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The Global Media and Entertainment (M&E) industry outlook 2020

 
  • An overview of the M&E industry
  • Trends shaping the future of Media and Entertainment market

 

The Global Media and Entertainment industry, one of the largest in terms of revenue and market size, is made up primarily of five distinct sub-segments– including TV, film, video games, publishing and music. As per some estimates, the US M&E industry is said to be the largest globally, clocking in revenues to the tune of US$ 735 bn annually, contributing approx. a third to the global M&E industry. The industry is under transformation phase with both the traditional and the emerging models continue to coexist led by multiple devices and platforms, digitization as well as globalization of services which have remodelled the entire M&E segment over the past decade.

The M&E industry has witnessed strong growth led by the increasing personalized media interactions demanded by today’s consumers - who are highly choosy, enthusiastic and very demanding in the way they would like to consume content based on their choice of medium, context, schedule and preferences. Internet - has been the key to both the industry’s growth as well as guided it to evolve continuously. As is common knowledge, the internet has been a major disruption in terms of how people consume content, thereby spearheading a fundamental shift in both content production as well as consumption. While the global M&E market is expected to grow to US$ 2.6 trn by the year 2023, digital services is said to account for a growing share of the industry’s revenue (refer chart below). Digitization of the M&E industry has, in many ways, threatened the traditional setup. For instance, with the new wave of the popularity of video gaming and video streaming, advertisers as well as other publishers are increasingly moving to digital platforms. In fact, as per PWC’s Global Entertainment & Media Outlook Report 2019-2023, in 2018, revenue earned from mobile internet advertising exceeded its wired equivalent for the very first time. Further, the report suggests that by 2023, it is estimated that marketers would allocate more than ~50% of their marketing budgets to digital advertising. With increasing internet penetration, mobile video internet advertising has become increasingly critical in comparison to wired display. These trends are backed by the increasing shift towards mobile data consumption which is estimated to exceed that of fixed broadband in the year 2020.

 

As the streaming wars continue to intensify, industry players have deployed new technologies in order to reach out to their broader customer base:

 

Thriving popularity of Artificial intelligence (AI) – The M&E industry is poised to look on to a major transformation due to the advent of transformative technologies such as AI, which has been deployed by several companies in the entertainment industry in order to make personalized recommendations based on consumer usage and further making the system more effective for content creation. In addition, AI also assists companies in streamlining both pre as well as post-production processes, thereby making all steps cohesive and therefore less resource consuming.

Impact of Virtual reality – the industry is put VR to use in order to captivate the attention of consumers by making consumers to interact with brands. By the help of the consumer engagement, the companies are able to improve the commercial success on their business front.

 

Growing blockchain technology – this trend came out as a radical change as it is helping companies that are financially divested from the distributors and various labels. Blockchain is eliminating the middlemen from the distribution channel by offering more equitable system for creators, producers and consumers. Furthermore, it can help in bringing in decentralization and efficiency in M&E industry.

 

Trends in this industry are in constant flux and it is thereby pertinent for any brand looking to strike a chord with customers, to keep up with the latest trends impacting the M&E industry. The ever-changing trends, specifically in the entertainment industry, have transformed the way in which people consume content via new platforms, mediums as well as features. From online streaming platforms disrupting the music industry by brutally challenging the traditional radio medium, to OTT (over-the-top) content providers rattling the once stronghold of the conventional TV, the world is watching a revolution unfold in the entertainment industry. 2018 witnessed the rising popularity of viewing sports on both new devices as well as platforms whilst social media evolved into an entertainment hub. In 2019 we experienced the explosive popularity of Netflix (followed by several more streaming platforms including the likes of Amazon Prime, Hotstar) along with traction towards E-sports. In the current year (2020), it is rather clear that the growth of video streaming will continue to show decent growth. While the slowdown in the global economy owing to the Coronavirus pandemic is expected to take a toll on the overall growth of the M&E industry globally, higher time spent by individuals at home due to the lockdown in different parts of the world is expected to continue to support the digital and video-streaming platforms. 

 

While the ever-changing trends in the industry have allowed for several growth opportunities for the industry players, they also pose several challenges due to the continuous pressure of increasingly being able to satiate consumer experience. Moreover, the shift in consumer demand for personalization is putting constant pressure on entertainment companies to drive innovation and embrace new technologies. The increasing need for personalization will continue to be critical for every M&E player in the industry. Content creators as well as distributors will need to continuously devise strategies not just to attract, but rather also engage the consumer, at his/her choice of medium.

The industry is constantly innovating and bringing new applications to the market. Nonetheless, actual reality is that digital media is disrupting the industry and players in the traditional industry are losing the market. This is evidenced by the growth in internet ads expenditure. Streaming services are capturing the whole industry and accounted as critical platforms for marketing. With the incorporation of AI and virtual reality, publishers can personalize content resulting by maximizing its impact on the consumers. The shift to digital platforms for media consumption implies that demand for data will continue to grow.

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