Global Cinema Revenue and Entertainment Industry Forecast: A Mixed Picture

Box Office Grosses May Surpass Pre-COVID Levels in 2026. That's the Good News...

'Grey's Anatomy' Star Kevin McKidd Joins BBC Studios Drama 'The Primrose Railway Children' Global box office and global total cinema revenue will surpass pre-COVID-19 pandemic levels in 2026, but admissions won't do so over the next five years. Global subscriptions to streaming services will post a 5.6 percent compound annual growth rate (CAGR) between 2023 and 2028, outpacing a compound annual gain in streaming revenue of just 4 percent. And advertising revenue will top the $1 trillion milestone in 2026 and be the fastest-growing of the three core revenue categories over the next five years. Those are just some of the predictions contained in consulting and accounting firm PwC's annual "Global Entertainment & Media Outlook," published late on July 15. The annual forecast, which covers 13 sectors across 53 countries and territories, notes that total revenue increased 5 percent in 2023 to $2.8 trillion, outpacing overall economic growth "despite economic headwinds, technological disruption, and increased geographic and industry competition." The CAGR for the next five years is projected to slow to 3.9 percent though, adding $597 billion to the global revenue pie to boost it to $3.4 trillion. Highlighting "widespread uncertainty," PwC emphasized that the name of the game in the industry to capture some of that revenue is business model reinvention, which has "evolved from a strategic option into an existential imperative," the firm said. When it comes to cinema revenue, the trends have been mixed. "Aided by a number of blockbuster releases in 2023, cinema saw a 30.4 percent year-on-year increase in spending at the box office," PwC highlights. But box office/theatrical revenue will top pre-pandemic levels in 2026, rather than 2025 as projected a year ago, according to the firm's updated forecast. "This is primarily driven by a larger budget slate expected to drive more box office sales and more ad spend," explains Bart Spiegel, global entertainment and media deals leader at PwC, to The Hollywood Reporter. The firm sees the 2019 box office revenue of $38.55 billion nearly reached in 2025 with $37.68 billion before hitting $40.23 billion in 2026. Global cinema revenue, helped by ticket price hikes and advertising growth, will continue to grow, but also see a one-year delay. "In last year's report, we anticipated that pre-pandemic levels would be reached by 2025. However, this year's report predicts that the return will occur in 2026, indicating a more pessimistic outlook," shares Spiegel. "Some of this can be attributed to a stronger budget slate throughout the year 2026. It is worth noting that there has been movement over the years, as some major studios made announcements towards the end of 2023." PwC estimates that after $42.11 billion in global cinema revenue, 2025 will reach $41.34 billion before a further jump to nearly $44.00 billion in 2026. The picture for cinema admissions is different. "Admissions are not expected to return to pre-pandemic levels throughout the forecast period. By 2028, the last year of our projections, admissions are projected to fall short by 1.5 billion compared to pre-pandemic levels," explains Spiegel. That means around 6.45 billion admissions forecast for 2028, compared with 7.92 billion in 2019. In North America, admissions are also not anticipated to reach pre-pandemic levels during the forecast period ending in 2028 when PwC forecasts 953 million admissions, which Spiegel calls "a significant decrease from 1.3 billion in 2019." Factors contributing to this decline include "changes in consumer habits following the pandemic, the increasing popularity of streaming platforms, the impact of rising inflation, and audience fatigue with superhero movies," he says. In streaming, PwC diagnoses slowing revenue momentum amid a maturing business. "This lack in revenue growth is likely because consumers are becoming overwhelmed by the number of streaming service choices," it explains. "Companies are responding by offering lower subscription fees in exchange for showing ads." Streaming usage and consumer uptake are rising, "albeit at a lower rate than in recent years as service providers face increased competition and challenges in getting consumers to pay more for digital goods and services," the firm's report mentions. "Global subscriptions to over-the-top (OTT) video services will rise to 2.1 billion in 2028 from 1.6 billion in 2023 - representing a 5 percent CAGR. Global average revenue per [streaming] video subscription is barely expected to grow, rising from $65.21 in 2023 to $67.66 in 2028." That explains recent strategy shifts at streaming services. "This plateauing effect is pushing leading streamers to reshape their business models and find new revenues beyond subscriptions, including the introduction of ad-based variants (reduced subscription fees with ad-filled content), cracking down on password-sharing, introduction of live sports, and industry consolidation," says PwC. "In developed markets, this consolidation is taking the form of bundling subscription service