Consumer spending on digital entertainment and media will grow at a much faster rate during the next five years than spending on non-digital entertainment and media, according to [pdf] a new white paper from PriceWaterhouseCoopers.
Digital Formats and Platforms Will Continue Long-term Growth Pattern
Spending on digital entertainment/media formats and platforms, including internet access, accounted for 24% of overall industry revenues in 2009, up from 21% in 2008. Internet access contributed about half of those revenues.
Excluding internet access, digital spending increased by about 10% in 2009. While this rate has substantially slowed since approaching 50% in 2005, it is still substantially better than the spending pattern demonstrated by non-digital entertainment/media. Spending growth in this category has been anemic since 2005 and actually fell 6.4% in 2009.
PriceWaterhouseCoopers forecasts another non-digital spending decline in 2010, while digital spending slightly increases,,before spending in both categories undergoes a moderate increase in 2011.
Digital Share to Reach 33% in 2014
Digital entertainment/media spending is expected to reach a 33% share of the entire market by 2014, due to a substantially higher anticipated compound annual growth rate (CAGR). While gradual economic recovery should provide the non-digital portion of the market with a 2.6% CAGR between now and 2014, during the same time period digital spending will experience a 12.1% CAGR.
Reports of Non-digital’s Death are Exaggerated
PriceWaterhouseCoopers advises that despite the dramatic disparity in growth rates, legacy offline revenue streams are still significantly larger and will remain so for the next five years. While the strongest growth will be in digital and online, the majority of revenues will still be analog and offline. Therefore, providers should view digital in a complementary, rather than competitive, light.