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Entertainment & Media

Global Entertainment and Media Outlook: 2007–2011* Global Overview


Entertainment & Media

Global Entertainment and Media Outlook: 2007–2011* Forecasts and economic analyses of 14 industry segments

Global Entertainment and Media Outlook is a forecast for the 2007–2011 period of spending in 14 entertainment and media segments. For ordering instructions, please refer to the next page of this book.

Reprinted from the Global Entertainment and Media Outlook: 2007–2011


Global Entertainment and Media Outlook: 2007–2011

ISBN 1-931684-15-4, Global Entertainment and Media Outlook: 2007–2011

Prepared and edited by:

ISBN 1-931684-16-2, Global Entertainment and Media Outlook: 2007–2011, Global Overview

PricewaterhouseCoopers LLP (www.pwc.com/e&m), the world’s largest professional services organization. Drawing on the knowledge and skills of more than 140,000 people in 149 countries, we build relationships by providing services based on quality and integrity.

Authored by: Wilkofsky Gruen Associates Inc. (www.wilkofskygruen.com), a provider of global research and analysis of the media, entertainment, and telecommunications industries.

Outlook editors: PricewaterhouseCoopers Entertainment & Media Practice: Laura Bobrik, Marketing Manager Ronald Cushey, Director James M. DePonte, Partner Marcel R. Fenez, Partner Wayne Jackson, Partner Stefanie Kane, Partner Nikolai Larchenko, Senior Associate Alexandra Maclean, Marketing Manager Thomas C. Nardozzi, Managing Director Pauline Orchard, Global E&M Marketing Director James O’Shaughnessy, Partner Laura Schooler, Marketing Manager Denise Shapiro, Managing Director Phil Stokes, Partner Many other professionals from the PricewaterhouseCoopers Entertainment & Media Practice reviewed and contributed to this publication. For Wilkofsky Gruen Associates Inc.: David Wilkofsky, Partner Arthur Gruen, Partner Norman D. Eisenberg, Vice President

Copyright © 2007 PricewaterhouseCoopers. PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. All rights reserved. *connectedthinking is a trademark of PricewaterhouseCoopers LLP (US).

This document is provided by PricewaterhouseCoopers for general guidance only and does not constitute the provision of legal advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. The information is provided as is, with no assurance or guarantee of completeness, accuracy, or timeliness of the information and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose. No part of this publication may be excerpted, reproduced, stored in a retrieval system, distributed or transmitted in any form or by any means—including electronic, mechanical, photocopying, recording, or scanning—without the prior written permission of PricewaterhouseCoopers. Without limiting the foregoing, you may not use excerpts from the publication in financial prospectus documents, public offerings, private placement memoranda, filings with the Securities and Exchange Commission, annual reports, or similar financial, investment, or regulatory documents. Requests to PricewaterhouseCoopers for permission should be addressed in writing to Laura Bobrik, PricewaterhouseCoopers, 401 Broad Hollow Road, Melville, NY 11747. The papers, paper mills, and printer utilized in the production of this document are all certified to Forest Stewardship Council (FSC) standards, which promote environmentally appropriate, socially beneficial, and economically viable management of the world’s forests. The book was printed with 100% green renewable energy.

Rick Marsland, Director, White Page Limited

For additional information and to order this publication, visit www.pwc.com/outlook.

Book design:

The publication is available for sale as follows:

Book editorial:

Adam West, PricewaterhouseCoopers Marketing Center for Design

Book production: Bowne Business Communications

Copy editing and proofreading: Paula Plantier, Principal, EditAmerica

• The full global forecast, which includes the Global Overview, is sold in both print and electronic formats. • The Global Overview is available separately in either print or electronic format. • Individual industry segments are sold in electronic format.

PricewaterhouseCoopers LLP 300 Madison Avenue New York, NY 10017 646-471-4000

 | PricewaterhouseCoopers


Table of Contents 4 Introduction Letter 5 PricewaterhouseCoopers Entertainment & Media Practice Global Contacts

Global Entertainment and Media Outlook: 2007–2011, Global Overview 6 8 9 10 11 23 31 31 32 33 34 35 36 38 39 40 41 42 43 44 45 46 46 52 63 72 79 83

Introduction Methodology Region/Countries Covered Exchange Rates Global Entertainment and Media Market Principal Industry Drivers Global Entertainment and Media Market by Segment Filmed Entertainment Television Networks: Broadcast and Cable Television Distribution Recorded Music Radio and Out-of-Home Advertising Internet Advertising and Access Spending Video Games Business Information Magazine Publishing Newspaper Publishing Book Publishing Theme Parks and Amusement Parks Casino and Other Regulated Gaming Sports Global Entertainment and Media Market by Region United States Europe, Middle East, Africa (EMEA) Asia Pacific Latin America Canada Summary of Tables and Charts†

Totals in tables and charts may not total arithmetically due to rounding. †

Key to Symbols Used in the Tables and Charts p = preliminary NA = not available — = no spending that year

European Union Status

Members: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Netherlands, Poland, Portugal, Romania, Spain, Sweden, United Kingdom Applicant: Turkey

Global Entertainment and Media Outlook: 2007–2011 | 


PricewaterhouseCoopers LLP PricewaterhouseCoopers Center 300 Madison Avenue New York, NY 10017

June 2007 To our clients and friends both in and beyond the Entertainment and Media industry: As leaders of PwC’s Global E&M Practice, we are pleased to welcome you to the eighth annual edition of PricewaterhouseCoopers’ Global Entertainment and Media Outlook, covering the forecast period 2007–2011. This edition adopts a familiar format and includes in-depth forecasts and analyses of 14 major industry segments across five regions of the world: the United States, EMEA (Europe, Middle East, Africa), Asia Pacific, Latin America, and Canada. Overall, we see that the entertainment and media (E&M) industry will continue to enjoy strong growth around the world. Such growth does not come without challenges, and most sectors are experiencing profound change, whether from the opportunities of digital distribution and new delivery platforms, or from the threats of piracy in its many—and seemingly increasing—forms, or just from managing global expansion. Physical media formats are still important but are growing more slowly as the availability of licensed digital distribution services provides consumers with authorized alternatives to piracy. Continued expansion in the broadband household universe and the rollout of next-generation wireless handsets and high-speed wireless networks will stimulate the market. Overall advertising growth is strong. Internet advertising will remain the fastest-growing ad medium and will constitute 14 percent of global advertising in 2011 compared with less than 3 percent in 2002. The E&M market is also seeing considerable merger activity as well as interest from the private equity sector as players seek to take advantage of the profound changes and strong fundamentals that the sector is demonstrating. Asia Pacific, led by India and China, is joined by Latin America as the fastest-growing regions, with double-digit percentage spending increases in the Internet, TV Distribution, and Casino and Other Regulated Gaming segments. The U.S. will remain the largest E&M market but will grow more slowly than the other regions. It is clear that the E&M industry is now more than ever a truly global industry, taking influences from developments in the many local markets and applying learning and experience to other markets worldwide. It is clearly an exciting time to be part of the ever-expanding entertainment and media industry. All of us at PwC continue to stay on top of new trends and developments that may impact your business now and in the future, and we look forward to working with you and sharing our thoughts with you further. We appreciate your feedback and ask that you continue to tell us what we can do to make the Outlook more useful to you. If we can be of service to your business in any way, please contact the PricewaterhouseCoopers Entertainment & Media regional professional nearest you (see facing page) or visit our Web site (pwc.com) for details of the contact in your territory. Finally, we thank you for your support and wish you an exciting and rewarding year ahead. Sincerely,

James O’Shaughnessy

Marcel R. Fenez

Chairman

Managing Partner

Global E&M Practice

Global E&M Practice

4 | PricewaterhouseCoopers


PricewaterhouseCoopers Entertainment & Media Practice—Global Contacts Provided below is a listing of key contacts for the PricewaterhouseCoopers Entertainment & Media Practice. If there is no listing for your location, please contact the PricewaterhouseCoopers office nearest you to be directed to the appropriate professional.

Global James O’Shaughnessy Chairman New York phone: 1.646.471.5878 james.oshaughnessy@us.pwc.com

Marcel R. Fenez Managing Partner Hong Kong phone: 852.22892628 marcel.fenez@hk.pwc.com

Regional Asia Pacific

Canada

Europe

South and Central Americas

United Kingdom

United States

Marcel R. Fenez Hong Kong phone: 852.22892628 marcel.fenez@hk.pwc.com

Timothy Leonard São Paulo phone: 55.11.3674.3786 timothy.leonard@br.pwc.com

Tracey L. Jennings Toronto phone: 1.416.869.8737 tracey.l.jennings@ca.pwc.com

Phil Stokes London phone: 44.20.7804.4072 phil.stokes@uk.pwc.com

John W. Middelweerd Utrecht, Netherlands phone: 31.30.2191.656 john.middelweerd@nl.pwc.com

James J. O’Shaughnessy New York phone: 1.646.471.5878 james.oshaughnessy@us.pwc.com

Functional Tax

Christ H. Economos New York phone: 1.646.471.0612 christ.h.economos@us.pwc.com

Convergence

Deborah K. Bothun Los Angeles phone: 1.213.217.3302 deborah.k.bothun@us.pwc.com

Global Entertainment and Media Outlook: 2007–2011 | 


Global Overview Introduction We are pleased to present the PricewaterhouseCoopers Entertainment and Media Outlook: Global Overview. The objective of the Global Overview is to identify key trends and developments affecting the industry and relate them to spending forecasts across 14 entertainment and media (E&M) segments for the 2007–2011 period. The Global Overview is only a summary of the full range of data and information provided in Global Entertainment and Media Outlook: 2007–2011 as a whole. The Outlook covers a wide array of issues in depth and provides detailed industry and country data for the various components of each segment. The entertainment and media industry has moved beyond its recovery cycle and is now in a steady expansion mode. The market is also in transition as digital distribution is growing rapidly and not only playing a more important role in the overall market but also in effect creating new medium. Computers and wireless telephones are now sophisticated multimedia devices, and spending related to entertainment and media content distribution through those devices is growing at double-digit rates. During the next five years, the broadband household universe will grow by 300 million, and the number of wireless subscribers will increase

PricewaterhouseCoopers  | Global Entertainment and Media Outlook: 2007–2011


from 2.3 billion in 2006 to 3.4 billion in 2011. In addition to new subscribers, mobile distribution will be enhanced by the introduction of new handsets specifically designed to play music, to provide video games, and to receive television broadcasts. More than 40 percent of total entertainment and media growth during the next five years will be generated through online and wireless technologies facilitated by the expansion of these universes. At the same time, revenue streams vulnerable to digital substitution will be adversely affected, with slow growth or declines in those segments. In addition to technology, growth will be fueled by the expansion of maturing economies in Brazil, Russia, India, and the People’s Republic of China (PRC), or BRIC, which are experiencing rapid growth in entertainment and media spending and are attracting international interest. Collectively, E&M spending in those four countries will grow at double-digit annual rates and will account for nearly a quarter of total global growth during the next five years. A relatively stable economic environment will support E&M expansion in all facets of the industry. As the economy moves beyond its recovery phase, growth will moderate but should remain on a stable upward trend. Stability provides a climate suitable for growth, as consumers are more willing to spend on entertainment and media when they are not worried about swings in the economy. The Global Overview takes into account these and other developments and addresses the underlying factors affecting forecast spending. It begins on page 11 with the facing page showing the Global Entertainment and Media Market chart, showing a forecast for spending and growth through 2011 across each of the five regions covered—United States, EMEA (Europe, Middle East, Africa), Asia Pacific, Latin America, and Canada—in the following 14 entertainment and media segments: Filmed Entertainment Television Networks: Broadcast and Cable Television Distribution Recorded Music Radio and Out-of-Home Advertising Internet Advertising and Access Spending Video Games

Business Information Magazine Publishing Newspaper Publishing Book Publishing Theme Parks and Amusement Parks Casino and Other Regulated Gaming Sports

The chart is followed by a discussion of global advertising and consumer/end-user spending. The Global Overview is then divided into four main sections of forecasts: • A discussion of Key Themes that will characterize the top trends in the global entertainment and media marketplace during the next five years, pages 17 to 22 • The Principal Industry Drivers, which discusses what we believe will fuel—or thwart—the aforementioned Key Themes, pages 23 to 30 • Analysis and forecasts for global spending by individual industry segment across all regions, pages 31 to 45 • Analysis and forecasts for spending by region across all industry segments, pages 46 to 82

Introduction Overview | 


Methodology Historical information is obtained principally from confidential and proprietary sources. In instances where third-party sources are used, their information is used either indirectly, as part of our calculus for the historical data, or directly, from government agencies, trade associations, or related entities that seek to have their data disseminated in the public domain. The sources of such information are explicitly cited. Recent trends in industry performance are analyzed, and the factors underlying those trends are identified. The factors considered include economic, demographic, technological, institutional, behavioral, competitive, and other drivers that may affect each of the entertainment and media markets. Models are then developed to quantify the impact of each factor on industry spending. A forecast scenario for each causative factor is created, and the contribution of each factor on a prospective basis is identified. Proprietary mathematical models and analytic algorithms are used in the process to provide an initial array of prospective values. Our professional expertise and institutional knowledge are then applied to review and adjust those values if required. The entire process is then examined for internal consistency and transparency vis-à-vis prevailing industry wisdom. Forecasts for 2007–2011 are based on an analysis of the dynamics of each segment in each region and on the factors that affect those dynamics. We recognize that cataclysmic events, such as the September 11, 2001, terrorist attacks, can occur at any time and can affect the outlook, but due to their unpredictable nature, such events are not contemplated in this forecast. We provide annual growth rates for 2002–11 and a compound annual growth rate (CAGR) that covers the 2007–2011 forecast period. In calculations of the CAGR, 2006 is the beginning year, with five growth years during the forecast period: 2007, 2008, 2009, 2010, and 2011. The year 2011 is the end year. The formula is: CAGR = 100*((Value in 2011/Value in 2006)^(1/5)–1). All figures are reported in nominal terms reflecting actual spending transactions and therefore include the effects of inflation. Segment spending consists of advertising and end-user spending related directly to entertainment and media content. We do not include spending on hardware or on services that may be needed to access content; we count only the content itself. In the television, radio, recorded music, filmed entertainment, and video games segments, for example, we do not include spending on equipment or hardware—meaning, television sets, radio sets, CD players or portable listening devices, DVD players, or video game consoles. We include only spending by advertisers and end users that is related directly to television and radio programs, music, videos, and video games themselves. Similarly, in calculations addressing the Internet segment, we do not include spending on computers or ordinary telephone lines—only spending specifically for accessing the Internet through an Internet service provider or through a cable modem or high-speed telephone line. In the box office component of filmed entertainment and in the gate revenue component of sports, we do not include the purchase of food or other concessionary items, because we do not view such items as entertainment content. In theme parks, by contrast, we count all purchases made at the park, because we view all services provided at the park as integral parts of the theme park experience. Spending is counted at the consumer or end-user level—not at the wholesale level—and includes retail markups where applicable. Advertising is measured “net of agency commissions” in all territories except the United States and Russia, where gross advertising is measured to be consistent with the way advertising is generally reported. Each chapter introduction begins with a definition of which spending streams are included in the segment.

PricewaterhouseCoopers  | Global Entertainment and Media Outlook: 2007–2011


The regions comprise the countries listed below.

Regions/Countries Covered

United States EMEA Western Europe Austria† Belgium† Denmark† Finland† France† Germany†

Central and Eastern Europe

Middle East/Africa

Greece† Ireland† Italy† Netherlands† Norway Portugal†

Spain† Sweden† Switzerland United Kingdom†

Czech Republic† Hungary† Poland† Romania† Russia Turkey‡

Israel Saudi Arabia/Pan Arab‡‡ South Africa

Indonesia Japan Malaysia New Zealand

Pakistan Philippines Singapore South Korea

Taiwan Thailand

Asia Pacific Australia China Hong Kong India

Latin America Argentina Brazil Chile

Colombia Mexico Venezuela

Canada †European Union members. ‡European Union applicants. ‡‡Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates.

Introduction Overview | 


Figures for EMEA, Asia Pacific, Latin America, and Canada are presented in U.S. dollars by using the average 2006 exchange rate held constant for each historical year and forecast year. In this way, the data reflect industry trends and are not distorted by fluctuations in international exchange rates.

The following exchange rates were used for the individual countries in Asia Pacific.

Exchange Rates per US$ (2006 Average) Asia Pacific

Currency

Exchange Rate

Australia

Dollar

1.32851

The following exchange rates were used for the individual countries in EMEA.

China

Yuan (renminbi)

7.98189

Hong Kong

Dollar

7.76895

Exchange Rates per US$ (2006 Average)

India

Rupee

45.31880

Indonesia

Rupiah

9,183.77255

Japan

Yen

116.33664

Malaysia

Ringgit

3.67834

EMEA Western Europe

Currency

Exchange Rate

Austria

Euro

0.79703

Belgium

Euro

0.79703

New Zealand

Dollar

1.54282

Rupee

60.24505

Denmark

Krone

5.94473

Pakistan

Finland

Euro

0.79703

Philippines

Peso

51.40865

France

Euro

0.79703

Singapore

Dollar

1.58942

Germany

Euro

0.79703

South Korea

Won

969.90155

Greece

Euro

0.79703

Taiwan

Dollar

32.55646

Thailand

Baht

37.98621

Ireland

Euro

0.79703

Italy

Euro

0.79703

Netherlands

Euro

0.79703

Norway

Krone

6.41557

Portugal

Euro

0.79703

Spain

Euro

0.79703

Sweden

Krona

7.37864

Switzerland

Franc

1.25364

United Kingdom

Pound sterling

0.54354

Central and Eastern Europe Czech Republic

Koruna

22.62525

Hungary

Forint

210.83024

Poland

Zloty

3.10768

Romania

New leu

2.81809

Russia

Ruble

27.18950

Turkey

New lira

1.44367

Middle East/Africa

Israel

New shekel

4.46685

Saudi Arabia/Pan Arab† U.S. dollar

1.00000

South Africa

6.78812

Rand

†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. Note: Figures are estimated in U.S. dollars.

PricewaterhouseCoopers 10 | Global Entertainment and Media Outlook: 2007–2011

The following exchange rates were used for the individual countries in Latin America.

Exchange Rates per US$ (2006 Average) Latin America

Currency

Exchange Rate

Argentina

Peso

3.09139

Brazil

Real

2.17995

Chile

Peso

539.39322

Colombia

Peso

2,424.14490

Mexico

Peso

10.91549

Venezuela

Bolivar

2,149.03540

The following exchange rate was used for Canada.

Exchange Rate per US$ (2006 Average) Canada

Currency

Exchange Rate

Canada

Dollar

1.13461


Global Entertainment and Media Market This forecast assesses the entertainment and media industry as 14 individual segments spanning five regions of the world. Together these segments constituted a $1.4-trillion industry in 2006. In addition to analyzing economic data, the forecast also considers numerous strategic, operational, technological, demographic, political, and cultural factors affecting the industry’s growth and evolution. Review of 2006 Total global E&M spending grew by 7.2 percent in 2006, up from a 6.2 percent increase in 2005. Doubledigit growth in Internet, video games, and sports, as well as high-single-digit increases in TV distribution and casino and other regulated gaming contributed to the improvement. Rising broadband penetration fueled the Internet market; the introduction of new video game platforms boosted spending on video game software; spending associated with major international events contributed to growth in sports; increased subscription household penetration expanded TV distribution; and new resort casinos propelled casino and other regulated gaming. These five segments accounted for 70 percent of global entertainment and media growth in 2006. Business information rose 6.9 percent, in part reflecting demand for information related to investment opportunities in BRIC and to increased merger and acquisition activity. Television benefited from advertising associated with the Winter Olympics and the FIFA World Cup, posting a 6.2 percent gain. The remaining segments rose by less than 5 percent.

Global Entertainment and Media Market Overview | 11


Global Entertainment and Media Market by Segment (US$ Millions) Segment Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change TV Distribution % Change Recorded Music % Change Radio/Out-of-Home Advertising % Change Internet Advertising and Access Spending % Change Video Games % Change Business Information % Change Magazine Publishing % Change Newspaper Publishing % Change Book Publishing % Change Theme Parks and Amusement Parks % Change Casino and Other Regulated Gaming % Change Sports % Change Total % Change

2007–11 CAGR

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

70,689

75,486

81,009

78,923

81,239

84,291

88,110

92,645

97,810

103,263

11.6

6.8

7.3

–2.6

2.9

3.8

4.5

5.1

5.6

5.6

4.9

130,180

138,339

152,387

161,934

171,976

181,404

195,237

204,630

217,793

228,335

4.5

6.3

10.2

6.3

6.2

5.5

7.6

4.8

6.4

4.8

5.8

116,056

124,936

137,905

146,825

160,643

172,346

189,525

206,744

229,114

250,745

9.6

7.7

10.4

6.5

9.4

7.3

10.0

9.1

10.8

9.4

9.3

36,983

34,793

35,491

35,859

36,078

35,617

36,432

37,693

39,098

40,437

–4.9

–5.9

2.0

1.0

0.6

–1.3

2.3

3.5

3.7

3.4

2.3

58,301

59,892

62,994

66,242

69,217

72,589

76,522

80,696

84,964

89,211

2.7

2.7

5.2

5.2

4.5

4.9

5.4

5.5

5.3

5.0

5.2

76,405

94,121

119,850

145,420

177,076

210,071

242,156

272,580

301,585

331,578

19.5

23.2

27.3

21.3

21.8

18.6

15.3

12.6

10.6

9.9

13.4

21,881

23,304

26,334

27,665

31,629

37,468

41,458

44,226

46,720

48,877

8.1

6.5

13.0

5.1

14.3

18.5

10.6

6.7

5.6

4.6

9.1

70,417

70,700

73,892

78,153

83,519

89,093

94,688

100,175

105,580

110,962

–1.1

0.4

4.5

5.8

6.9

6.7

6.3

5.8

5.4

5.1

5.8

89,854

90,874

94,341

98,138

100,722

103,361

106,532

109,982

113,647

117,223

–2.5

1.1

3.8

4.0

2.6

2.6

3.1

3.2

3.3

3.1

3.1

164,318

167,540

173,398

177,852

181,043

183,207

187,191

191,141

195,888

200,722

–1.1

2.0

3.5

2.6

1.8

1.2

2.2

2.1

2.5

2.5

2.1

110,367

112,771

114,345

119,364

121,395

127,144

130,066

135,022

139,781

144,604

1.5

2.2

1.4

4.4

1.7

4.7

2.3

3.8

3.5

3.5

3.6

19,776

20,264

21,148

21,829

22,769

23,800

24,909

26,041

27,258

28,498

5.2

2.5

4.4

3.2

4.3

4.5

4.7

4.5

4.7

4.5

4.6

65,938

73,197

83,696

93,631

101,609

108,703

117,426

124,483

134,867

144,044

8.7

11.0

14.3

11.9

8.5

7.0

8.0

6.0

8.3

6.8

7.2

73,522

76,257

82,271

85,881

96,144

99,428

109,106

110,833

121,952

123,868

9.4

3.7

7.9

4.4

12.0

3.4

9.7

1.6

10.0

1.6

5.2

1,104,687 1,161,258 1,257,520 1,335,689 1,432,395 1,525,172 1,635,283 1,732,066 1,850,507 1,956,067

4.4

5.1

8.3

6.2

7.2

6.5

7.2

5.9

6.8

5.7

6.4

Note: Beginning in 2003, newspaper Web site advertising in the United States is included in both the newspaper and Internet segments but is counted only once in the overall total. Prior to 2003, newspaper Web site advertising in the U.S. is included only in the Internet segment. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

PricewaterhouseCoopers 12 | Global Entertainment and Media Outlook: 2007–2011


Industry size and expected growth We project the entertainment and media industry in the United States, EMEA, Asia Pacific, Latin America, and Canada will increase from $1.4 trillion in 2006 to $2 trillion in 2011, growing at a compound annual rate of 6.4 percent. The United States will expand at a 5.3 percent compound annual rate—slowest of the five regions, rising from $582 billion in 2006 to $754 billion in 2011. EMEA will increase from $473 billion in 2006 to $617 billion in 2011, growing at 5.5 percent compounded annually. Spending in Asia Pacific will average 9.6 percent annual growth—the highest of all of the regions, increasing from $297 billion in 2006 to $470 billion in 2011. Excluding Japan, which will experience relatively slower growth, Asia Pacific will grow at a 12.9 percent compound annual rate. The PRC will pass Japan in 2009 to become the largest territory in Asia Pacific. The market in Latin America will total $68 billion in 2011, up from $44 billion in 2006, advancing at a compound annual rate of 8.9 percent. In Canada, spending will increase from $36 billion in 2006 to $47 billion in 2011, for an average annual gain of 5.6 percent. In total, compared with the past five years—when growth averaged 6.2 percent compounded annually—the 6.4 percent projected advance will represent a modest improvement. The projected increase, however, will be slower than the 7.2 percent compound annual growth during 2004–06.

Global Entertainment and Media Market by Region (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

464,592

488,156

525,231

550,027

582,448

612,163

648,948

680,713

720,203

754,209

4.7

5.1

7.6

4.7

5.9

5.1

6.0

4.9

5.8

4.7

5.3

369,840

386,241

416,125

442,434

473,040

499,106

528,754

556,368

591,023

616,918

4.3

4.4

7.7

6.3

6.9

5.5

5.9

5.2

6.2

4.4

5.5

210,824

224,612

248,357

270,089

296,982

327,694

364,314

394,841

431,446

470,408

4.6

6.5

10.6

8.8

10.0

10.3

11.2

8.4

9.3

9.0

9.6

31,088

32,012

35,474

39,671

44,228

48,375

53,028

57,669

63,113

67,732

–3.4

3.0

10.8

11.8

11.5

9.4

9.6

8.8

9.4

7.3

8.9

28,343

30,237

32,333

33,468

35,697

37,834

40,239

42,475

44,722

46,800

6.7

6.7

6.9

3.5

6.7

6.0

6.4

5.6

5.3

4.6

5.6

1,104,687 1,161,258 1,257,520 1,335,689 1,432,395 1,525,172 1,635,283 1,732,066 1,850,507 1,956,067

4.4

5.1

8.3

6.2

7.2

6.5

7.2

5.9

6.8

5.7

6.4

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Global Entertainment and Media Market Overview | 13


Advertising We project global advertising will increase at a 5.4 percent compound annual rate during the 2007–2011 period, rising to $531 billion in 2011 from $407 billion in 2006. The market is characterized by spikes occurring during even years related to advertising associated with the Olympic Games and in 2010 with the FIFA World Cup. We do not expect growth in any of the forecast years to match the 8.3 percent increase during 2004. At the same time, in no forecast year will the market be as weak as it was during 2002–03. Internet advertising has grown at annual rates in excess of 30 percent during each of the past three years, and we expect the Internet to remain the fastest-growing advertising medium, with a projected 18.3 percent compound annual increase to $73 billion in 2011. The Internet will constitute 14 percent of global advertising in 2011 compared with less than 3 percent in 2002. Out-of-home will be the second-fastest-growing advertising medium, with a projected 6.5 percent compound annual increase. Digital billboards are expanding the effective inventory by allowing the same display to be sold to multiple advertisers. Television will expand at a 5.1 percent compound annual rate, boosted by advertising on new channels supported by expanding digital platforms. Advertising associated with the Beijing Summer Olympics in 2008 will generate an 8.8 percent increase that year. The 2010 FIFA World Cup in South Africa and the Winter Olympics in Vancouver, Canada, will also attract incremental advertising. Television is the largest advertising medium, at $154 billion in 2006, and will rise to a projected $197 billion in 2011. Radio, magazines, and newspapers will each grow by less than 4 percent annually, losing share during the next five years.