providers." Cord-cutting will continue to impact the industry over the coming years, according to the Global Outlook report. "We anticipate ongoing declines in the linear ecosystem as more users transition to digital offerings," shares Spiegel. "While some major legacy media companies now offer digital options, they all still face challenges in reducing churn, managing the rising costs of content (especially sports rights), and delivering a compelling value proposition to their subscribers." All this also means that advertising is becoming a bigger part of the streaming revenue mix. The result: "In four years, advertising will make up almost 28 percent of all the money that streaming services make - a major increase from the 20 percent it made in 2023." Speaking of advertising: Global ad revenue is expected to grow at a 6.7 percent CAGR through 2028, ahead of the other two broad sector segments. Connectivity will post a CAGR of 2.9 percent, while consumer spending will only reach a 2.2 percent CAGR. Total advertising revenue will hit $1 trillion in 2026, "while 2028 revenue will hit double the revenue of 2020," the accounting firm predicts and highlights: "Advertising is projected to account for 55 percent of the total entertainment and media industry's growth over the coming five years." Internet advertising is the largest and "one of the fastest-growing components" of the ad pie. Notes the PwC report: "It grew 10.1 percent in 2023, adding $52.5 billion in new revenues, and is projected to rise at a 9.5 percent CAGR through 2028 when it will account for 77.1 percent of total ad spending." What is behind the growing importance of ad revenue? "Advertisers are now willing to invest more in reaching consumers through different platforms, including phones, games, and e-commerce sites," Spiegel tells THR. "The growing significance of advertising in the entertainment and media industry can be attributed to factors such as the ability to monetize data, the closer relationship between product discovery and purchase, and the influence of global privacy regulations." Questioned about the impact of higher consumer prices on the media industry, the expert notes: "Consumer spending has been affected by inflation, prompting media companies to respond by offering more ad-friendly or ad-supported options at a lower price point." Meanwhile, gaming, including the e-sports business, has continued being what PwC describes as "one of the fastest-growing large sectors in the entertainment and media universe, with total revenue hitting $227.6 billion in 2023, up 4.6 percent." Gaming revenue is on track to top $300 billion in 2027, almost double its level in 2019, the firm highlights. All those Taylor Swift fans, old and new, streaming to stadiums have also been a key growth engine. Notes PwC: "Driven by large events, such as musician world tours, live music revenues rose 26 percent and accounted for more than half of the overall music market." Of course, AI also gets attention in the latest PwC report. Summarizes the company: "The global entertainment and media industry looks to generative AI to drive new revenue streams and transform business models." After all: "Shifts in consumer preferences, and uncertainty around the continued impact of digital transformation and new and emerging technology, such as generative AI, are inspiring a wave of business model reinvention. If market players are to gain their share of the growing revenue pools we identify, they will have to reimagine how their company creates, delivers, and captures value, leveraging the growth of advertising while also harnessing the powerful opportunity presented by AI." There are, of course, also risks and discussions to be had. "Having exploded onto the scene in the past couple of years, generative AI brings major implications -- including both opportunities and challenges," PwC notes in its Global Outlook report. "The U.S. cut of PwC's most recent CEO Survey shows that nearly half of U.S. CEOs see GenAI boosting profits this year, with 61 percent expecting it to improve the quality of their products and services." The labor talks of the past year made AI a focus topic though. "The need to control the use of AI tools and AI-generated content -- and to avoid undercutting creators' rights and payments -- were key factors in the 2023 Hollywood writers' strike, and in the subsequent deal struck with the Writers Guild of America," notes the PwC report. "Going forward, the speed at which high-quality content can be produced will continue to increase as the related costs decline. The open question remains precisely how GenAI will translate into higher revenues and help companies accelerate their pursuit of revenue pools." One high-potential area is in the advertising space, according to the Global Outlook. "GenAI is increasingly being integrated into content creation and advertising tools," it notes. "Here its application has tended to focus initially on extracting small pieces of information and generating summaries in subsectors, such as sports media," it highlights before outlining more opportunity ahead: "If GenAI can be harnessed to offer new experiences and create new revenue streams, the growth potential is even greater."

