Online ad spending to top TV ads in 2017

Global media facing ‘unprecedented challenges,’ PwC says

Online advertising will surpass spending on TV ads for the first time in 2017, according to a new forecast from Pricewaterhouse Coopers.

Another of the forecasted shifts in the consulting firm’s annual “Global Entertainment and Media Outlook 2016-2020:” China will supplant the U.S. as the global box office leader.

Overall, slower growth will lead to U.S. entertainment and media spending (including advertising) increasing from $605 billion in 2015 to $720 billion in 2020, a compound annual growth rate of 3.7%. Globally, spending will increase slightly higher (4.4%) from $1.7 trillion in 2015 to $2.1 trillion in 2020. That global growth outpaces GDP growth in 36 out of the 54 countries covered by PwC’s Outlook.

“Today’s entertainment and media reality is one of companies intensely competing for dollars with the increasing proliferation of free online media alternatives,” Deborah Bothun, PwC’s global and U.S. entertainment & media leader, said in a statement accompanying the report. “This global multi-speed media landscape has created unprecedented challenges for companies in the battle for customers and value.”

Advertisers are following consumers online. U.S. Internet advertising revenue is expected to increase from $59.6 billion in 2015 to $93.5 billion by 2020.

This year, advertisers will spend more on TV advertising ($73 billion) than for online ads ($68.1 billion).

But in 2017, online ad spending of $75.3 billion will surpass the $74.7 billion that PwC projects for TV ads. TV advertising is “expected to remain healthy,” the report says, and is projected to grow to $81.7 billion in 2010.

These forecasts jibe with findings from research firm eMarketer that projects a decline in U.S. TV ad spending from $68.9 billion in 2015 to $73.8 billion in 2018.

For theatrical revenue, China’s box office is expected to reach $15.1 billion in 2020, compared to the U.S. with $11 billion — the first time the U.S. has relinquished that spot.

“Studios are facing increasing international competition with foreign governments — the challenge will be how to tap into this opportunity given strict market conditions,” PwC’s Bothun said.

The fastest-growing U.S. consumer segment is Internet access, which is expected to grow from $140.7 billion this year to $181.7 billion in 2020.

This is a pattern reflected globally, “with a significant increase in the volume of users around the world who are getting connected,” said PwC Director Matt Lieberman.

“We do also see improvements in the speed of access” with more users having access to medium and high-speed broadband, he said.

The next highest spending category, TV and video, is projected to grow in the U.S. from $122.7 billion this year to $124.2 billion in 2020.

Subscription streaming services and other online video is the fastest-growing TV and video segment, projected to increase from $7.4 billion this year to $10.4 billion in 2020.

Despite a projected flat growth rate, pay TV remains the largest video component with consumers expected to spend $101.8 billion this year, increasing to $102.3 billion in 2020.

“TV remains an engaging format, and we see growth in (overthe-top video delivered via the Net) and streaming helping maintain revenue in this segment,” Lieberman said.