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PwC: internet video revenues to overtake DVD this year

netflix Bedroom_Device_shot1-0043_V_Final_0000_L_play_onb2Internet video revenues will overtake physical home video for the first time this year, according to a major new international study by PricewaterhouseCoopers.

PwC’s Global Entertainment and Media Outlook 2017-2021 claimed that global internet ad revenues exceeded TV ad revenues for the first time last year – with “major digital tipping-points” occurring or due to occur across all segments.

The study predicts that internet video revenues will grow at a compound annual growth rate (CAGR) of 11.6% to reach US$36.7 billion in 2021 – while the “terminally declining” DVD and Blu-ray market is tipped to fall to US$13.9 billion.

The consumer VR content market is tipped to grow at a CAGR of 77.0% over a five-year period to US$15.1bn by 2021. Of this, US$8.0 billion is due to be spent on VR video, with this segment expected to surpassing interactive experiences and games revenue in 2019.

Total global eSports revenue is projected to increase at a 21.7% CAGR to reach US$874 million in 2021.

Other projections include: overall smartphone data traffic will exceed fixed broadband data traffic in 2020; and data consumption in Russia will overtake Japan in 2020, but the US and China together will account for nearly half of all data traffic.

“In many of the largest markets, and hence in the industry as a whole, entertainment and media businesses are approaching or have reached a form of saturation,” said Deborah Bothun, PwC global entertainment and media leader.

“This effectively puts us on an industry plateau – one where some traditional, mature segments are in slow growth or decline, the internet and digital entertainment and media content are growing but at a slowing rate.

“The next wave of content and entertainment is in areas such as eSports and virtual reality that are just beginning to ramp up.”

In the US alone, PwC expects traditional TV and home video revenue to contract from $109 billion in 2016 to US$105 billion in 2021 – a decline in CAGR of 0.7%.

However, TV ad revenue in the US is expected to grow from US$70.6 billion in 2016 to US$75.2 billion in 2021, marking a CAGR of 1.3%.

A total of 68 million VR headsets will be in use in the US by 2021, with the segment projected to add nearly the same revenue as TV advertising between 2016 to 2021 – a total of US$4.6 billion.