SHANGHAI – China’s entertainment and media market will overtake Japan’s to become the world’s second-largest by the end of 2018, according to a survey published this week.
The Global Entertainment and Media Outlook 2014-18, which was published by global professional services network PricewaterhouseCoopers (PwC) on Tuesday, compares consumer and advertising spending data from 54 countries across 13 sectors, including book publishing, filmed entertainment, internet advertising, music, radio, TV subscriptions and license fees, and video games.
According to the survey, China’s entertainment and media market is forecast to grow from a value of US$127.34 billion in 2013 to US$213.55 billion in 2018. Overall, spending across the 13 sectors is expected to grow at a compound annual growth rate (CAGR) of 10.9 percent until 2018, compared with a global average CAGR across the sectors of 5 percent.Sectors with particularly high CAGRs include internet advertising (17.9 percent), internet access (13.7 percent), filmed entertainment (13 percent), and TV subscriptions and license fees (11.3 percent).
Chinese consumers’ enthusiasm towards all forms of entertainment and media is illustrated by predicted growth in each of the 13 sectors evaluated. The value of China’s filmed entertainment sector is forecast to overtake Japan in 2018, making China the world’s third-largest market behind the U.S. and the UK. In the same year, China’s total filmed entertainment revenue will reach US$7 billion, marking an increase of US$3.2 billion from 2013.
China, which is already the the second-largest film market in the world, is set to overtake the U.S. in 2020 to become the world’s largest film market.
China’s television industry is also growing quickly, and is forecast to overtake the UK in 2014 and Germany in 2016 to become the world’s second-largest television market, in part due to the country’s investment in subscription technology. China’s subscription television revenues are expected to increase from US$11.5 billion to US$19.7 billion between 2013 and 2018.
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Other sectors of China’s entertainment and media market are also thriving, including those which are struggling in more mature markets. According to the survey, China’s book market will overtake Japan and Germany in 2014 and 2017 respectively, therefore making China the world’s second-largest book market with revenue of US$13.2 billion. Furthermore, China will account for 35 percent of the Asia-Pacific region’s total books revenue by the end of 2018. Newspaper publishing in China is set to grow at a CAGR of 8.3 percent through to 2018.
However, in spite of significant growth in other segments, the most noteworthy trend illustrated by the survey is China’s booming appetite for all things digital. China and India alone will account for 47 percent of new mobile Internet users between 2013 and 2018, a percentage which will equate to approximately 750 million new users.
China is currently the world’s largest internet market and the second-largest for online gaming, which isforecast to grow at a 7.9 percent CAGR through to 2018. China’s mobile music revenue will grow at a CAGR of 8.5 percent in the same period.
As Chinese consumers are going mobile, so is advertising spending, with the PwC report also finding that over half (55 percent) of total Chinese advertising revenue will be digital in 2018, compared with 40 percent in 2013. Furthermore, total entertainment and media spending on digital, excluding spending on Internet access, is expected to grow at a 15.5 percent CAGR until 2018, accounting for 53 percent of China’s entertainment and media spending growth.
“In China, the biggest form of mass media is by far the internet,” said Marcel Fenez, PwC’s global leader for entertainment and media. “The power of the internet in China for advertising is huge.”
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The Asia-Pacific region was the world’s third-largest online advertising region in 2013, with revenue of US$31.4 billion. China will easily be the country with the largest online advertising market in the region by 2018, at a value of US$30.6 billion in comparison with Japan’s US$10.8 billion.
“The coming of age of China as the world’s second-largest entertainment and media market in 2018 is a reflection of the consumption power of a growing middle class that is both the target of increasing brand activity as well as a potent force itself in the demand for all forms of entertainment,” said Fenez.
Global companies have previously had to comply with stringent regulations in the entertainment and media sector. However, as part of the 12th Five-Year Plan (2011-2015), which marks a move towards consumption-led growth, the Chinese government is relaxing regulations and encouraging investment in some entertainment and media sectors. This, combined with the impact of digital adoption, is offering both Chinese and global companies even better opportunities to invest in the promising entertainment and media market.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email asia@dezshira.com or visit www.dezshira.com.
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