Global Advertising (US$ Millions) Segment Television % Change Internet % Change Magazines % Change Newspapers % Change Radio % Change Out-of-Home % Change Total % Change

2011

2007–11 CAGR

119,877 125,805 139,169 144,049 153,504 159,552 173,582 178,336 190,330 196,852

2002

2003

2004

2005

2006p

2007

2008

2009

2010

4.1

4.9

10.6

3.5

6.6

3.9

8.8

2.7

6.7

3.4

5.1

9,047

11,588

16,451

22,917

31,593

40,558

49,501

57,719

65,585

73,096

–8.3

28.1

42.0

39.3

37.9

28.4

22.0

16.6

13.6

11.5

18.3

46,007

46,697

48,999

51,377

53,066

54,748

56,784

59,048

61,531

63,939

–5.4

1.5

4.9

4.9

3.3

3.2

3.7

4.0

4.2

3.9

3.8

102,506 105,025 110,119 113,626 116,280 117,878 121,209 124,482 128,556 132,693

–2.6

2.5

4.9

3.2

2.3

1.4

2.8

2.7

3.3

3.2

2.7

29,023

29,671

31,001

31,711

32,382

33,262

34,355

35,643

37,177

38,815

3.9

2.2

4.5

2.3

2.1

2.7

3.3

3.7

4.3

4.4

3.7

18,565

19,270

20,508

21,912

23,296

24,825

26,658

28,381

30,099

31,871

0.7

3.8

6.4

6.8

6.3

6.6

7.4

6.5

6.1

5.9

6.5

325,025 336,840 364,706 383,565 407,457 427,473 458,014 478,784 507,728 530,966

–0.1

3.6

8.3

5.2

6.2

4.9

7.1

4.5

6.0

4.6

5.4

Note: Beginning in 2003, newspaper Web site advertising in the United States is included in both the newspaper and Internet segments but is counted only once in the overall total. Prior to 2003, newspaper Web site advertising in the U.S. is included only in the Internet segment. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

PricewaterhouseCoopers 14 | Global Entertainment and Media Outlook: 2007–2011


Consumer/end-user spending Global consumer/end-user spending will increase from $1 trillion in 2006 to $1.4 trillion in 2011, growing by 6.8 percent compounded annually. The traditional electronic media and the newest digital media are still the fastest growers: Internet access and TV distribution will be the fastest-growing segments, with respective increases averaging 12.2 percent and 10.9 percent compounded annually. Internet access will be boosted by increases in broadband penetration. TV distribution will be fueled by growth in subscription households— buoyed by the entrance of telephone companies into TV distribution—and a surging video-on-demand market. Video games and casino and other regulated gaming will be the next-fastest-growing segments, at 9.1 percent and 7.2 percent, respectively. New games associated with next-generation console platforms and rapidly growing online and wireless universes will stimulate the video game market. New resort casinos will drive casino and other regulated gaming. Radio will grow at a 6.5 percent compound annual rate, boosted by new radio licenses in India and an expanding satellite radio subscription market in the United States, Canada, and, to a lesser degree, India, which will offset large but slow-growing public radio license fees in EMEA and Asia Pacific. Business information will increase at a 5.8 percent compound annual rate, helped by a generally healthy economic environment and growing demand for information related to rapidly growing territories in Asia Pacific, Central and Eastern Europe, and Latin America. TV networks will grow at a 5.6 percent annual rate, boosted by rising cable network license fees in North America. Sports will expand at a 5.2 percent annual rate, fueled by large increases in rights fees, including online and mobile rights. Major international sporting events in 2008 and 2010 will lead to high-single-digit or doubledigit increases in those years. The remaining six segments will each grow by less than 5 percent compounded annually.

Global Entertainment and Media Market Overview | 15


Global Consumer/End-User Spending (US$ Millions) Segment Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change TV Distribution % Change Recorded Music % Change Radio % Change Internet Access % Change Video Games % Change Business Information % Change Magazines % Change Newspapers % Change Books % Change Theme Parks and Amusement Parks % Change Casino and Other Regulated Gaming % Change Sports % Change Total % Change

2003

2004

2005

2006p

2007

2008

2009

70,689

75,486

81,009

78,923

81,239

84,291

88,110

92,645

11.6

6.8

7.3

–2.6

2.9

3.8

4.5

5.1

5.6

5.6

4.9

38,919

41,220

44,552

47,899

50,715

53,408

56,030

59,677

63,090

66,583

10.3

5.9

8.1

7.5

5.9

5.3

4.9

6.5

5.7

5.5

5.6

96,250 106,571 116,811 128,400 140,790 155,150 173,361 193,487 215,645

87,440

2010

2011

2007–11 CAGR

2002

97,810 103,263

9.2

10.1

10.7

9.6

9.9

9.6

10.2

11.7

11.6

11.5

10.9

36,983

34,793

35,491

35,859

36,078

35,617

36,432

37,693

39,098

40,437

–4.9

–5.9

2.0

1.0

0.6

–1.3

2.3

3.5

3.7

3.4

2.3

10,713

10,951

11,485

12,619

13,539

14,502

15,509

16,672

17,688

18,525

2.2

4.9

9.9

7.3

7.1

6.9

7.5

6.1

4.7

6.5

82,533 103,399 122,503 145,483 169,513 192,655 214,861 236,000 258,482

3.2 67,358 24.5

22.5

25.3

18.5

18.8

16.5

13.7

11.5

9.8

9.5

12.2

21,881

23,304

26,334

27,665

31,629

37,468

41,458

44,226

46,720

48,877

8.1

6.5

13.0

5.1

14.3

18.5

10.6

6.7

5.6

4.6

9.1

70,417

70,700

73,892

78,153

83,519

89,093

94,688 100,175 105,580 110,962

–1.1

0.4

4.5

5.8

6.9

6.7

6.3

5.8

5.4

5.1

5.8

43,847

44,177

45,342

46,761

47,656

48,613

49,748

50,934

52,116

53,284

0.8

0.8

2.6

3.1

1.9

2.0

2.3

2.4

2.3

2.2

2.3

61,812

62,515

63,279

64,226

64,763

65,329

65,982

66,659

67,332

68,029

1.6

1.1

1.2

1.5

0.8

0.9

1.0

1.0

1.0

1.0

1.0

110,367 112,771 114,345 119,364 121,395 127,144 130,066 135,022 139,781 144,604

1.5

2.2

1.4

4.4

1.7

4.7

2.3

3.8

3.5

3.5

3.6

19,776

20,264

21,148

21,829

22,769

23,800

24,909

26,041

27,258

28,498

5.2

2.5

4.4

3.2

4.3

4.5

4.7

4.5

4.7

4.5

4.6

65,938

73,197

83,696

93,631 101,609 108,703 117,426 124,483 134,867 144,044

8.7

11.0

14.3

11.9

8.5

73,522

76,257

82,271

85,881

96,144

9.4

3.7

7.9

4.4

12.0

7.0

6.8

7.2

99,428 109,106 110,833 121,952 123,868

5.2  

8.3

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

PricewaterhouseCoopers 16 | Global Entertainment and Media Outlook: 2007–2011

6.6

7.6

7.1

7.2

1.6

8.3

1.6

5.7

9.7

6.0

779,662 824,418 892,814 952,124 1,024,938 1,097,699 1,177,269 1,253,282 1,342,779 1,425,101 6.3

3.4

8.0

6.5

10.0 7.1

6.1

6.8


Key Themes: 2007–2011 The migration to digital formats is having an adverse impact on competing revenue streams. Brazil, Russia, India, and the PRC are emerging as major drivers of entertainment and media growth and are attracting international investment. Consumer-generated media is accelerating content fragmentation. Segments vulnerable to digital competition The migration to digital formats is accelerating. In 2006, entertainment and media content distributed over digital and mobile platforms—online digital streaming, digital movie/TV downloads, video-on-demand, music downloaded from the Internet, music downloaded to wireless phones, online advertising, online video games, wireless video games, electronic books, and online gaming—rose by 39 percent. We do not include Internet access itself in this discussion because our focus is on other entertainment and media segments distributed over digital platforms. Digital/mobile spending streams compete with physical home video sell-through and rental, physical recorded music sales, physical book sales, and purchases of magazines and newspapers. Additionally, traditional TV, radio, magazine, and newspaper advertising continues to compete with Internet advertising. In 2006, for the first time ever, digital/mobile spending streams contributed more to global entertainment and media spending growth than did directly competing spending streams. Digital/mobile spending increased by $16.4 billion in 2006 compared with an $11.4-billion gain for streams in direct competition. Global Spending Added Annually by Category (US$ Millions) 30,000 25,000 20,000 15,000 10,000

• Digital/Mobile Distribution • Competing Distribution Channels

5,000 0

2003

2004

2005

2006

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Revenue streams vulnerable to digital competition grew slowly during the past five years, averaging 2.4 percent compounded annually. Asia Pacific and Latin America recorded faster increases because they are growing rapidly, allowing for increases in these traditional revenue streams at the same time as digital and mobile are surging. In 2006, for example, the revenue streams subject to digital competition rose 8.9 percent in Latin America and 3.9 percent in Asia Pacific. By contrast, those same revenue streams rose by only 2.2 percent in EMEA and Canada and declined by 0.4 percent in the United States. During the next five years, revenue streams vulnerable to digital competition will continue to grow slowly, averaging 2.7 percent compounded annually. Latin America and Asia Pacific will have the fastest growth in

Key Themes Overview | 17


revenues vulnerable to digital competition. Latin America will expand at a 6.5 percent compound annual rate, and Asia Pacific by 3.8 percent compounded annually. EMEA will grow by 2.6 percent annually, Canada by 2.5 percent, and the United States by 1.6 percent.

Revenues Subject to Digital Competition† (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

201,389 207,248 216,523 220,321 219,468 220,140 223,387 226,266 232,048 238,122 1.1

1.6

212,954 215,858 223,757 229,329 234,350 240,524 246,229 252,715 260,263 266,841

1.4

4.5 3.7

1.8 2.5

–0.4 2.2

0.3 2.6

1.5 2.4

1.3 2.6

2.6

2.6

0.3

2.9

2007–11 CAGR

3.0

2.5

2.6

122,176 125,257 130,764 134,407 139,689 144,185 151,551 156,347 162,450 167,960

0.6

2.5

4.4

2.8

3.9

3.2

5.1

3.2

3.9

3.4

3.8

13,675

13,847

15,513

17,628

19,204

20,403

21,971

23,212

25,146

26,350

–4.6

1.3

12.0

13.6

8.9

6.2

7.7

5.6

8.3

4.8

6.5

12,914

13,827

14,795

15,058

15,388

15,753

16,158

16,584

17,014

17,445

8.1

7.1

7.0

1.8

2.2

2.4

2.6

2.6

2.6

2.5

2.5

563,108 576,037 601,352 616,743 628,099 641,005 659,296 675,124 696,921 716,718

0.7

2.3

4.4

2.6

1.8

2.1

2.9

2.4

3.2

2.8

2.7

†Includes physical home video sell-through and rental, TV advertising, physical recorded music, radio advertising, magazine publishing, newspaper publishing, and physical book publishing where applicable. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Revenues not subject to digital competition—which include the digital revenue streams described earlier (excluding Internet access) as well as revenue streams not directly affected by digital distribution, which

PricewaterhouseCoopers 18 | Global Entertainment and Media Outlook: 2007–2011


includes box office spending, TV subscriptions, console and PC video games, out-of-home advertising, business information, theme parks, sports, casino gaming, and legal sports wagering—averaged 9.4 percent growth compounded annually during the past three years. Growth during the next five years will average 8.3 percent compounded annually. These revenue streams will generate 61 percent of E&M growth during the next five years.

Revenues Not Subject to Digital Competition† (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2007–11 CAGR

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

244,394

259,082

284,703

303,070

332,545

358,645

389,655

415,978

447,248

473,136

6.8

6.0

9.9

6.5

9.7

7.8

8.6

6.8

7.5

5.8

7.3

131,862

139,540

153,145

167,798

185,312

197,849

214,733

229,791

251,852

266,698

7.5

5.8

9.7

9.6

10.4

6.8

8.5

7.0

9.6

5.9

7.6

68,483

73,470

82,411

91,222

103,244

117,119

134,077

147,491

165,542

184,379

6.9

7.3

12.2

10.7

13.2

13.4

14.5

10.0

12.2

11.4

12.3

15,275

15,502

16,475

17,640

19,244

20,938

22,880

25,135

27,571

29,792

–5.2

1.5

6.3

7.1

9.1

8.8

9.3

9.9

9.7

8.1

9.1

14,207

15,094

16,035

16,713

18,468

20,103

21,987

23,686

25,373

26,862

5.0

6.2

6.2

4.2

10.5

8.9

9.4

7.7

7.1

5.9

7.8

474,221

502,688

552,769

596,443

658,813

714,654

783,332

842,081

917,586

980,867

6.5

6.0

10.0

7.9

10.5

8.5

9.6

7.5

9.0

6.9

8.3

†Includes box office spending, online rental subscriptions, digital movie/TV downloads, cable network license fees, public TV and radio license fees, satellite radio, out-of-home advertising, TV subscription spending, pay-per-view, video-on-demand, digital music downloads, mobile music, online advertising, video games, business information, electronic books, theme parks, sports, and casino and other regulated gaming. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Consolidation and integration Consumer migration to digital formats is leading to change on the part of content providers. One change is the increased interest in consolidation. With content now being distributed on multiple platforms, content producers/providers, distributors, and technology companies are looking to expand their presence among the proliferating channels, resulting in an increase in merger and acquisition (M&A) activity. In 2006, M&A deals among entertainment and media companies surpassed $70 billion in total value. Companies are also forming alliances and joint ventures to better take advantage of and serve the needs of the changing environment. Broadcasters are creating strategic alliances with digital networking companies and teaming up with Internet companies and wireless providers to stream programming both over the Internet and to mobile devices. Publishers and search engine companies are working together to share content and sell advertising in both print and digital formats. Technology companies are creating alliances to support the expansion of digital and mobile distribution of content. After several years of relatively slow deal activity, the pace quickened during 2004–05 and accelerated in 2006. We expect that content, distribution, and technology companies will continue to pursue new relationships during the next five years to accommodate the growing role that digital distribution will play in the entertainment and media market.

Key Themes Overview | 19


Intellectual property Digital distribution has dramatically changed the landscape for management of intellectual property. The cost of copying and distributing entertainment and media has plummeted, while the quality of copied product is now often indistinguishable from the original. The result is that consumers can more readily acquire quality product without paying for it. Such illegal copying affects virtually all segments of entertainment and media, with recorded music, filmed entertainment, and TV distribution affected the most. In recorded music, for example, piracy accounts for more than 80 percent of music consumption in Indonesia and the PRC and 50 percent or more in Russia, Mexico, and Greece. Piracy in these and other countries translates into billions of CDs and songs obtained annually through illegal or unauthorized channels. Legal technologies such as Slingbox, which allow TV programs to be viewed on computers and mobile phones, also have intellectual property implications because content licensed to one medium gets expanded to others without incremental compensation. Though content owners have been traditionally slow to adopt digital media commercial distribution, they have responded by introducing licensed digital services that give consumers the opportunity to acquire product in digital formats through legitimate channels. At the same time, prosecutions for copyright infringement have become more aggressive. While these developments may not eliminate or even reduce piracy, they are allowing consumers and end users to acquire content legitimately and the intellectual property owners to share in the increased demand by consumers for digital content. An issue for content providers and distributors is the degree to which they utilize digital rights management (DRM) software to control distribution. DRM restricts the ability of consumers to copy and distribute product. The benefit to content providers is that DRM limits unauthorized distribution. There is also a cost. Restrictions on usage, which include the inability of content downloaded on one device to play on another, can discourage some consumers from buying product through legitimate channels. Companies are grappling with this trade-off. In recorded music, for example, Apple has urged music companies to eliminate copy protection software that limits interoperability. Because of increasing pressure on the industry itself, major labels are considering releasing music over the Internet without copy protection, which would fuel Internet distribution and revenue growth by allowing music downloaded to be played on virtually any device. In April 2007, EMI made a deal with Apple to sell songs without DRM copy-protection software, with the expectation that an open standard would boost consumer spending on digital music. With physical distribution falling rapidly, labels are becoming more receptive to strategies that enhance digital distribution even as it reduces impediments to unauthorized distribution. Companies are experimenting with different approaches to intellectual property management. We expect that technologies, methodologies, and business models will continue to evolve during the next five years.

Growing markets The BRIC countries are generating excitement because of their expanding economies and surging E&M markets. Nominal growth in gross domestic product (GDP) in the each of the four BRIC countries rose at double-digit and high-single-digit rates during 2003–05 and continued to expand at double-digit rates in India and the PRC in 2006. Even though economic growth in Brazil and Russia is slowing, the large increases during the prior three years created an emerging and rapidly expanding middle class. In the process, discretionary income has grown, and pent-up demand for entertainment and media was unleashed, leading to large increases in spending. Consequently, even though GDP in both countries will grow more slowly during the next five years compared with the past few years, E&M spending will continue to post large gains in all four countries. India and the PRC had the fastest-growing economies of the BRIC countries in 2006. India rose 14.3 percent, and the PRC, 11.6 percent. We expect continued double-digit compound annual increases in these two countries during the next five years. For the BRIC countries as a group, growth will average 9.3 percent

PricewaterhouseCoopers 20 | Global Entertainment and Media Outlook: 2007–2011


compounded annually. That expansion will be nearly twice the 4.9 percent projected annual GDP increase in the rest of the world.

Nominal GDP Growth in BRIC (%) 2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

–9.4

9.7

19.5

31.8

3.7

4.2

4.1

4.5

4.3

4.1

4.2

12.7

24.9

36.5

29.7

6.5

6.5

6.5

6.5

6.4

6.2

6.4

India

7.4

12.7

13.1

13.1

14.3

13.1

12.6

12.0

11.1

10.3

11.8

China

9.7

12.9

17.7

14.0

11.6

12.5

11.3

10.2

9.9

9.2

10.6

BRIC Total

6.0

13.8

19.6

19.0

9.9

10.3

9.7

9.1

8.9

8.3

9.3

Rest of the World

2.6

3.8

5.8

5.4

5.6

5.1

5.2

4.9

4.7

4.6

4.9

Global Total

2.9

4.6

7.0

6.7

6.0

5.7

5.7

5.4

5.3

5.1

5.4

BRIC

2002

Brazil Russia

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates, World Bank

Economic expansion is generating large increases in E&M spending. During the past five years, E&M spending in the BRIC countries rose at double-digit annual rates. In 2006, BRIC E&M spending increased by 17.0 percent, while the rest of the world grew by 6.4 percent. Led by India and the PRC, E&M spending in BRIC will continue to grow at double-digit annual rates during the next five years. India is projected to increase at an 18.5 percent compound annual rate, and 16.8 percent annual growth is expected for the PRC, with mid- to high-single-digit gains in Brazil and Russia. Casino closings in Russia will lead to a $2-billion drop in spending in 2009. Excluding casinos, Russia will grow by 12.8 percent in 2009. BRIC as a group will increase at a 14.7 percent compound annual rate. That gain will be nearly three times the projected 5.5 percent compound annual increase for the rest of the world. BRIC will account for 24 percent of global E&M growth during the next five years.

E&M Market in BRIC (US$ Millions) BRIC Brazil % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

11,947

12,355

13,834

15,761

17,615

19,314

21,272

23,098

25,309

27,256

–1.6

3.4

12.0

13.9

11.8

9.6

10.1

8.6

9.6

7.7

9.1

7,978

10,644

14,999

18,629

19,958

21,114

22,890

23,408

25,723

27,851

30.5

33.4

40.9

24.2

7.1

5.8

8.4

2.3

9.9

8.3

6.9

7,425

8,104

8,969

10,107

11,590

13,616

16,218

19,324

23,213

27,089

10.2

9.1

10.7

12.7

14.7

17.5

19.1

19.2

20.1

16.7

18.5

31,426

38,805

50,616

63,953

77,776

95,529

115,187

131,961

149,836

169,309

% Change

22.9

23.5

30.4

26.3

21.6

22.8

20.6

14.6

13.5

13.0

16.8

BRIC Total

58,776

69,908

88,418

108,450

126,939

149,573

175,567

197,791

224,081

251,505

% Change

16.2

18.9

26.5

22.7

17.0

17.8

17.4

12.7

13.3

12.2

14.7

1,045,911 1,091,350 1,169,102 1,227,239 1,305,456 1,375,599 1,459,716 1,534,275 1,626,426 1,704,562

Russia % Change India % Change China

Rest of the World % Change Global Total % Change

4.8

5.5

1,104,687 1,161,258 1,257,520 1,335,689 1,432,395 1,525,172 1,635,283 1,732,066 1,850,507 1,956,067

3.8

4.4

4.3 5.1

7.1 8.3

5.0 6.2

6.4 7.2

5.4 6.5

6.1 7.2

5.1 5.9

6.0 6.8

5.7

6.4

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Key Themes Overview | 21


Continued content fragmentation A by-product of the growing digital media marketplace is that distribution costs are declining. Digital distribution does not require the manufacturing of physical product and packaging, or the cost of shipping that product to retailers or consumers, or the expense of managing inventory and dealing with returns. Lower costs reduce barriers to entry and make the market potentially more competitive. In fact, costs have been reduced so much that consumers themselves are creating and distributing content. New content communities such as MySpace and YouTube are creating a growing buzz among consumers— often with no money changing hands. The Internet is becoming an entertainment center for social networking and a distribution channel to access entertainment content, as well as a source of information and communication. As the Internet becomes a central aspect in more consumers’ lives, advertisers are following. Global Internet advertising rose at annual rates in excess of 30 percent during each of the past three years, including a 37.9 percent gain in 2006. User-generated content and social network sites will help drive online Internet advertising by 18.3 percent compounded annually during the next five years. One of the more striking developments in 2006 was the emergence of alternative video platforms such as YouTube. Web sites featuring user-generated content (UGC) are becoming enormously popular and further fragmenting the market. UGC sites are beginning to attract advertising and are competing with traditional television advertising. At the same time, UGC sites foster interest in television programs provided by the networks. Discussion of characters and plot lines, as well as leaks of future episodes, sustains interest in programs, as does fan fiction. New business models are emerging to deal with increased fragmentation. In some cases, networks are partnering with Web sites to provide content and share advertising. In other cases, networks are limiting access to content. As with DRM, traditional content providers are experimenting with different approaches in order to deal with this emerging phenomenon. The next section discusses the principal drivers, which are those influences that enable and fuel the key themes mentioned in this section, as well as the other topics discussed throughout the rest of the Outlook. That section is followed by a discussion of industry forecasts for each of the 14 segments covered in Global Entertainment and Media Outlook: 2007–2011 and the regional analysis of the five principal global regions.

PricewaterhouseCoopers 22 | Global Entertainment and Media Outlook: 2007–2011


Principal Industry Drivers As content becomes increasingly accessible over multiple platforms, consumption will continue to grow. Broadband availability—both wired and mobile—will drive spending. Sustained economic growth will support E&M spending. Convergent platforms/devices The consumption of entertainment and media is coalescing on three hardware platforms—the home computer, wireless mobile devices, and the television set—each of which now has multiple E&M uses. The computer has become a center for entertainment and media. The computer is used for accessing the Internet, and it has become a medium on which to play video games, purchase music, download movies and order movies online for delivery by mail, download TV shows, purchase books in physical formats, buy and read electronic books, place bets, and access business information. Wireless handsets are no longer simply voice communication devices. They are now used for listening to music, playing video games, watching television, accessing the Internet, and placing bets. They also have other, non-E&M functions, including taking pictures and videos, locating children through GPS technology, and sending text and instant messages. The use of the television set for multiple purposes is not new. In addition to watching television, TVs have long been used for watching movies that were separately purchased or rented in the home video market and for playing video games. The TV is now also being used to access programming on demand and to watch content that was downloaded from the Internet. Content consumed on these convergent platforms—which consist of home video, TV networks, TV distribution, digital music downloads, mobile music, Internet advertising and access spending, video games, business information, electronic books, and online gaming—represents a significant component of the global entertainment and media market. In 2006, these platforms generated $690 billion in global spending, or 48 percent of total entertainment and media spending, including Internet access spending. During the past five years, spending on these platforms expanded by double-digit rates and high-single-digit rates. We expect two additional years of double-digit growth, with high-single-digit gains anticipated during 2009–11. By 2011, spending on these platforms will reach $1.1 trillion, growing at a 9.1 percent compound annual rate. Asia Pacific will be the fastest-growing region, with a projected 13.5 percent compound annual increase. We also expect double-digit growth in Latin America as Internet and broadband penetration begins to gain momentum.

Principal Industry Drivers Overview | 23


Convergent Platform Market† (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2007–11 CAGR

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

209,736

224,487

248,867

263,776

288,128

309,516

335,611

356,475

381,668

403,326

7.4

7.0

10.9

6.0

9.2

7.4

8.4

6.2

7.1

5.7

7.0

139,306

153,356

173,029

189,034

209,387

229,922

251,930

273,406

294,997

315,209

9.7

10.1

12.8

9.3

10.8

9.8

9.6

8.5

7.9

6.9

8.5

85,489

97,037

114,331

131,292

151,176

175,052

201,108

226,508

254,096

284,307

9.5

13.5

17.8

14.8

15.1

15.8

14.9

12.6

12.2

11.9

13.5

14,002

15,004

17,355

20,303

23,632

26,903

30,554

34,045

38,246

41,915

–3.7

7.2

15.7

17.0

16.4

13.8

13.6

11.4

12.3

9.6

12.1

13,411

14,559

16,019

17,007

17,991

19,101

20,257

21,415

22,524

23,653

12.9

8.6

10.0

6.2

5.8

6.2

6.1

5.7

5.2

5.0

5.6

461,944

504,443

569,601

621,412

690,314

760,494

839,460

911,849

991,531 1,068,410

8.2

9.2

12.9

9.1

11.1

10.2

10.4

8.6

8.7

7.8

9.1

†Includes home video, TV networks, TV distribution, digital music downloads, mobile music, Internet advertising and access spending, video games, business information, electronic books, and online gaming. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

To put these figures in context, the remaining components of the global E&M market—box office spending, physical recorded music, radio and out-of-home advertising, magazine publishing, newspaper publishing, physical books, theme parks, casino gaming and legal sports wagering, and sports—averaged only 3.3 percent compound annual growth during the past five years. During the next five years, they will grow at a 3.6 percent compound annual rate. In each region, spending on convergent platforms will grow faster than other E&M platforms will.

Other Entertainment and Media Platforms† (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2007–11 CAGR

254,856

263,669

276,364

286,251

294,320

302,647

313,337

324,238

338,535

350,883

2.7

3.5

4.8

3.6

2.8

2.8

3.5

3.5

4.4

3.6

3.6

230,534

232,885

243,096

253,400

263,653

269,184

276,824

282,962

296,026

301,709

1.3

1.0

4.4

4.2

4.0

2.1

2.8

2.2

4.6

1.9

2.7

125,335

127,575

134,026

138,797

145,806

152,642

163,206

168,333

177,350

186,101

1.4

1.8

5.1

3.6

5.0

4.7

6.9

3.1

5.4

4.9

5.0

17,086

17,008

18,119

19,368

20,596

21,472

22,474

23,624

24,867

25,817

–3.2

–0.5

6.5

6.9

6.3

4.3

4.7

5.1

5.3

3.8

4.6

14,932

15,678

16,314

16,461

17,706

18,733

19,982

21,060

22,198

23,147

1.7

5.0

4.1

0.9

7.6

5.8

6.7

5.4

5.4

4.3

5.5

642,743

656,815

687,919

714,277

742,081

764,678

795,823

820,217

858,976

887,657

1.7

2.2

4.7

3.8

3.9

3.0

4.1

3.1

4.7

3.3

3.6

†Includes box office spending, physical recorded music, radio and out-of-home advertising, magazine publishing, newspaper publishing, physical books, theme parks, casino gaming and legal sports wagering, and sports. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

The convergent platform market will overtake spending on other E&M platforms in 2008 and by 2011 will constitute 55 percent of the global E&M market. Convergent platforms constituted the majority of spending

PricewaterhouseCoopers 24 | Global Entertainment and Media Outlook: 2007–2011


in Asia Pacific, Latin America, and Canada in 2006 and will become the majority component of the market in the United States in 2007 and in EMEA in 2011. Convergent platforms will account for 72 percent of total E&M spending growth during the next five years. E&M Spending by Platform (US$ Millions) 1,200,000

• Convergent Platforms • Other Platforms

1,000,000 800,000 600,000 400,000 200,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Increasing availability of broadband Distribution is shifting from traditional channels to the Internet and to mobile devices. In addition to contributing directly to E&M growth, the Internet, along with wireless, is fueling growth in several segments. In filmed entertainment, online rental subscriptions and video streaming of movies and downloads of TV shows are emerging categories. Video-on-demand and mobile TV subscriptions are fueling growth in TV distribution. Digital downloads of music to computers and to wireless telephones are in the process of supplanting physical distribution. Online and wireless video games are propelling the video game market. Electronic books represent a small but rapidly expanding component of book publishing, and online and mobile gaming are contributing to the casino and other regulated gaming market. The increase in the number of broadband households and wireless subscribers is driving the industry. Broadband connectivity facilitates the transmission of high-volume entertainment applications, thereby facilitating Internet distribution. From 2002 to 2006, the global broadband household universe rose by nearly 200 million. In 2006, there were 240 million broadband households, an increase of 31.8 percent from 2005. During the next five years, the broadband household universe will rise by an incremental 300 million. Growth in the broadband universe will expand the scope of digital distribution and will contribute to overall E&M growth.