Global ads lift entertainment and media as game industry recovers | PwC

GamesBeat is excited to partner with Lil Snack to have customized games just for our audience! We know as gamers ourselves, this is an exciting way to engage through play with the GamesBeat content you have already come to love. Start playing games here. Despite economic headwinds, technological disruption and increased geographic and industry competition, the global entertainment and media (E&M) industry grew in 2023, with total revenues rising 5% in 2023 to $2.8 trillion, according to PwC. By 2028, entertainment & media is expected to hit and projected to hit $3.4 trillion. The E&M industry's rate of growth for 2023 outpaced overall 3.2% global economic growth cited by the International Monetary Fund for 2023. It's worth noting the numbers in the forecast don't yet include the impact of generative AI, as it still isn't quite clear exactly how it will impact the economy in various ways. And when it comes to games, PwC -- a big accounting and professional services firm -- the industry grew 4.3% in 2023. Total video game and esports revenue is expected to grow another 8.2% in 2024. This is why PwC classifies gaming as one of four major opportunities for growth in entertainment and media. That may sound overly optimistic to those who have been watching game industry layoffs, but it's worth noting this category includes not only PC and console game revenue, but also esports, social/casual games, mobile games, ad revenue and cloud/subscription game revenue. Overall, gaming is just 9% of overall entertainment and media industry revenues. PwC has been doing this report for 25 years. I talked about the report with CJ Bangah, Principal, TMT customer transformation consulting at PwC U.S. Gaming's growth By 2028, gaming is expected to stand out for its growth rate while live-events and global cinema continue a rebound. Global gaming, which includes esports (competitive gaming with professional tournaments and live spectators), continued its streak as one of the fastest-growing large sectors in the E&M universe, with total revenue hitting $216.3 billion in 2023, up 4.3%. Revenue is on track to top $321.4 billion in 2028, almost double its level in 2019, for a five-year compound annual growth rate (CAGR) of 8.2%. That compares to a CAGR of just 3.9% for five years for the larger E&M industry. Asia Pacific remains the largest regional market for gaming, representing 48.1% of the segment's global total, rising to 54.4% - or $181.8 billion - in 2028. I noted my surprise that gaming, as big as it is, was just 9% of the overall entertainment and media industry. "Gaming for years has been the highest growth category. We talked about this earlier that games are the most transformative category and entertainment media. Those things haven't changed," Bangah said. "That's why it can feel like it has an outsized impact on a relative basis to the sector. Gamers tend to spend. Real gamers tend to spend a good chunk of their free time in gaming. And you're not necessarily engaging in the same way with all the other categories. So I'm not surprised to hear you say that." She noted that gaming is forecasted to grow in each of the next five years, and that growth will happen at a higher growth rate than other entertainment and media categories. Still, Bangah noted that game companies are clearly looking for new sources of growth. "While our gaming forecast is a very healthy growth rate compared to traditional entertainment and media experiences, it's a decelerated growth rate from what games are used to," Bangah said. Bangah said the anomaly of revenue growth and layoffs happening at the same time probably has more to do with profit expectations that did not come to pass. With rising costs across the board in the recent years and high inflation, game companies saw a financial squeeze in spite of the revenue growth. And it's worth noting that the revenue never spreads evenly. Games is always full of winners and losers. Bangah also believes that the power of intellectual property keeps showing up everywhere, with a balance of creative freedom, IP protection and growth. This is true for gaming, but also many other industries in entertainment and media. Bangah noted that the European Union has been aggressively enforcing antitrust and open market regulations in hopes of creating an equitable environment for game creators and other entertainment creators. That is happening in a variety of jurisdictions around the world. I wonder if these actions could result in changes for game developers' fortunes. With new ventures like adapting games to movies, Bangah said, "You're either going to do really well or it could be a pretty big hole that you need to fill with other revenue. We started to enter this tipping point where profitable operations are increasingly important and levers like layoffs get pulled to make sure" that the profits are there to self-fund investments in the future. "We are still extremely optimistic about gaming and