Perspectives into the future

Watch

The ‘watch’ category contains numerous segments covering video consumption. We have split the graphs below to ease comprehension. The first graph shows ‘pay to watch’ revenues (SVOD, TVOD and cinema) while the second graph shows advertising-supported video services. In both categories, revenues reflect changing consumer behaviour.

Revenue trends for ‘pay to watch’ businesses diverge depending on whether the watch event happens outside or inside the home. Box office spend was cut catastrophically by the COVID-19 pandemic, while in-home subscription video on demand (SVOD) services grew steadily. However, a plateauing in online subscriptions may be occurring due to cost of living pressures. The 2023 Television and Media Survey of nearly 5,000 Australians, commissioned by the Department of Communications and conducted by the Social Research Centre, showed that the top reason for cancelling online subscriptions was cost⁴. In 2023, 65 percent of respondents reported watching an online service in the last week, compared to 66 percent in 2022⁵.

Box office admissions, meanwhile, crept up by 0.3 percent in 2023, from 57.9 million in 2022 to 58.1 million⁶. New blockbuster content and enhanced theatrical experiences (e.g. seating and sound improvements) will assist box office revenue growth over the forecast period.

Total ‘Watch’ consumer spend by segment (A$millions)

^{Footnotes
Subscription video on demand revenues: consumer subscription fees for subscription video on demand (SVOD) services such as Stan, Netflix and Disney delivered through a browser, app or aggregator such as Apple TV or Hubbl.
Transactional video on demand revenues (TVOD): consumer spend on filmed entertainment content delivered via the internet that do not require a subscription including sell-through and rentals through the iTunes store or Amazon Prime.
Filmed entertainment revenues: includes box office (ticket sales) and cinema advertising revenues.}

Advertising-supported ‘watch’ businesses demonstrate the clear shift by consumers towards on-demand content, delivered over the open internet. Online TV, comprising broadcast video on demand (BVOD) services plus advertising revenues from SVOD services’ new ad-tiers, is steadily becoming more popular. In 2023, 31 percent of surveyed Australians reported watching commercial online TV in the last week, up from 29 percent in 2022. Public broadcasters still offer the most popular free online TV services, with 34 percent of surveyed Australians reporting they watched one in the past week⁷.

However, traditional TV audiences are declining. In 2023, 51 percent of surveyed Australians reported watching a commercial free-to-air service in the past week, a decline from 61 percent in 2020⁸.

Free video streaming services, such as YouTube and TikTok, have also enjoyed steady growth in audiences, with advertising revenues following. In 2023, 61 percent of surveyed Australians reported they had watched a free video streaming service in the past week, up from 54 percent in 2020⁹. As a result, this sector is forecast to grow from A$5.2 billion in 2023 to A$7.7 billion in 2028, at a CAGR of 8.1 percent.

Total ‘Watch’ advertising revenue by segment (A$millions)

^{Footnotes
Online TV advertising revenues: comprises BVOD advertising revenues (broadcaster video on demand, “catch up” services including 9Now, 7plus, 10Play and SBS on demand) and advertising revenues from streaming services (ad supported tiers of services including Kayo, Binge & Netflix).
Video advertising revenues: video advertising delivered via the internet including YouTube, Instagram and TikTok.
Traditional TV revenues: advertising generated by free-to-air networks through terrestrial transmission and consumer spend on premium subscription television services (e.g. Foxtel cable/satellite and Fetch) characterised by linear channels and a box that records content.}

Read

Like ‘watch’, the ‘read’ category is large and we have split it into its consumer and advertising components. Consumer revenues for books, news media and magazines continue to be challenged over the forecast period as ubiquitous video dominates media consumption. Looking at the subcategories within each segment, we see interesting stories emerge. Electronic books are steady at 25 percent of total book revenues over the forecast period. Children’s, large format, premium and reader’s fondness for a physical, sharable book keep printed publications sustained. 

Print news media and print magazine circulation revenues are expected to decline over the forecast period as competition from free sources (including brand-funded magazines) and social media intensifies. Whilst digital news media and magazine circulation revenues are expected to grow to A$690 million in 2028 by a CAGR of 6.1 percent and 4.6 percent respectively, this growth is not expected to offset the declines experienced by print formats. Increasing engagement with paid subscribers will be an important imperative for news and magazine publishers over the forecast period.

Total ‘Read’ consumer spend by segment (A$millions)

^{Footnotes 
Consumer book sales: sale of print/audio books and ebooks for the consumer and education markets.
Newspaper circulation revenues: sale of physical and digital newspapers.
Magazine circulation revenues: sale of physical and digital magazines.}

The ad-supported part of the ‘read’ category comprises text based digital ads – search, classifieds and non-video general display – as well as out-of-home revenues – digital and static – and news media and magazines’ advertising revenues, both print and digital.

The ‘big gorilla’ remains in search, now bolstered by the rise of search activity on retailers’ e-commerce sites, such as Amazon and online stores for local retailers including Coles and Woolworths. These advertisements leverage the rich consumer behavioural data collected from loyalty programs and provide direct and timely feedback on the effectiveness of campaigns which is highly valued by advertisers. Retail paid search advertising’s share of total paid search advertising up to 7.8 percent, A$529 million, in 2023. We expect retail paid search to grow by 23 percent CAGR to reach A$1.5 billion by 2028. At that time, it will represent a 14.6 percent share of total search revenues.

Due to the prominence of video consumption, non-video online advertising (general display) is expected to decline over the forecast period by a 5.6 percent CAGR to A$1.9 billion in 2028. For the same reasons, news media and magazine advertising revenues are also expected to decline, by -6.3 percent CAGR to A$788 million in 2028.

