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48 TVBEurope Data Centre The drivers of growth


Adam Edelshain, senior manager in PwC’s entertainment and media team, details the findings from PwC’s Entertainment and Media Outlook that suggests advertising and electronic home video will drive growth in the EMEA Television market over the next five years


ONLINE TV advertising is expected to more than treble over the next five years, growing at a compound annual growth rate (CAGR) of 29.3 per cent to reach €1.6 billion by 2018. Over the same period, multi-channel broadcast advertising revenue is expected to grow at a CAGR


of over ten per cent, taking it from €6.7 billion in 2013 to €10.9 billion by 2018. Meanwhile, even more impressive growth rates are being witnessed in the electronic home video market. Total OTT/ Streaming revenue grew by 46.6 per cent last year and is expected to continue to grow at


a similarly impressive rate over the next five years. This growth is being spearheaded by Subscription Video On Demand (SVOD), which is expected to overtake Transactional Video On Demand (TVOD) this year and reach €2.3 billion by 2018. However, TVOD is growing very quickly as well, with annual


growth of more than 30 per cent expected over the next five years. The strength of the OTT/ Streaming market in EMEA is underlined by the fact that revenues from the OTT/ Streaming electronic home video market will overtake Through- TV-Subscription revenues in 2017, a market which itself is


expected to see double digit annual growth between now and 2018.


PwC’s E&M Outlook, which makes five-year projections for both advertising and consumer spending, has highlighted that the television market will grow at 3.4 per cent per year over the next five years. This will be a boost to the industry, which has seen significantly slower growth in 2012 and 2013. In fact, total TV advertising revenue fell in 2012 and grew only 0.4 per cent in 2013. Similar patterns were witnessed in the home video market, with revenues falling in 2012 and only growing at 0.6 per cent in 2013.


So what is driving this expected upturn in the EMEA TV market? There is no doubt that some of this growth can be attributed to the global economic recovery which has seen investor and consumer confidence return, to some extent. However, there are several other factors that are also key to this growth.


Growth of internet access The first is the continued rapid growth of internet access even in the relatively mature markets of Western Europe. Globally, internet access is expected to generate more consumer spend than any other media product or service in the next five years. And this consumer spend will extend to the television market, driving revenue growth in online television, OTT/ streaming and electronic home video.


In some markets, analysts have expressed concern that an increase in internet access revenue will divert spend away from consumer products. However, the growth of internet access itself is being driven by an increase in the size of its customer base. Fixed broadband penetration in EMEA will grow from 53.6 per cent to 61.6 per cent, while mobile internet growth will see penetration rise from 32.1 per cent to 58.3 per cent. Accompanying growth in internet penetration is the strong increase in device ownership. Tablet ownership in EMEA will rise from 88 million in 2013 to 346 million by 2018, while smartphone ownership


www.tvbeurope.com July 2014


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