gaming growth in total, while acknowledging that the industry has made short term optimization decisions that have more to do with the economic performance than it does with the top line revenue," Bangah said. As for regional game growth, Bangah noted there are high-growth markets like Pakistan, and individual markets have strong forecasts thanks to young audiences with good economic purchasing power in certain countries. Countries with multi-generational consumers of games are also strong. Indonesia has a youthful population and growing purchasing power. Saudi Arabia's government has made a big investment in gaming. Does Bangah see more of that happening? She noted that gaming is growing, it influences culture, affects human emotion and human connection. That would lead you to believe more countries would embrace gaming as part of a flourishing creative and economic ecosystem, Bangah said. At the same time, some like China are worried about addiction and are restricting gaming hours. Larger entertainment and media growth The outlook covers 13 sectors across 53 countries and territories. PwC found global E&M revenues are projected to hit $3.4 trillion in 2028, growing at a 3.9% compound annual growth rate (CAGR). Advertising revenue is set to hit $1 trillion in 2026 and is projected to account for more than half (55%) of total E&M industry revenue growth over the next five years. The outlook also finds that streaming services, traditionally dependent on subscription models, face increased competition and challenges in consumer use and uptake, and are looking to consolidation, live sports (including mega-events like the Summer Olympics), a crack-down on password sharing (watch out to those with big families), and ad-based models to drive growth. Looking across the globe, the U.S. remains the world's largest consumer spending and advertising market (4.3% CAGR to 2028), representing more than one-third of global spending in 2023. However, other large markets including China (7.1%) and India (8.3%), and less mature markets such as Indonesia (8.5%) and Nigeria (10.1%), are growing more quickly. Werner Ballhaus, global entertainment & media leader at PwC Germany, said in a statement, "As the global entertainment & media industry continues to grow, market players face both risks and opportunities. Shifts in consumer preferences, and uncertainty around the continued impact of digital transformation and new and emerging technology such as Generative AI, are inspiring a wave of business model reinvention." Ballhaus added, "If market players are to gain their share of the growing revenue pools we identify, they will have to reimagine how their company creates, delivers, and captures value, leveraging the growth of advertising while also harnessing the powerful opportunity presented by AI. As consumers increasingly consume content online, companies will also need to diversify their product-offerings and continue to connect with consumers on the platforms where they spend more of their time." Streaming services look to new models to drive growth Streaming service usage and consumer uptake is rising, albeit at a lower rate than in recent years, as service-providers face increased competition and challenges in getting consumers to pay more for digital goods and services. Global subscriptions to over-the-top (OTT) video services will rise to 2.1 billion in 2028 from 1.6 billion in 2023 - representing a 5% CAGR. Global average revenue per OTT video subscription is barely expected to grow, rising from $65.21 in 2023 to $67.66 in 2028. This plateauing effect is pushing leading streamers to reshape their business models and find new revenues beyond subscriptions, including the introduction of ad-based variants (reduced subscription fees with ad-filled content), cracking down on password-sharing, introduction of live sports, and industry consolidation. In developed markets, this consolidation is taking the form of bundling subscription service providers. By 2028, advertising will account for about 28% of OTT global streaming revenues, up from 20% in 2023. PwC said that in-person, real-life, tech-enabled E&M experiences such as live music and cinema remain key growth industries, with movie box office and music ticket sales representing 38.6% of 2023's net increase in consumer spending worldwide. Driven by large events such as musician world tours, live music revenues rose 26% and accounted for more than half of the overall music market. (I think we can thank Taylor Swift for some of that). Aided by a number of blockbuster releases in 2023, cinema saw a 30.4% year-on-year increase in spending at the box office. Global cinema revenues are poised to surpass their pre-pandemic, 2019 levels in 2026. Wilson Chow, global tech, media and telecommunications industry leader at PwC China, said in a statement, "The global entertainment & media industry has always thrived on technological disruption. To capitalize on the many growth opportunities, it must leverage the power of new and emerging technologies