Broadband Households (Millions) 2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

14.00

20.60

30.10

38.60

50.30

59.80

68.00

75.80

83.00

89.00

79.5

47.1

46.1

28.2

30.3

18.9

13.7

11.5

9.5

7.2

12.1

EMEA

10.48

18.52

39.02

53.35

75.64

94.73

113.41

130.11

145.40

159.56

% Change

103.9

76.7

110.7

36.7

41.8

25.2

19.7

14.7

11.8

9.7

16.1

Asia Pacific

23.72

37.28

60.20

79.69

97.40

124.05

150.80

176.85

207.45

243.20

% Change

88.6

57.2

61.5

32.4

22.2

27.4

21.6

17.3

17.3

17.2

20.1

Region United States % Change

Latin America

0.38

0.95

2.35

4.02

9.45

14.57

19.59

24.77

29.90

36.15

280.0

150.0

147.4

71.1

135.1

54.2

34.5

26.4

20.7

20.9

30.8

Canada

2.80

3.90

5.20

6.60

7.50

8.50

9.40

10.20

11.00

11.90

% Change

64.7

39.3

33.3

26.9

13.6

13.3

10.6

8.5

7.8

8.2

9.7

51.38

81.25

136.87

182.26

240.29

301.65

361.20

417.73

476.75

539.81

88.1

58.1

68.5

33.2

31.8

25.5

19.7

15.7

14.1

13.2

17.6

% Change

Total % Change

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Principal Industry Drivers Overview | 25


The wireless telephone universe has also been growing at double-digit annual rates during the past five years. In 2006, the number of subscribers rose 15.3 percent to 2.3 billion. During the next five years, the wireless telephone universe will expand by more than 1.1 billion to 3.4 billion in 2011, an 8.4 percent compound annual increase. Two-thirds of that growth will be generated in Asia Pacific, where the wireless market will rise to 1.75 billion in 2011, representing 51 percent of the global total. In addition to new subscribers, mobile distribution will be enhanced by the introduction of new handsets specifically designed to play music, play video games, and receive television broadcasts. Latin America has a weak landline infrastructure. Telephone access is largely wireless, and most people have only wireless access available. With Latin America’s economic rebound, the wireless market soared during the past four years: in 2006, the number of wireless subscribers nearly tripled the 2002 total. The U.S., by contrast, has a well-established landline infrastructure, wherein wireless is an add-on, and growth has been much slower: 60 percent from 2002 to 2006. The U.S. has a much larger landline market, at 162 million subscribers in 2006 compared with 92 million in Latin America.

Wireless Subscribers (Millions) Region

2002

2003

United States

135

148

170

% Change

14.4

9.6

14.9

EMEA

425

493

593

% Change

14.9

16.0

Asia Pacific

438

% Change Latin America % Change

2004

2005

2007–11 CAGR

2006

2007

2008

2009

2010

2011

195

216

235

251

263

270

275

14.7

10.8

8.8

6.8

4.8

2.7

1.9

4.9

723

764

798

830

854

875

900

20.3

21.9

5.7

4.5

4.0

2.9

2.5

2.9

3.3

550

676

805

993

1,148

1,299

1,454

1,602

1,750

30.7

25.6

22.9

19.1

23.4

15.6

13.2

11.9

10.2

9.2

12.0

98

122

169

232

282

322

361

397

428

450

36.1

24.5

38.5

37.3

21.6

14.2

12.1

10.0

7.8

5.1

9.8

Canada

12

13

15

17

19

21

24

26

28

29

% Change

9.1

8.3

15.4

13.3

11.8

10.5

14.3

8.3

7.7

3.6

8.8

1,108

1,326

1,623

1,972

2,274

2,524

2,765

2,994

3,203

3,404

22.3

19.7

22.4

21.5

15.3

11.0

9.5

8.3

7.0

6.3

8.4

Total % Change

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Broadband growth is leading to a surge in online advertising because broadband users spend more time online than dial-up users do, they visit more Web sites, and they buy more products, all of which make them attractive to advertisers. Broadband, along with wireless, also is generating revenues in the filmed entertainment, TV distribution, recorded music, video game, book publishing, and online gaming segments. Global digital/mobile revenue in 2006 totaled $58 billion, an increase of 39.0 percent from 2005. During the past five years, the digital/mobile market rose at a 37.3 percent compound annual rate. We expect continued double-digit annual growth in digital/mobile spending in each region during the next five years. The overall global market will rise to $153 billion in 2011, a 21.3 percent compound annual increase. Growth in spending through digital/mobile platforms, excluding Internet access, will account for 18 percent of total global E&M spending growth during the next five years.

PricewaterhouseCoopers 26 | Global Entertainment and Media Outlook: 2007–2011


Digital/Mobile Revenues† (US$ Millions) Region

2007–11 CAGR

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

United States

6,778

9,230

13,269

17,814

24,188

31,132

38,081

44,605

50,932

56,944

% Change

–10.0

36.2

43.8

34.3

35.8

28.7

22.3

17.1

14.2

11.8

18.7

EMEA

2,939

4,754

7,376

10,922

15,309

19,513

24,747

30,210

35,583

40,503

% Change

22.9

61.8

55.2

48.1

40.2

27.5

26.8

22.1

17.8

13.8

21.5

Asia Pacific

2,476

4,151

6,762

11,378

16,291

21,622

27,617

34,120

41,304

49,260

% Change

45.8

67.6

62.9

68.3

43.2

32.7

27.7

23.5

21.1

19.3

24.8

Latin America

104

137

276

466

656

863

1,088

1,340

1,588

1,815

% Change

30.0

31.7

101.5

68.8

40.8

31.6

26.1

23.2

18.5

14.3

22.6

Canada

416

581

882

1,365

1,864

2,428

3,057

3,695

4,292

4,905

% Change

70.5

39.7

51.8

54.8

36.6

30.3

25.9

20.9

16.2

14.3

21.3

12,713

18,853

28,565

41,945

58,308

75,558

94,590

113,970

133,699

153,427

6.4

48.3

51.5

46.8

39.0

29.6

25.2

20.5

17.3

14.8

21.3

Total % Change

†Includes online subscription rentals, digital movie/TV downloads, video-on-demand, digital music downloads, mobile music, online advertising, online video games, wireless video games, electronic books, and online gaming. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Principal Industry Drivers Overview | 27


Economic activity In addition to other trends, the economy plays a significant role in the entertainment and media industry because most segments are cyclically sensitive. When economic conditions were weak during the early part of the decade, the entertainment and media industry grew slowly. During the past three years, faster economic growth contributed to faster entertainment and media growth. The global economy in 2006 expanded by 6.0 percent, the third consecutive year of increases of 6 percent or higher. The global economy appears to have moved beyond the recovery phase and is now in a steady-state mode where moderate but sustainable expansion can be maintained. We expect global GDP during the next five years to expand at somewhat slower rates compared with 2004–06 but to grow faster compared with the early part of the decade. Growth will average an estimated 5.4 percent compounded annually. Asia Pacific and the United States will have the fastest-growing economies, with projected increases of 6.6 percent and 5.6 percent, respectively. EMEA will grow at a 4.7 percent compound annual rate, Canada by 4.6 percent, and Latin America by 4.2 percent.

Nominal GDP Growth by Region (%) 2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

United States

3.4

4.7

6.9

6.3

6.4

5.5

6.2

5.5

5.4

5.3

5.6

EMEA

4.3

4.6

6.5

5.7

5.2

5.0

4.9

4.7

4.5

4.3

4.7

Asia Pacific

3.0

4.5

6.9

6.3

7.3

7.2

6.8

6.5

6.3

6.0

6.6

–12.7

4.1

14.5

20.5

4.8

4.5

4.2

4.3

4.1

4.0

4.2

Canada

4.3

5.2

6.2

6.1

5.4

5.0

4.8

4.6

4.4

4.2

4.6

Total

2.9

4.6

7.0

6.7

6.0

5.7

5.7

5.4

5.3

5.1

5.4

Region

Latin America

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates, World Bank

Regional averages can mask substantial differences among countries. In EMEA, Middle East/Africa and Central and Eastern Europe will grow much faster than Western Europe. Western Europe will maintain a relatively steady 4.3 percent increase on a compound annual basis. Central and Eastern Europe had generated double-digit increases during 2002–05, principally because of large increases in Russia and Turkey. Those two countries suffered severe economic downturns during the late 1990s and early years of the current decade and were rebounding nearly as rapidly during the ensuing years. Now that those territories have largely regained their footing, growth dropped to mid-single-digit gains. We project Central and Eastern Europe to expand at a 6.0 percent compound annual rate during the next five years. In Middle East/Africa, South Africa will be the fastest-growing territory, at 8.9 percent on a compound annual basis, with Saudi Arabia/Pan Arab at 6.8 percent and Israel projected at 6.4 percent. Middle East/Africa as a whole will grow at a 7.2 percent compound annual rate.

PricewaterhouseCoopers 28 | Global Entertainment and Media Outlook: 2007–2011


Nominal GDP Growth by Country in EMEA (%) 2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

Austria

2.2

2.8

4.4

4.0

4.6

4.4

4.5

4.3

4.1

3.9

4.2

Belgium

3.5

2.6

4.7

3.5

5.2

4.1

4.2

4.0

3.9

3.7

4.0

Denmark

2.8

2.7

4.1

5.7

4.8

4.4

4.2

4.4

3.9

3.8

4.1

Finland

3.2

2.1

4.1

3.8

5.1

4.4

4.2

4.1

3.9

3.8

4.1

France

3.4

3.0

4.0

3.1

4.5

4.2

4.1

3.9

3.8

3.7

3.9

Germany

1.5

0.9

2.4

1.4

4.0

3.9

4.0

4.0

3.8

3.7

3.9

Greece

7.9

8.3

8.3

7.5

7.5

7.0

6.9

6.5

6.1

5.8

6.5

Ireland

11.4

6.6

6.8

7.9

8.8

8.3

7.7

6.7

6.3

5.9

7.0

Italy

3.7

3.1

4.0

2.0

3.9

3.6

3.5

3.3

3.2

3.1

3.3

Netherlands

3.9

2.4

2.6

2.7

4.6

4.7

5.0

4.9

4.6

4.4

4.7

Norway

–0.5

3.8

8.9

10.9

4.9

4.8

4.6

4.4

4.2

4.1

4.4

Portugal

4.8

1.5

4.0

3.0

3.9

3.9

3.5

3.4

3.3

3.2

3.5

Spain

7.2

7.1

7.2

8.0

7.2

6.6

6.2

6.2

5.9

5.5

6.1

Sweden

3.7

3.7

4.6

3.9

5.7

4.5

3.8

3.7

3.5

3.4

3.8

Switzerland

1.9

1.0

2.6

2.5

3.8

3.7

3.5

3.4

3.3

3.2

3.4

United Kingdom

5.2

5.9

6.0

4.1

5.0

5.3

4.9

4.6

4.4

4.2

4.7

Western Europe Total

3.6

3.3

4.4

3.5

4.8

4.6

4.5

4.3

4.1

4.0

4.3

4.8

4.6

7.9

7.1

8.6

7.4

6.9

6.5

6.1

5.7

6.5

Hungary

12.9

10.1

9.5

6.7

8.1

9.3

9.3

9.2

8.4

7.8

8.8

Poland

3.7

4.2

9.5

6.2

6.1

6.5

7.0

6.8

6.4

6.0

6.6

Romania

13.9

29.9

26.9

28.6

0.9

2.0

1.0

1.0

1.0

1.0

1.2

Russia

12.7

24.9

36.5

29.7

6.5

6.5

6.5

6.5

6.4

6.2

6.4

Turkey

26.5

30.1

26.0

20.1

5.1

5.0

5.0

4.8

4.5

4.3

4.7

Central and Eastern Europe Total

11.7

17.7

23.3

19.7

6.1

6.2

6.2

6.1

5.9

5.7

6.0

EMEA Western Europe

Central and Eastern Europe Czech Republic

Middle East/Africa Israel

–8.4

5.9

6.0

5.6

7.0

6.1

7.1

6.7

6.3

5.9

6.4

4.9

9.0

17.1

17.6

8.9

7.7

7.2

6.7

6.3

5.9

6.8

14.6

7.6

10.3

9.8

9.0

9.2

9.1

9.3

8.8

8.1

8.9

Middle East/Africa Total

5.0

8.2

13.8

14.1

8.7

7.9

7.6

7.3

6.9

6.5

7.2

Total

4.3

4.6

6.5

5.7

5.2

5.0

4.9

4.7

4.5

4.3

4.7

Saudi Arabia/Pan Arab

South Africa

†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Principal Industry Drivers Overview | 29


Similarly in Asia Pacific, there are wide disparities in growth. Japan, the dominant territory in E&M spending, rose by 3.0 percent in 2006, while the PRC, India, Indonesia, and the Philippines expanded at double-digit rates. We expect continued double-digit average annual increases compounded annually in the PRC, India, Indonesia, and the Philippines. Excluding Japan, nominal GDP growth in Asia Pacific will average 9.1 percent compounded annually.

Nominal GDP Growth by Country in Asia Pacific (%) Asia Pacific

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

Australia

6.8

6.3

7.1

7.1

6.8

6.5

5.8

5.6

5.6

5.3

5.8

China

9.7

12.9

17.7

14.0

11.6

12.5

11.3

10.2

9.9

9.2

10.6

–1.7

–3.3

4.7

7.0

8.6

8.3

7.7

6.7

6.3

5.9

6.9

7.4

12.7

13.1

13.1

14.3

13.1

12.6

12.0

11.1

10.3

11.8

Indonesia

10.6

9.3

11.6

20.1

18.7

12.3

12.0

11.9

10.6

9.6

11.3

Japan

–1.4

0.2

1.1

1.3

3.0

2.9

2.5

2.4

2.4

2.3

2.5

Malaysia

8.3

9.1

13.8

10.0

9.5

9.1

9.0

8.8

8.1

7.5

8.5

New Zealand

4.3

6.7

7.2

3.4

5.3

4.9

4.7

5.1

4.9

4.7

4.9

Pakistan

5.6

9.7

15.1

12.0

9.5

8.4

7.9

7.4

6.8

6.4

7.4

Philippines

9.3

8.9

12.5

11.6

11.8

10.9

10.7

10.4

9.4

8.6

10.0

Singapore

3.3

2.0

12.5

7.0

8.7

6.3

5.9

5.6

5.3

5.0

5.6

10.0

5.9

7.5

3.5

7.7

7.1

6.8

6.7

6.3

5.9

6.6

Taiwan

3.4

1.2

4.4

3.3

5.8

5.7

5.4

5.4

5.1

4.9

5.3

Thailand

6.2

8.8

9.7

9.2

9.3

8.3

7.7

7.6

7.0

6.9

7.5

Total

3.0

4.5

6.9

6.3

7.3

7.2

6.8

6.5

6.3

6.0

6.6

Hong Kong India

South Korea

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Latin America is moving to a postrecovery phase characterized by sustained mid-single-digit growth. In 2002, nominal GDP fell by double-digit rates, and during 2004–05 it rose at double-digit rates, including a 20.5 percent increase in 2005. In 2006, nominal GDP expanded by 4.8 percent. Although nominal GDP growth in 2006 was lower than during the prior two years, the region is on a firmer footing. Inflation has come down, which accounts for part of the slowdown, and the economy is operating at closer to its potential, which limits its ability to expand. The stable outlook is making the region attractive to investors and is fostering large increases in E&M spending. In a stable environment, consumers are more willing to spend on entertainment and media than when there is economic upheaval.

Nominal GDP Growth by Country in Latin America (%) Latin America Argentina

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

–62.0

26.9

18.1

20.5

7.9

6.0

5.2

5.0

4.7

4.5

5.1

Brazil

–9.4

9.7

19.5

31.8

3.7

4.2

4.1

4.5

4.3

4.1

4.2

Chile

6.4

10.0

13.6

8.0

8.8

8.6

8.3

8.4

8.4

7.7

8.3

–1.0

–2.2

21.9

26.3

5.1

5.1

3.7

3.6

3.4

3.3

3.8

4.3

–1.5

7.0

12.4

4.1

3.8

3.6

3.5

3.4

3.3

3.5

Venezuela

–24.4

–10.1

30.5

14.7

8.0

3.7

3.6

3.4

3.3

3.2

3.5

Total

–12.7

4.1

14.5

20.5

4.8

4.5

4.2

4.3

4.1

4.0

4.2

Colombia Mexico

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

PricewaterhouseCoopers 30 | Global Entertainment and Media Outlook: 2007–2011


Global Entertainment and Media Market by Segment We have provided historical results and spending forecasts for each of the 14 entertainment and media segments covered in Global Entertainment and Media Outlook: 2007–2011. This section discusses overall market spending by segment and summarizes the principal factors driving growth or contraction. Filmed entertainment Filmed entertainment rebounded in 2006 with a 2.9 percent advance following a 2.6 percent decline in 2005. A strong slate of films boosted the box office market in each region while supporting the home video market. A key factor affecting the market in any given year is the quality of releases and their appeal to consumers, a development we cannot predict. The underlying box office market will be enhanced by digital cinemas in the United States, EMEA, and Asia Pacific and by the construction of modern theaters and more screens in Central and Eastern Europe, Asia Pacific, and Latin America. The introduction of high-definition DVDs will stimulate home video sell-through in the United States, EMEA, Asia Pacific, and Canada. Digital download-to-own streaming services will generate incremental revenue in the United States and EMEA, and online DVD rental services will augment rental spending. Piracy will continue to impede growth in Asia Pacific and Latin America. We expect the market to expand at a 4.9 percent compound annual rate, rising to $103 billion in 2011.

Global Filmed Entertainment Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

31,703

33,297

34,971

34,235

35,185

36,731

38,257

39,889

41,877

44,000

9.5

5.0

5.0

–2.1

2.8

4.4

4.2

4.3

5.0

5.1

4.6

19,769

21,278

23,228

21,944

21,874

22,136

22,895

23,992

25,318

26,677

16.9

7.6

9.2

–5.5

–0.3

1.2

3.4

4.8

5.5

5.4

4.0

13,614

14,537

15,526

15,496

16,664

17,604

18,765

20,167

21,608

23,145

4.7

6.8

6.8

–0.2

7.5

5.6

6.6

7.5

7.1

7.1

6.8

1,443

1,549

1,765

1,741

1,871

1,994

2,125

2,271

2,420

2,574

9.7

7.3

13.9

–1.4

7.5

6.6

6.6

6.9

6.6

6.4

6.6

4,160

4,825

5,519

5,507

5,645

5,826

6,068

6,326

6,587

6,867

33.3

16.0

14.4

–0.2

2.5

3.2

4.2

4.3

4.1

4.3

4.0

70,689

75,486

81,009

78,923

81,239

84,291

88,110

92,645

97,810

103,263

11.6

6.8

7.3

–2.6

2.9

3.8

4.5

5.1

5.6

5.6

4.9

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Global Entertainment and Media Market by Segment Overview | 31


Television networks The TV network market rose 6.2 percent in 2006—comparable to the 6.3 percent gains in 2003 and 2005 but significantly less than the growth in 2004, which had been driven by the Summer Olympics. Advertising associated with the Winter Olympics and the FIFA World Cup did not lead to improved growth compared with 2005, because large increases in online advertising cut into TV advertising growth. Large increases in the number of digital TV households will boost multichannel advertising, while the free-toair market will benefit from high-definition television (HDTV), new channels, and a generally healthy economic environment—particularly in Central and Eastern Europe, the PRC, India, and Latin America. Mandated switch offs of analog broadcasting will accelerate the migration to digital platforms in Western Europe, while the U.S. is already rapidly shifting to digital platforms. Digital video recorders will add more to program and commercial viewing than they take away and will prove to have a net positive impact on advertising. Public TV license fees in EMEA and Asia Pacific will continue to be slow-growing components of the market. We project spending to increase at a 5.8 percent rate compounded annually to $228 billion in 2011 from $172 billion in 2006.

Global Television Network Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

43,286

47,224

54,399

58,096

62,229

66,105

71,920

75,520

80,645

85,410

9.3

9.1

15.2

6.8

7.1

6.2

8.8

5.0

6.8

5.9

6.5

49,927

52,049

55,416

58,536

61,573

64,563

67,723

70,822

74,552

77,253

1.8

4.3

6.5

5.6

5.2

4.9

4.9

4.6

5.3

3.6

4.6

29,504

30,966

33,309

34,758

36,550

38,363

42,047

43,908

46,693

48,967

3.4

5.0

7.6

4.4

5.2

5.0

9.6

4.4

6.3

4.9

6.0

4,505

4,866

5,841

7,019

7,905

8,517

9,502

10,150

11,473

12,073

–3.8

8.0

20.0

20.2

12.6

7.7

11.6

6.8

13.0

5.2

8.8

2,958

3,234

3,422

3,525

3,719

3,856

4,045

4,230

4,430

4,632

6.9

9.3

5.8

3.0

5.5

3.7

4.9

4.6

4.7

4.6

4.5

130,180

138,339

152,387

161,934

171,976

181,404

195,237

204,630

217,793

228,335

4.5

6.3

10.2

6.3

6.2

5.5

7.6

4.8

6.4

4.8

5.8

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

PricewaterhouseCoopers 32 | Global Entertainment and Media Outlook: 2007–2011


Television distribution The global television distribution market increased by 9.4 percent in 2006, an improvement compared with the 6.5 percent increase in 2005. The entrance of telephone companies into the TV distribution market is stimulating competition and fueling subscriber growth. Cable operators are migrating their subscribers to digital platforms that not only boost monthly subscription revenues but also expand the market for videoon-demand. Mandated shutdowns of analog broadcasts in EMEA and the United States will boost the subscription household universe. Large increases in subscription household penetration will drive subscription spending in Asia Pacific, Latin America, and EMEA. We expect more than 120 million additional subscription households in Asia Pacific during the next five years, mostly from the PRC and India. Even with that increase, less than half of all TV households will subscribe to a multichannel service, meaning that growth will not be constrained by approaching saturation. Growth in Asia Pacific will also be enhanced by mobile phone TV subscriptions. We expect the market to reach $251 billion in 2011 from $161 billion in 2006, a 9.3 percent compound annual increase.

Global Television Distribution Market (US$ Millions) 2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

73,812

77,869

85,447

87,988

94,673

98,125

105,305

110,192

118,026

123,261

10.0

5.5

9.7

3.0

7.6

3.6

7.3

4.6

7.1

4.4

5.4

22,619

24,975

27,767

31,099

35,069

39,457

44,642

50,097

56,075

62,722

14.0

10.4

11.2

12.0

12.8

12.5

13.1

12.2

11.9

11.9

12.3

11,494

13,718

15,822

17,977

20,187

22,847

26,268

31,539

38,403

46,363

13.9

19.3

15.3

13.6

12.3

13.2

15.0

20.1

21.8

20.7

18.1

Latin America

4,877

4,880

5,200

5,810

6,539

7,508

8,632

9,942

11,362

12,883

% Change

–14.8

0.1

6.6

11.7

12.5

14.8

15.0

15.2

14.3

13.4

14.5

Canada

3,254

3,494

3,669

3,951

4,175

4,409

4,678

4,974

5,248

5,516

4.2

7.4

5.0

7.7

5.7

5.6

6.1

6.3

5.5

5.1

5.7

116,056

124,936

137,905

146,825

160,643

172,346

189,525

206,744

229,114

250,745

9.6

7.7

10.4

6.5

9.4

7.3

10.0

9.1

10.8

9.4

9.3

Region United States % Change EMEA % Change Asia Pacific % Change

% Change Total % Change

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Global Entertainment and Media Market by Segment Overview | 33


Recorded music The global recorded music market rose by 0.6 percent in 2006, principally the result of double-digit growth in Asia Pacific that offset declines in the United States, EMEA, and Canada. The composition of the market is rapidly migrating from physical to digital formats. Distribution of music in physical formats fell 8.5 percent in 2006, and we expect declines to average 9.6 percent on a compound annual basis through 2011 to $18 billion from $29 billion in 2006. Music distributed in digital formats—to mobile phones and licensed Internet downloads—rose 72.2 percent in 2006. We expect digital distribution of music to expand at a 26.8 percent compound annual rate, more than tripling to $23 billion in 2011 from $7 billion in 2006. An expanding wireless universe, upgrades to next-generation wireless networks, and the introduction of wireless handsets designed to play music will propel mobile phone distribution. Growth in the number of broadband services and the introduction of licensed download services in some territories will fuel Internet distribution. In 2009, digital distribution will surpass physical distribution in Asia Pacific and Latin America, and in 2010 it will become the principal distribution channel in the United States. Globally, digital distribution will become the largest distribution stream in 2010. As digital distribution expands, it will contribute more to overall growth, while a declining physical market will have less of an impact. Piracy remains a significant problem and will continue to cut into the physical and Internet distribution markets. We project spending to rise at a 2.3 percent compound annual rate to $40 billion in 2011 from $36 billion in 2006.

Global Recorded Music Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

12,643 –8.0 14,750 –2.6 7,614 –3.3 1,116 –5.3 860 –8.3 36,983 –4.9

12,025 –4.9 13,729 –6.9 7,212 –5.3 988 –11.5 839 –2.4 34,793 –5.9

12,762 6.1 13,319 –3.0 7,387 2.4 1,203 21.8 820 –2.3 35,491 2.0

12,270 –3.9 13,338 0.1 8,077 9.3 1,360 13.1 814 –0.7 35,859 1.0

11,511 –6.2 13,065 –2.0 9,341 15.6 1,409 3.6 752 –7.6 36,078 0.6

10,482 –8.9 12,927 –1.1 10,023 7.3 1,456 3.3 729 –3.1 35,617 –1.3

10,427 –0.5 13,087 1.2 10,650 6.3 1,532 5.2 736 1.0 36,432 2.3

10,603 1.7 13,457 2.8 11,248 5.6 1,634 6.7 751 2.0 37,693 3.5

10,926 3.0 13,901 3.3 11,760 4.6 1,741 6.5 770 2.5 39,098 3.7

11,308 3.5 14,330 3.1 12,177 3.5 1,831 5.2 791 2.7 40,437 3.4

–0.4   1.9   5.4   5.4   1.0   2.3

Sources: PricewaterhouseCoopers LLP, Recording Industry Association of America, Wilkofsky Gruen Associates

Global Recorded Music Digital Distribution Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

29 — 38 — 97 — 18 — 1 — 183 —

171 489.7 198 421.1 268 176.3 46 155.6 4 300.0 687 275.4

608 255.6 488 146.5 613 128.7 140 204.3 25 525.0 1,874 172.8

1,075 76.8 1,096 124.6 1,569 156.0 261 86.4 48 92.0 4,049 116.1

1,860 73.0 1,786 63.0 2,855 82.0 394 51.0 77 60.4 6,972 72.2

2,680 44.1 2,502 40.1 4,123 44.4 520 32.0 127 64.9 9,952 42.7

3,771 40.7 3,450 37.9 5,321 29.1 668 28.5 189 48.8 13,399 34.6

4,793 27.1 4,516 30.9 6,425 20.7 837 25.3 251 32.8 16,822 25.5

5,720 19.3 5,600 24.0 7,378 14.8 1,001 19.6 308 22.7 20,007 18.9

6,561 14.7 6,611 18.1 8,174 10.8 1,138 13.7 358 16.2 22,842 14.2

28.7   29.9   23.4   23.6   36.0   26.8

Sources: PricewaterhouseCoopers LLP, Recording Industry Association of America, Wilkofsky Gruen Associates PricewaterhouseCoopers 34 | Global Entertainment and Media Outlook: 2007–2011


Global Recorded Music Physical Distribution Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

12,614 –8.2 14,712 –2.8 7,517 –4.5 1,098 –6.8 859 –8.4 36,800 –5.3

11,854 –6.0 13,531 –8.0 6,944 –7.6 942 –14.2 835 –2.8 34,106 –7.3

12,154 2.5 12,831 –5.2 6,774 –2.4 1,063 12.8 795 –4.8 33,617 –1.4

11,195 –7.9 12,242 –4.6 6,508 –3.9 1,099 3.4 766 –3.6 31,810 –5.4

9,651 –13.8 11,279 –7.9 6,486 –0.3 1,015 –7.6 675 –11.9 29,106 –8.5

7,802 –19.2 10,425 –7.6 5,900 –9.0 936 –7.8 602 –10.8 25,665 –11.8

6,656 –14.7 9,637 –7.6 5,329 –9.7 864 –7.7 547 –9.1 23,033 –10.3

5,810 –12.7 8,941 –7.2 4,823 –9.5 797 –7.8 500 –8.6 20,871 –9.4

5,206 –10.4 8,301 –7.2 4,382 –9.1 740 –7.2 462 –7.6 19,091 –8.5

4,747 –8.8 7,719 –7.0 4,003 –8.6 693 –6.4 433 –6.3 17,595 –7.8

–13.2   –7.3   –9.2   –7.3   –8.5   –9.6

Sources: PricewaterhouseCoopers LLP, Recording Industry Association of America, Wilkofsky Gruen Associates

Radio and out-of-home advertising The radio and out-of-home market rose 4.5 percent in 2006, down from the 5.2 percent annual gains during 2004–05 although an improvement compared with the 2.7 percent annual gains during 2002–03. Out-of-home was the faster-growing component, with a 6.3 percent increase, while radio rose by only 3.6 percent. The advent of digital billboards that expand the effective out-of-home inventory by allowing multiple ads to be shown on the same display will drive the out-of-home market. Improved out-of-home audience measurement systems and the expansion of captive video networks will attract advertisers. We expect out-of-home advertising to expand at a 6.5 percent compound annual rate during the next five years to $32 billion in 2011 from $23 billion in 2006. High-definition radio will enhance sound quality and allow for multicasts of niche formats that will generate incremental advertising. A growing satellite radio market will boost spending in the United States and Canada and will provide a modest addition in Asia Pacific. Slow-growing public radio license fees will hold down growth in EMEA and Asia Pacific. We look for radio to grow at a 4.5 percent compound annual rate from $46 billion in 2006 to $57 billion in 2011. The overall radio and out-of-home market will increase to $89 billion in 2011, a 5.2 percent compound annual increase from $69 billion in 2006.

