Global entertainment and media advertising is projected to surpass $1 trillion by 2026 and, by 2028, double its 2020 level. Growth will be driven by an explosion in internet advertising, which looks set to generate 77% of total ad spending within five years, and around 30% of streaming revenue, according to consulting giant PwC in its annual five-year outlook.
Advertising spending outpaced consumer spending globally last year.
Total entertainment and media revenue rose 5% to $2.8 trillion in 2023 and is expected to reach $3.4 trillion in 2028, the company said, led by advertising.
Streamers, the future of the industry, are increasingly turning to advertising to drive sales, along with consolidation and bundling, live sports and a crackdown on password sharing. At this point in the US, all the big platforms that didn’t have an ad-supported tier, such as Disney+, Netflix and Amazon Prime Video, now do. In a growing number of markets around the world, many smaller or regional players are doing the same, the report said.
The ads are meant to offset a plateau in subscription revenue as companies find it harder to get people to pay for digital products.
“As the number and variety of streaming services proliferate, a form of market saturation has begun to emerge,” says PwC. It forecasts that global subscriptions to over-the-top video services will rise to 2.1 billion in 2028 from 1.6 billion in 2028, but average global subscription revenue will rise less proportionally, to $67.7 million in 2028 from $65.2 million in 2023.
By 2028, advertising will account for around 28% of global streaming revenue, up from 20% in 2023.
Online connected TV (CTV) ads shown during video programming will see a huge leap, with sales doubling from $20.5 billion in 2023 to $41.2 billion in 2028.
Retail media are increasingly experimenting with “shoppable TV” advertising, which makes it possible for consumers to buy products directly from ads, an opportunity underscored by retailer Walmart’s purchase of smart TV maker Vizio earlier this year.
Amid an advertising boom, PwC warned, companies will need to understand how global privacy regulations impact growth. I didn’t specify, but that’s one reason why Alphabet, Google’s parent company, is in advanced talks to buy cloud security company Wiz for about $23 billion, its largest acquisition to date.
The report doesn’t break out individual countries, but notes that the U.S. accounts for more than a third of global spending in 2023, and remains by a wide margin the world’s largest entertainment and consumer market for the combined advertising and consumer spending markets. “But with scale comes maturity and therefore relatively slower growth,” it said, projecting a compound annual growth rate of 4.3% through 2028 in the U.S., lagging behind the global rate of 4.6%.
The fastest-growing markets globally are Indonesia and India, followed by China. India will be the fastest-growing OTT video streaming market in the world over the forecast period and there is a lot of movement there. China is steadily closing its gap with the US, but government regulation complicates outside investment.
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