Entertainment & Media. Global Entertainment and Media Outlook: 2008-2012 Executive Summary

Entertainment & Media Global Entertainment and Media Outlook: 2008-2012 Executive Summary

Entertainment & Media Global Entertainment and Media Outlook: 2008 2012 Forecasts and economic analyses of 15 industry segments Global Entertainment and Media Outlook is a forecast for the 2008 2012 period of spending in 15 entertainment and media segments. For ordering instructions, please refer to the next page of this book. Reprinted from the Global Entertainment and Media Outlook: 2008 2012

Global Entertainment and Media Outlook: 2008 2012 Prepared and edited by: PricewaterhouseCoopers (www.pwc.com) provides industryfocused assurance, tax, and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 146,000 people in 150 countries across our network share their thinking, experience, and solutions to develop fresh perspectives and practical advice. Authored by: Wilkofsky Gruen Associates Inc. (www.wilkofskygruen.com), a provider of global research and analysis of the media, entertainment, and telecommunications industries. Outlook editorial board: PricewaterhouseCoopers Entertainment & Media Practice: Laura Bobrik, Marketing Manager Deborah Bothun, Principal James M. DePonte, Partner Marcel R. Fenez, Partner Stefanie Kane, Partner Nikolai Larchenko, Senior Associate Pauline Orchard, Global E&M Marketing Director James O Shaughnessy, Partner Phil Stokes, Partner Many other professionals from the PricewaterhouseCoopers Entertainment & Media Practice reviewed and contributed to this publication. For Wilkofsky Gruen Associates Inc.: Norman D. Eisenberg, Vice President Arthur Gruen, Partner David Wilkofsky, Partner Copy editing: Rick Marsland, Director, White Page Limited Paula Plantier, Principal, EditAmerica Book design: Donna M. Goodwin, PricewaterhouseCoopers Graphic Design Book production: Bowne Business Communications ISBN 1-931684-17-0, Global Entertainment and Media Outlook: 2008 2012 ISBN 1-931684-18-9, Global Entertainment and Media Outlook: 2008 2012, Executive Summary Copyright 2008 PricewaterhouseCoopers. All rights reserved. PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. This document is provided by PricewaterhouseCoopers for general guidance only and does not constitute the provision of legal advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. The information is provided as is, with no assurance or guarantee of completeness, accuracy, or timeliness of the information and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose. No part of this publication may be excerpted, reproduced, stored in a retrieval system, distributed or transmitted in any form or by any means including electronic, mechanical, photocopying, recording, or scanning without the prior written permission of PricewaterhouseCoopers. Without limiting the foregoing, you may not use excerpts from the publication in financial prospectus documents, public offerings, private placement memoranda, filings with the Securities and Exchange Commission, annual reports, or similar financial, investment, or regulatory documents. Requests to PricewaterhouseCoopers for permission should be addressed in writing to Pauline Orchard, PricewaterhouseCoopers LLP, 1 Embankment Place, London WC2N 6RH, England. The papers, paper mills, and printer utilized in the production of this publication are all certified to Forest Stewardship Council (FSC) standards, which promote environmentally appropriate, socially beneficial, and economically viable management of the world s forests. The publication was printed on paper containing 10% post-consumer waste material. The materials used in the production of this book were created using 100% renewable energy. Although the Outlook is available in print format, we have limited the print run and encourage you to select the electronic format if you are considering purchasing the full book. This will help us realize our commitment to the environment. For additional information and to order this publication, visit www.pwc.com/outlook. The publication is available for sale as follows: The full global forecast, which includes the Executive Summary, is sold in both print and electronic formats. The Executive Summary is available separately in either print or electronic format. Individual industry segments are sold in electronic format. PricewaterhouseCoopers LLP 300 Madison Avenue New York, NY 10017 646-471-4000 PricewaterhouseCoopers 2 Global Entertainment and Media Outlook: 2008 2012

Table of Contents Introduction Letter 4 PricewaterhouseCoopers Entertainment & Media Practice Global Contacts 5 Global Entertainment and Media Outlook: 2008 2012, Executive Summary 7 Introduction 7 Categories Covered 7 Regions/Countries Covered 8 New Additions to the 2008 2012 Outlook 8 2007: A Year of Healthy Growth, Accelerating Change 9 The Big Picture for the Next Five Years 9 Finding Growth in Emerging Markets 11 Rise of Those in the Net Generation and Continued Influence of Their Parents 13 Multiple Technology Tipping Points 16 Welcome to the On-Demand World 19 Traditional Foundation, Digital Migration 20 The New Collaboration Imperative 24 Economic Activity 25 Global Entertainment and Media Industry Summary 30 Global Entertainment and Media Market by Segment 35 Internet Access 35 Internet Advertising 36 Television Subscriptions and License Fees 37 Television Advertising 39 Recorded Music 40 Filmed Entertainment 42 Video Games 43 Consumer Magazine Publishing 45 Newspaper Publishing 46 Radio and Out-of-Home Advertising 48 Theme Parks and Amusement Parks 49 Casino and Other Regulated Gaming 50 Consumer and Educational Book Publishing 51 Business-to-Business Publishing 53 Sports 55 Global Entertainment and Media Market by Region 57 United States 57 Europe, Middle East, Africa (EMEA) 63 Asia Pacific 79 Latin America 90 Canada 99 Methodology 105 Exchange Rates 106 Summary of Tables and Charts 109 Key to symbols used in the tables and charts p = preliminary NA = not available = no spending that year Totals in tables and charts may not total arithmetically due to rounding. Totals in tables and charts may not total arithmetically due to rounding. Executive Summary 3