Out-of-home media, addressed previously in this report, will be supported by population growth, post-pandemic outdoor activities and travel, improved measurement and increasing digitisation over the forecast period, achieving a growth rate of 4.5 percent CAGR and revenues of A$1.5 billion in 2028.

Total ‘Read’ advertising revenue by segment (A$millions)

^{Footnotes
Out of home advertising revenues: advertising expenditure on outdoor media, both static and digital. Categories include billboards, street furniture (e.g. bus shelters), transit, retail, place- based media and sports arenas.
Search advertising revenues: revenues from placing ads on web pages that show results of search engine queries. Includes both retail and traditional platforms.
Classified advertising revenues: advertising posted online in a categorical listing of products or services. A fee is paid by an advertiser to display an ad or listing around a specific vertical such as automotive, recruiting or real estate.
Non-video general display advertising revenues: revenues from traditional non-video ads placed on a web page including banner ads and branded content/native advertising. Includes both retail and traditional platforms and other internet advertising formats (affiliates, rich media and email).
Newspaper and magazine advertising revenues: Includes both physical and digital newspaper and magazine advertising streams (as well as newspaper inserted magazines NIMs).}

Listen

The ‘listen’ category is a combination of advertising and consumer spending, comprising radio and podcast advertising, and consumers’ spending on music through a variety of means – online subscription services (e.g. Spotify), download-to-own digital music (e.g. through iTunes), physical music such as records and CDs (although these are marginal now) or live concert tickets.

Radio has always benefited from its ‘companion’ status, a hands-and-eyes-free media that could be played while consumers did other things, even at work. It’s free, and that has added to its broad appeal. Radio’s audiences are still large, however, they are declining. The Australian and Media Authority’s survey of Australian watch and listening habits showed that at June 2023, over the previous seven days, 69 percent of Australians listened to the radio. This was a decline from 75 percent in 2022. PwC forecasts that traditional radio revenues will follow the audience trend, declining by a -8.0 percent CAGR to reach revenues of A$744 million in 2028.

Some of the change can be explained by the growth in paid online music subscriptions. Newer entrants such as Apple Music, Amazon Music Prime and YouTube Music Premium have helped grow the market. PwC forecasts digital music streaming revenues will grow from A$635 million in 2023 to A$900 million in 2028, a CAGR of 7.2 percent.

Total ‘Listen’ revenue by segment (A$millions)

^{Footnotes
Music spend: Includes live music tickets, live music sponsorship revenue and consumer spend on “owned” physical and digital recorded music.
Radio advertising revenues: advertising delivered on terrestrial and internet radio.
Podcast advertising revenues: revenues from advertising delivered throughout podcasts.
Digital music streaming revenues: includes both consumer spend to access music & podcasts on streaming services and revenue from advertising delivered on music streaming services.}

Play

The ‘play’ category comprises the multiple revenue streams attached to interactive games – consumer spending, advertising and esports, i.e. organised digital games competitions, both online and offline. The interactive Gaming and Entertainment Association (iGEA) reports that 81 percent of Australians now play digital video games, up from 67 percent in 2022, and that 48 percent of Australian players are female¹¹.

The growth in ‘play’ revenues follows this pattern. Traditional consumer spending on video game software and services has been reinforced by the growing popularity of social and casual gaming, conducted largely on a mobile phone, and also by the availability of digital games subscriptions and additional downloadable content via online stores like Steam and Xbox Games Store. 

Advertising revenue in digital games is another growing segment of ‘play’. In-app advertising and integrated advertising (equivalent to product placement within a game scene) are expected to increase by 7.6 percent CAGR to reach A$2.1 billion by 2028.

Another bright note is the growth of the Australian games production sector. Of approximately A$4 billion in revenues in 2023, A$345.5 million is attributable to games developed in Australian studios, an increase of 21 percent on the previous year¹². The growth in income for Australian developers contributed to an increase in full time employees working in Australian game development studios to A$2,458 million, a 17% increase on the previous year¹³.

Total ‘Play’ revenue by segment (A$millions)

^{Footnotes
Interactive games consumer revenues: includes consumer spend on PC (physical and digital), console (physical and digital), online (massively multiplayer online MMO/social games) and mobile gaming (casual games played on a smartphone or tablet including free games with in-app purchasing).
In-app games advertising revenues: revenue generated from the publishing of advertising within games apps.
Esports revenues: comprises both consumer and advertiser spending on esports, defined as organised video games competitions both online and offline, from one- off events to organised leagues.}

Access

The enabler of digital entertainment and media content and services - internet access - is by far the largest segment in our Entertainment & Media Outlook, representing 59.7 percent of total consumer revenues in 2023. Forecast revenues are flat however, as retail service providers and mobile network operators compete to offer highly attractive deals to price sensitive customers. 

PwC expects that fixed service revenues will grow at a 0.9 percent CAGR to reach A$9.3 billion and mobile service revenues will grow at a 1.7 percent CAGR to reach A$15.3 billion by 2028.

Continued consolidation amongst telecommunication service providers is likely to occur over the forecast period, as well as concerted efforts at business model reinvention.

Total ‘Internet access’ revenue by segment (A$millions)

^{Footnotes
Fixed service revenue: revenues generated by fixed voice, fixed broadband access, and value-added services delivered to residential and enterprise customers by communications service providers.
Mobile service revenue: revenue from the provision of subscriber voice and non-voice services, including roaming charges and net interconnection revenue.}