UK companies set to cash in on digital media

The transition from physical formats, such as CDs, newspapers and books, to digital has provided a turbulent backdrop for the media sectors over the past decade. However, PwC has argued that the industry is set for robust growth with the value of the UK entertainment and media market expected to hit £66.6 billion in 2019 compared with £56.9 billion last year, reports The Times.

That growth will largely be driven by the video games, online advertising and book publishing sectors which will enjoy robust growth over the next four years. That bodes well for book publishers with the sub-sector struggling to make progress since 2010. PwC said that ebooks, read on tablets, would grow at a compound annual growth rate of 20 per cent a year over the next five years to become a £1 billion sector. It expects that electronic books will overtake printed texts in 2018.

Music, a sector that is only just emerging from a near 15-year decline, is seen as returning to growth this year courtesy of the huge growth in streaming. The launch of Apple’s streaming service will spur further growth with the digital music sector expected to overtake radio advertising this year. That is despite a tail off in digital music download revenue, which is expected to drop to £388 million by 2019 from £516 million in 2013.

Newspaper revenues will continue to shrink according to PwC, but it expects the declines to become marginal from 2017. It said that paywalls, like the one used for The Times website, have started to offset lost print sales with global digital subscriptions worth nearly $2.5 billion in 2014.

The cinema sector is back in vogue after suffering a poor year at the box office in 2014. Attendances dropped to 179 million from 187 million in 2013. However, blockbusters such as Avengers: Age of Ultron, Jurassic World and the new James Bond and Star Wars films will push box office revenues to £1.2 billion in 2015 and growth will continue according to PwC, which predicts a £1.4 billion market in Britain by 2019.

The growth in digital media will have a knock-on effect for telecoms companies, with smartphones becoming the preferred way to watch films and read newspapers.

PwC expects that the mobile internet market will overtake broadband in value in 2017, which perhaps explains why BT has bought EE for £12.5 billion. The mobile internet market is expected to grow at 7 per cent a year, reaching £7 billion by 2019.