Digital advertising boom drives growth: PwC’s 2024 Entertainment and Media Outlook

Tuesday, 30 July 2024

• The Australian entertainment and media industry rose 2.8 percent from A$60.6 billion in 2022 to A$62.3 billion in 2023
• Whilst sector revenue growth has remained positive, macro conditions like rising inflation, interest rate hikes and a cost-of-living crisis have slowed the growth rate from 6.6 percent in 2022 to 2.8 percent in 2023
• Internet enabled advertising, particularly search and video, are forecast to represent 73 percent of the entire advertising market in Australia by 2028, achieving a compound average growth rate (CAGR) of 5.9 percent from 2023 to 2028
• Interactive games consumer revenues in Australia reached A$4.0 billion in 2023, and is expected to increase to approximately A$4.5 billion in 2028. While esports are expected to achieve a CAGR of 10.1 percent forecast to reach A$37m by 2028
• Traditional TV, delivered through a terrestrial transmission or cable/satellite, recorded declines of 15.3 percent to A$4.7 billion in 2023, while news media revenues also declined by 6.9 percent on the prior year

Revenues for the Australian entertainment and media industry hit A$62.3bn in 2023, up 2.8 per cent year-on-year despite macroeconomic and sector-specific challenges. The 25th edition of PwC's Australian Entertainment and Media Outlook revealed that it's advertisers who harness the full value of digital media who are reaping rewards.

Louise King, PwC Australia Partner and Technology, Media and Telecommunications Leader, said this year's report highlights the importance of adopting new technologies and taking calculated risks to meet the needs of the modern consumer.

"Back in 2013, digital advertising represented only 27 percent of the advertising pie. Over the next five years, it's set to hit close to 80 percent. This speaks not only to the pace of change, but the success Australian advertisers have seen in shifting their strategies to better suit the tech-enabled world we live in," Ms King said.

"Several factors have driven this huge growth, but the 'big gorilla' remains in search - now bolstered by the rise of search activity on retailers' e-commerce sites, such as Amazon, Coles, Woolworths and eBay."

Retail paid search advertising's share of total paid search advertising rose 7.8 percent to A$529 million in 2023. PwC expects retail paid search to grow by 23.0 per cent CAGR to reach A$1.5 billion by 2028.

2025 content boom incoming

PwC Australia is predicting next year will be a big one for advertisers, consumers and media companies, with sector revenue tipped to grow by 3.4 percent in 2025.

High impact, global events, including the resolution of the US actors and writer's strikes, are expected to drive a resurgence in volume of premium scripted content. Keystone programs for streaming services including Stranger Things (Netflix), The White Lotus (BINGE), and Severance (Apple TV+) are expected to return after a three year hiatus.

As a result, PwC forecasts growth in box office spend and subscription video on demand revenues will accelerate in 2025, growing faster than the average of the previous two years.

Another bright note is the growth of the Australian video games production sector. Of approximately A$4 billion in revenues in 2023, A$345.5 million is attributable to games developed in Australian studios, an increase of 21 percent on the previous year.

Digital revenues not offsetting declines for broadcasters and media players

Broadcasters push to diversify revenue streams through streaming, subscription and catch up services is helping to drive growth, but PwC forecasts that Australian television and radio broadcasters will not make up declines in revenues on their traditional offerings over the forecast period, although the gap is closing.

"Broadcasters are definitely moving the dial by exploring new revenue streams. The key to staying competitive against international players will be continuing to invest in new products and services that appeal to Australian consumers and advertisers alike," Ms King said.

"This will include initiatives like FAST channels (free, ad-supported television streamed over the open internet), better cross-platform audience measurement, digital ad insertion into linear ad breaks and new ways to monetise opted-in viewers and listeners directly."

The shift to digital advertising has had clear impacts on traditional media. In 2013, printed newspapers, television and radio took 60 percent of all advertising revenues in Australia. In 2023 those products captured only 20 percent of advertising revenues. PwC's forecast is that by 2028, they will have shrunk further, representing 11 percent of the advertising market.

Ms King notes that strategic challenges remain and uncertainties exist in the external environment that will require focus from the entertainment and media industry.

"We see this year as a pivot point. The Australian industry has always thrived on technological disruption, companies looking to succeed in this market will need to be bold in strategic risk taking and move at-pace, capitalising on the digital growth the sector is seeing."

To view the Australian Entertainment and Media Outlook, click HERE

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