such as Generative AI, re-shape business and creative models, and leverage the technology for advertising. So far, many of the applications of Gen AI in the E&M industry have focused on speed and efficiency. As we look ahead, the industry will have to focus on how Gen AI can lead to greater value creation through experimenting, iterating, and scaling new solutions and processes." In the report, PwC said, in aggregate, the industry's ship seems to be sailing through calm seas on an even keel. But the firm said the surface is continually roiled by cresting waves and deep troughs, with dangerous shoals and reefs lurking everywhere. Disruption, presenting opportunities and risks, continues to break over the sector. Linear value chains are disaggregating as we move into a world dominated by digital ecosystems. The content boom driven by rapid streaming growth has come to a halt. Opportunity #1: Advertising If we're looking for things that could have an outsized impact on revenues across industries, you need look no further than the old-fashioned notion of advertising. "Advertising is playing [a bigger role] in driving the growth of entertainment media across the board," Bangah said. "Consumers have gotten trained that they can have pretty good content experiences for low costs or no cost. And advertising is an incredibly important part of bringing that set of expectations to life." She added, "The the cost of production has to come from somewhere. And I think we're seeing brands and agencies really say where we should be putting our advertising dollars and taking a much more holistic approach" to entertainment and media advertising. It's increasingly challenging to drive revenue growth by selling E&M products directly to users. Of the three major categories -- consumer spending, connectivity, and advertising -- consumer spending is both the smallest and slowest growing. The connectivity category, what people pay for fixed and mobile services, topped $1.1 trillion in 2023. Growing only modestly through 2028 -- as people remain willing to spend more to ensure they have access to all that the E&M industry has to offer -- it will continue to be the largest category. (Note: Reported and forecast data for connectivity are higher this year than in previous versions of the Outlook. The definition has been expanded from an imputed share of service revenues to include all service revenues as reported by the largest industry players.) But PwC said the real growth story, the biggest opportunity, lies in what companies are willing to pay to reach consumers, whether they are on phones, playing games, on the road, or on e-commerce sites. Advertising, which surpassed consumer spending in 2023, is projected to top $1 trillion in 2026, and will grow at a 6.7% CAGR through 2028 -- when ad spending will be nearly double the 2020 total. With advertising accounting for 55% of total E&M industry growth over the coming five years, it is poised to become a more important part of companies' business models -- even for those that had previously avoided ad revenue. For strategic reasons, all participants in the E&M industry need to become more proficient at selling ads -- and more effective at making them generate value for all participants in the ecosystem. Changes to the way businesses approach the ad business will be seen in three key areas: The monetization of data will fuel more sophisticated advertising models. There will be closer connections between the discovery of products and services and their purchase and consumption. And companies will have to understand how global privacy regulations impact growth. Global advertising revenue is expected to grow at a 6.7% compound annual growth rate (CAGR) through 2028, ahead of the other two broad E&M segments analyzed: connectivity (2.9%) and consumer (2.2%). Internet advertising is the largest and one of the fastest-growing components of the advertising industry. It grew 10.1% in 2023, adding $52.5 billion in new revenues, and is projected to rise at a 9.5% CAGR through 2028, when it will account for 77.1% of total ad spending. This broad advance of ad revenues underlines the wider opportunities for other E&M players. Addressable, measurable ads delivered on TV screens will become a vital contributor to the revenues of direct-to-consumer online video providers. Online connected TV (CTV) ads, which are served during video programming, are projected to double, from $20.5 billion in 2023 to $41.2 billion in 2028. Retail media players are increasingly experimenting with 'shoppable TV' advertising, which makes it possible for consumers to buy products direct from ads on television and on videos -- an opportunity underlined by US retailer Walmart's purchase of smart TV manufacturer Vizio in February 2024. As more consumer attention migrates away from traditional television to user-generated, short-form content, advertisers may need to follow this migration with approaches that go beyond the 30-second or 15-second spot. These may include relying more