Global Radio/Out-of-Home Advertising Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

24,133 4.7 20,737 2.4 11,328 0.3 910 –5.7 1,193 1.8 58,301 2.7

24,734 2.5 21,546 3.9 11,536 1.8 796 –12.5 1,280 7.3 59,892 2.7

25,809 4.3 22,735 5.5 12,216 5.9 901 13.2 1,333 4.1 62,994 5.2

26,973 4.5 24,034 5.7 12,717 4.1 1,061 17.8 1,457 9.3 66,242 5.2

28,291 4.9 24,898 3.6 13,213 3.9 1,215 14.5 1,600 9.8 69,217 4.5

29,756 5.2 25,844 3.8 13,861 4.9 1,344 10.6 1,784 11.5 72,589 4.9

31,455 5.7 26,844 3.9 14,734 6.3 1,482 10.3 2,007 12.5 76,522 5.4

33,426 6.3 27,906 4.0 15,456 4.9 1,619 9.2 2,289 14.1 80,696 5.5

35,439 6.0 28,968 3.8 16,256 5.2 1,757 8.5 2,544 11.1 84,964 5.3

37,450 5.7 30,072 3.8 17,020 4.7 1,888 7.5 2,781 9.3 89,211 5.0

5.8   3.8   5.2   9.2   11.7   5.2

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Global Entertainment and Media Market by Segment Overview | 35


Global Radio Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

18,901 5.8 14,183 2.5 4,957 0.5 743 –3.0 952 3.0 39,736 3.7

19,229 1.7 14,672 3.4 5,072 2.3 619 –16.7 1,030 8.2 40,622 2.2

19,975 3.9 15,414 5.1 5,337 5.2 694 12.1 1,066 3.5 42,486 4.6

20,672 3.5 16,139 4.7 5,569 4.3 796 14.7 1,154 8.3 44,330 4.3

21,451 3.8 16,528 2.4 5,762 3.5 911 14.4 1,269 10.0 45,921 3.6

22,306 4.0 17,046 3.1 5,968 3.6 1,021 12.1 1,423 12.1 47,764 4.0

23,335 4.6 17,532 2.9 6,255 4.8 1,132 10.9 1,610 13.1 49,864 4.4

24,616 5.5 18,070 3.1 6,529 4.4 1,243 9.8 1,857 15.3 52,315 4.9

25,969 5.5 18,594 2.9 6,869 5.2 1,356 9.1 2,077 11.8 54,865 4.9

27,320 5.2 19,097 2.7 7,182 4.6 1,462 7.8 2,279 9.7 57,340 4.5

5.0   2.9   4.5   9.9   12.4   4.5

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Global Out-of-Home Advertising Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

5,232 0.8 6,554 2.0 6,371 0.2 167 –16.1 241 –2.8 18,565 0.7

5,505 5.2 6,874 4.9 6,464 1.5 177 6.0 250 3.7 19,270 3.8

5,834 6.0 7,321 6.5 6,879 6.4 207 16.9 267 6.8 20,508 6.4

6,301 8.0 7,895 7.8 7,148 3.9 265 28.0 303 13.5 21,912 6.8

6,840 8.6 8,370 6.0 7,451 4.2 304 14.7 331 9.2 23,296 6.3

7,450 8.9 8,798 5.1 7,893 5.9 323 6.3 361 9.1 24,825 6.6

8,120 9.0 9,312 5.8 8,479 7.4 350 8.4 397 10.0 26,658 7.4

8,810 8.5 9,836 5.6 8,927 5.3 376 7.4 432 8.8 28,381 6.5

9,470 7.5 10,374 5.5 9,387 5.2 401 6.6 467 8.1 30,099 6.1

10,130 7.0 10,975 5.8 9,838 4.8 426 6.2 502 7.5 31,871 5.9

8.2   5.6   5.7   7.0   8.7   6.5

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Internet advertising and access spending The global Internet market rose 21.8 percent, the fastest-growing segment in 2006 and the fourth consecutive increase in excess of 20 percent. Advertising rose 37.9 percent, and access spending increased 18.8 percent. The migration of Internet subscribers from dial-up to broadband is the principal driver. Cable operators and telephone companies have introduced triple-play packages that combine broadband with television and telephone service. These packages are attracting subscribers and fueling growth in the broadband market. Competition is bringing down broadband fees, further contributing to subscriber growth. In the United States and Canada, broadband providers are offering higher-speed options at higher price points, a development that will help maintain or increase average payments even as the basic broadband service becomes less expensive. Asia Pacific passed EMEA in 2006 to become the largest access region. The number of broadband households in Asia Pacific will increase by more than 145 million during the next five years, more than threequarters of which will come from the PRC, leading to a 16.9 percent compound annual increase to $118 billion for that region. The PRC will pass the United States in overall Internet spending in 2010 to become the largest Internet territory in the world. We expect access spending to increase from $145 billion in 2006 to $258 billion in 2011, a 12.2 percent compound annual increase.

PricewaterhouseCoopers 36 | Global Entertainment and Media Outlook: 2007–2011


Broadband growth is also stimulating Internet advertising. Broadband users spend more time online than dial-up users do; they buy more products online; and use search engines to visit more Web sites. Broadband users are also converting the Internet into a medium for social networking and entertainment. Advertisers are following users and going online. We project global online advertising to expand at an 18.3 percent compound annual rate to $73 billion in 2011 from $32 billion in 2006. Internet advertising and access spending as a whole will increase to $332 billion in 2011, growing at a 13.4 percent compound annual rate from $177 billion in 2006. The Internet will continue to be the fastest-growing segment during the next five years.

Global Internet Advertising and Access Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

24,819 9.1 26,674 26.2 21,311 24.7 2,224 22.1 1,377 17.5 76,405 19.5

29,093 17.2 33,199 24.5 27,551 29.3 2,753 23.8 1,525 10.7 94,121 23.2

33,631 15.6 43,073 29.7 37,704 36.9 3,618 31.4 1,824 19.6 119,850 27.3

39,178 16.5 50,979 18.4 48,473 28.6 4,598 27.1 2,192 20.2 145,420 21.3

47,235 20.6 61,653 20.9 59,616 23.0 6,025 31.0 2,547 16.2 177,076 21.8

54,478 15.3 71,793 16.4 73,507 23.3 7,346 21.9 2,947 15.7 210,071 18.6

61,106 12.2 81,721 13.8 87,446 19.0 8,555 16.5 3,328 12.9 242,156 15.3

67,269 10.1 90,584 10.8 101,256 15.8 9,768 14.2 3,703 11.3 272,580 12.6

73,107 8.7 98,292 8.5 115,178 13.7 10,910 11.7 4,098 10.7 301,585 10.6

78,351 7.2 105,268 7.1 131,265 14.0 12,174 11.6 4,520 10.3 331,578 9.9

10.7   11.3   17.1   15.1   12.2   13.4

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Global Internet Advertising Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

6,010 –16.6 1,650 8.0 1,146 19.5 86 7.5 155 82.4 9,047 –8.3

7,267 20.9 2,356 42.8 1,666 45.4 90 4.7 209 34.8 11,588 28.1

9,626 32.5 3,850 63.4 2,522 51.4 132 46.7 321 53.6 16,451 42.0

12,542 30.3 5,672 47.3 4,013 59.1 195 47.7 495 54.2 22,917 39.3

16,800 33.9 8,275 45.9 5,567 38.7 245 25.6 706 42.6 31,593 37.9

21,100 25.6 11,060 33.7 7,117 27.8 312 27.3 969 37.3 40,558 28.4

25,200 19.4 13,929 25.9 8,760 23.1 378 21.2 1,234 27.3 49,501 22.0

28,800 14.3 16,722 20.1 10,253 17.0 446 18.0 1,498 21.4 57,719 16.6

32,200 11.8 19,384 15.9 11,724 14.3 514 15.2 1,763 17.7 65,585 13.6

35,400 9.9 21,889 12.9 13,196 12.6 584 13.6 2,027 15.0 73,096 11.5

16.1   21.5   18.8   19.0   23.5   18.3

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Global Entertainment and Media Market by Segment Overview | 37


Global Internet Access Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

18,809 21.1 25,024 27.6 20,165 25.1 2,138 22.8 1,222 12.4 67,358 24.5

21,826 16.0 30,843 23.3 25,885 28.4 2,663 24.6 1,316 7.7 82,533 22.5

24,005 10.0 39,223 27.2 35,182 35.9 3,486 30.9 1,503 14.2 103,399 25.3

26,636 11.0 45,307 15.5 44,460 26.4 4,403 26.3 1,697 12.9 122,503 18.5

30,435 14.3 53,378 17.8 54,049 21.6 5,780 31.3 1,841 8.5 145,483 18.8

33,378 9.7 60,733 13.8 66,390 22.8 7,034 21.7 1,978 7.4 169,513 16.5

35,906 7.6 67,792 11.6 78,686 18.5 8,177 16.2 2,094 5.9 192,655 13.7

38,469 7.1 73,862 9.0 91,003 15.7 9,322 14.0 2,205 5.3 214,861 11.5

40,907 6.3 78,908 6.8 103,454 13.7 10,396 11.5 2,335 5.9 236,000 9.8

42,951 5.0 83,379 5.7 118,069 14.1 11,590 11.5 2,493 6.8 258,482 9.5

7.1   9.3   16.9   14.9   6.3   12.2

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Video games The introduction of the new generation of video game consoles and the associated increase in video game software purchases for those consoles boosted spending by 14.3 percent in 2006. The Xbox 360 from Microsoft entered the market at the end of 2005. Wii from Nintendo was introduced in late 2006, and PlayStation 3 from Sony was launched in Japan and the United States at the end of 2006 and will be introduced in other territories in 2007. We anticipate two more years of double-digit growth in software as a result of these newly introduced consoles. The new consoles, which have Internet capabilities, will also spur growth in the online game market as will growing broadband penetration. New wireless handsets with enhanced graphics designed to play video games will drive demand for wireless games. High-speed wireless networks will provide an environment for wireless games that will approach the quality of console games. We project the video game market to expand from $32 billion in 2006 to $49 billion in 2011, a 9.1 percent compound annual increase.

Global Video Game Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

7,187 11.4 5,939 9.4 7,786 2.3 451 32.6 518 23.3 21,881 8.1

7,497 4.3 6,545 10.2 8,154 4.7 515 14.2 593 14.5 23,304 6.5

8,200 9.4 7,630 16.6 9,282 13.8 544 5.6 678 14.3 26,334 13.0

8,170 –0.4 8,227 7.8 9,996 7.7 528 –2.9 744 9.7 27,665 5.1

9,034 10.6 9,441 14.8 11,696 17.0 586 11.0 872 17.2 31,629 14.3

10,438 15.5 11,135 17.9 14,146 20.9 715 22.0 1,034 18.6 37,468 18.5

11,221 7.5 12,450 11.8 15,841 12.0 785 9.8 1,161 12.3 41,458 10.6

11,642 3.8 13,539 8.7 16,980 7.2 815 3.8 1,250 7.7 44,226 6.7

12,069 3.7 14,560 7.5 17,938 5.6 843 3.4 1,310 4.8 46,720 5.6

12,473 3.3 15,352 5.4 18,813 4.9 871 3.3 1,368 4.4 48,877 4.6

6.7   10.2   10.0   8.2   9.4   9.1

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

PricewaterhouseCoopers 38 | Global Entertainment and Media Outlook: 2007–2011


Business information Business information spending rose 6.9 percent in 2006, the largest increase during the past five years. Favorable economic conditions, increased M&A activity, and growth in international investment are fueling demand for business information. Growing interest in entering emerging markets is driving demand for industry information. Rising investment and the growth of hedge funds are fueling demand for financial information. Increased competition is driving demand for marketing information. And information providers are packaging their data with analytic tools to make their information more useful to subscribers and to distinguish their fee-based services from advertiser-supported services. We expect the market to rise at a 5.8 percent compound annual rate to $111 billion in 2011 from $84 billion in 2006.

Global Business Information Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

38,300 –1.3 20,770 –0.6 5,898 –2.3 1,267 –4.2 4,182 0.0 70,417 –1.1

38,500 0.5 20,834 0.3 5,904 0.1 1,258 –0.7 4,204 0.5 70,700 0.4

40,650 5.6 21,518 3.3 6,103 3.4 1,294 2.9 4,327 2.9 73,892 4.5

43,300 6.5 22,583 4.9 6,433 5.4 1,347 4.1 4,490 3.8 78,153 5.8

46,500 7.4 24,046 6.5 6,872 6.8 1,407 4.5 4,694 4.5 83,519 6.9

49,775 7.0 25,594 6.4 7,337 6.8 1,473 4.7 4,914 4.7 89,093 6.7

53,025 6.5 27,132 6.0 7,848 7.0 1,544 4.8 5,139 4.6 94,688 6.3

56,200 6.0 28,669 5.7 8,329 6.1 1,618 4.8 5,359 4.3 100,175 5.8

59,300 5.5 30,168 5.2 8,836 6.1 1,697 4.9 5,579 4.1 105,580 5.4

62,400 5.2 31,649 4.9 9,344 5.7 1,770 4.3 5,799 3.9 110,962 5.1

6.1   5.6   6.3   4.7   4.3   5.8

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Global Entertainment and Media Market by Segment Overview | 39


Magazine publishing Magazine publishing increased 2.6 percent in 2006 to $101 billion, the slowest growth since 2003. Circulation decreases in the United States and Canada contributed to the slowdown, while circulation spending in the remaining regions rose 3.3 percent. Rising incomes will fuel circulation growth in Eastern Europe, Latin America, and portions of Asia Pacific. In North America, the migration of readers to the Internet will cut into the print circulation market. Consumer magazine advertising will be buoyed by both economic expansion and new titles targeting affluent readers in Asia Pacific and a growing middle class in Central and Eastern Europe and Latin America. Trade magazines will benefit from a rebounding telecommunication market, which is a key advertiser in business-to-business publications. We project magazine publishing to expand at a 3.1 percent compound annual rate to $117 billion in 2011.

Global Magazine Publishing Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

32,588 –4.6 38,692 –1.4 14,969 0.9 2,311 –11.0 1,294 –2.2 89,854 –2.5

32,999 1.3 38,737 0.1 15,379 2.7 2,443 5.7 1,316 1.7 90,874 1.1

34,481 4.5 39,878 2.9 15,972 3.9 2,671 9.3 1,339 1.7 94,341 3.8

35,933 4.2 41,190 3.3 16,727 4.7 2,927 9.6 1,361 1.6 98,138 4.0

36,488 1.5 42,475 3.1 17,237 3.0 3,135 7.1 1,387 1.9 100,722 2.6

37,022 1.5 43,767 3.0 17,807 3.3 3,350 6.9 1,415 2.0 103,361 2.6

37,883 2.3 45,163 3.2 18,481 3.8 3,563 6.4 1,442 1.9 106,532 3.1

39,044 3.1 46,551 3.1 19,141 3.6 3,779 6.1 1,467 1.7 109,982 3.2

40,293 3.2 48,019 3.2 19,845 3.7 3,999 5.8 1,491 1.6 113,647 3.3

41,532 3.1 49,416 2.9 20,551 3.6 4,208 5.2 1,516 1.7 117,223 3.1

2.6   3.1   3.6   6.1   1.8   3.1

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

PricewaterhouseCoopers 40 | Global Entertainment and Media Outlook: 2007–2011


Newspaper publishing Newspaper publishing increased 1.8 percent in 2006, its weakest showing since the 1.1 percent decrease in 2002. Circulation declines and the migration of advertising, particularly classified advertising, to the Internet is hurting the print newspaper market. Free papers are attracting readers from paid dailies in EMEA, Asia Pacific, and Canada, thereby reducing circulation spending while contributing to overall increases in print advertising. In the United States, advertising on newspaper Web sites will be the principal source of growth. Newspaper Web sites are attracting advertisers in other regions, but we do not have data to track it. The overall newspaper market will expand from $181 billion in 2006 to $201 billion in 2011, growing at a 2.1 percent compound annual rate.

Global Newspaper Publishing Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

55,128 0.1 61,533 –2.1 39,798 –1.0 5,018 –1.7 2,841 0.4 164,318 –1.1

57,380 4.1 61,252 –0.5 41,048 3.1 4,977 –0.8 2,883 1.5 167,540 2.0

59,232 3.2 63,287 3.3 42,639 3.9 5,244 5.4 2,996 3.9 173,398 3.5

60,344 1.9 64,769 2.3 43,925 3.0 5,787 10.4 3,027 1.0 177,852 2.6

60,066 –0.5 66,434 2.6 45,227 3.0 6,238 7.8 3,078 1.7 181,043 1.8

59,231 –1.4 67,659 1.8 46,620 3.1 6,579 5.5 3,118 1.3 183,207 1.2

59,206 0.0 69,258 2.4 48,663 4.4 6,910 5.0 3,154 1.2 187,191 2.2

59,740 0.9 70,872 2.3 50,100 3.0 7,243 4.8 3,186 1.0 191,141 2.1

60,813 1.8 72,458 2.2 51,829 3.5 7,578 4.6 3,210 0.8 195,888 2.5

62,160 2.2 73,953 2.1 53,465 3.2 7,914 4.4 3,230 0.6 200,722 2.5

0.7   2.2   3.4   4.9   1.0   2.1

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Global Entertainment and Media Market by Segment Overview | 41


Book publishing The book publishing market rose 1.7 percent in 2006, down from the 4.4 percent advance in 2005. The absence of a Harry Potter title that had boosted spending in most regions in 2005 contributed to the slowdown. The seventh, and final, Harry Potter title will provide another stimulus in 2007. The Harry Potter cycle affects Asia Pacific a year later than in other regions because releases in that region are delayed. In other developments, electronic browsing technologies will make users aware of more titles and will stimulate spending in the United States, EMEA, and Canada. Increased school funding will enhance the educational book market. Professional books will benefit from improved economic conditions and the advent of digital browsing. At the same time, increased use of electronic books by professionals will cut into print growth. We project spending to increase at a 3.6 percent compound annual rate to $145 billion in 2011 from $121 billion in 2006.

Global Book Publishing Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

32,651 4.2 48,901 0.9 22,873 –0.3 4,284 –1.6 1,658 0.2 110,367 1.5

34,606 6.0 49,491 1.2 22,703 –0.7 4,306 0.5 1,665 0.4 112,771 2.2

34,711 0.3 50,091 1.2 23,470 3.4 4,380 1.7 1,693 1.7 114,345 1.4

36,912 6.3 51,800 3.4 24,389 3.9 4,493 2.6 1,770 4.5 119,364 4.4

36,565 –0.9 52,494 1.3 25,901 6.2 4,620 2.8 1,815 2.5 121,395 1.7

38,485 5.3 54,629 4.1 27,363 5.6 4,753 2.9 1,914 5.5 127,144 4.7

38,942 1.2 55,234 1.1 29,022 6.1 4,897 3.0 1,971 3.0 130,066 2.3

40,667 4.4 56,776 2.8 30,483 5.0 5,039 2.9 2,057 4.4 135,022 3.8

42,316 4.1 58,312 2.7 31,838 4.4 5,178 2.8 2,137 3.9 139,781 3.5

44,123 4.3 59,787 2.5 33,167 4.2 5,317 2.7 2,210 3.4 144,604 3.5

3.8   2.6   5.1   2.9   4.0   3.6

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

PricewaterhouseCoopers 42 | Global Entertainment and Media Outlook: 2007–2011


Theme parks and amusement parks The theme park market rose 4.3 percent in 2006, up from 3.2 percent growth in 2005, buoyed by the late 2005 opening of Hong Kong Disneyland, which had its first full-year impact in 2006. New parks expected in the PRC, India, and other countries will continue to boost spending in Asia Pacific during the next five years. EMEA will benefit from increased investment at existing parks, from growth in Central and Eastern Europe, and from the introduction of major new parks in the United Arab Emirates. The weak U.S. dollar will help destination parks in the United States, and ownership changes will lead to new investment in regional parks. The shift in emphasis in a number of parks from thrill rides for teenagers to family-oriented attractions will boost per capita spending because families generally spend more on food and souvenirs. We project spending to increase from $23 billion in 2006 to $28 billion in 2011, growing at a 4.6 percent compound annual rate.

Global Theme Parks and Amusement Parks Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

9,903 3.2 3,713 7.7 5,527 7.5 254 2.0 379 4.1 19,776 5.2

10,300 4.0 3,775 1.7 5,559 0.6 248 –2.4 382 0.8 20,264 2.5

10,775 4.6 3,980 5.4 5,711 2.7 253 2.0 429 12.3 21,148 4.4

11,230 4.2 4,136 3.9 5,782 1.2 241 –4.7 440 2.6 21,829 3.2

11,543 2.8 4,334 4.8 6,188 7.0 248 2.9 456 3.6 22,769 4.3

12,039 4.3 4,534 4.6 6,498 5.0 260 4.8 469 2.9 23,800 4.5

12,565 4.4 4,739 4.5 6,845 5.3 272 4.6 488 4.1 24,909 4.7

13,024 3.7 4,992 5.3 7,233 5.7 285 4.8 507 3.9 26,041 4.5

13,509 3.7 5,261 5.4 7,662 5.9 299 4.9 527 3.9 27,258 4.7

13,998 3.6 5,546 5.4 8,099 5.7 313 4.7 542 2.8 28,498 4.5

3.9   5.1   5.5   4.8   3.5   4.6

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Global Entertainment and Media Market by Segment Overview | 43


Casino and other regulated gaming Casino and other regulated gaming rose by 8.5 percent in 2006, led by new casinos in Macao, Las Vegas, and other regions. Casino revenues in Macao, which has become a major gaming destination center, surpassed the Las Vegas Strip in 2006. New resort casinos in Singapore and Macao will drive the market in Asia Pacific during the next five years. In EMEA, casino closings in Russia will contribute to a downturn in 2007, while a new destination resort casino in Spain and growth in online and sports betting will help that region rebound. In the United States, new casinos in Las Vegas and the introduction of slot parlors will expand the market. New border casinos in Mexico will boost growth in Latin America, and new and renovated casinos in Canada will lead to double-digit gains during 2007–08. Increased sports wagering related to the FIFA World Cup will boost spending in 2010. We expect spending to increase from $102 billion in 2006 to $144 billion in 2011, a 7.2 percent compound annual increase.

Global Casino and Other Regulated Gaming Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

41,357 7.1 13,866 14.5 7,674 11.8 199 –56.3 2,842 7.7 65,938 8.7

43,964 6.3 16,667 20.2 9,212 20.0 199 0.0 3,155 11.0 73,197 11.0

48,522 10.4 20,146 20.9 11,397 23.7 226 13.6 3,405 7.9 83,696 14.3

53,044 9.3 23,815 18.2 12,737 11.8 251 11.1 3,784 11.1 93,631 11.9

57,482 8.4 25,208 5.8 14,631 14.9 278 10.8 4,010 6.0 101,609 8.5

61,822 7.6 24,579 –2.5 17,518 19.7 311 11.9 4,473 11.5 108,703 7.0

66,660 7.8 24,900 1.3 20,555 17.3 345 10.9 4,966 11.0 117,426 8.0

70,905 6.4 24,455 –1.8 23,434 14.0 392 13.6 5,297 6.7 124,483 6.0

75,570 6.6 26,684 9.1 26,581 13.4 449 14.5 5,583 5.4 134,867 8.3

79,600 5.3 27,755 4.0 30,325 14.1 495 10.2 5,869 5.1 144,044 6.8

6.7   1.9   15.7   12.2   7.9   7.2

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

PricewaterhouseCoopers 44 | Global Entertainment and Media Outlook: 2007–2011


Sports Sports increased 12.0 percent in 2006, the largest increase during the past five years, buoyed by the FIFA World Cup, the Winter Olympics, and the return of the National Hockey League (NHL) in North America. Competition in the TV distribution market is fueling demand for TV rights fees, leading to record deals. Mobile and online rights are also expanding the market, and companies are spending more on naming rights and sponsorship deals. The 2010 FIFA World Cup in South Africa, the 2008 Beijing Summer Olympics, and the 2010 Winter Olympics in Vancouver will boost spending on TV rights fees and sponsorship and merchandising, and the host country will also benefit from increased gate revenues. We expect the sports market to expand at a 5.2 percent compound annual rate to $124 billion in 2011 from $96 billion in 2006.

Global Sports Market (US$ Millions) Region United States % Change EMEA % Change Asia Pacific % Change Latin America % Change Canada % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

37,082 8.2 21,950 10.7 11,434 12.7 2,229 7.1 827 –3.6 73,522 9.4

39,884 7.6 22,164 1.0 11,133 –2.6 2,234 0.2 842 1.8 76,257 3.7

43,182 8.3 24,057 8.5 11,819 6.2 2,334 4.5 879 4.4 82,271 7.9

44,381 2.8 25,984 8.0 12,602 6.6 2,508 7.5 406 –53.8 85,881 4.4

48,310 8.9 30,476 17.3 13,659 8.4 2,752 9.7 947 133.3 96,144 12.0

51,024 5.6 30,489 0.0 14,200 4.0 2,769 0.6 946 –0.1 99,428 3.4

55,051 7.9 32,966 8.1 17,149 20.8 2,884 4.2 1,056 11.6 109,106 9.7

57,417 4.3 33,656 2.1 15,567 –9.2 3,114 8.0 1,079 2.2 110,833 1.6

61,863 7.7 38,455 14.3 17,019 9.3 3,407 9.4 1,208 12.0 121,952 10.0

64,443 4.2 37,138 –3.4 17,707 4.0 3,421 0.4 1,159 –4.1 123,868 1.6

5.9   4.0   5.3   4.4   4.1   5.2

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Global Entertainment and Media Market by Segment Overview | 45


Global Entertainment and Media Market by Region

United States The United States expanded by 5.9 percent in 2006, led by double-digit growth in Internet advertising and access spending and video games and by high-single-digit increases in sports, casino and other regulated gaming, and TV distribution. Those segments offset declines in recorded music, book publishing, and newspaper publishing. We expect Internet advertising and access spending to be the only segment to average double-digit growth during the next five years. Migration to broadband and rapid growth in online advertising will combine to propel Internet advertising and access spending to double-digit gains through 2009 and a compound annual increase of 10.7 percent through 2011. Video games and casino and other regulated gaming will each expand at a 6.7 percent compound annual rate, with TV networks at 6.5 percent followed by business information at 6.1 percent. Next-generation console games and rapid growth in online and wireless games will propel the video game market. Casino and other regulated gaming will be bolstered by new casinos in Las Vegas, the introduction of slot parlors in regional casinos, and continued growth in tribal casinos. In the TV network market, product placement advertising and basic network license fees will fuel growth. Demand for business information is being fueled by an active M&A market and by interest in investing in emerging markets in Asia, Central and Eastern Europe, and Latin America. Sports, radio and out-of-home advertising, and TV distribution will be the next-fastest-growing segments. Satellite and online sports packages and naming rights deals will contribute to a 5.9 percent annual increase in sports. Radio and out-of-home advertising will grow at a 5.8 percent annual rate, boosted by satellite radio subscriptions, an emerging satellite radio advertising market, new billboard technologies, and increased street furniture advertising. TV distribution will be bolstered by the entrance of telephone companies into the market, which will increase competition, attract new subscribers, and encourage existing subscribers to trade up to advanced services such as digital, premium channels, and video-on-demand. At the same time, the mandated shutoff of analog broadcasts will also boost subscription penetration.

