In our Global E&M (Entertainment & Media) 2020 Outlook, we predicted that the total E&M revenue in the UK is expected to increase at a CAGR (compound annual growth rate) of 2.8% and should reach £79.8bn by 2024. This represents a robust recovery from a -6.7% decline in revenue expected in 2030 due to the impacts of economic recession and lockdowns caused by Covid-19.
Changes and Trends
This year we made the decision to delay publishing the Outlook so that we could obtain an accurate idea of the impacts of the pandemic. We are going to make two comments about our analysis and forecasts. To begin with, we are confident that these projections may be robust, but the accuracy of their future might be affected or impacted by continual changes associated with this pandemic, which includes the policy responses that Government may make. So if you would like access to our latest view, you can contact us directly.
Secondly, while COVID-19 has had a dramatic effect on the entire UK media industry, many of the impacts on sub-sectors have also varied widely. As self-isolation and social distancing saw many UK consumers stay indoors, this was typically great news for the industries that serve up in-home engaging content, such as OTT (over-the-top) video gaming, video services, corporate video production, podcasts, internet access, and podcasts. But it wasn’t that great, over the short-term, for any service that required consumers to be in public spaces such as live music, events, cinema, outdoor advertising, and buying magazines at physical stores.
With this in mind, across all these sub-sectors, Covid-19 has managed to open up the opportunity for updated revenue models along with a new way to engage and target audiences. Some of these examples include virtual B2B events and virtual live music, along with a few of the sports broadcasts, which are now “free” to air, along with many more. At the same time, the media industry in the UK is also now a lot more equipped to cope with disruptive events like the pandemic than it ever was. Today there are a lot more subscriptions, not so much reliance on having to print, as opposed to ad-funded models, streaming has become mainstream, while many media enterprises are now more “digitally” enabled for facilitating remote collaboration/working, while continuing with content distribution and creation.
We predict that the media sector will start demonstrating its agility again, and it will strongly rebound once the economy starts to re-open. This is a prospect we reflected in the revenue forecast we published through to 2024.
The global advertising markets have gone through a difficult period during the Covid-19 pandemic. Advertising has suffered a much larger decline compared to spending by consumers on E&M, as these agencies that sell these products relied on customers to leave their homes had to stop placing ads on different media. Digital advertising was also affected, but these impacts were very mild when compared to advertising options like cinema, out-of-home, and newspapers. We expect that the total UK internet advertising that spans across search, display, and classifieds will probably be down 5% in 2020. To compare: printed newspaper advertising will most likely slump by 24%, while out-of-home both physical and digital will drop by 30%.
As advertising revenues start recovering from this pandemic, it is assumed that digital advertising will carry on outperforming the other advertising forms, which will enable it to bounce back more strongly from this temporary setback. Similar to consumer spending, this pandemic hasn’t only sustained a shift to “digital” within the advertising markets, but rather actively sped it up. As we come out of Covid-19, more and more brands will have to start investing more in eCommerce platforms, and digital platforms, and engage with consumers over a more far-reaching range of digital-based touchpoints or channels. This is also going to underpin the rebound in revenue for digital advertising over time.