on influencers, offering experiential promotions, and tapping into new technologies that enable creative messaging. Opportunity #2: Rethinking business models The streaming world neatly encapsulates the industry's broader challenge. Usage and consumer uptake of the core offering is continuing to increase -- albeit at a lower rate than in recent years -- but companies are having greater difficulty getting people to pay more for digital goods and services. As the number and range of streaming services proliferate, a form of market saturation has begun to kick in. Global subscriptions will rise in the next five years at 5.0% CAGR, but average revenue per subscription will barely grow. This plateauing effect is already pushing leading streamers to reshape their business models and find new revenue streams beyond subscriptions. The big three Western global players in the streaming sector -- Disney+, Netflix and Amazon Prime Video -- all rolled out ad-funded 'hybrid tier' offerings, in which consumers agree to view ads in return for paying a lower subscription fee. In an expanding number of markets worldwide, many smaller or regional players are following suit. The introduction of an ad-based variant is often accompanied by other measures to boost revenues, ranging from cracking down on sharing of passwords to investing in 'appointment viewing' content, such as live sports, to attract both subscribers and advertisers. As subscription revenue growth levels off, global advertising VOD (AVOD) revenue will continue to grow at double-digit rates through 2028 -- for a five-year CAGR of 14.1%. By 2028, advertising will account for about 28% of global streaming revenues, up from 20% in 2023. The business model reinvention underway in the OTT space also includes a wave of consolidation and rationalization initiatives. Disney+ Hotstar in India was created in 2020, after Disney acquired Star India's parent company, 21st Century Fox. After several challenging years, in February 2024, Disney's Star India struck a $8.5 billion merger with Viacom18, a unit of the conglomerate Reliance Industries, which owns the larger Jio OTT platform. India's fragmented OTT market -- which will be the world's fastest growing in the next five years, with total revenue hitting $4.3 billion in 2028 -- is ripe for consolidation, with around 101 million paid subscribers and 58 OTT platforms, about half of which are regional players operating in local languages. Speculation about deals is being fuelled by the increasing involvement of international E&M companies in India. To name one example, Warner Bros. Discovery opened its GCC (Global Capability Center) in Hyderabad in September 2023. OTT consumers in China subscribe on an individual basis by channel rather than paying a subscription for the whole household -- for example, a person buys a membership for a first-window screening of a drama or variety show. A single compelling show can dramatically boost a streamer's memberships and share prices. Content that has achieved that effect this year includes Tencent's drama Blossom Shanghai. The first television series from famed director Wong Kar-Wai not only attracted new members, but it also featured more than 200 product placements and boosted tourism to Shanghai. In developed markets, by contrast, a different form of consolidation is taking place: the return of the bundle. With customers reluctant to endlessly expand their subscription purchases, major players are slowly reconstituting a version of the cable offering. In the US, Disney and Warner Bros. Discovery have teamed up to offer a Disney+-Hulu-Max bundle, and Disney, WBD and Fox Corp. are launching a live sports bundle called Venu Sports. Comcast is offering its TV and broadband customers a service called StreamSaver, bundling Peacock, Netflix and Apple TV+. And in a complete reversal, we are starting to see early indications that IP owners/creators are migrating back to potential licensing deals with streaming competitors to generate incremental margin. Opportunity #3: Gaming The global obsession with gaming continues to produce rising revenues, even as some companies that expanded rapidly in the COVID era have reduced employment -- there were 10,500 layoffs in 2023 and more than 11,000 so far in 2024 in gaming. Global video games revenue -- which includes esports, still a very small component -- reached $227.6 billion in 2023, up 4.6%. It's among the fastest-growing large sectors in the E&M universe, with revenue on track to top US$300 billion in 2028 -- more than double its level in 2019. Although the pace of annual growth will decline as the segment matures, in 2028, gaming will account for 9% of the entire E&M industry. Historically, revenues from video gaming have been dominated by subscriptions and purchases of games. But advertising is gaining prominence. Of the two main revenue sources, app-based social/casual gaming revenue ($82.9 billion) was narrowly ahead of in-app games advertising revenue ($72.4 billion). By 2028, the latter will rise at