PricewaterhouseCoopers 46 | Global Entertainment and Media Outlook: 2007–2011


Recorded music will fall at a 0.4 percent compound annual rate, and the remaining segments will grow by less than 5 percent annually. The overall market will expand at a 5.3 percent compound annual rate to $754 billion in 2011 from $582 billion in 2006.

Entertainment and Media Market by Segment (US$ Millions) United States Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change TV Distribution % Change Recorded Music % Change Radio/Out-of-Home Advertising % Change Internet Advertising and Access Spending % Change Video Games % Change Business Information % Change Magazine Publishing % Change Newspaper Publishing % Change Book Publishing % Change Theme Parks and Amusement Parks % Change Casino and Other Regulated Gaming % Change Sports % Change Total % Change

2007–11 CAGR

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

31,703

33,297

34,971

34,235

35,185

36,731

38,257

39,889

41,877

44,000

9.5

5.0

5.0

–2.1

2.8

4.4

4.2

4.3

5.0

5.1

4.6

43,286

47,224

54,399

58,096

62,229

66,105

71,920

75,520

80,645

85,410

9.3

9.1

15.2

6.8

7.1

6.2

8.8

5.0

6.8

5.9

6.5

73,812

77,869

85,447

87,988

94,673

98,125 105,305 110,192 118,026 123,261

10.0

5.5

9.7

3.0

7.6

3.6

7.3

4.6

7.1

4.4

5.4

12,643

12,025

12,762

12,270

11,511

10,482

10,427

10,603

10,926

11,308

–8.0

–4.9

6.1

–3.9

–6.2

–8.9

–0.5

1.7

3.0

3.5

–0.4

24,133

24,734

25,809

26,973

28,291

29,756

31,455

33,426

35,439

37,450

4.7

2.5

4.3

4.5

4.9

5.2

5.7

6.3

6.0

5.7

5.8

24,819

29,093

33,631

39,178

47,235

54,478

61,106

67,269

73,107

78,351

9.1

17.2

15.6

16.5

20.6

15.3

12.2

10.1

8.7

7.2

10.7

7,187

7,497

8,200

8,170

9,034

10,438

11,221

11,642

12,069

12,473

11.4

4.3

9.4

–0.4

10.6

15.5

7.5

3.8

3.7

3.3

6.7

38,300

38,500

40,650

43,300

46,500

49,775

53,025

56,200

59,300

62,400

–1.3

0.5

5.6

6.5

7.4

7.0

6.5

6.0

5.5

5.2

6.1

32,588

32,999

34,481

35,933

36,488

37,022

37,883

39,044

40,293

41,532

–4.6

1.3

4.5

4.2

1.5

1.5

2.3

3.1

3.2

3.1

2.6

55,128

57,380

59,232

60,344

60,066

59,231

59,206

59,740

60,813

62,160

0.1

4.1

3.2

1.9

–0.5

–1.4

0.0

0.9

1.8

2.2

0.7

32,651

34,606

34,711

36,912

36,565

38,485

38,942

40,667

42,316

44,123

4.2

6.0

0.3

6.3

–0.9

5.3

1.2

4.4

4.1

4.3

3.8

9,903

10,300

10,775

11,230

11,543

12,039

12,565

13,024

13,509

13,998

3.2

4.0

4.6

4.2

2.8

4.3

4.4

3.7

3.7

3.6

3.9

41,357

43,964

48,522

53,044

57,482

61,822

66,660

70,905

75,570

79,600

7.1

6.3

10.4

9.3

8.4

7.6

7.8

6.4

6.6

5.3

6.7

37,082

39,884

43,182

44,381

48,310

51,024

55,051

57,417

61,863

64,443

8.2

7.6

8.3

2.8

8.9

5.6

7.9

4.3

7.7

4.2

5.9

464,592 488,156 525,231 550,027 582,448 612,163 648,948 680,713 720,203 754,209

4.7

5.1

7.6

4.7

5.9

5.1

6.0

4.9

5.8

4.7

5.3

Note: Beginning in 2003, newspaper Web site advertising is included in both the newspaper and the Internet segments but is counted only once in the overall total. Prior to 2003, newspaper Web site advertising is included only in the Internet segment. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Global Entertainment and Media Market by Region United States | 47


Advertising Advertising rose 5.0 percent in 2006, led by Internet advertising, which soared by 33.9 percent, buoyed by a jump in classifieds, an emerging online video advertising market, and continued growth in keyword search. Out-of-home was the next-fastest-growing medium, with an 8.6 percent advance as digital billboards boosted effective inventory and overall spending, followed by TV distribution at 7.5 percent and TV networks at 5.0 percent. Political advertising on TV stations boosted TV distribution, while product placement advertising and the Winter Olympics contributed to TV network advertising. We expect continued double-digit growth in Internet advertising through 2010, with growth averaging 16.1 percent compounded annually through 2011 as the Internet becomes a central aspect of consumers’ lives and as advertisers adapt to this shift in lifestyle. Out-of-home will remain the second-fastest-growing category, with a projected 8.2 percent compound annual increase, helped by the attraction of digital billboards, captive video networks and other new venues, and improved audience measurement that will make it easier for advertisers to incorporate out-of-home in their campaigns. TV networks will average 5.0 percent compounded annually. The shift to commercial ratings will reduce uncertainty with respect to actual viewing levels, thereby giving advertisers more confidence in the medium. At the same time, product placement advertising will continue to augment spending. In 2008 and 2010, advertising associated with the Olympics will boost spending. Magazines will grow at a 3.3 percent rate, an improvement from the 2.7 percent increase in 2006, with trade magazines rebounding due largely to an expanding telecommunication market. Radio will improve to 2.3 percent compound annual growth, helped by the expansion of high-definition radio, a growing satellite radio market, and a modest improvement in traditional terrestrial radio. TV distribution will increase at a 1.7 percent annual rate, the result of a decrease in political advertising in 2011 compared with elevated levels in 2006. Newspapers will remain the slowest-growing segment, at 1.1 percent, which will be an improvement compared with the 0.3 percent decline in 2006. Expanding newspaper Web site advertising will offset continued declines in print advertising.

PricewaterhouseCoopers 48 | Global Entertainment and Media Outlook: 2007–2011


The U.S. advertising market as a whole will increase at a 4.1 percent compound annual rate to $225 billion in 2011 from $184 billion in 2006.

Advertising by Segment (US$ Millions) United States TV Networks: Broadcast and Cable % Change TV Distribution % Change Radio % Change Out-of-Home % Change Internet

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

28,146

30,254

34,809

36,396

38,219

40,075

43,760

44,550

46,925

48,750

4.2

7.5

15.1

4.6

5.0

4.9

9.2

1.8

5.3

3.9

5.0

28,260

28,328

30,980

29,658

31,877

31,190

34,000

33,000

35,230

34,690

11.1

0.2

9.4

–4.3

7.5

–2.2

9.0

–2.9

6.8

–1.5

1.7

18,877

19,104

19,590

19,660

19,679

19,820

20,095

20,584

21,271

22,100

5.7

1.2

2.5

0.4

0.1

0.7

1.4

2.4

3.3

3.9

2.3

5,232

5,505

5,834

6,301

6,840

7,450

8,120

8,810

9,470

10,130

0.8

5.2

6.0

8.0

8.6

8.9

9.0

8.5

7.5

7.0

8.2

6,010

7,267

9,626

12,542

16,800

21,100

25,200

28,800

32,200

35,400

% Change

–16.6

20.9

32.5

30.3

33.9

25.6

19.4

14.3

11.8

9.9

16.1

Magazines

20,660

21,165

22,351

23,654

24,298

24,850

25,550

26,500

27,550

28,600

–7.5

2.4

5.6

5.8

2.7

2.3

2.8

3.7

4.0

3.8

3.3

44,102

46,155

48,244

49,435

49,276

48,560

48,675

49,300

50,475

51,925

–0.5

4.7

4.5

2.5

–0.3

–1.5

0.2

1.3

2.4

2.9

1.1

151,287 156,562 169,893 175,619 184,325 189,695 201,325 206,719 217,571 225,295

% Change Newspapers % Change Total % Change

1.3

3.5

8.5

3.4

5.0

2.9

6.1

2.7

5.2

3.6

4.1

Note: Beginning in 2003, newspaper Web site advertising is included in both the newspaper and the Internet segments but is counted only once in the overall total. Prior to 2003, newspaper Web site advertising is included only in the Internet segment. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Global Entertainment and Media Market by Region United States | 49


Consumer/end-user spending Consumer/end-user spending rose by 6.3 percent in 2006, up from the 5.4 percent gain in 2005. Double-digit growth in satellite radio subscriptions, Internet access spending, video games, and cable network license fees offset declines in recorded music, newspaper publishing, magazine publishing, and book publishing. Satellite radio subscriptions rose 75.1 percent because factory-installed receivers in new cars introduced people to the service. The shift from dial-up to broadband continued to boost Internet access spending; new console platforms stimulated the video game market; and an increase in basic network license fees contributed to growth in TV networks. Sports, casino and other regulated gaming, and TV distribution were the next-fastest-growing segments, at 8.9 percent, 8.4 percent, and 7.7 percent, respectively. TV rights for the Winter Olympics and lucrative satellite TV and radio deals boosted sports in 2006. Double-digit growth in tribal casinos and a strong Nevada market contributed to the casino and other regulated gaming market. Triple-play offerings helped cable companies stem subscriber losses. Migration to digital boosted spending per cable subscriber and expanded the videoon-demand market. During the next five years, growth in consumer/end-user spending will average 5.8 percent compounded annually, increasing from $398 billion in 2006 to $529 billion in 2011. Single-digit compound annual increase rates are projected for all segments except satellite radio, which will continue to post double-digit percentage increases, and recorded music, which will stay relatively flat, and newspapers which will decline. TV networks will be the second-fastest-growing segment, at a projected 8.8 percent compound annual increase, fueled by rising subscription penetration that will lead to growth in cable network license fees. TV distribution and Internet access spending will be the next-fastest-growing segments, at 7.1 percent each. Increased penetration from participation by telephone companies in the market, the mandated shutdown of analog broadcasts, and a growing video-on-demand market stemming from the expanding digital universe will drive TV distribution. The shift from dial-up to broadband will continue to stimulate Internet access spending. Video games and casino and other regulated gaming will each expand at a 6.7 percent compound annual rate. Console games associated with the new hardware platforms and expanding online and wireless markets will boost video games. New casinos and racinos and continued growth in tribal casinos will sustain growth in the casino market. Business information will expand at a 6.1 percent annual rate fueled by rising investment and the associated demand for information. Sports will grow by 5.9 percent compounded annually, boosted by naming rights and satellite and online rights. Filmed entertainment will grow at a 4.6 percent annual rate, fueled by digital cinemas, 3-D screens, highdefinition DVDs, and download-to-own streaming and online subscription rentals. Theme parks and books will be the next-fastest-growing segments, at 3.9 percent and 3.8 percent, respectively. New rides and attractions will help destination parks, while new capital will lead to upgrades in regional parks. Electronic browsing will help the consumer and professional markets, while (1) increased funding will boost school textbooks and (2) rising enrollment will stimulate the college textbook market. Magazines will grow at a 1.2 percent compound annual rate, and newspapers will fall at a 1.1 percent rate—in both cases hurt by declining unit circulation. The recorded music market will experience double-digit declines in physical spending and double-digit increases in digital, leaving overall spending relatively flat.

PricewaterhouseCoopers 50 | Global Entertainment and Media Outlook: 2007–2011


Consumer/End-User Spending by Segment (US$ Millions) United States Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change TV Distribution % Change Recorded Music % Change Radio

2007–11 CAGR

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

31,703

33,297

34,971

34,235

35,185

36,731

38,257

39,889

41,877

44,000

9.5

5.0

5.0

–2.1

2.8

4.4

4.2

4.3

5.0

5.1

4.6

15,140

16,970

19,590

21,700

24,010

26,030

28,160

30,970

33,720

36,660

20.3

12.1

15.4

10.8

10.6

8.4

8.2

10.0

8.9

8.7

8.8

45,552

49,541

54,467

58,330

62,796

66,935

71,305

77,192

82,796

88,571

9.3

8.8

9.9

7.1

7.7

6.6

6.5

8.3

7.3

7.0

7.1

12,643

12,025

12,762

12,270

11,511

10,482

10,427

10,603

10,926

11,308

–8.0

–4.9

6.1

–3.9

–6.2

–8.9

–0.5

1.7

3.0

3.5

–0.4

24

125

385

1,012

1,772

2,486

3,240

4,032

4,698

5,220

% Change

2,300.0

420.8

208.0

162.9

75.1

40.3

30.3

24.4

16.5

11.1

24.1

Internet Access

18,809

21,826

24,005

26,636

30,435

33,378

35,906

38,469

40,907

42,951

21.1

16.0

10.0

11.0

14.3

9.7

7.6

7.1

6.3

5.0

7.1

7,187

7,497

8,200

8,170

9,034

10,438

11,221

11,642

12,069

12,473

11.4

4.3

9.4

–0.4

10.6

15.5

7.5

3.8

3.7

3.3

6.7

38,300

38,500

40,650

43,300

46,500

49,775

53,025

56,200

59,300

62,400

–1.3

0.5

5.6

6.5

7.4

7.0

6.5

6.0

5.5

5.2

6.1

11,928

11,834

12,130

12,279

12,190

12,172

12,333

12,544

12,743

12,932

% Change Video Games % Change Business Information % Change Magazines % Change Newspapers % Change Books % Change Theme Parks and Amusement Parks % Change Casino and Other Regulated Gaming % Change Sports % Change Total % Change

0.8

–0.8

2.5

1.2

–0.7

–0.1

1.3

1.7

1.6

1.5

1.2

11,026

11,225

10,988

10,909

10,790

10,671

10,531

10,440

10,338

10,235

2.3

1.8

–2.1

–0.7

–1.1

–1.1

–1.3

–0.9

–1.0

–1.0

–1.1

32,651

34,606

34,711

36,912

36,565

38,485

38,942

40,667

42,316

44,123

4.2

6.0

0.3

6.3

–0.9

5.3

1.2

4.4

4.1

4.3

3.8

9,903

10,300

10,775

11,230

11,543

12,039

12,565

13,024

13,509

13,998

3.2

4.0

4.6

4.2

2.8

4.3

4.4

3.7

3.7

3.6

3.9

41,357

43,964

48,522

53,044

57,482

61,822

66,660

70,905

75,570

79,600

7.1

6.3

10.4

9.3

8.4

7.6

7.8

6.4

6.6

5.3

6.7

37,082

39,884

43,182

44,381

48,310

51,024

55,051

57,417

61,863

64,443

8.2

7.6

8.3

2.8

8.9

5.6

7.9

4.3

7.7

4.2

5.9

313,305 331,594 355,338 374,408 398,123 422,468 447,623 473,994 502,632 528,914

6.5

5.8

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

7.2

5.4

6.3

6.1

6.0

5.9

6.0

5.2

5.8

Global Entertainment and Media Market by Region United States | 51


Europe, Middle East, Africa (EMEA) Spending in EMEA totaled $473 billion in 2006, up 6.9 percent from 2005. Growth was paced by double-digit increases in Internet advertising and access spending, sports, video games, and TV distribution. Business information and casino and other regulated gaming were the next-fastest-growing segments, at 6.5 percent and 5.8 percent, respectively, followed by TV networks at 5.2 percent. The remaining segments rose by less than 5 percent, and recorded music and filmed entertainment declined. We expect TV distribution, Internet advertising and access spending, and video games to average doubledigit compound annual increases during the next five years. Sports will grow at a 4.0 percent compound annual rate, reflecting the absence of either a FIFA World Cup or Olympic Games that boosted spending in 2006. Penetration growth fueled by the entrance of telephone companies and the introduction of triple-play packages will stimulate the TV distribution market. Triple-play rollouts will also boost broadband penetration, which in turn will stimulate online advertising, thereby fueling the Internet market. Games associated with the new video game consoles will generate near-term increases in the video game market, while increased spending on online and wireless games will sustain growth over the long run. Business information will grow by 5.6 percent, helped by improved economic conditions, and theme parks will expand at a 5.1 percent annual rate, buoyed by new parks in Eastern Europe and the Middle East and upgrades at existing parks in Western Europe. The remaining segments will each grow by less than 5 percent annually. The entire market will expand at a 5.5 percent compound annual rate, with spending increasing to $617 billion by 2011.

PricewaterhouseCoopers 52 | Global Entertainment and Media Outlook: 2007–2011


Entertainment and Media Market by Segment (US$ Millions) EMEA Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change TV Distribution % Change Recorded Music % Change Radio/Out-of-Home Advertising % Change Internet Advertising and Access Spending % Change Video Games % Change Business Information % Change Magazine Publishing % Change Newspaper Publishing % Change Book Publishing % Change Theme Parks and Amusement Parks % Change Casino and Other Regulated Gaming % Change Sports % Change Total % Change

2007–11 CAGR

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

19,769

21,278

23,228

21,944

21,874

22,136

22,895

23,992

25,318

26,677

16.9

7.6

9.2

–5.5

–0.3

1.2

3.4

4.8

5.5

5.4

4.0

49,927

52,049

55,416

58,536

61,573

64,563

67,723

70,822

74,552

77,253

1.8

4.3

6.5

5.6

5.2

4.9

4.9

4.6

5.3

3.6

4.6

22,619

24,975

27,767

31,099

35,069

39,457

44,642

50,097

56,075

62,722

14.0

10.4

11.2

12.0

12.8

12.5

13.1

12.2

11.9

11.9

12.3

14,750

13,729

13,319

13,338

13,065

12,927

13,087

13,457

13,901

14,330

–2.6

–6.9

–3.0

0.1

–2.0

–1.1

1.2

2.8

3.3

3.1

1.9

20,737

21,546

22,735

24,034

24,898

25,844

26,844

27,906

28,968

30,072

2.4

3.9

5.5

5.7

3.6

3.8

3.9

4.0

3.8

3.8

3.8

26,674

33,199

43,073

50,979

61,653

71,793

81,721

90,584

98,292 105,268

26.2

24.5

29.7

18.4

20.9

16.4

13.8

10.8

8.5

7.1

11.3

5,939

6,545

7,630

8,227

9,441

11,135

12,450

13,539

14,560

15,352

9.4

10.2

16.6

7.8

14.8

17.9

11.8

8.7

7.5

5.4

10.2

20,770

20,834

21,518

22,583

24,046

25,594

27,132

28,669

30,168

31,649

–0.6

0.3

3.3

4.9

6.5

6.4

6.0

5.7

5.2

4.9

5.6

38,692

38,737

39,878

41,190

42,475

43,767

45,163

46,551

48,019

49,416

–1.4

0.1

2.9

3.3

3.1

3.0

3.2

3.1

3.2

2.9

3.1

61,533

61,252

63,287

64,769

66,434

67,659

69,258

70,872

72,458

73,953

–2.1

–0.5

3.3

2.3

2.6

1.8

2.4

2.3

2.2

2.1

2.2

48,901

49,491

50,091

51,800

52,494

54,629

55,234

56,776

58,312

59,787

0.9

1.2

1.2

3.4

1.3

4.1

1.1

2.8

2.7

2.5

2.6

3,713

3,775

3,980

4,136

4,334

4,534

4,739

4,992

5,261

5,546

7.7

1.7

5.4

3.9

4.8

4.6

4.5

5.3

5.4

5.4

5.1

13,866

16,667

20,146

23,815

25,208

24,579

24,900

24,455

26,684

27,755

14.5

20.2

20.9

18.2

5.8

–2.5

1.3

–1.8

9.1

4.0

1.9

21,950

22,164

24,057

25,984

30,476

30,489

32,966

33,656

38,455

37,138

10.7

1.0

8.5

8.0

17.3

0.0

8.1

2.1

14.3

–3.4

4.0

369,840 386,241 416,125 442,434 473,040 499,106 528,754 556,368 591,023 616,918

4.3

4.4

7.7

6.3

6.9

5.5

5.9

5.2

6.2

4.4

5.5

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

The United Kingdom is the largest market in the region, at $96 billion in 2006, followed by Germany at $87 billion and France at $61 billion. Middle East/Africa and Central and Eastern Europe were the fastest-growing areas in EMEA in 2006, with increases of 12.8 percent and 9.4 percent, respectively, over 2005. Western Europe expanded by 6.2 percent. Led by Saudi Arabia/Pan Arab and South Africa, Middle East/Africa will continue to be the growth leader, averaging 8.5 percent compounded annually during 2007–2011. Central and Eastern Europe will increase at a 7.7 percent compound annual rate, and Western Europe will grow by 4.8 percent compounded annually. Global Entertainment and Media Market by Region EMEA | 53


Entertainment and Media Market by Country (US$ Millions) EMEA Western Europe

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

Austria

7,246

7,572

8,016

8,419

8,724

9,118

9,463

9,809

10,157

10,498

Belgium

6,407

6,893

7,443

7,803

8,150

8,484

8,809

9,193

9,517

9,801

Denmark

5,693

6,099

6,549

6,977

7,260

7,603

7,852

8,110

8,372

8,636

Finland

4,426

4,698

5,144

5,491

5,732

5,935

6,146

6,318

6,479

6,605

France

49,781

51,343

54,547

57,073

60,955

64,320

67,352

70,233

73,670

76,638

Germany

75,897

76,011

78,580

81,737

86,843

88,244

91,236

94,369

98,501

100,967

3,636

4,017

4,332

4,640

5,001

5,332

5,623

5,950

6,284

6,618

Greece Ireland

2,343

2,540

2,756

2,982

3,178

3,385

3,602

3,788

3,998

4,202

Italy

34,008

34,941

38,115

39,957

43,013

45,571

48,580

51,484

55,229

57,737

Netherlands

14,494

14,672

15,294

15,677

16,277

16,885

17,530

18,163

18,847

19,490

Norway

6,628

7,277

7,876

8,533

9,078

9,500

9,905

10,344

10,815

11,256

Portugal

3,113

3,234

3,671

4,019

4,288

4,685

5,073

5,472

5,810

6,108

22,278

23,837

25,462

27,502

30,044

32,289

35,501

38,363

41,394

43,795

Sweden

8,454

8,707

9,110

9,529

10,042

10,479

10,901

11,321

11,706

12,128

Switzerland

7,626

7,785

8,261

8,891

9,378

9,782

10,132

10,500

10,887

11,212

Spain

United Kingdom

77,992

81,247

87,064

90,983

95,733

101,344

106,931

112,217

118,852

123,622

330,022

340,873

362,220

380,213

403,696

422,956

444,636

465,634

490,518

509,313

Czech Republic

2,161

2,299

2,510

2,844

3,058

3,287

3,532

3,767

4,063

4,312

Hungary

2,186

2,424

2,753

3,026

3,204

3,485

3,773

4,061

4,357

4,648

Poland

5,132

5,862

6,243

6,839

7,616

8,323

8,979

9,623

10,384

10,990

926

1,006

1,122

1,267

1,440

1,636

1,819

1,988

2,165

2,339

Russia

7,978

10,644

14,999

18,629

19,958

21,114

22,890

23,408

25,723

27,851

Turkey

1,728

1,900

2,444

2,928

3,581

4,237

4,817

5,343

5,824

6,276

20,111

24,135

30,071

35,533

38,857

42,082

45,810

48,190

52,516

56,416

Western Europe Total Central and Eastern Europe

Romania

Central and Eastern Europe Total Middle East/Africa Israel

2,236

2,246

2,335

2,434

2,447

2,508

2,568

2,637

2,724

2,803

Saudi Arabia/Pan Arab†

3,854

4,100

4,655

5,378

6,423

7,166

7,854

8,635

9,396

10,141

South Africa

4,118

4,689

5,366

6,007

6,720

7,456

8,206

8,954

9,840

10,539

10,208

11,035

12,356

13,819

15,590

17,130

18,628

20,226

21,960

23,483

360,341

376,043

404,647

429,565

458,143

482,168

509,074

534,050

564,994

589,212

9,499

10,198

11,478

12,869

14,897

16,938

19,680

22,318

26,029

27,706

369,840

386,241

416,125

442,434

473,040

499,106

528,754

556,368

591,023

616,918

Middle East/Africa Total Country Subtotal Regional Spending Total

†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

PricewaterhouseCoopers 54 | Global Entertainment and Media Outlook: 2007–2011


Entertainment and Media Market Growth by Country (%) EMEA

2002

Western Europe

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

Austria

4.5

4.5

5.9

5.0

3.6

4.5

3.8

3.7

3.5

3.4

3.8

Belgium

7.7

7.6

8.0

4.8

4.4

4.1

3.8

4.4

3.5

3.0

3.8

Denmark

5.4

7.1

7.4

6.5

4.1

4.7

3.3

3.3

3.2

3.2

3.5

Finland

4.0

6.1

9.5

6.7

4.4

3.5

3.6

2.8

2.5

1.9

2.9

France

3.7

3.1

6.2

4.6

6.8

5.5

4.7

4.3

4.9

4.0

4.7

Germany

–0.1

0.2

3.4

4.0

6.2

1.6

3.4

3.4

4.4

2.5

3.1

Greece

11.7

10.5

7.8

7.1

7.8

6.6

5.5

5.8

5.6

5.3

5.8

Ireland

6.2

8.4

8.5

8.2

6.6

6.5

6.4

5.2

5.5

5.1

5.7

Italy

2.8

2.7

9.1

4.8

7.6

5.9

6.6

6.0

7.3

4.5

6.1

Netherlands

2.5

1.2

4.2

2.5

3.8

3.7

3.8

3.6

3.8

3.4

3.7

Norway

10.7

9.8

8.2

8.3

6.4

4.6

4.3

4.4

4.6

4.1

4.4

Portugal

6.9

3.9

13.5

9.5

6.7

9.3

8.3

7.9

6.2

5.1

7.3

Spain

3.5

7.0

6.8

8.0

9.2

7.5

9.9

8.1

7.9

5.8

7.8

Sweden

6.1

3.0

4.6

4.6

5.4

4.4

4.0

3.9

3.4

3.6

3.8

Switzerland

0.3

2.1

6.1

7.6

5.5

4.3

3.6

3.6

3.7

3.0

3.6

United Kingdom

6.1

4.2

7.2

4.5

5.2

5.9

5.5

4.9

5.9

4.0

5.2

Western Europe Total

3.5

3.3

6.3

5.0

6.2

4.8

5.1

4.7

5.3

3.8

4.8

3.1

6.4

9.2

13.3

7.5

7.5

7.5

6.7

7.9

6.1

7.1

Hungary

12.9

10.9

13.6

9.9

5.9

8.8

8.3

7.6

7.3

6.7

7.7

Poland

6.3

14.2

6.5

9.5

11.4

9.3

7.9

7.2

7.9

5.8

7.6

Romania

4.9

8.6

11.5

12.9

13.7

13.6

11.2

9.3

8.9

8.0

10.2

Russia

30.5

33.4

40.9

24.2

7.1

5.8

8.4

2.3

9.9

8.3

6.9

Turkey

22.9

10.0

28.6

19.8

22.3

18.3

13.7

10.9

9.0

7.8

11.9

Central and Eastern Europe Total

16.5

20.0

24.6

18.2

9.4

8.3

8.9

5.2

9.0

7.4

7.7

0.4

4.0

4.2

0.5

2.5

2.4

2.7

3.3

2.9

2.8

Central and Eastern Europe Czech Republic

Middle East/Africa Israel

–0.6

Saudi Arabia/Pan Arab

9.2

6.4

13.5

15.5

19.4

11.6

9.6

9.9

8.8

7.9

9.6

12.5

13.9

14.4

11.9

11.9

11.0

10.1

9.1

9.9

7.1

9.4

Middle East/Africa Total

8.1

8.1

12.0

11.8

12.8

9.9

8.7

8.6

8.6

6.9

8.5

Country Subtotal

4.3

4.4

7.6

6.2

6.7

5.2

5.6

4.9

5.8

4.3

5.2

Regional Spending

3.3

7.4

12.6

12.1

15.8

13.7

16.2

13.4

16.6

6.4

13.2

Total

4.3

4.4

7.7

6.3

6.9

5.5

5.9

5.2

6.2

4.4

5.5

South Africa

†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Global Entertainment and Media Market by Region EMEA | 55


Advertising Advertising in EMEA grew 7.2 percent in 2006, the second-largest gain during the past five years, behind the 7.8 percent increase in 2004. Internet advertising rose 45.9 percent, surpassing radio in 2006 and nearly reaching out-of-home advertising spending. TV networks rose 7.1 percent, helped by advertising associated with the FIFA World Cup and the Winter Olympics, both of which were held in Europe. Out-of-home increased by 6.0 percent, radio expanded by 4.7 percent, and newspapers and magazines rose by 4.0 percent and 3.7 percent, respectively. We expect the generally stable economic outlook to sustain advertising growth at mid-single-digit levels. The Internet will continue to expand at double-digit rates, averaging 21.5 percent on a compound annual basis, boosted by rising broadband penetration and the migration of advertisers from print. TV networks will increase by 5.8 percent compounded annually, buoyed by rising digital penetration and HDTV rollouts. Out-of-home will grow by 5.6 percent annually as digital billboards and improved audience measurement attract advertisers. Digital radio and new radio licenses will lead to a 5.1 percent compound annual increase in radio. Increases of 3.9 percent and 3.1 percent compounded annually are anticipated for magazines and newspapers, respectively. Advertising as a whole will increase at a 6.1 percent compound annual rate, reaching $165 billion in 2011 from $123 billion in 2006.

