China's media markets enjoy unexpected growth : PwC

Driven by advertising spend, the entertainment and media market rebounded by 10.4 per cent in 2010 with ad spend forecast having grown 15.3 per cent last year. Higher consumer spending contributed to the growth, with an increase of 4.5 per cent last year.

Many entertainment and media sectors in Hong Kong have exceeded forecasts published in a previous report by PwC. This includes TV advertising, radio, out of home advertising, newspaper publishing, internet access and consumer magazine publishing. In some cases, traditional media in particular, growth was more than double the forecast.

Based on this, PwC forecasts a compound annual growth rate (CAGR) of 7.4 per cent between now and 2015 for the entertainment and media market as a whole, and a CAGR of 8.1 per cent for advertising spend over the same period.

Cecilia Yau, PwC Hong Kong's entertainment and media practice partner, says traditional media is proving resilient in the face of new technology. "There is no doubt digitisation is happening in Hong Kong. However, this has yet to translate into higher digital advertising as traditional media is seen as the preferred and proven platform for advertisers due to the availability of historical viewership data and the loyalty of consumers on these platforms," she said.

For mainland China, overall entertainment and media spending grew 13.9 per cent in 2010, and PwC predicts it will continue to be among the faster-growing markets for the industry over the next five years, with a projected 11.6 per cent CAGR. Overall, China's market is in the midst of a shift to digital platforms, facilitated by an explosion in broadband-equipped households and mobile access. PwC forecasts that by 2015, 26.3 per cent of total entertainment and media spending will be digital in nature.

Growth last year was led by filmed entertainment which soared by 53.1 per cent; China's video games and TV subscription spending also rose over 30 per cent. Internet advertising grew by 28.2 per cent. Double-digit annual gains are projected for each segment over the next five years except internet access, print media and the business-to-business segment.

Overall advertising in mainland China is projected to grow by 14.2 per cent compounded annually to 2015, with consumer spending expected to enjoy a CAGR of 2.4 per cent to US$1.5 billion (9.7 billion yuan). PwC says TV will remain the biggest advertising segment throughout the forecast period and internet advertising will be the fastest-growing advertising category.

"As a highly digitised fast growing economy, increasingly affluent connected consumers in mainland China are actively participating and enjoying the higher quality user experience. Entertainment and media CEOs are having to adapt business models to capture the shifting nature of consumer demand," commented Marcel Fenez, global leader for PwC's Entertainment and Media practice.

Over the next five years, it will be key for the world's content producers to collaborate with other players, such as operators, application providers or payment gateways, to enable the largest possible scope for moulding their payment models and content delivery around what the consumer wants, added Fenez. "Bottom line is that in order to create quality content, someone has to pay," he said.