PricewaterhouseCoopers LLP PricewaterhouseCoopers Center 300 Madison Avenue New York, NY 10017 June 2008 To our clients and friends both in and beyond the Entertainment and Media industry: As leaders of PwC s Global Entertainment and Media (E&M) Practice, we are pleased to welcome you to the ninth annual edition of PricewaterhouseCoopers Global Entertainment and Media Outlook, covering the forecast period 2008 2012. While we have modified the description of a number of the industry segments covered in this edition to better reflect the accepted global definitions, we have maintained a largely consistent format and have included in-depth forecasts and analyses of 15 major industry segments across five regions of the world: the United States, EMEA (Europe, Middle East, Africa), Asia Pacific, Latin America, and Canada. Due to the importance of access to the Internet, be it wired or wireless, as a driver of many of the developments in the industry as a whole, we have dedicated a chapter to this area. Overall, the E&M industry achieved the strong growth in 2007 that we had forecast in last year s Outlook, and we believe that the next five years will deliver a similar story. Short-term economic uncertainties do exist in some markets, but the advertising markets in 2008 benefit from this being an election year in many key E&M countries and from the Beijing Olympics. The emerging-market growth story is driving overall growth rates in the E&M industry in the Asia Pacific and Latin America regions, which will continue as the fastest growing. India and China are delivering on the potential that we have featured previously and are destined to enter periods of sustained significant growth. They will be joined by the next wave of emerging markets, and there is no doubt that the global E&M industry is becoming increasingly global. The challenge for many in the industry is how to take advantage of those growth opportunities in often highly regulated markets where local content is a must. For others the issue is how to apply learnings from local markets to the broader marketplace. The digital future is now clearly the digital reality, and its impact is seen across many of the sectors. The industry is grappling with a range of emerging business models, a number of which reflect the transition to more free, ad-supported, on-demand, and online distribution of their products. Notwithstanding such trends, traditional and physical formats are still growing and continue to form the backbone of many of the industry segments covered in the Outlook, and managing both the digital transition and the threats of piracy is increasingly challenging. Changes in consumer behavior, particularly within the Net generation, will start to have a profound impact on media consumption habits. Staying close to the consumer will be vital in ensuring that product offerings and business models are transitioned. We see that overall advertising growth will remain robust. Internet advertising will remain the fastest-growing significant ad medium and is being supplemented by new modes of advertising such as within video games and on mobile platforms. There is no question that the ever-expanding E&M industry continues to provide opportunities for entrepreneurial innovation as well as for collaboration across the entertainment, media, and communications value chains. All of us at PricewaterhouseCoopers continue to stay on top of new trends and developments that may impact your business now and in the future, and we look forward to working with you and sharing our thoughts with you further through a range of events that we hold in many territories, through other publications, and through future editions of the Outlook. We appreciate your feedback and ask that you continue to tell us what we can do to make the Outlook more useful to you. If you wish further clarification on any matters included in the Outlook or believe that we can be of service to your business in any way, please contact the PricewaterhouseCoopers E&M regional professional nearest you (see facing page) or visit our Web site (www.pwc.com/ e&m) for details of the contact in your territory. Finally, we thank you for your support and wish you an exciting and rewarding year ahead. Sincerely, James O Shaughnessy Chairman Global E&M Practice Marcel Fenez Managing Partner Global E&M Practice PricewaterhouseCoopers 4 Global Entertainment and Media Outlook: 2008 2012