Advertising by Segment (US$ Millions) EMEA TV Networks: Broadcast and Cable % Change Radio % Change Out-of-Home % Change Internet % Change Magazines % Change Newspapers % Change Total % Change

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

31,474

33,271

36,229

38,438

41,166

43,688

46,543

49,032

52,326

54,695

–0.1

5.7

8.9

6.1

7.1

6.1

6.5

5.3

6.7

4.5

5.8

5,337

5,721

6,291

6,622

6,935

7,325

7,707

8,094

8,484

8,874

1.2

7.2

10.0

5.3

4.7

5.6

5.2

5.0

4.8

4.6

5.1

6,554

6,874

7,321

7,895

8,370

8,798

9,312

9,836

10,374

10,975

2.0

4.9

6.5

7.8

6.0

5.1

5.8

5.6

5.5

5.8

5.6

1,650

2,356

3,850

5,672

8,275

11,060

13,929

16,722

19,384

21,889

8.0

42.8

63.4

47.3

45.9

33.7

25.9

20.1

15.9

12.9

21.5

18,270

18,199

18,947

19,617

20,349

21,106

21,987

22,857

23,797

24,677

–4.4

–0.4

4.1

3.5

3.7

3.7

4.2

4.0

4.1

3.7

3.9

33,923

33,473

35,096

36,121

37,552

38,549

39,860

41,202

42,525

43,797

–5.2

–1.3

4.8

2.9

4.0

2.7

3.4

3.4

3.2

3.0

3.1

99,894 107,734 114,365 122,647 130,526 139,338 147,743 156,890 164,907

97,208 –2.4

2.8

7.8

6.2

7.2

6.4

6.8

6.0

6.2

5.1

6.1

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

The United Kingdom generated $25 billion in advertising in 2006, the region leader. Germany was next, at $17 billion, followed by Italy at $14 billion and France at $13 billion. The top four territories constituted 56 percent of total advertising in EMEA. We expect Central and Eastern Europe and Middle East/Africa to average double-digit compound annual gains during the next five years, fueled by expanding economies. Western Europe will average 4.9 percent growth compounded annually, similar to the 5.0 percent increase in 2006.

PricewaterhouseCoopers 56 | Global Entertainment and Media Outlook: 2007–2011


Advertising by Country (US$ Millions) EMEA Western Europe

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

Austria

1,309

1,346

1,440

1,513

1,601

1,696

1,798

1,882

1,981

2,069

Belgium

1,909

2,111

2,295

2,424

2,637

2,788

2,946

3,093

3,265

3,414

Denmark

1,286

1,307

1,364

1,427

1,489

1,556

1,635

1,698

1,774

1,840

Finland

1,106

1,129

1,197

1,242

1,284

1,324

1,377

1,418

1,468

1,510

France

10,424

10,690

11,563

12,011

12,766

13,613

14,511

15,432

16,424

17,359

Germany

17,146

16,017

16,204

16,458

16,906

17,151

17,553

17,842

18,390

18,714

2,032

2,291

2,527

2,731

2,927

3,107

3,261

3,441

3,636

3,821

Greece Ireland

748

855

970

1,095

1,217

1,307

1,432

1,534

1,655

1,766

12,408

12,731

13,492

13,909

14,417

14,868

15,545

16,098

16,759

17,366

Netherlands

4,422

4,218

4,340

4,433

4,615

4,769

4,949

5,106

5,282

5,429

Norway

1,763

1,937

2,097

2,287

2,443

2,600

2,758

2,919

3,086

3,239

Portugal

1,160

1,183

1,236

1,276

1,310

1,356

1,406

1,460

1,535

1,595

Spain

6,139

6,329

7,025

7,709

8,434

9,146

9,848

10,549

11,371

11,938

Sweden

2,099

2,097

2,189

2,373

2,582

2,774

2,949

3,118

3,302

3,466

Switzerland

2,965

2,785

2,830

2,922

3,078

3,250

3,420

3,591

3,781

3,957

United Kingdom

20,238

21,067

22,999

23,809

24,815

26,032

27,671

29,409

31,046

32,564

Western Europe Total

87,154

88,093

93,768

97,619 102,521 107,337 113,059 118,590 124,755

130,047

Italy

Central and Eastern Europe Czech Republic

923

994

1,096

1,239

1,358

1,462

1,589

1,700

1,867

1,983

Hungary

987

1,145

1,341

1,526

1,611

1,780

1,953

2,129

2,307

2,483

2,092

2,594

2,582

2,863

3,327

3,728

4,093

4,445

4,913

5,267

140

171

224

299

395

510

625

738

854

970

Russia

1,872

2,489

3,361

4,415

5,550

6,616

7,796

8,791

9,772

10,740

Turkey

623

707

957

1,156

1,451

1,752

2,020

2,250

2,444

2,603

6,637

8,100

9,561

11,498

13,692

15,848

18,076

20,053

22,157

24,046

Poland Romania

Central and Eastern Europe Total Middle East/Africa Israel

714

648

680

716

725

750

777

806

837

870

Saudi Arabia/Pan Arab†

1,314

1,499

1,929

2,531

3,466

4,115

4,704

5,333

5,922

6,481

South Africa

1,389

1,554

1,796

2,001

2,243

2,476

2,722

2,961

3,219

3,463

Middle East/Africa Total

3,417

3,701

4,405

5,248

6,434

7,341

8,203

9,100

9,978

10,814

99,894 107,734 114,365 122,647 130,526 139,338 147,743 156,890

164,907

Total

97,208

†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Global Entertainment and Media Market by Region EMEA | 57


Advertising Growth by Country (%) EMEA

2002

Western Europe

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

Austria

–1.2

2.8

7.0

5.1

5.8

5.9

6.0

4.7

5.3

4.4

5.3

Belgium

3.8

10.6

8.7

5.6

8.8

5.7

5.7

5.0

5.6

4.6

5.3

Denmark

–6.2

1.6

4.4

4.6

4.3

4.5

5.1

3.9

4.5

3.7

4.3

Finland

–2.6

2.1

6.0

3.8

3.4

3.1

4.0

3.0

3.5

2.9

3.3

France

–1.8

2.6

8.2

3.9

6.3

6.6

6.6

6.3

6.4

5.7

6.3

–10.4

–6.6

1.2

1.6

2.7

1.4

2.3

1.6

3.1

1.8

2.1

Greece

8.5

12.7

10.3

8.1

7.2

6.1

5.0

5.5

5.7

5.1

5.5

Ireland

–0.3

14.3

13.5

12.9

11.1

7.4

9.6

7.1

7.9

6.7

7.7

Italy

–3.8

2.6

6.0

3.1

3.7

3.1

4.6

3.6

4.1

3.6

3.8

Netherlands

Germany

–5.5

–4.6

2.9

2.1

4.1

3.3

3.8

3.2

3.4

2.8

3.3

Norway

2.9

9.9

8.3

9.1

6.8

6.4

6.1

5.8

5.7

5.0

5.8

Portugal

–8.9

2.0

4.5

3.2

2.7

3.5

3.7

3.8

5.1

3.9

4.0

Spain

–1.3

3.1

11.0

9.7

9.4

8.4

7.7

7.1

7.8

5.0

7.2

Sweden

–4.1

–0.1

4.4

8.4

8.8

7.4

6.3

5.7

5.9

5.0

6.1

Switzerland

–8.8

–6.1

1.6

3.3

5.3

5.6

5.2

5.0

5.3

4.7

5.2

United Kingdom

–3.0

4.1

9.2

3.5

4.2

4.9

6.3

6.3

5.6

4.9

5.6

Western Europe Total

–4.4

1.1

6.4

4.1

5.0

4.7

5.3

4.9

5.2

4.2

4.9

Czech Republic

–1.7

7.7

10.3

13.0

9.6

7.7

8.7

7.0

9.8

6.2

7.9

Hungary

19.8

16.0

17.1

13.8

5.6

10.5

9.7

9.0

8.4

7.6

9.0

Poland

5.3

24.0

–0.5

10.9

16.2

12.1

9.8

8.6

10.5

7.2

9.6

Romania

5.3

22.1

31.0

33.5

32.1

29.1

22.5

18.1

15.7

13.6

19.7

Russia

66.8

33.0

35.0

31.4

25.7

19.2

17.8

12.8

11.2

9.9

14.1

Turkey

57.7

13.5

35.4

20.8

25.5

20.7

15.3

11.4

8.6

6.5

12.4

Central and Eastern Europe Total

22.9

22.0

18.0

20.3

19.1

15.7

14.1

10.9

10.5

8.5

11.9

–11.5

–9.2

4.9

5.3

1.3

3.4

3.6

3.7

3.8

3.9

3.7

Saudi Arabia/Pan Arab

21.7

14.1

28.7

31.2

36.9

18.7

14.3

13.4

11.0

9.4

13.3

South Africa

16.6

11.9

15.6

11.4

12.1

10.4

9.9

8.8

8.7

7.6

9.1

Middle East/Africa Total

11.0

8.3

19.0

19.1

22.6

14.1

11.7

10.9

9.6

8.4

10.9

Total

–2.4

2.8

7.8

6.2

7.2

6.4

6.8

6.0

6.2

5.1

6.1

Central and Eastern Europe

Middle East/Africa Israel †

†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

PricewaterhouseCoopers 58 | Global Entertainment and Media Outlook: 2007–2011


Consumer/end-user spending The consumer/end-user market increased 6.8 percent in 2006. Internet access spending, sports, video games, and TV distribution grew at double-digit rates; business information was the next-fastest-growing segment, at 6.5 percent, followed by casino and other regulated gaming at 5.8 percent. Theme parks rose 4.8 percent, and the remaining segments increased by less than 3 percent. TV distribution and video games will be the fastest-growing segments from 2007 to 2011, with compound annual increases of 12.3 percent and 10.2 percent, respectively. Internet access spending will drop to singledigit increases beginning in 2009—as that market begins to mature and penetration growth slows—and will average 9.3 percent compounded annually through 2011. Subscription household growth will fuel TV distribution, and new console games and growth in online and wireless video games will drive the video game market. Business information will grow by 5.6 percent and theme parks by 5.1 percent, while filmed entertainment and sports will each expand at a 4.0 percent compound annual rate. Increases of less than 3 percent annually are anticipated for the remaining segments. Total consumer/end-user spending will rise from $350 billion in 2006 to $452 billion in 2011, growing at a 5.2 percent compound annual rate.

Global Entertainment and Media Market by Region EMEA | 59


Consumer/End-User Spending by Segment (US$ Millions) EMEA Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change TV Distribution % Change Recorded Music % Change Radio % Change Internet Access % Change Video Games % Change Business Information % Change Magazines % Change Newspapers % Change Books % Change Theme Parks and Amusement Parks % Change Casino and Other Regulated Gaming % Change Sports % Change Total % Change

2007–11 CAGR

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

19,769

21,278

23,228

21,944

21,874

22,136

22,895

23,992

25,318

26,677

16.9

7.6

9.2

–5.5

–0.3

1.2

3.4

4.8

5.5

5.4

4.0

18,453

18,778

19,187

20,098

20,407

20,875

21,180

21,790

22,226

22,558

5.1

1.8

2.2

4.7

1.5

2.3

1.5

2.9

2.0

1.5

2.0

22,619

24,975

27,767

31,099

35,069

39,457

44,642

50,097

56,075

62,722

14.0

10.4

11.2

12.0

12.8

12.5

13.1

12.2

11.9

11.9

12.3

14,750

13,729

13,319

13,338

13,065

12,927

13,087

13,457

13,901

14,330

–2.6

–6.9

–3.0

0.1

–2.0

–1.1

1.2

2.8

3.3

3.1

1.9

8,846

8,951

9,123

9,517

9,593

9,721

9,825

9,976

10,110

10,223

3.4

1.2

1.9

4.3

0.8

1.3

1.1

1.5

1.3

1.1

1.3

25,024

30,843

39,223

45,307

53,378

60,733

67,792

73,862

78,908

83,379

27.6

23.3

27.2

15.5

17.8

13.8

11.6

9.0

6.8

5.7

9.3

5,939

6,545

7,630

8,227

9,441

11,135

12,450

13,539

14,560

15,352

9.4

10.2

16.6

7.8

14.8

17.9

11.8

8.7

7.5

5.4

10.2

20,770

20,834

21,518

22,583

24,046

25,594

27,132

28,669

30,168

31,649

–0.6

0.3

3.3

4.9

6.5

6.4

6.0

5.7

5.2

4.9

5.6

20,422

20,538

20,931

21,573

22,126

22,661

23,176

23,694

24,222

24,739

1.6

0.6

1.9

3.1

2.6

2.4

2.3

2.2

2.2

2.1

2.3

27,610

27,779

28,191

28,648

28,882

29,110

29,398

29,670

29,933

30,156

1.9

0.6

1.5

1.6

0.8

0.8

1.0

0.9

0.9

0.7

0.9

48,901

49,491

50,091

51,800

52,494

54,629

55,234

56,776

58,312

59,787

0.9

1.2

1.2

3.4

1.3

4.1

1.1

2.8

2.7

2.5

2.6

3,713

3,775

3,980

4,136

4,334

4,534

4,739

4,992

5,261

5,546

7.7

1.7

5.4

3.9

4.8

4.6

4.5

5.3

5.4

5.4

5.1

13,866

16,667

20,146

23,815

25,208

24,579

24,900

24,455

26,684

27,755

14.5

20.2

20.9

18.2

5.8

–2.5

1.3

–1.8

9.1

4.0

1.9

21,950

22,164

24,057

25,984

30,476

30,489

32,966

33,656

38,455

37,138

10.7

1.0

8.5

8.0

17.3

0.0

8.1

2.1

14.3

–3.4

4.0

272,632 286,347 308,391 328,069 350,393 368,580 389,416 408,625 434,133 452,011

6.9

5.0

7.7

6.4

6.8

5.2

5.7

4.9

6.2

4.1

5.2

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

The United Kingdom and Germany are the leading territories in consumer/end-user spending, at $71 billion and $70 billion, respectively, in 2006. France is a distant third at $48 billion, with Italy at $29 billion, Spain at $22 billion, Russia at $14 billion, and the Netherlands at $12 billion. In contrast with advertising, consumer/ end-user spending in the three areas in EMEA rose at similar mid-single-digit rates in 2006 and will expand at comparable rates during the next five years: 6.7 percent annually in Middle East/Africa, 5.2 percent in Central and Eastern Europe, and 4.7 percent in Western Europe.

PricewaterhouseCoopers 60 | Global Entertainment and Media Outlook: 2007–2011


Regional spending consists of those spending streams in EMEA for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. We expect growth in regional spending to average 13.2 percent compounded annually.

Consumer/End-User Spending by Country (US$ Millions) EMEA

2002

Western Europe

2003

2004

2005

2006p

2007

2008

2009

2010

2011

Austria

5,937

6,226

6,576

6,906

7,123

7,422

7,665

7,927

8,176

8,429

Belgium

4,498

4,782

5,148

5,379

5,513

5,696

5,863

6,100

6,252

6,387

Denmark

4,407

4,792

5,185

5,550

5,771

6,047

6,217

6,412

6,598

6,796

Finland

3,320

3,569

3,947

4,249

4,448

4,611

4,769

4,900

5,011

5,095

France

39,357

40,653

42,984

45,062

48,189

50,707

52,841

54,801

57,246

59,279

Germany

58,751

59,994

62,376

65,279

69,937

71,093

73,683

76,527

80,111

82,253

1,604

1,726

1,805

1,909

2,074

2,225

2,362

2,509

2,648

2,797

Greece Ireland

1,595

1,685

1,786

1,887

1,961

2,078

2,170

2,254

2,343

2,436

Italy

21,600

22,210

24,623

26,048

28,596

30,703

33,035

35,386

38,470

40,371

Netherlands

10,072

10,454

10,954

11,244

11,662

12,116

12,581

13,057

13,565

14,061

Norway

4,865

5,340

5,779

6,246

6,635

6,900

7,147

7,425

7,729

8,017

Portugal

1,953

2,051

2,435

2,743

2,978

3,329

3,667

4,012

4,275

4,513

16,139

17,508

18,437

19,793

21,610

23,143

25,653

27,814

30,023

31,857

Sweden

6,355

6,610

6,921

7,156

7,460

7,705

7,952

8,203

8,404

8,662

Switzerland

4,661

5,000

5,431

5,969

6,300

6,532

6,712

6,909

7,106

7,255

57,754

60,180

64,065

67,174

70,918

75,312

79,260

82,808

87,806

91,058

242,868

252,780

268,452

282,594

301,175

315,619

331,577

347,044

365,763

379,266

Czech Republic

1,238

1,305

1,414

1,605

1,700

1,825

1,943

2,067

2,196

2,329

Hungary

1,199

1,279

1,412

1,500

1,593

1,705

1,820

1,932

2,050

2,165

Poland

3,040

3,268

3,661

3,976

4,289

4,595

4,886

5,178

5,471

5,723

786

835

898

968

1,045

1,126

1,194

1,250

1,311

1,369

Russia

6,106

8,155

11,638

14,214

14,408

14,498

15,094

14,617

15,951

17,111

Turkey

1,105

1,193

1,487

1,772

2,130

2,485

2,797

3,093

3,380

3,673

13,474

16,035

20,510

24,035

25,165

26,234

27,734

28,137

30,359

32,370

1,522

1,598

1,655

1,718

1,722

1,758

1,791

1,831

1,887

1,933

Saudi Arabia/Pan Arab

2,540

2,601

2,726

2,847

2,957

3,051

3,150

3,302

3,474

3,660

South Africa

2,729

3,135

3,570

4,006

4,477

4,980

5,484

5,993

6,621

7,076

Middle East/Africa Total

6,791

7,334

7,951

8,571

9,156

9,789

10,425

11,126

11,982

12,669

263,133

276,149

296,913

315,200

335,496

351,642

369,736

386,307

408,104

424,305

9,499

10,198

11,478

12,869

14,897

16,938

19,680

22,318

26,029

27,706

272,632

286,347

308,391

328,069

350,393

368,580

389,416

408,625

434,133

452,011

Spain

United Kingdom Western Europe Total Central and Eastern Europe

Romania

Central and Eastern Europe Total Middle East/Africa Israel †

Country Subtotal Regional Spending

††

Total

†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. ††Regional spending consists of those spending streams in the region for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Global Entertainment and Media Market by Region EMEA | 61


Consumer/End-User Market Growth by Country (%) EMEA

2002

Western Europe

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

Austria

5.9

4.9

5.6

5.0

3.1

4.2

3.3

3.4

3.1

3.1

3.4

Belgium

9.4

6.3

7.7

4.5

2.5

3.3

2.9

4.0

2.5

2.2

3.0

Denmark

9.4

8.7

8.2

7.0

4.0

4.8

2.8

3.1

2.9

3.0

3.3

Finland

6.4

7.5

10.6

7.7

4.7

3.7

3.4

2.7

2.3

1.7

2.8

France

5.2

3.3

5.7

4.8

6.9

5.2

4.2

3.7

4.5

3.6

4.2

Germany

3.4

2.1

4.0

4.7

7.1

1.7

3.6

3.9

4.7

2.7

3.3

Greece

16.0

7.6

4.6

5.8

8.6

7.3

6.2

6.2

5.5

5.6

6.2

Ireland

9.5

5.6

6.0

5.7

3.9

6.0

4.4

3.9

3.9

4.0

4.4

Italy

7.0

2.8

10.9

5.8

9.8

7.4

7.6

7.1

8.7

4.9

7.1

Netherlands

6.5

3.8

4.8

2.6

3.7

3.9

3.8

3.8

3.9

3.7

3.8

Norway

13.9

9.8

8.2

8.1

6.2

4.0

3.6

3.9

4.1

3.7

3.9

Portugal

19.2

5.0

18.7

12.6

8.6

11.8

10.2

9.4

6.6

5.6

8.7

Spain

5.4

8.5

5.3

7.4

9.2

7.1

10.8

8.4

7.9

6.1

8.1

Sweden

9.9

4.0

4.7

3.4

4.2

3.3

3.2

3.2

2.5

3.1

3.0

Switzerland

7.1

7.3

8.6

9.9

5.5

3.7

2.8

2.9

2.9

2.1

2.9

United Kingdom

9.7

4.2

6.5

4.9

5.6

6.2

5.2

4.5

6.0

3.7

5.1

Western Europe Total

6.7

4.1

6.2

5.3

6.6

4.8

5.1

4.7

5.4

3.7

4.7

7.0

5.4

8.4

13.5

5.9

7.4

6.5

6.4

6.2

6.1

6.5

Central and Eastern Europe Czech Republic Hungary

7.8

6.7

10.4

6.2

6.2

7.0

6.7

6.2

6.1

5.6

6.3

Poland

7.0

7.5

12.0

8.6

7.9

7.1

6.3

6.0

5.7

4.6

5.9

Romania

4.8

6.2

7.5

7.8

8.0

7.8

6.0

4.7

4.9

4.4

5.5

Russia

22.3

33.6

42.7

22.1

1.4

0.6

4.1

–3.2

9.1

7.3

3.5

Turkey

9.3

8.0

24.6

19.2

20.2

16.7

12.6

10.6

9.3

8.7

11.5

13.6

19.0

27.9

17.2

4.7

4.2

5.7

1.5

7.9

6.6

5.2

Central and Eastern Europe Total Middle East/Africa Israel

5.5

5.0

3.6

3.8

0.2

2.1

1.9

2.2

3.1

2.4

2.3

Saudi Arabia/Pan Arab†

3.7

2.4

4.8

4.4

3.9

3.2

3.2

4.8

5.2

5.4

4.4

10.5

14.9

13.9

12.2

11.8

11.2

10.1

9.3

10.5

6.9

9.6

Middle East/Africa Total

6.8

8.0

8.4

7.8

6.8

6.9

6.5

6.7

7.7

5.7

6.7

Country Subtotal

7.1

4.9

7.5

6.2

6.4

4.8

5.1

4.5

5.6

4.0

4.8

Regional Spending

3.3

7.4

12.6

12.1

15.8

13.7

16.2

13.4

16.6

6.4

13.2

Total

6.9

5.0

7.7

6.4

6.8

5.2

5.7

4.9

6.2

4.1

5.2

South Africa

††

†Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. ††Regional spending consists of those spending streams in the region for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

PricewaterhouseCoopers 62 | Global Entertainment and Media Outlook: 2007–2011


Asia Pacific The entertainment and media market in Asia Pacific rose 10.0 percent in 2006, helped by double-digit increases in Internet advertising and access spending, video games, casino and other regulated gaming, recorded music, and TV distribution. Large increases in the broadband universe and a surging online advertising market led to a 23.0 percent increase in Internet spending. Console games associated with the new console platforms and double-digit increases in online and wireless games boosted the video game market by 17.0 percent. New casinos in Macao (part of the People’s Republic of China, although gaming is not permitted on the mainland) contributed to the 14.9 percent rise in casino and other regulated gaming. Recorded music rose 15.6 percent in Asia Pacific, the only region to post a significant gain. The expanding digital component of the recorded music market constitutes a larger share of total spending in Asia Pacific than it does in other regions and therefore contributed more to growth. Additionally, relatively steady physical sales of recorded music in Australia, India, and Japan kept the overall physical market from the sharp decline that characterized other regions. TV distribution was boosted by increases in subscription households. Sports rose 8.4 percent as TV rights fees and merchandising and sponsorships related to the FIFA World Cup expanded the market. Filmed entertainment increased 7.5 percent, led by double-digit growth in box office spending and an emerging online subscription rental market. A full year of revenues at Hong Kong Disneyland led to 7.0 percent growth in theme parks. Business information rose 6.8 percent because investment opportunities in expanding territories, particularly the PRC and India, are driving demand for information. Book publishing increased 6.2 percent, led by strong growth in the PRC and India and a rebound in Japan. TV networks rose 5.2 percent, helped by large increases in the PRC and India and a rebound in Japan. The remaining segments each grew by less than 5 percent.

Global Entertainment and Media Market by Region Asia Pacific | 63


We expect Asia Pacific to be the fastest-growing region during the next five years. Growth will be helped by double-digit increases in TV distribution, the Internet, casino and other regulated gaming, and video games. The region will also have the fastest overall economic growth, which will support steady increases in each of the other segments. We expect overall spending to increase to $470 billion in 2011 from $297 billion in 2006, growing at a 9.6 percent compound annual rate.

Entertainment and Media Market by Segment (US$ Millions) Asia Pacific Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change TV Distribution % Change Recorded Music % Change Radio/Out-of-Home Advertising % Change Internet Advertising and Access Spending % Change Video Games % Change Business Information % Change Magazine Publishing % Change Newspaper Publishing % Change Book Publishing % Change Theme Parks and Amusement Parks % Change Casino and Other Regulated Gaming % Change Sports % Change Total % Change

2007–11 CAGR

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

13,614

14,537

15,526

15,496

16,664

17,604

18,765

20,167

21,608

23,145

4.7

6.8

6.8

–0.2

7.5

5.6

6.6

7.5

7.1

7.1

6.8

29,504

30,966

33,309

34,758

36,550

38,363

42,047

43,908

46,693

48,967

3.4

5.0

7.6

4.4

5.2

5.0

9.6

4.4

6.3

4.9

6.0

11,494

13,718

15,822

17,977

20,187

22,847

26,268

31,539

38,403

46,363

13.9

19.3

15.3

13.6

12.3

13.2

15.0

20.1

21.8

20.7

18.1

7,614

7,212

7,387

8,077

9,341

10,023

10,650

11,248

11,760

12,177

–3.3

–5.3

2.4

9.3

15.6

7.3

6.3

5.6

4.6

3.5

5.4

11,328

11,536

12,216

12,717

13,213

13,861

14,734

15,456

16,256

17,020

0.3

1.8

5.9

4.1

3.9

4.9

6.3

4.9

5.2

4.7

5.2

21,311

27,551

37,704

48,473

59,616

73,507

87,446 101,256 115,178 131,265

24.7

29.3

36.9

28.6

23.0

23.3

19.0

15.8

13.7

14.0

7,786

8,154

9,282

9,996

11,696

14,146

15,841

16,980

17,938

18,813

2.3

4.7

13.8

7.7

17.0

20.9

12.0

7.2

5.6

4.9

10.0

5,898

5,904

6,103

6,433

6,872

7,337

7,848

8,329

8,836

9,344

–2.3

0.1

3.4

5.4

6.8

6.8

7.0

6.1

6.1

5.7

6.3

14,969

15,379

15,972

16,727

17,237

17,807

18,481

19,141

19,845

20,551

0.9

2.7

3.9

4.7

3.0

3.3

3.8

3.6

3.7

3.6

3.6

39,798

41,048

42,639

43,925

45,227

46,620

48,663

50,100

51,829

53,465

–1.0

3.1

3.9

3.0

3.0

3.1

4.4

3.0

3.5

3.2

3.4

22,873

22,703

23,470

24,389

25,901

27,363

29,022

30,483

31,838

33,167

–0.3

–0.7

3.4

3.9

6.2

5.6

6.1

5.0

4.4

4.2

5.1

5,527

5,559

5,711

5,782

6,188

6,498

6,845

7,233

7,662

8,099

7.5

0.6

2.7

1.2

7.0

5.0

5.3

5.7

5.9

5.7

5.5

7,674

9,212

11,397

12,737

14,631

17,518

20,555

23,434

26,581

30,325

11.8

20.0

23.7

11.8

14.9

19.7

17.3

14.0

13.4

14.1

15.7

11,434

11,133

11,819

12,602

13,659

14,200

17,149

15,567

17,019

17,707

12.7

–2.6

6.2

6.6

8.4

4.0

20.8

–9.2

9.3

4.0

5.3

210,824 224,612 248,357 270,089 296,982 327,694 364,314 394,841 431,446 470,408

4.6

6.5

10.6

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

PricewaterhouseCoopers 64 | Global Entertainment and Media Outlook: 2007–2011

8.8

10.0

10.3

11.2

8.4

9.3

9.0

17.1

9.6


Japan is the dominant market in the region, at $112 billion in 2006, with the PRC next, at $78 billion, followed by South Korea at $35 billion and Australia at $20 billion. In 2006 the PRC was the fastest-growing territory in Asia Pacific, with a 21.6 percent increase. We expect India to be the fastest-growing territory during the next five years, at 18.5 percent compounded annually. The introduction of a major resort casino in Singapore will lead to a surge in growth during 2010–11 that will raise Singapore’s compound annual growth to 18.0 percent. The PRC will continue to record double-digit annual gains that will average 16.8 percent compounded annually. The Philippines also will benefit from a major new casino and will expand at a 13.6 percent compound annual rate. We also expect double-digit annual increases in Indonesia and Pakistan. Japan improved to a 4.5 percent gain in 2006, its largest increase during the past five years, reflecting the increasing role played by domestic demand and the growing flexibility of Japan’s economy. Given these trends, we expect growth in Japan to average 3.3 percent compounded annually during the next five years. In 2009, Japan’s market will be surpassed by the PRC in terms of overall spending.

