In our Global E & M Outlook for 2020, we predict a total rise in Entertainment and Media revenues in the UK at a CAGR (Compound Annual Growth) rate of 2.8%, reaching approximately £79.8bn by 2024. This indicates a sharp recovery from the expected decline of -6.7% in 2020 due to the impact of lockdowns and an economic recession triggered by the arrival of COVID-19.
The publication Outlook has been delayed this year in order to allow us to get a clearer view of the impacts of the Covid pandemic. In the first instance, while we are confident of the robustness of our projections, it is clear that their future accuracy could be affected by rapid and continued changes to the Covid pandemic that include responses from the government on policy. Therefore, in order to get Outlook’s very latest views on the subject, it is recommended that clients should speak to us directly.
Secondly, while the Covid pandemic has had a significant impact on the media industry as a whole, on specific sub-sectors its effects varied widely. While regulations like social distancing and self-isolation forced UK consumers to remain indoors, in general, this created unique opportunities for those, such as a video production agency, who are in the business of providing in-home entertainment to serve up engaging content such as OTT (Over The Top) internet access in the form of podcasts, video services, music, and video games. However, at least in the short term, this was less than good news for businesses that require people to partake in events while out and about, such as cinema, theatre, restaurants, impulse buying, and being exposed to outdoor advertising.
That being said, the pandemic has also opened up whole new avenues of possibilities for the creation of new revenue streams and novel ways for businesses to engage with their audiences. For example, we have witnessed how some events like B2B and live music have gone virtual, sports broadcasts being offered free-to-air, and many other ways to circumvent the restrictions posed by the pandemic. It can also be added that in 2020 the UK media industry is much better equipped to cope with a disruptive event such as Covid-19 than it would have been at the beginning of the century. The industry has already become less reliant on printed media, streaming is mainly mainstream, and with rather than ad-funded models there are more subscriptions. In addition, many media companies have become more digitally-enabled in order to facilitate collaboration/remote working that allows continued content creation and distribution.
As reflected in our revenue forecasts for the UK through 2024, we expect the prospect of a media sector that is ready to once more demonstrate its agility to rebound strongly as the economy readies itself to re-open.
During the Covid pandemic, the advertising market in the UK has gone through a particularly rough time. As companies that rely on consumers to be out and about to buy their products stopped placing ads through various media outlets, advertising suffered significantly larger losses than consumer spending on Entertainment & Media. While digital advertising was affected to some degree, when compared to other advertising options such as out-of-home advertising, cinema, and newspaper print, the impact was relatively mild. We expect 2020 total internet advertising across classifieds, search, and display to be down 15%. By comparison, we anticipate printed newspaper advertising to slump by 24% and both physical and digital out-of-home advertising to drop by 30%.
In the event of ad revenues recovering from the pandemic, digital advertising is still set to continually outperform any other form of advertising. This is why digital advertising is expected to rebound much more robustly from the temporary setback of the pandemic. As is the case with consumer spending, not only did the pandemic cause a sustained shift to digital advertising, it has actively accelerated it. Coming out of the pandemic, there will be an increased need for brands to invest in digital platforms and eCommerce while engaging with their consumers across a larger range of digital media touchpoints/channels. Over time this will also underpin a rebound in digital advertising revenue.