$108 Billion U.K. Media and Entertainment Market Will Remain European Leader, PwC Report Forecasts
The U.K. will maintain its position as the leading entertainment and media market in Europe over the next four years, ahead of Germany and France, according to PwC’s Global Entertainment & Media (E&M) Outlook 2023-2027 report.
U.K. E&M revenue is expected to reach £85 billion ($108 billion) this year with growth forecast at a compound annual growth rate (CAGR) of 4% over the next four years to generate revenue of £100 billion overall by 2027. The report predicts that the next biggest European E&M markets – Germany, which is expected to reach £83.1 billion in 2023 and France, set to touch £54.6 billion in 2023 – will grow to £90.8 billion and £61.1 billion by 2027 respectively.
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In the U.K. SVOD revenue is forecast to grow from £3.6 billion in 2023 to £4.7 billion by 2027. En route, in 2025, SVOD (£4.2 billion) will overtake TV subscriptions (£4.1 billion). The report notes that the rising presence of AVOD offers consumers the chance to switch away from subscription models.
Cinema will continue its post pandemic recovery growth over the next four years at 7% CAGR, with box office revenues expected to exceed pre-pandemic levels by 2025 at £1.3 billion.
Internet access is forecast to generate £16.7 billion in revenue this year before growing to £20 billion by 2027. The U.K. market will be driven by mobile internet access and a tipping point will be reached in 2023 when mobile internet will overtake fixed broadband as the biggest contributor to total internet access revenue, the report says. By 2027 mobile internet access revenue will account for 55% of total internet access revenue.
The growth of data services will more than double as annual data consumption rises from 158,000 petabytes in 2022 to 415,000 in 2027. This is linked to greater consumption of streaming services, social video platforms and broadcast VOD services, which will together account for 36% of all data consumption in 2027.
Overall advertising revenue in the U.K. is expected to be £35.7 billion in 2023, with digital dominating. Internet advertising revenue of £27.5 billion is forecast for 2023 before reaching £35.5 billion by 2027, at 6% CAGR. TV advertising is expected to decline by 3% in 2023 as budgets have tightened, but then recover with 4% growth in 2024 to £4.8 billion.
The Virtual Reality market revenue in the U.K. is set to increase from £1.3 billion in 2023 to £2 billion in 2027 at 10% CAGR. VR within video gaming is growing at 22% per annum from 2022 to 2027, supported by new games releases. Between 2022 and 2027 the U.K.’s installed base of VR headsets is forecast to grow from 1.7 million to 4.2 million units. Thanks to the success of the Meta Quest 2, the largest and fastest-growing headset category is now standalone VR, which will represent over 80% of the total installed base in 2027. Apple’s new headset may also act as another stimulus for the market, the report says.
The report also strikes a note of caution saying that the rate of growth is expected to fluctuate year-to-year given variable economic conditions and are muted by sluggish consumer spending.
Both Mary Shelton Rose, partner and U.K. technology, media and telecoms leader at PwC and Dan Bunyan, partner at PwC Strategy&, heralded generative AI as the new force to reckon with both in content creation and advertising.
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