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PwC: Small Digital Segment, Big Media Growth

Entertainment and media companies find that digital and mobile is 5% of revenue, but it will contribute 24% of their growth in the next five years, according to consultancy PricewaterhouseCoopers.

Still, by 2012, digital and mobile will be just 10% of total revenue.

The total U.S. entertainment and media market will grow at a 4.8% compound annual growth rate in the next five years, reaching $759 billion in 2012, according to PwC’s “Global Entertainment and Media Outlook: 2008-2012” report. U.S. television advertising will grow at a decent 4.9% CAGR in the next five years, although that will lag behind the 5.9% global rate.

According to PwC’s report, “While digital and mobile are driving growth, established and traditional business segments will continue to dominate revenues, with the exception of recorded music, where digital distribution will surpass physical distribution in 2011. By 2012, digital and mobile revenues will account for 10% of total E&M spending in the U.S., or $75 billion of the $759 billion U.S. market.”

“In the United States, consumers are showing a preference for free, or heavily discounted, ad-supported content and services in the new digital and mobile environment,” Jim O’Shaughnessy, PwC’s global chairman, entertainment and media practice said in a press release. “This ensures that the importance of advertising will continue to grow -- both to entertainment and media companies themselves and to their customers.”

PwC said several media sectors tied to TV are reaching “tipping points that will deeply influence both the pace and direction of entertainment and media growth during the next five years. Mobile is gaining ground quickly -- adding subscribers and upgrading infrastructure to enable the next wave of mobile expansion, driven by Internet access, advertising and television. Modern movie houses, digital cinemas and 3-D upgrades are enhancing the cinema-going experience, while high-definition-television subscriptions and a resolution of the high-definition DVD-format wars will invigorate digital living rooms.”