a 15.4% CAGR globally to $147.9 billion in 2028, while the former will grow at just a 5.15% CAGR, to $106.6 billion. By 2028, social/casual gaming will account for more than three-quarters of the overall global video games and esports market. Gaming is a global business. But the culture of gaming -- and the business models that support it -- varies significantly from country to country. The biggest region globally for total video games and esports revenue is Asia Pacific. In 2023, video gaming in the region generated revenues of some $109.6 billion, 48.1% of the segment's global total. By 2028, the region will account for $181.8 billion in gaming revenues, or 54.4% of the total. The leading region is not a monolith. Within Asia Pacific, total video games and esports revenue in Indonesia is projected to rise at a CAGR of 16.0% through 2028, which makes it the third-fastest-growing video games market (tied with Pakistan). The Indonesian government is strongly supporting the industry's development in the country, working to help it resolve challenges in areas such as funding, talent, infrastructure and regulation. In Japan, where video gaming is hugely popular across all age groups, gaming benefits from its close association with the traditional Japanese anime content that's gaining a growing global audience. As the gaming sector grows, investments in new products, new tech and new business models will increase. Nintendo is likely to release the next generation of its popular Switch console in 2025. To appeal to younger demographics, companies are focusing on more compelling collaborative, social game play. And in February 2024, Disney and Epic announced a deal to work together to create an ecosystem that would envelop Fortnite and the worlds of Pixar, Marvel and Star Wars, PwC said. Bangah noted that esports seemed to have good potential for licensing revenue, ticket fees and other revenue sources. But the "esports winter" started with the pandemic, where events transitioned from physical in-person events to online remotely viewed matches. Parts of esports are healthy, but other parts are still in recovery mode. Opportunity #4: High-growth geographies and segments Just as the growth potential in video gaming varies by region and country, the same divergence of opportunity applies across different E&M markets more generally, PwC said. The matrix above charts country-by-country E&M revenue against its projected growth rates. (It's important to note that this chart excludes connectivity revenue, which would blur the picture.) The biggest pools of revenue growth lie in two principal areas: regions that are already big and growing relatively rapidly, and those that are relatively small and growing extremely quickly. And for many major players, low per capita spending power in some markets poses a challenge. The U.S., representing more than one-third of global spending in 2023, remains the world's biggest E&M market for the combined advertising and consumer spending markets by a wide margin. But this scale brings with it maturity and hence relatively slower growth, which is projected to run at a 4.3% CAGR through 2028 -- behind the global rate of 4.6%, PwC said. Among the larger markets showing rapid growth, the clear stand-outs are Indonesia and India, followed by China, at a 7.1% CAGR. By 2028, China's advertising and consumer spending revenues ($362.5 billion) will be less than half of those in the U.S. ($808.4 billion), PwC said. Each of these territories has its own distinctive market dynamics. India will be the world's fastest-growing OTT video-streaming market over the forecast period, serving its vast, diverse and widely dispersed population -- many of whom are obsessed with sports content in general, and cricket in particular: Reliance's JioCinema app attracted a record 32 million viewers for the 2023 Indian Premier League (IPL) final between Chennai Super Kings and Gujarat Titans. And China's continued strong growth means it's steadily closing the gap on the U.S. in terms of market size, although tight government regulation can make investing there more complex than in other territories. Among the relatively small markets that show extremely rapid growth, Nigeria (10.1% CAGR through 2028) leads the way. It has a predominantly young population of 220 million consumers, and is widely acknowledged as Africa's leading E&M hub, home to the Nollywood movie industry, which produces around 2,500 films annually. Growth in Turkey's E&M industry (9.5% CAGR through 2028) is bolstered by widespread use of social media. A new driver of reinvention: Generative AI Having exploded onto the scene in the past couple of years, generative AI (GenAI) brings major implications for companies across E&M, PwC said. The U.S. cut of PwC's most recent CEO Survey shows that nearly half of U.S. CEOs see GenAI boosting profits this year, with 61% expecting it to improve the quality of their products and services. Thus far, much of the discussion surrounding AI in E&M has focused on reducing and