ter­net ad­ver­tis­ing and video are each pro­jected to see about 10% an­nual growth. News­pa­pers will be the hard­est hit, with rev­enue shrink­ing more than 4% an­nu­ally.

Glob­ally, rev­enue is ex­pected to grow 4.2% to $2.2 tril­lion in 2021, down from a 4.4% in­crease in last year’s PwC’s fore­cast. The re­port at­tributes part of the de­crease to the ef­fects of dig­i­tal dis­rup­tion.

Josh Edel­son AFP/Getty Images

AN AP­PLE em­ployee helps a woman try on an HTC Vive while test­ing out the iMac’s vir­tual re­al­ity ca­pa­bil­i­ties Monday at Ap­ple’s de­vel­oper con­fer­ence.

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