Entertainment and Media Market by Country (US$ Millions) Asia Pacific

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

Australia

15,673

17,132

18,578

19,496

20,454

21,537

22,863

23,773

24,998

26,229

China

31,426

38,805

50,616

63,953

77,776

95,529

115,187

131,961

149,836

169,309

Hong Kong

3,208

3,305

3,779

4,223

4,769

5,047

5,400

5,632

5,922

6,147

India

7,425

8,104

8,969

10,107

11,590

13,616

16,218

19,324

23,213

27,089

Indonesia

1,546

1,871

2,315

2,631

3,030

3,443

3,837

4,248

4,649

5,059

Japan

101,839

102,061

105,769

107,567

112,429

116,139

121,215

124,175

128,391

132,205

Malaysia

1,817

2,024

2,258

2,404

2,575

2,745

2,935

3,115

3,307

3,483

New Zealand

2,660

2,884

3,086

3,270

3,403

3,588

3,764

3,921

4,097

4,276

568

646

774

894

1,006

1,135

1,284

1,426

1,574

1,714

Philippines

1,544

1,614

1,796

2,021

2,159

2,351

2,741

3,220

3,694

4,090

Singapore

1,634

1,733

1,906

1,956

2,031

2,116

2,199

2,438

3,119

4,650

27,496

29,291

31,428

32,625

34,683

36,789

39,133

40,292

41,937

43,250

Taiwan

6,194

6,544

7,077

7,326

7,786

8,136

8,586

8,983

9,438

9,813

Thailand

3,110

3,410

3,708

3,878

4,016

4,296

4,620

4,929

5,285

5,710

206,140

219,424

242,059

262,351

287,707

316,467

349,982

377,437

409,460

443,024

4,684

5,188

6,298

7,738

9,275

11,227

14,332

17,404

21,986

27,384

210,824

224,612

248,357

270,089

296,982

327,694

364,314

394,841

431,446

470,408

Pakistan

South Korea

Country Subtotal Regional Spending† Total

†Regional spending consists of those spending streams in the region for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Global Entertainment and Media Market by Region Asia Pacific | 65


Entertainment and Media Market Growth by Country (%) Asia Pacific

2002

Australia

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

3.6

9.3

8.4

4.9

4.9

5.3

6.2

4.0

5.2

4.9

5.1

22.9

23.5

30.4

26.3

21.6

22.8

20.6

14.6

13.5

13.0

16.8

0.2

3.0

14.3

11.7

12.9

5.8

7.0

4.3

5.1

3.8

5.2

India

10.2

9.1

10.7

12.7

14.7

17.5

19.1

19.2

20.1

16.7

18.5

Indonesia

18.6

21.0

23.7

13.7

15.2

13.6

11.4

10.7

9.4

8.8

10.8

Japan

–1.6

0.2

3.6

1.7

4.5

3.3

4.4

2.4

3.4

3.0

3.3

Malaysia

10.1

11.4

11.6

6.5

7.1

6.6

6.9

6.1

6.2

5.3

6.2

New Zealand

6.7

8.4

7.0

6.0

4.1

5.4

4.9

4.2

4.5

4.4

4.7

Pakistan

8.2

13.7

19.8

15.5

12.5

12.8

13.1

11.1

10.4

8.9

11.2

Philippines

5.2

4.5

11.3

12.5

6.8

8.9

16.6

17.5

14.7

10.7

13.6

Singapore

8.2

6.1

10.0

2.6

3.8

4.2

3.9

10.9

27.9

49.1

18.0

South Korea

8.1

6.5

7.3

3.8

6.3

6.1

6.4

3.0

4.1

3.1

4.5

Taiwan

0.6

5.7

8.1

3.5

6.3

4.5

5.5

4.6

5.1

4.0

4.7

Thailand

6.8

9.6

8.7

4.6

3.6

7.0

7.5

6.7

7.2

8.0

7.3

4.3

6.4

10.3

8.4

9.7

10.0

10.6

7.8

8.5

8.2

9.0

14.9

10.8

21.4

22.9

19.9

21.0

27.7

21.4

26.3

24.6

24.2

4.6

6.5

10.6

8.8

10.0

10.3

11.2

8.4

9.3

9.0

9.6

China Hong Kong

Country Subtotal Regional Spending

Total

†Regional spending consists of those spending streams in the region for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

PricewaterhouseCoopers 66 | Global Entertainment and Media Outlook: 2007–2011


Advertising Advertising rose 6.5 percent in 2006, with Internet advertising soaring by 38.7 percent and the remaining segments growing at low- to mid-single-digit rates. TV networks rose 5.5 percent, newspapers increased 4.3 percent, out-of-home grew 4.2 percent, radio rose 3.8 percent, and magazines increased 2.6 percent. The Internet will continue to be the fastest-growing category, rising at an 18.8 percent compound annual rate, driven by increased online penetration and an expanding broadband market. TV networks will grow by 6.5 percent compounded annually, with a double-digit spike in 2008 associated with the Olympics in Beijing. New radio licenses in India, rapid growth in the PRC, and new street furniture contracts will drive radio and outof-home advertising. Out-of-home and radio will each expand at rates in excess of 5 percent compounded annually, and newspapers and magazines will grow at rates in excess of 4 percent. Advertising in Asia Pacific will increase from $77 billion in 2006 to $108 billion in 2011.

Advertising by Segment (US$ Millions) Asia Pacific TV Networks: Broadcast and Cable % Change Radio % Change Out-of-Home % Change Internet

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

25,206

26,593

28,698

29,882

31,534

33,209

36,780

38,498

41,136

43,263

3.8

5.5

7.9

4.1

5.5

5.3

10.8

4.7

6.9

5.2

6.5

3,114

3,197

3,360

3,479

3,610

3,752

3,985

4,193

4,448

4,674

0.0

2.7

5.1

3.5

3.8

3.9

6.2

5.2

6.1

5.1

5.3

6,371

6,464

6,879

7,148

7,451

7,893

8,479

8,927

9,387

9,838

0.2

1.5

6.4

3.9

4.2

5.9

7.4

5.3

5.2

4.8

5.7

1,146

1,666

2,522

4,013

5,567

7,117

8,760

10,253

11,724

13,196

% Change

19.5

45.4

51.4

59.1

38.7

27.8

23.1

17.0

14.3

12.6

18.8

Magazines

5,553

5,712

5,947

6,187

6,350

6,571

6,874

7,167

7,504

7,836

% Change

–0.4

2.9

4.1

4.0

2.6

3.5

4.6

4.3

4.7

4.4

4.3

19,235

20,036

21,115

21,901

22,851

23,849

25,445

26,445

27,719

28,837

–3.2

4.2

5.4

3.7

4.3

4.4

6.7

3.9

4.8

4.0

4.8

60,625

63,668

68,521

72,610

77,363

82,391

90,323

95,483 101,918 107,644

0.7

5.0

7.6

6.0

6.5

6.5

9.6

Newspapers % Change Total % Change

5.7

6.7

5.6

6.8

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Japan is the dominant advertising market in Asia Pacific, at $36 billion and constituting 47 percent of the total, with the PRC next, at $11 billion. We expect the PRC to be the fastest-growing territory during the next five years, with a 15.0 percent compound annual increase. India will grow nearly as fast, at 14.6 percent. Indonesia, which also has a strong economy, will increase at a 12.7 percent compound annual rate.

Global Entertainment and Media Market by Region Asia Pacific | 67


Advertising by Country (US$ Millions) Asia Pacific

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

Australia

5,737

6,272

7,018

7,536

8,011

8,454

8,898

9,277

9,703

10,203

China

5,811

7,022

8,153

9,738

11,222

13,057

16,594

18,238

20,511

22,570

Hong Kong

1,429

1,486

1,772

1,988

2,180

2,303

2,526

2,635

2,823

2,962

India

2,117

2,314

2,623

3,016

3,471

3,995

4,660

5,408

6,195

6,863

876

1,133

1,484

1,727

2,067

2,420

2,748

3,088

3,421

3,764

33,213

33,173

34,460

35,136

36,314

37,366

39,046

40,310

41,686

43,001

Malaysia

396

425

496

515

536

560

595

620

657

679

New Zealand

993

1,119

1,254

1,341

1,377

1,486

1,579

1,660

1,756

1,878

Pakistan

107

114

123

133

142

153

165

175

190

200

Philippines

404

470

534

599

661

720

826

885

985

1,054

Singapore

581

600

676

683

708

733

762

783

812

838

South Korea

5,897

6,137

6,086

6,272

6,694

7,037

7,552

7,852

8,346

8,609

Taiwan

1,939

2,098

2,396

2,404

2,481

2,567

2,740

2,845

3,017

3,118

Thailand

1,125

1,305

1,446

1,522

1,499

1,540

1,632

1,707

1,816

1,905

60,625

63,668

68,521

72,610

77,363

82,391

90,323

95,483

101,918

107,644

Indonesia Japan

Total

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Advertising Growth by Country (%) Asia Pacific Australia

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

1.4

9.3

11.9

7.4

6.3

5.5

5.3

4.3

4.6

5.2

5.0

China

24.6

20.8

16.1

19.4

15.2

16.4

27.1

9.9

12.5

10.0

15.0

Hong Kong

–2.8

4.0

19.2

12.2

9.7

5.6

9.7

4.3

7.1

4.9

6.3

6.0

9.3

13.4

15.0

15.1

15.1

16.6

16.1

14.6

10.8

14.6

Indonesia

36.2

29.3

31.0

16.4

19.7

17.1

13.6

12.4

10.8

10.0

12.7

Japan

–6.8

–0.1

3.9

2.0

3.4

2.9

4.5

3.2

3.4

3.2

3.4

Malaysia

7.6

7.3

16.7

3.8

4.1

4.5

6.3

4.2

6.0

3.3

4.8

New Zealand

5.2

12.7

12.1

6.9

2.7

7.9

6.3

5.1

5.8

6.9

6.4

Pakistan

7.0

6.5

7.9

8.1

6.8

7.7

7.8

6.1

8.6

5.3

7.1

Philippines

5.2

16.3

13.6

12.2

10.4

8.9

14.7

7.1

11.3

7.0

9.8

Singapore

8.2

3.3

12.7

1.0

3.7

3.5

4.0

2.8

3.7

3.2

3.4

South Korea

23.8

4.1

–0.8

3.1

6.7

5.1

7.3

4.0

6.3

3.2

5.2

Taiwan

–3.2

8.2

14.2

0.3

3.2

3.5

6.7

3.8

6.0

3.3

4.7

Thailand

13.3

16.0

10.8

5.3

–1.5

2.7

6.0

4.6

6.4

4.9

4.9

0.7

5.0

7.6

6.0

6.5

6.5

9.6

5.7

6.7

5.6

6.8

India

Total

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

PricewaterhouseCoopers 68 | Global Entertainment and Media Outlook: 2007–2011


Consumer/end-user spending Consumer/end-user spending increased 11.2 percent in 2006, helped by 21.6 percent growth in Internet access spending and double-digit increases in video games, casino and other regulated gaming, recorded music, and TV distribution. We expect faster growth during the next two years and a 10.6 percent compound annual increase through 2011. Subscription household growth and an emerging mobile TV subscription market will boost TV distribution by 18.1 percent compounded annually. Increases in Internet households and broadband subscriptions will propel access spending at a 16.9 percent compound annual rate. New resort casinos in Macao and Singapore will contribute to a 15.7 percent compound annual increase in casino and other regulated gaming. Video games will average 10.0 percent compound annual growth, boosted by rising online and wireless growth and by new console games. Filmed entertainment will expand at a 6.8 percent annual rate as modern cinemas contribute to box office growth and increases in mobile music will more than offset decreases in physical music spending. Business information will expand at a 6.3 percent annual rate, and gains of 5 percent or more are expected for theme parks, recorded music, sports, and book publishing. Spending will total an estimated $363 billion in 2011, up from $220 billion in 2006.

Global Entertainment and Media Market by Region Asia Pacific | 69


Consumer/End-User Spending by Segment (US$ Millions) Asia Pacific

2007–11 CAGR

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

13,614

14,537

15,526

15,496

16,664

17,604

18,765

20,167

21,608

23,145

4.7

6.8

6.8

–0.2

7.5

5.6

6.6

7.5

7.1

7.1

6.8

4,298

4,373

4,611

4,876

5,016

5,154

5,267

5,410

5,557

5,704

1.5

1.7

5.4

5.7

2.9

2.8

2.2

2.7

2.7

2.6

2.6

11,494

13,718

15,822

17,977

20,187

22,847

26,268

31,539

38,403

46,363

13.9

19.3

15.3

13.6

12.3

13.2

15.0

20.1

21.8

20.7

18.1

7,614

7,212

7,387

8,077

9,341

10,023

10,650

11,248

11,760

12,177

–3.3

–5.3

2.4

9.3

15.6

7.3

6.3

5.6

4.6

3.5

5.4

1,843

1,875

1,977

2,090

2,152

2,216

2,270

2,336

2,421

2,508

1.5

1.7

5.4

5.7

3.0

3.0

2.4

2.9

3.6

3.6

3.1

20,165

25,885

35,182

44,460

54,049

66,390

78,686

91,003 103,454 118,069

25.1

28.4

35.9

26.4

21.6

22.8

18.5

15.7

13.7

14.1

7,786

8,154

9,282

9,996

11,696

14,146

15,841

16,980

17,938

18,813

2.3

4.7

13.8

7.7

17.0

20.9

12.0

7.2

5.6

4.9

10.0

5,898

5,904

6,103

6,433

6,872

7,337

7,848

8,329

8,836

9,344

% Change

–2.3

0.1

3.4

5.4

6.8

6.8

7.0

6.1

6.1

5.7

6.3

Magazines

9,416

9,667

10,025

10,540

10,887

11,236

11,607

11,974

12,341

12,715

1.7

2.7

3.7

5.1

3.3

3.2

3.3

3.2

3.1

3.0

3.2

20,563

21,012

21,524

22,024

22,376

22,771

23,218

23,655

24,110

24,628

1.3

2.2

2.4

2.3

1.6

1.8

2.0

1.9

1.9

2.1

1.9

22,873

22,703

23,470

24,389

25,901

27,363

29,022

30,483

31,838

33,167

–0.3

–0.7

3.4

3.9

6.2

5.6

6.1

5.0

4.4

4.2

5.1

5,527

5,559

5,711

5,782

6,188

6,498

6,845

7,233

7,662

8,099

7.5

0.6

2.7

1.2

7.0

5.0

5.3

5.7

5.9

5.7

5.5

7,674

9,212

11,397

12,737

14,631

17,518

20,555

23,434

26,581

30,325

11.8

20.0

23.7

11.8

14.9

19.7

17.3

14.0

13.4

14.1

15.7

11,434

11,133

11,819

12,602

13,659

14,200

17,149

15,567

17,019

17,707

12.7

–2.6

6.2

6.6

8.4

4.0

20.8

–9.2

9.3

4.0

5.3

150,199 160,944 179,836 197,479 219,619 245,303 273,991 299,358 329,528 362,764

Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change TV Distribution % Change Recorded Music % Change Radio % Change Internet Access % Change Video Games % Change Business Information

% Change Newspapers % Change Books % Change Theme Parks and Amusement Parks % Change Casino and Other Regulated Gaming % Change Sports % Change Total % Change

6.2

7.2

11.7

9.8

11.2

11.7

11.7

9.3

10.1

10.1

16.9

10.6

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Japan is the leading territory in consumer/end-user spending, at $76 billion, with the PRC close behind at $67 billion. In 2007, the PRC will pass Japan in consumer/end-user spending, although it will remain well behind Japan in advertising throughout the forecast period. Singapore will be the fastest-growing territory, with a 23.6 percent compound annual increase, principally the result of new resort casinos. India and the PRC will be the next-fastest-growing territories, at 20.0 percent and 17.1 percent, respectively. Large increases in Internet access spending and subscription households in both territories will fuel growth. PricewaterhouseCoopers 70 | Global Entertainment and Media Outlook: 2007–2011


Regional spending consists of categories for which we do not have country breakouts, including several rapidly growing digital segments. We expect regional spending to grow by 24.2 percent compounded annually.

Consumer/End-User Spending by Country (US$ Millions) Asia Pacific Australia China Hong Kong India Indonesia Japan Malaysia New Zealand Pakistan Philippines Singapore South Korea Taiwan Thailand Country Subtotal Regional Spending† Total

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

9,936 25,615 1,779 5,308 670 68,626 1,421 1,667 461 1,140 1,053 21,599 4,255 1,985 145,515 4,684 150,199

10,860 31,783 1,819 5,790 738 68,888 1,599 1,765 532 1,144 1,133 23,154 4,446 2,105 155,756 5,188 160,944

11,560 42,463 2,007 6,346 831 71,309 1,762 1,832 651 1,262 1,230 25,342 4,681 2,262 173,538 6,298 179,836

11,960 54,215 2,235 7,091 904 72,431 1,889 1,929 761 1,422 1,273 26,353 4,922 2,356 189,741 7,738 197,479

12,443 66,554 2,589 8,119 963 76,115 2,039 2,026 864 1,498 1,323 27,989 5,305 2,517 210,344 9,275 219,619

13,083 82,472 2,744 9,621 1,023 78,773 2,185 2,102 982 1,631 1,383 29,752 5,569 2,756 234,076 11,227 245,303

13,965 98,593 2,874 11,558 1,089 82,169 2,340 2,185 1,119 1,915 1,437 31,581 5,846 2,988 259,659 14,332 273,991

14,496 113,723 2,997 13,916 1,160 83,865 2,495 2,261 1,251 2,335 1,655 32,440 6,138 3,222 281,954 17,404 299,358

15,295 129,325 3,099 17,018 1,228 86,705 2,650 2,341 1,384 2,709 2,307 33,591 6,421 3,469 307,542 21,986 329,528

16,026 146,739 3,185 20,226 1,295 89,204 2,804 2,398 1,514 3,036 3,812 34,641 6,695 3,805 335,380 27,384 362,764

†Regional spending consists of those spending streams in the region for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Consumer/End-User Spending Market Growth by Country (%) Asia Pacific Australia China Hong Kong India Indonesia Japan Malaysia New Zealand Pakistan Philippines Singapore South Korea Taiwan Thailand Country Subtotal Regional Spending† Total

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

5.0 22.5 2.8 11.9 1.4 1.2 10.8 7.7 8.5 5.2 8.2 4.5 2.5 3.4 5.9 14.9 6.2

9.3 24.1 2.2 9.1 10.1 0.4 12.5 5.9 15.4 0.4 7.6 7.2 4.5 6.0 7.0 10.8 7.2

6.4 33.6 10.3 9.6 12.6 3.5 10.2 3.8 22.4 10.3 8.6 9.4 5.3 7.5 11.4 21.4 11.7

3.5 27.7 11.4 11.7 8.8 1.6 7.2 5.3 16.9 12.7 3.5 4.0 5.1 4.2 9.3 22.9 9.8

4.0 22.8 15.8 14.5 6.5 5.1 7.9 5.0 13.5 5.3 3.9 6.2 7.8 6.8 10.9 19.9 11.2

5.1 23.9 6.0 18.5 6.2 3.5 7.2 3.8 13.7 8.9 4.5 6.3 5.0 9.5 11.3 21.0 11.7

6.7 19.5 4.7 20.1 6.5 4.3 7.1 3.9 14.0 17.4 3.9 6.1 5.0 8.4 10.9 27.7 11.7

3.8 15.3 4.3 20.4 6.5 2.1 6.6 3.5 11.8 21.9 15.2 2.7 5.0 7.8 8.6 21.4 9.3

5.5 13.7 3.4 22.3 5.9 3.4 6.2 3.5 10.6 16.0 39.4 3.5 4.6 7.7 9.1 26.3 10.1

4.8 13.5 2.8 18.9 5.5 2.9 5.8 2.4 9.4 12.1 65.2 3.1 4.3 9.7 9.1 24.6 10.1

5.2 17.1 4.2 20.0 6.1 3.2 6.6 3.4 11.9 15.2 23.6 4.4 4.8 8.6 9.8 24.2 10.6

†Regional spending consists of those spending streams in the region for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Global Entertainment and Media Market by Region Asia Pacific | 71


Latin America Latin America’s entertainment and media market rose 11.5 percent, the fastest-growing region in 2006. Spending was paced by double-digit increases in Internet advertising and access spending, radio and outof-home advertising, TV networks, TV distribution, video games, casino and other regulated gaming, and by high-single-digit increases in sports, filmed entertainment, and newspaper and magazine publishing. Double-digit increases in the next five years are anticipated for Internet access and advertising, TV distribution, and casino and other regulated gaming, with high single-digit growth projected for radio and outof-home advertising, TV networks, and video games. Increased Internet household penetration and a growing broadband market will fuel Internet spending; subscription household growth will boost TV distribution; and new casinos will expand a small casino and other regulated gaming market. Digital launches and economic expansion will sustain growth in radio and out-of-home advertising. Multichannel advertising growth will boost the TV network market, and new consoles will enhance the video game market. We project overall growth to average 8.9 percent compounded annually during the next five years. Spending will rise to $68 billion by 2011 from $44 billion in 2006.

PricewaterhouseCoopers 72 | Global Entertainment and Media Outlook: 2007–2011


Entertainment and Media Market by Segment (US$ Millions) 2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

1,443

1,549

1,765

1,741

1,871

1,994

2,125

2,271

2,420

2,574

9.7

7.3

13.9

–1.4

7.5

6.6

6.6

6.9

6.6

6.4

6.6

4,505

4,866

5,841

7,019

7,905

8,517

9,502

10,150

11,473

12,073

–3.8

8.0

20.0

20.2

12.6

7.7

11.6

6.8

13.0

5.2

8.8

TV Distribution

4,877

4,880

5,200

5,810

6,539

7,508

8,632

9,942

11,362

12,883

% Change

–14.8

0.1

6.6

11.7

12.5

14.8

15.0

15.2

14.3

13.4

14.5

Recorded Music

1,116

988

1,203

1,360

1,409

1,456

1,532

1,634

1,741

1,831

% Change

–5.3

–11.5

21.8

13.1

3.6

3.3

5.2

6.7

6.5

5.2

5.4

Radio/Out-of-Home Advertising

910

796

901

1,061

1,215

1,344

1,482

1,619

1,757

1,888

% Change

–5.7

–12.5

13.2

17.8

14.5

10.6

10.3

9.2

8.5

7.5

9.2

Latin America Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change

Internet Advertising and Access Spending

2,224

2,753

3,618

4,598

6,025

7,346

8,555

9,768

10,910

12,174

% Change

22.1

23.8

31.4

27.1

31.0

21.9

16.5

14.2

11.7

11.6

15.1

Video Games

451

515

544

528

586

715

785

815

843

871

% Change

32.6

14.2

5.6

–2.9

11.0

22.0

9.8

3.8

3.4

3.3

8.2

1,267

1,258

1,294

1,347

1,407

1,473

1,544

1,618

1,697

1,770

–4.2

–0.7

2.9

4.1

4.5

4.7

4.8

4.8

4.9

4.3

4.7

Magazine Publishing

2,311

2,443

2,671

2,927

3,135

3,350

3,563

3,779

3,999

4,208

% Change

–11.0

5.7

9.3

9.6

7.1

6.9

6.4

6.1

5.8

5.2

6.1

Newspaper Publishing

5,018

4,977

5,244

5,787

6,238

6,579

6,910

7,243

7,578

7,914

Business Information % Change

% Change

–1.7

–0.8

5.4

10.4

7.8

5.5

5.0

4.8

4.6

4.4

4.9

4,284

4,306

4,380

4,493

4,620

4,753

4,897

5,039

5,178

5,317

% Change

–1.6

0.5

1.7

2.6

2.8

2.9

3.0

2.9

2.8

2.7

2.9

Theme Parks and Amusement Parks

254

248

253

241

248

260

272

285

299

313

% Change

2.0

–2.4

2.0

–4.7

2.9

4.8

4.6

4.8

4.9

4.7

4.8

Casino and Other Regulated Gaming

199

199

226

251

278

311

345

392

449

495

Book Publishing

% Change

–56.3

0.0

13.6

11.1

10.8

11.9

10.9

13.6

14.5

10.2

12.2

Sports

2,229

2,234

2,334

2,508

2,752

2,769

2,884

3,114

3,407

3,421

7.1

0.2

4.5

7.5

9.7

0.6

4.2

8.0

9.4

0.4

4.4

31,088

32,012

35,474

39,671

44,228

48,375

53,028

57,669

63,113

67,732

–3.4

3.0

10.8

11.8

11.5

9.4

9.6

8.8

9.4

7.3

8.9

% Change Total % Change

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Brazil is the largest market in Latin America, at $18 billion in 2006, with Mexico second, at $10 billion. Every territory except Chile expanded at double-digit rates in 2006, and Chile improved to an 8.7 percent increase. A stable economic environment will help all countries in the region. We project continued double-digit growth in Colombia and Venezuela. Mexico will expand at a projected 9.3 percent annual rate, with Argentina and Brazil each growing at a 9.1 percent rate and Chile at 6.0 percent.

