The report comes in 13 segments, ranging from video games to internet advertising (my colleague Laura Owen has the ebook predictions here). We’re digging into some of those but, in the meantime, here’s some highlights from the big picture entitled “Entertainment and Media Outlook: 2013-2017 .. Summary of  Key Themes”

Consumers are cord-cutting, in control — and confused

PwC says a plethora of choices has trained consumers to expect to receive media and entertainment when and where they want it. This means traditional forms of content packaging — like cable TV subscriptions — are becoming less tenable: “it is the connected consumer who is now really in control … cord-cutters are now being joined the ‘cordnevers’, a younger generation who would never think of paying for TV.”

But the report (citing people in Singapore who pay for pirated content even though a legal version was available for free) also suggests that the volume of content is leaving consumers “confused.” This presents an opportunity for companies that can help people discover and navigate all this media.

Advertising will be enormous — if the industry can figure out the data thing

Traditional advertisers have been alarmed at how the consumer audience has scattered to consume an infinite variety of content across multiple screens. But PwC sees huge opportunities if the industry can become “platform-agnostic” and tap into a growing wealth of consumer data. Interestingly, the report plays down “big data” hype in favor of (emphasis mine):

granular, small data— derived through analytics—that gives insights into customers’ actual and likely behavior in response to a particular message or experience. One of the most exciting areas is the emerging opportunity around the second screen, which has huge potential for building not just consumer engagement, but also especially in combination with mobile wallets eCommerce transactions.

Likewise, the advertising and media industry must solve the problem of credible, cross-platform metrics. Right now, plenty of people are proposing standards to measure online audiences but there is no single, widely-accepted number like there is for TV.

Content is king (again) — but companies must still figure out how to package and sell it

Here’s some good news for those creative types who equate the internet with cheap and lousy content (emphasis mine):

The rising value of content has fired the starting-gun on an industry-wide race to acquire it. Recent months and years have seen several major acquisitions of content assets, as consumers’ rising expectation of ubiquitous access to premium and library content drives companies to focus on licensing and/or acquiring content

But, says PwC, just getting content is not enough. Content holders must also figure out how to: distribute it to second screens; reinvent “windowing” models to shorten release times; discover new “bundling” and discount models since “People still love a bargain”

Global markets — and piracy — are evolving quickly

Media and entertainment opportunities in developing markets are growing fast, but the real bucks will still remain in the mature markets of the US and Europe. But as the global population becomes more migratory, there are also new opportunities to target diasporas. Check out this interesting nugget (emphasis mine):

there were more than 215 million migrants worldwide in 2010, which would make that ‘migrant nation’ the fourth largest in the world. As expatriate communities grow, distributors are increasingly crossing geographical borders to address them. Examples include iRoko, which targets the African diaspora in wealthier markets and has more customers in London than Lagos.

Piracy will of course remain an issue in emerging markets but PwC proposes a more sophisticated prescription than the usual howls for enforcement. The report appears to share the perspective of copyright scholar Bill Patry, who regards piracy in large part as a pricing issue. In other words, content owners should not just focus on enforcement but on pricing and distribution too: “Tackling piracy … means using an understanding of consumers to deliver the right content to the right people, at the right time, place and price via the right experience.”

Some numbers

• Globally, digital media will account for 37 percent of advertising revenues by 2017, up from 26 percent in 2012.”
• Internet advertising will be the fastest-growing segment, at a 13.1 percent CAGR
• Video gaming at a 6.5% CAGR and TV advertising at a 5.3 percent CAGR will also show strong growth.
• Segments traditionally related to print—newspapers, magazines and books—which will grow by an average of less than one percentage point
• By 2017, physical purchases will represent just 53 percent of consumer spending.

(Image by alphaspirit via Shutterstock)

Total book spending in the U.S. will be flat

PwC considers consumer and educational books together in the report, as well as breaking them out separately. Below, I focus on the consumer book data except where noted. Overall, the company sees total book spending in North America as relatively flat, “1.1 percent compound annual rate” of increase between 2011 and 2016 — and PwC thinks that while total spending on print trade books will decline, the e-book market will be growing fast enough by 2013 to offset those declines. In the U.S., the company estimates that “around 30 percent of adults had at least one portable reading device [an e-reader or tablet] in the first quarter of 2012.”

By 2016, PwC expects, “e-books will account for half of total spending on consumer books” in the U.S. and the total U.S. consumer book market (print + digital) will be worth $21 billion, up from $19.5 billion in 2011.

North American e-book spending will skyrocket, but Europe will be slower

I made this chart using PwC data to compare consumer e-book spending by region.

In addition to breaking out Europe, the Middle East and Africa (EMEA) by region — as I did in the chart above — PwC considers them together when it projects that “the consumer and educational book publishing market in EMEA will decrease during the next two years and then rise to $44.8 billion by 2016, returning to its 2011 level.”

In consumer books, the firm thinks “weak economic conditions will continue to limit print spending” in the near term and that e-books will “siphon off a portion of the print market,” ultimately resulting in the overall market remaining “stable in growth” as e-book spending counteracts (but doesn’t override) the decline in print book spending.

Japan, South Korea and China will lead the way on growth in Asia Pacific

In 2011, South Korea has Asia Pacific’s second-largest consumer e-book market after Japan, PwC says, and consumer e-book sales there “constituted 24.2 percent of South Korea’s total consumer book sales — the highest share of any country in the world.” But because South Korea is already relatively far along in the transition to e-books, the researchers expect its e-book growth in the next four years to be the slowest of any country in Asia Pacific.

I added Australia here, too, because PwC has it as “the only other country [in the region] where e-books will generate more than $100 million in sales.”

See also:

What will it take for international e-book markets to take off?

Photo: Flickr / Mr. iMaax