Study: Internet Will Fuel Annual Growth Of 6.6%

Led by surging growth in the online sector, global entertainment and media will expand into a $1.83 trillion industry in 2010, up from an estimated $1.33 trillion last year, making for a compound annual growth rate of 6.6%, according to an annual study from PricewaterhouseCoopers.

Consumer/end-user spending gains will outpace advertising growth as PwC estimates compound annual increases of 6.8% and 6.2%, respectively, during the next five years.

The biggest global industry engines during that time frame will be Internet advertising and access spending, for which PwC projects a compound annual growth rate of 12.9%, and video games, with an estimated 11.4% compound gain. Filmed entertainment will expand at a rate of 5.3%, according to PwC.

The projected 6.6% compound annual growth rate for the latest five-year frame compares with 7.3% in last year's report, with PwC having brought down its 2009 entertainment market revenue estimate from $1.78 trillion to $1.73 trillion.

For the U.S., the latest annual "Global Entertainment and Media Outlook: 2006-2010" predicts the entertainment economy to expand from an estimated $553.49 billion in 2005 to $726.22 billion in 2010. That would mean a compound annual gain of 5.6%.

The digital revolution will remain a key theme for the entertainment economy. "Virtually every segment of the entertainment and media industry is shifting from physical distribution to digital distribution of content," said Wayne Jackson, global leader of PwC's entertainment and media practice. "While physical distribution of content is declining, that decline will be offset somewhat by digital distribution, which is driving and creating new growth opportunities."

Digital, mobile and broadband will become "increasingly lucrative distribution channels," according to the company.

Overall, the industry "is well into a recovery pattern with increases during the past two years exceeding growth during 2001-2003," Jackson said in the introduction to the "Outlook" report.

Globally, advertising is expected to grow from $383 billion last year to $521 billion, with all ad categories set to enjoy modest growth. Internet advertising will see the largest five-year surge -- at an 18.1% compound rate -- from an estimated $22.45 billion last year to $51.6 billion in 2010.

In the U.S., total advertising will increase at a below-average compound annual rate of 5.4% through 2010, with online ads set to expand 15.2% and TV network ads rising 7.1%. This will leave total ad spending in the U.S. at $230.44 billion in 2010, compared with an estimated $177 billion last year. TV network ad revenue will increase to $51.95 billion in 2010, and online ads to $25.5 billion.

For the long-suffering recorded music space, PwC predicts a 5.2% global compound annual growth rate, with the U.S. set to expand at 3.7%. Key engines will be digital distribution and mobile music, which will offset further declines in spending on physical formats, the firm said. This will leave the global music market at $47.9 billion in 2010, with the U.S. contributing $14.7 billion.

Read the full story at The Hollywood Reporter.com.