controlling costs -- rather than driving new revenue streams. GenAI-driven text generation tools can translate concepts into stories and generate credible human dialogue, turn text into visuals and storyboards, and create animated 3D models from 2D videos or static images. GenAI can also add value in post-production by making editing quicker and easier. In Japan, anime and comic producers are using AI to streamline and accelerate their production processes. In Indonesia, too, GenAI is being deployed as a productivity engine for creative processes. The need to control the use of AI tools and AI-generated content -- and to avoid undercutting creators' rights and payments -- were key factors in the 2023 Hollywood writers' strike, and in the subsequent deal struck with the Writers Guild of America. Going forward, the speed at which high-quality content can be produced will continue to increase as the related costs decline, PwC said. The open question remains precisely how GenAI will translate into higher revenues and help companies accelerate their pursuit of revenue pools. One high-potential area lies in the highest-growth sector: advertising, PwC said. GenAI is increasingly being integrated into content creation and advertising tools. Here its application has tended to focus initially on extracting small pieces of information and generating summaries in subsectors such as sports media. To date, many of the applications of GenAI have focused on speed, efficiency and reducing costs. Looking ahead, in a dynamic that the forecast doesn't quite capture yet, industry participants will have to focus on how this powerful technology can lead to greater value creation. GenAI offers users a powerful flywheel for experimenting, iterating, and scaling new solutions and processes. In advertising, GenAI can be used to quickly develop creative approaches for different contexts -- and then to iterate and refine rapidly in response to consumer attention and uptake. If GenAI can be harnessed to offer new experiences, and create new revenue streams, the growth potential is even greater, PwC concluded. Bangah said AI can be both a productivity tool that reduces costs and also enables creativity. It can pave the way to transform and reinvent the experiences that consumers are having across entertainment, she said. "One of the big things this year is how AI can move beyond cost out and productivity into innovation and transformative capabilities," she said. Bangah said it feels like AI has superceded the metaverse in terms of conversations compared to a few years ago. It has shown compelling use cases and value propositions in a way that the metaverse did not. The adoption is also accelerated compared to consumer enthusiasm for the metaverse. Bangah thinks that some thinking about the metaverse was wrong, like taking 2D thinking into 3D worlds, like opening up a web site or a shopping mall inside the infinite spaces of the metaverse. "There's nothing intrinsically wrong with that. Consumers may or may want that experience. The truly transformative power of the metaverse is [more like having] an avatar that I can take with me across multiple experiences in my online world," Bangah said. And the time horizon for that is further out than initially expected, Bangah said. Blockchain could also be useful in bringing a single identity aross environments and other such benefits, but blockchain also has had to deal with hype and down cycles that suggest it isn't in a mature state yet. "But the potential is absolutely there," Bangah said. Who will win? I asked Bangah if the big tech platforms or the entertainment companies would rule the industry in the future. She said she expects a little of both. Entertainment has big companies like Disney and Sony, while the tech companies like Google, Meta, Amazon, Netflix and Apple have made inroads into entertainment and media. The tech firms dominate the mobile devices and some have consoles that serve as the gateway to gaming. Bangah said she thinks it's too early to tell who will have power in the long term. "We are seeing some of the technology companies realize the importance of having killer stories, killer content, loyal gamers who want to engage with that kind of platform," she said. She noted that gamer are playing across platforms and don't necessarily want to see platform divisions that block them from getting their favorite content. She sees friction between the endemic entertainment companies and the tech giants. I noted that whoever does a better job of portraying themselves as authentic to the fans are the ones that are going to succeed. "What we've seen in 25, plus years of producing the entertainment media outlook is that, in the short term, companies can optimize for their own competitive results," she said. "But long term, if you don't let put consumer, the gamer, the fan at the center of the experience that you deliver, eventually, your going to lose share and you're going to grow at a slower rate. It needs to be authentic, fan centric content."