Global Entertainment and Media Market by Region Latin America | 73


Entertainment and Media Market by Country (US$ Millions) Latin America

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2,970

3,282

3,904

4,618

5,234

5,827

6,375

6,925

7,506

8,103

Brazil

11,947

12,355

13,834

15,761

17,615

19,314

21,272

23,098

25,309

27,256

Chile

1,961

2,030

2,138

2,277

2,474

2,633

2,812

2,976

3,154

3,310

Colombia

2,182

2,166

2,265

2,528

2,816

3,108

3,464

3,833

4,250

4,638

Mexico

7,395

7,469

8,244

8,985

9,989

10,964

12,041

13,145

14,459

15,593

660

648

763

838

934

1,009

1,129

1,237

1,398

1,523

27,115

27,950

31,148

35,007

39,062

42,855

47,093

51,214

56,076

60,423

Argentina

Venezuela Country Subtotal Regional Spending

Total

3,973

4,062

4,326

4,664

5,166

5,520

5,935

6,455

7,037

7,309

31,088

32,012

35,474

39,671

44,228

48,375

53,028

57,669

63,113

67,732

†Regional spending consists of those spending streams in the region for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Entertainment and Media Market Growth by Country (%) Latin America Argentina Brazil Chile

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

–25.2

10.5

19.0

18.3

13.3

11.3

9.4

8.6

8.4

8.0

9.1

–1.6

3.4

12.0

13.9

11.8

9.6

10.1

8.6

9.6

7.7

9.1

3.1

3.5

5.3

6.5

8.7

6.4

6.8

5.8

6.0

4.9

6.0

Colombia

–2.5

–0.7

4.6

11.6

11.4

10.4

11.5

10.7

10.9

9.1

10.5

Mexico

–2.0

1.0

10.4

9.0

11.2

9.8

9.8

9.2

10.0

7.8

9.3

2.6

–1.8

17.7

9.8

11.5

8.0

11.9

9.6

13.0

8.9

10.3

–4.6

3.1

11.4

12.4

11.6

9.7

9.9

8.8

9.5

7.8

9.1

5.9

2.2

6.5

7.8

10.8

6.9

7.5

8.8

9.0

3.9

7.2

–3.4

3.0

10.8

11.8

11.5

9.4

9.6

8.8

9.4

7.3

8.9

Venezuela Country Subtotal Regional Spending† Total

†Regional spending consists of those spending streams in the region for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Advertising Advertising in Latin America rose 12.0 percent in 2006, the third consecutive double-digit gain, reflecting sustained economic growth and a stable economic environment. Internet advertising was the fastestgrowing category in 2006, at 25.6 percent, followed by out-of-home at 14.7 percent, radio at 14.4 percent, TV networks at 12.6 percent, and magazines and newspapers at 10.6 percent and 10.0 percent, respectively. This is the only region in which publishing rose at double-digit rates, the result of rising unit circulation. Internet advertising will grow at a 19.0 percent compound annual rate during the next five years, buoyed by an expanding broadband-household universe. Radio will grow at a 9.9 percent compound annual rate, boosted by digital launches. TV advertising will grow at an 8.8 percent rate as new channels expand the market. Magazine advertising will increase by 8.4 percent compounded annually, benefiting from economic growth. Out-of-home will be helped by increased exposure to ads because rising employment increases the number of people commuting, thereby helping out-of-home spending to grow at a 7.0 percent compound annual rate. Newspaper advertising will grow more slowly as the growing Internet universe begins to attract readers from newspapers. We project advertising during the next five years to increase at an 8.2 percent compound annual rate, rising from $15 billion in 2006 to $22 billion in 2011. PricewaterhouseCoopers 74 | Global Entertainment and Media Outlook: 2007–2011


Advertising by Segment (US$ Millions) Latin America TV Networks: Broadcast and Cable

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

4,505

4,866

5,841

7,019

7,905

8,517

9,502

10,150

11,473

12,073

% Change

–3.8

8.0

20.0

20.2

12.6

7.7

11.6

6.8

13.0

5.2

8.8

Radio

743

619

694

796

911

1,021

1,132

1,243

1,356

1,462

% Change

–3.0

–16.7

12.1

14.7

14.4

12.1

10.9

9.8

9.1

7.8

9.9

Out-of-Home

167

177

207

265

304

323

350

376

401

426

% Change

–16.1

6.0

16.9

28.0

14.7

6.3

8.4

7.4

6.6

6.2

7.0

Internet

86

90

132

195

245

312

378

446

514

584

% Change

7.5

4.7

46.7

47.7

25.6

27.3

21.2

18.0

15.2

13.6

19.0

Magazines

825

889

988

1,135

1,255

1,379

1,504

1,629

1,759

1,878

% Change Newspapers % Change Total % Change

–8.3

7.8

11.1

14.9

10.6

9.9

9.1

8.3

8.0

6.8

8.4

3,033

3,133

3,364

3,825

4,208

4,488

4,761

5,035

5,312

5,587

–0.5

3.3

7.4

13.7

10.0

6.7

6.1

5.8

5.5

5.2

5.8

9,359

9,774

11,226

13,235

14,828

16,040

17,627

18,879

20,815

22,010

–3.3

4.4

14.9

17.9

12.0

8.2

9.9

7.1

10.3

5.7

8.2

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Brazil and Mexico are the leading territories in terms of advertising spending, at $6.6 billion and $4.3 billion, respectively, together constituting 74 percent of 2006 advertising in Latin America. Venezuela, the smallest territory, at $396 million, will be the fastest growing, with a projected 10.1 percent compound annual increase. Growth will reflect rising oil revenues and relatively high inflation compared with other territories in Latin America.

Advertising by Country (US$ Millions) Latin America

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

Argentina

542

699

838

1,046

1,206

1,320

1,436

1,527

1,651

1,733

3,586

3,849

4,556

5,866

6,626

7,215

7,996

8,595

9,560

10,110

Brazil Chile

681

740

793

855

945

992

1,060

1,107

1,167

1,216

Colombia

1,153

1,095

1,146

1,263

1,382

1,472

1,585

1,674

1,807

1,897

Mexico

3,143

3,132

3,586

3,857

4,273

4,621

5,075

5,459

6,032

6,412

254

259

307

348

396

420

475

517

598

642

9,359

9,774

11,226

13,235

14,828

16,040

17,627

18,879

20,815

22,010

Venezuela Total

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Global Entertainment and Media Market by Region Latin America | 75


Advertising Growth by Country (%) 2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

–33.8

29.0

19.9

24.8

15.3

9.5

8.8

6.3

8.1

5.0

7.5

Brazil

–4.3

7.3

18.4

28.8

13.0

8.9

10.8

7.5

11.2

5.8

8.8

Chile

5.6

8.7

7.2

7.8

10.5

5.0

6.9

4.4

5.4

4.2

5.2

–5.5

–5.0

4.7

10.2

9.4

6.5

7.7

5.6

7.9

5.0

6.5

Latin America Argentina

Colombia Mexico

3.4

–0.3

14.5

7.6

10.8

8.1

9.8

7.6

10.5

6.3

8.5

Venezuela

22.7

2.0

18.5

13.4

13.8

6.1

13.1

8.8

15.7

7.4

10.1

Total

–3.3

4.4

14.9

17.9

12.0

8.2

9.9

7.1

10.3

5.7

8.2

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Consumer/end-user spending Consumer/end-user spending increased by 11.2 percent in 2006. Double-digit growth in Internet access spending, TV distribution, video games, and casino and other regulated gaming, and high-single-digit growth in sports and filmed entertainment paced the market. The remaining segments rose by less than 5 percent. We expect Internet access spending to continue to grow at double-digit rates, averaging 14.9 percent compounded annually driven by increased Internet penetration and a rapidly growing broadband market. Growth in subscription TV households will drive TV distribution to a 14.5 percent compound annual increase. Casino and other regulated gaming will grow at a 12.2 percent rate during the next five years, helped by a stronger economy and new casinos in Mexico and Chile. Video games will expand at an 8.2 percent compound annual rate, helped in the near term by new console platforms. Anticipated growth during 2009– 11 will be less than 4 percent annually. Filmed entertainment will rise at a 6.6 percent annual rate as new multiplexes attract people to theaters. Recorded music will rise at a 5.4 percent compound annual rate as large increases in digital distribution will offset declines in physical distribution. The remaining segments will each grow by less than 5 percent annually. Overall consumer/end-user spending in Latin America will increase from $29 billion in 2006 to $46 billion in 2011, growing at a 9.2 percent compound annual rate.

PricewaterhouseCoopers 76 | Global Entertainment and Media Outlook: 2007–2011


Consumer/End-User Spending by Segment (US$ Millions) Latin America

2007–11 CAGR

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

1,443

1,549

1,765

1,741

1,871

1,994

2,125

2,271

2,420

2,574

9.7

7.3

13.9

–1.4

7.5

6.6

6.6

6.9

6.6

6.4

6.6

TV Distribution

4,877

4,880

5,200

5,810

6,539

7,508

8,632

9,942

11,362

12,883

% Change

–14.8

0.1

6.6

11.7

12.5

14.8

15.0

15.2

14.3

13.4

14.5

Recorded Music

1,116

988

1,203

1,360

1,409

1,456

1,532

1,634

1,741

1,831

–5.3

–11.5

21.8

13.1

3.6

3.3

5.2

6.7

6.5

5.2

5.4

2,138

2,663

3,486

4,403

5,780

7,034

8,177

9,322

10,396

11,590

22.8

24.6

30.9

26.3

31.3

21.7

16.2

14.0

11.5

11.5

14.9

Filmed Entertainment % Change

% Change Internet Access % Change Video Games

451

515

544

528

586

715

785

815

843

871

% Change

32.6

14.2

5.6

–2.9

11.0

22.0

9.8

3.8

3.4

3.3

8.2

1,267

1,258

1,294

1,347

1,407

1,473

1,544

1,618

1,697

1,770

% Change

–4.2

–0.7

2.9

4.1

4.5

4.7

4.8

4.8

4.9

4.3

4.7

Magazines

1,486

1,554

1,683

1,792

1,880

1,971

2,059

2,150

2,240

2,330

% Change

–12.4

4.6

8.3

6.5

4.9

4.8

4.5

4.4

4.2

4.0

4.4

Newspapers

1,985

1,844

1,880

1,962

2,030

2,091

2,149

2,208

2,266

2,327

–3.4

–7.1

2.0

4.4

3.5

3.0

2.8

2.7

2.6

2.7

2.8

Business Information

% Change Books

4,284

4,306

4,380

4,493

4,620

4,753

4,897

5,039

5,178

5,317

% Change

–1.6

0.5

1.7

2.6

2.8

2.9

3.0

2.9

2.8

2.7

2.9

Theme Parks and Amusement Parks

254

248

253

241

248

260

272

285

299

313

% Change

2.0

–2.4

2.0

–4.7

2.9

4.8

4.6

4.8

4.9

4.7

4.8

Casino and Other Regulated Gaming

199

199

226

251

278

311

345

392

449

495

% Change

–56.3

0.0

13.6

11.1

10.8

11.9

10.9

13.6

14.5

10.2

12.2

Sports

2,229

2,234

2,334

2,508

2,752

2,769

2,884

3,114

3,407

3,421

7.1

0.2

4.5

7.5

9.7

0.6

4.2

8.0

9.4

0.4

4.4

21,729

22,238

24,248

26,436

29,400

32,335

35,401

38,790

42,298

45,722

–3.5

2.3

9.0

9.0

11.2

10.0

9.5

9.6

9.0

8.1

9.2

% Change Total % Change

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Brazil is the leading consumer/end-user territory in Latin America, at $11 billion in 2006. Mexico is second, at $6 billion, followed by Argentina at $4 billion. Each of these territories will expand at rates in excess of 9 percent compounded annually. Regional spending consists of categories for which we do not have country breakouts. It consists largely of relatively new and rapidly growing digital sectors. We expect regional spending to grow by 7.2 percent compounded annually.

Global Entertainment and Media Market by Region Latin America | 77


Consumer/End-User Spending by Country (US$ Millions) Latin America

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

Argentina

2,428

2,583

3,066

3,572

4,028

4,507

4,939

5,398

5,855

6,370

Brazil

8,361

8,506

9,278

9,895

10,989

12,099

13,276

14,503

15,749

17,146

Chile

1,280

1,290

1,345

1,422

1,529

1,641

1,752

1,869

1,987

2,094

Colombia

1,029

1,071

1,119

1,265

1,434

1,636

1,879

2,159

2,443

2,741

Mexico

4,252

4,337

4,658

5,128

5,716

6,343

6,966

7,686

8,427

9,181

406

389

456

490

538

589

654

720

800

881

17,756

18,176

19,922

21,772

24,234

26,815

29,466

32,335

35,261

38,413

Venezuela Country Subtotal Regional Spending

Total

3,973

4,062

4,326

4,664

5,166

5,520

5,935

6,455

7,037

7,309

21,729

22,238

24,248

26,436

29,400

32,335

35,401

38,790

42,298

45,722

†Regional spending consists of those spending streams in the region for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Consumer/End-User Market Growth by Country (%) 2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

–23.0

6.4

18.7

16.5

12.8

11.9

9.6

9.3

8.5

8.8

9.6

Brazil

–0.3

1.7

9.1

6.7

11.1

10.1

9.7

9.2

8.6

8.9

9.3

Chile

1.8

0.8

4.3

5.7

7.5

7.3

6.8

6.7

6.3

5.4

6.5

Colombia

1.0

4.1

4.5

13.0

13.4

14.1

14.9

14.9

13.2

12.2

13.8

Latin America Argentina

Mexico

–5.6

2.0

7.4

10.1

11.5

11.0

9.8

10.3

9.6

8.9

9.9

Venezuela

–6.9

–4.2

17.2

7.5

9.8

9.5

11.0

10.1

11.1

10.1

10.4

–5.3

2.4

9.6

9.3

11.3

10.7

9.9

9.7

9.0

8.9

9.7

5.9

2.2

6.5

7.8

10.8

6.9

7.5

8.8

9.0

3.9

7.2

–3.5

2.3

9.0

9.0

11.2

10.0

9.5

9.6

9.0

8.1

9.2

Country Subtotal Regional Spending

Total

†Regional spending consists of those spending streams in the region for which we do not have country breakouts. It typically consists of relatively new and rapidly growing digital sectors. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

PricewaterhouseCoopers 78 | Global Entertainment and Media Outlook: 2007–2011


Canada Canada’s entertainment and media market rose 6.7 percent in 2006—comparable to increases during 2002– 04 and a significant improvement from the 3.5 percent growth in 2005, when cancellation of the NHL season cut into growth in sports. With the return of the NHL in 2006, sports more than doubled. Video games rose by 17.2 percent, Internet advertising and access spending increased 16.2 percent, and radio and out-of-home expanded by 9.8 percent. TV distribution grew 5.7 percent, and TV networks rose by 5.5 percent. Casino and other regulated gaming rose 6.0 percent, helped by double-digit growth in online gaming. The remaining segments grew by less than 5 percent, and recorded music declined by 7.6 percent. We expect double-digit growth in the Internet and radio and out-of-home segments and high-single-digit increases in video games and casino and other regulated gaming. A surging online advertising market will boost Internet spending, while radio and out-of-home will be driven by high-definition terrestrial radio, an emerging satellite radio market, and digital billboards, 3-D displays, and in-store networks that will fuel out-ofhome advertising. New console platforms and gains in online and wireless games will propel the video game market, and casino and other regulated gaming will benefit from new and upgraded casinos, a new sportsbetting parlor, and broadband growth that will stimulate online gaming. TV distribution will be the only other segment to grow by more than 5 percent annually, helped by the shift to digital and the entrance of telephone companies into the market, which will enhance penetration while inducing subscribers to trade up to higher services, in turn boosting revenues. The recorded music market will flatten out during the next five years as the rapidly expanding digital component becomes large enough to offset continued declines in physical spending. The overall market will expand at a 5.6 percent compound annual rate to $47 billion in 2011 from $36 billion in 2006.

Global Entertainment and Media Market by Region Canada | 79


Entertainment and Media Market by Segment (US$ Millions) Canada Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change TV Distribution

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

4,160

4,825

5,519

5,507

5,645

5,826

6,068

6,326

6,587

6,867

33.3

16.0

14.4

–0.2

2.5

3.2

4.2

4.3

4.1

4.3

4.0

2,958

3,234

3,422

3,525

3,719

3,856

4,045

4,230

4,430

4,632

6.9

9.3

5.8

3.0

5.5

3.7

4.9

4.6

4.7

4.6

4.5

3,254

3,494

3,669

3,951

4,175

4,409

4,678

4,974

5,248

5,516

% Change

4.2

7.4

5.0

7.7

5.7

5.6

6.1

6.3

5.5

5.1

5.7

Recorded Music

860

839

820

814

752

729

736

751

770

791

% Change

–8.3

–2.4

–2.3

–0.7

–7.6

–3.1

1.0

2.0

2.5

2.7

1.0

1,193

1,280

1,333

1,457

1,600

1,784

2,007

2,289

2,544

2,781

1.8

7.3

4.1

9.3

9.8

11.5

12.5

14.1

11.1

9.3

11.7

1,377

1,525

1,824

2,192

2,547

2,947

3,328

3,703

4,098

4,520

% Change

17.5

10.7

19.6

20.2

16.2

15.7

12.9

11.3

10.7

10.3

12.2

Video Games

518

593

678

744

872

1,034

1,161

1,250

1,310

1,368

% Change

23.3

14.5

14.3

9.7

17.2

18.6

12.3

7.7

4.8

4.4

9.4

4,182

4,204

4,327

4,490

4,694

4,914

5,139

5,359

5,579

5,799

Radio/Out-of-Home Advertising % Change Internet Advertising and Access Spending

Business Information % Change Magazine Publishing % Change Newspaper Publishing % Change Book Publishing

0.0

0.5

2.9

3.8

4.5

4.7

4.6

4.3

4.1

3.9

4.3

1,294

1,316

1,339

1,361

1,387

1,415

1,442

1,467

1,491

1,516

–2.2

1.7

1.7

1.6

1.9

2.0

1.9

1.7

1.6

1.7

1.8

2,841

2,883

2,996

3,027

3,078

3,118

3,154

3,186

3,210

3,230

0.4

1.5

3.9

1.0

1.7

1.3

1.2

1.0

0.8

0.6

1.0

1,658

1,665

1,693

1,770

1,815

1,914

1,971

2,057

2,137

2,210

% Change

0.2

0.4

1.7

4.5

2.5

5.5

3.0

4.4

3.9

3.4

4.0

Theme Parks and Amusement Parks

379

382

429

440

456

469

488

507

527

542

% Change

4.1

0.8

12.3

2.6

3.6

2.9

4.1

3.9

3.9

2.8

3.5

2,842

3,155

3,405

3,784

4,010

4,473

4,966

5,297

5,583

5,869

7.7

11.0

7.9

11.1

6.0

11.5

11.0

6.7

5.4

5.1

7.9

Sports

827

842

879

406

947

946

1,056

1,079

1,208

1,159

% Change

–3.6

1.8

4.4

–53.8

133.3

–0.1

11.6

2.2

12.0

–4.1

4.1

28,343

30,237

32,333

33,468

35,697

37,834

40,239

42,475

44,722

46,800

6.7

6.7

6.9

3.5

6.7

6.0

6.4

5.6

5.3

4.6

5.6

Casino and Other Regulated Gaming % Change

Total % Change

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Advertising Advertising rose 7.2 percent in 2006, its largest increase during the past five years. Internet advertising rose 42.6 percent; high-single-digit increases were generated in out-of-home and radio; and TV networks rose 6.0 percent. Magazines rose 3.8 percent, TV distribution increased 2.8 percent, and newspapers were the slowest-growing category, at 2.1 percent.

PricewaterhouseCoopers 80 | Global Entertainment and Media Outlook: 2007–2011


We expect the Internet to continue to be the fastest-growing category, at 23.5 percent—driven by broadband penetration—followed by out-of-home at 8.7 percent. Radio will grow at a 6.5 percent annual rate, TV networks will expand by 4.0 percent compounded annually, magazines will increase at a 3.1 percent annual rate, and newspapers and TV distribution will each grow by less than 3 percent annually. For the advertising market as a whole, spending will climb at a 6.0 percent compound annual rate, rising to $11 billion in 2011 from $8 billion in 2006.

Advertising by Segment (US$ Millions) 2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

1,930

2,135

2,258

2,300

2,437

2,507

2,622

2,723

2,843

2,971

% Change

3.5

10.6

5.8

1.9

6.0

2.9

4.6

3.9

4.4

4.5

4.0

TV Distribution

356

358

354

356

366

366

375

383

397

410

% Change

–7.8

0.6

–1.1

0.6

2.8

0.0

2.5

2.1

3.7

3.3

2.3

Radio

952

1,030

1,066

1,154

1,247

1,344

1,436

1,529

1,618

1,705

% Change

3.0

8.2

3.5

8.3

8.1

7.8

6.8

6.5

5.8

5.4

6.5

Out-of-Home

241

250

267

303

331

361

397

432

467

502

% Change

–2.8

3.7

6.8

13.5

9.2

9.1

10.0

8.8

8.1

7.5

8.7

Internet

155

209

321

495

706

969

1,234

1,498

1,763

2,027

% Change

82.4

34.8

53.6

54.2

42.6

37.3

27.3

21.4

17.7

15.0

23.5

Magazines

699

732

766

784

814

842

869

895

921

948

% Change

–2.8

4.7

4.6

2.3

3.8

3.4

3.2

3.0

2.9

2.9

3.1

2,213

2,228

2,300

2,344

2,393

2,432

2,468

2,500

2,525

2,547

0.4

0.7

3.2

1.9

2.1

1.6

1.5

1.3

1.0

0.9

1.3

6,546

6,942

7,332

7,736

8,294

8,821

9,401

9,960

10,534

11,110

1.8

6.0

5.6

5.5

7.2

6.4

6.6

5.9

5.8

5.5

6.0

Canada TV Networks: Broadcast and Cable

Newspapers % Change Total % Change

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Consumer/end-user spending Consumer/end-user spending rose 6.5 percent in 2006. Sports jumped 133.3 percent with the return of the NHL, and video games rose 17.2 percent as games associated with the new consoles boosted spending. Internet access, TV distribution, and casino and other regulated gaming were the only other segments to grow by more than 5 percent in 2006. Rising broadband penetration boosted Internet access spending, videoon-demand drove TV distribution, and growth in sports betting and online gaming spurred casino and other regulated gaming. Satellite radio subscriptions—a new market in Canada that will reach $574 million in 2011—will be the only category to grow at double-digit rates. We expect increases of greater than 5 percent annually in video games, casino and other regulated gaming, Internet access spending, TV distribution, and TV networks. Video games associated with next-generation consoles and large increases in online and wireless games will fuel video game growth by 9.4 percent compounded annually. Casino upgrades and growth in sports and online betting will enhance the casino and other regulated gaming market, which we project will increase by 7.9 percent compounded annually. Internet access spending will rise at a 6.3 percent annual rate, and TV distribution by 6.0 percent compounded annually. The continued shift from dial-up to broadband will drive Internet access spending, and video-on-demand will boost TV distribution. TV subscription penetration growth will also boost specialty channel license fees, which will lead to a 5.3 percent compound annual

Global Entertainment and Media Market by Region Canada | 81


increase for TV networks. No other segment will exceed 5 percent growth. Overall consumer/end-user spending will increase from $27 billion in 2006 to $36 billion in 2011, growing at a 5.4 percent compound annual rate.

Consumer/End-User Spending by Segment (US$ Millions) Canada Filmed Entertainment % Change TV Networks: Broadcast and Cable % Change TV Distribution

2002

2003

2004

2005

2006p

2007

2008

2009

2010

2011

2007–11 CAGR

4,160

4,825

5,519

5,507

5,645

5,826

6,068

6,326

6,587

6,867

33.3

16.0

14.4

–0.2

2.5

3.2

4.2

4.3

4.1

4.3

4.0

1,028

1,099

1,164

1,225

1,282

1,349

1,423

1,507

1,587

1,661

14.1

6.9

5.9

5.2

4.7

5.2

5.5

5.9

5.3

4.7

5.3

2,898

3,136

3,315

3,595

3,809

4,043

4,303

4,591

4,851

5,106

% Change

5.8

8.2

5.7

8.4

6.0

6.1

6.4

6.7

5.7

5.3

6.0

Radio

22

79

174

328

459

574

% Change

259.1

120.3

88.5

39.9

25.1

92.0

Recorded Music

860

839

820

814

752

729

736

751

770

791

% Change

–8.3

–2.4

–2.3

–0.7

–7.6

–3.1

1.0

2.0

2.5

2.7

1.0

1,222

1,316

1,503

1,697

1,841

1,978

2,094

2,205

2,335

2,493

12.4

7.7

14.2

12.9

8.5

7.4

5.9

5.3

5.9

6.8

6.3

Internet Access % Change Video Games

518

593

678

744

872

1,034

1,161

1,250

1,310

1,368

% Change

23.3

14.5

14.3

9.7

17.2

18.6

12.3

7.7

4.8

4.4

9.4

4,182

4,204

4,327

4,490

4,694

4,914

5,139

5,359

5,579

5,799

0.0

0.5

2.9

3.8

4.5

4.7

4.6

4.3

4.1

3.9

4.3

Business Information % Change Magazines

595

584

573

577

573

573

573

572

570

568

% Change

–1.5

–1.8

–1.9

0.7

–0.7

0.0

0.0

–0.2

–0.3

–0.4

–0.2

Newspapers

628

655

696

683

685

686

686

686

685

683

% Change

0.5

4.3

6.3

–1.9

0.3

0.1

0.0

0.0

–0.1

–0.3

–0.1

Books

1,658

1,665

1,693

1,770

1,815

1,914

1,971

2,057

2,137

2,210

% Change

0.2

0.4

1.7

4.5

2.5

5.5

3.0

4.4

3.9

3.4

4.0

Theme Parks and Amusement Parks

379

382

429

440

456

469

488

507

527

542

% Change

4.1

0.8

12.3

2.6

3.6

2.9

4.1

3.9

3.9

2.8

3.5

2,842

3,155

3,405

3,784

4,010

4,473

4,966

5,297

5,583

5,869

7.7

11.0

7.9

11.1

6.0

11.5

11.0

6.7

5.4

5.1

7.9

Sports

827

842

879

406

947

946

1,056

1,079

1,208

1,159

% Change

–3.6

1.8

4.4

–53.8

133.3

–0.1

11.6

2.2

12.0

–4.1

4.1

21,797

23,295

25,001

25,732

27,403

29,013

30,838

32,515

34,188

35,690

8.3

6.9

7.3

2.9

6.5

5.9

6.3

5.4

5.1

4.4

5.4

Casino and Other Regulated Gaming % Change

Total % Change

Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Full discussions of the trends and drivers discussed here in the Global Overview are provided in the full edition of PricewaterhouseCoopers’ Global Entertainment and Media Outlook: 2007–2011 covering the United States, EMEA, Asia Pacific, Latin America, and Canada. Containing numerous tables and charts with summary data broken out into subcomponents, the full Outlook provides a more detailed and more granular depiction of the industry. The tables and charts accompany in-depth forecasts and analyses for each of the 14 industry segments organized into 14 separate chapters. The full Outlook is available in a single volume, and individual chapters can also be acquired separately at www.pwc.com/outlook.

PricewaterhouseCoopers 82 | Global Entertainment and Media Outlook: 2007–2011


Global Entertainment and Media Outlook: 2007–2011, Global Overview

Global Recorded Music Physical Distribution Market................................................ 35 Global Radio/Out-of-Home Advertising Market.... 35 Global Radio Market............................................. 36

Summary of Tables and Charts

Global Out-of-Home Advertising Market.............. 36

Regions/Countries Covered.................................... 9

Global Internet Advertising and Access Market.... 37

Exchange Rates per US$...................................... 10

Global Internet Advertising Market........................ 37

Global Entertainment and Media Market by Segment........................................................... 12

Global Internet Access Market.............................. 38

Global Entertainment and Media Market by Region.............................................................. 13

Global Business Information Market..................... 39

Global Video Game Market................................... 38

Global Advertising................................................. 14

Global Magazine Publishing Market...................... 40

Global Consumer/End-User Spending.................. 16

Global Newspaper Publishing Market................... 41

Global Spending Added Annually by Category..... 17

Global Book Publishing Market............................. 42

Revenues Subject to Digital Competition............. 18

Global Theme Parks and Amusement Parks Market..................................... 43

Revenues Not Subject to Digital Competition....... 19 Nominal GDP Growth in BRIC............................... 21

Global Casino and Other Regulated Gaming Market...................................................... 44

E&M Market in BRIC............................................. 21

Global Sports Market............................................ 45

Convergent Platform Market................................. 24

United States

Other Entertainment and Media Platforms . ......... 24

Entertainment and Media Market by Segment..... 47

E&M Spending by Platform................................... 25

Advertising by Segment........................................ 49

Broadband Households........................................ 25

Consumer/End-User Spending by Segment......... 51

Wireless Subscribers............................................. 26

EMEA

Digital/Mobile Revenues........................................ 27

Entertainment and Media Market by Segment..... 53

Nominal GDP Growth by Region........................... 28

Entertainment and Media Market by Country....... 54

Nominal GDP Growth by Country in EMEA.......... 29

Entertainment and Media Market Growth by Country............................................................. 55

Nominal GDP Growth by Country in Asia Pacific........................................................ 30

Advertising by Segment........................................ 56

Nominal GDP Growth by Country in Latin America..................................................... 30

Advertising by Country.......................................... 57

Global Filmed Entertainment Market..................... 31

Consumer/End-User Spending by Segment......... 60

Global Television Network Market......................... 32

Consumer/End-User Spending by Country.......... 61

Global TV Distribution Market............................... 33

Consumer/End-User Market Growth by Country............................................................. 62

Global Recorded Music Market............................ 34 Global Recorded Music Digital Distribution Market................................................ 34

Advertising Growth by Country............................. 58

Asia Pacific Entertainment and Media Market by Segment..... 64

Index – Summary of Tables and Charts | 83


Entertainment and Media Market by Country....... 65 Entertainment and Media Market Growth by Country............................................................. 66

Entertainment and Media Market Growth by Country............................................................. 74 Advertising by Segment........................................ 75

Advertising by Segment........................................ 67

Advertising by Country.......................................... 75

Advertising by Country.......................................... 68

Advertising Growth by Country............................. 76

Advertising Growth by Country............................. 68

Consumer/End-User Spending by Segment......... 77

Consumer/End-User Spending by Segment......... 70

Consumer/End-User Spending by Country.......... 78

Consumer/End-User Spending by Country.......... 71

Consumer/End-User Market Growth by Country............................................................. 78

Consumer/End-User Spending Market Growth by Country................................................ 71

Canada

Latin America

Entertainment and Media Market by Segment..... 80

Entertainment and Media Market by Segment..... 73

Advertising by Segment........................................ 81

Entertainment and Media Market by Country....... 74

Consumer/End-User Spending by Segment......... 82

PricewaterhouseCoopers 84 | Global Entertainment and Media Outlook: 2007–2011


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PWCGlobalEntMediaOutlook_07  

Global Entertainment and Media Outlook: 2007–2011* Global Overview Entertainment & Media Forecasts and economic analyses of 14 industry...

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