PricewaterhouseCoopers Entertainment & Media Practice Global Contacts Provided below is a listing of key contacts for the PricewaterhouseCoopers Entertainment & Media Practice. If there is no listing for your location, please contact the PricewaterhouseCoopers office nearest you to be directed to the appropriate professional. Global James O Shaughnessy Chairman New York phone: 1.646.471.5878 james.oshaughnessy@us.pwc.com Marcel R. Fenez Managing Partner Hong Kong phone: 852.22892628 marcel.fenez@hk.pwc.com Regional Asia Pacific Marcel R. Fenez Hong Kong phone: 852.22892628 marcel.fenez@hk.pwc.com Canada Tracey L. Jennings Toronto phone: 1.416.869.8737 tracey.l.jennings@ca.pwc.com Europe John W. Middelweerd Utrecht, Netherlands phone: 31.30.2191.656 john.middelweerd@nl.pwc.com South and Central Americas Estela Vieira Brazil phone: 55 (21) 3232-6069 estela.vieira@br.pwc.com United Kingdom Phil Stokes London phone: 44.20.7804.4072 phil.stokes@uk.pwc.com United States James O Shaughnessy New York phone: 1.646.471.5878 james.oshaughnessy@us.pwc.com Functional Tax Christ H. Economos New York phone: 1.646.471.0612 christ.h.economos@us.pwc.com Convergence Deborah K. Bothun Los Angeles phone: 1.213.217.3302 deborah.k.bothun@us.pwc.com Executive Summary 5

PricewaterhouseCoopers 6 Global Entertainment and Media Outlook: 2008 2012

Global Entertainment and Media Outlook: 2008 2012 Executive Summary Introduction PricewaterhouseCoopers Global Entertainment and Media Outlook: 2008 2012 provides forecasts of revenues and industry trends across 15 major industry segments in 59 countries. The information in this annual publication reflects the collective wisdom of our large team of professionals who work with entertainment and media (E&M) companies around the world. The publication is a unique resource for the industry, offering a five-year outlook for global consumer spending and advertising revenues, along with insights into the technology, government, political, and business trends driving those forecasts. Our objective is to help illuminate companies decision making, as companies engage in business-critical strategic and operational planning with regard to the business models, partnerships, investments, and customer relationships that will shape the future of their organizations and of the entertainment and media industry in general. At such a pivotal moment in the customer- and technology-driven transformation taking place throughout the entertainment and media industry, it is our distinct privilege to share these forecasts and collective insights with our clients and with the industry at large. The purpose of this Executive Summary is to provide a brief overview of the past 12 months since our 2007 2011 Outlook was published and to identify the key themes and drivers affecting the industry and relate them to forecasts of actual spending. The Executive Summary represents an overview of the vast array of information provided in the Outlook, which provides detailed industry and country data for the various components of each segment of the entertainment and media industry. Categories covered Internet Access Spending: Wired and Mobile Internet Advertising: Wired and Mobile TV Subscriptions and License Fees Television Advertising Recorded Music Filmed Entertainment Video Games Consumer Magazine Publishing Newspaper Publishing Radio and Out-of-Home Advertising Theme Parks and Amusement Parks Casino and Other Regulated Gaming Consumer and Educational Book Publishing Business-to-Business Publishing Sports Executive Summary Introduction 7

Regions/Countries Covered United States EMEA Western Europe Central and Eastern Europe Middle East/Africa Austria Belgium Denmark Finland France Germany Greece Ireland Italy Netherlands Norway Portugal Spain Sweden Switzerland United Kingdom Czech Republic Hungary Poland Romania Russia Turkey Israel Saudi Arabia/Pan Arab South Africa Asia Pacific Australia China Hong Kong India Indonesia Japan Malaysia New Zealand Pakistan Philippines Singapore South Korea Taiwan Thailand Vietnam Latin America Argentina Brazil Chile Canada Colombia Mexico Venezuela Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. New additions to the 2008 2012 Outlook In response to today s rapidly evolving market, we have made a number of changes in the way we measure the industry s prospects. These changes include adding new categories and enhancing the coverage of a number of existing industry segments. Both Internet access spending and Internet advertising are growing rapidly and now occupy separate, stand-alone chapters. While Internet access is a critical driver of the entertainment and media market today and is therefore highly relevant to the discussion of the future of virtually every category of entertainment and media, it is a business that is separate and distinct from Internet advertising. A further change is that in-game advertising, which topped $1 billion in 2007, is now broken out as a separate line item in our coverage of the fast-growing video game market. And mobile advertising, mobile television, and mobile Internet access each now have distinct forecasts and analyses. With digital distribution of recorded music set to surpass physical distribution of recorded music by 2012, this year s Outlook also provides full country breakouts for music downloaded over the Internet and music downloaded to mobile phones. Our publishing coverage, too, continues to evolve with the industry. Business-to-Business Publishing is a new chapter this year, encompassing business information, directory advertising, trade magazines, and professional books. We ve also enhanced our coverage within various publishing areas, including Web site and mobile advertising, directory advertising, and electronic books. PricewaterhouseCoopers 8 Global Entertainment and Media Outlook: 2008 2012

2007: A year of healthy growth, accelerating change This past year was characterized by healthy growth throughout much of the entertainment and media industry. With the exception of recorded music and of a relatively flat year for newspaper publishing, all segments of entertainment and media expanded in 2007, with total global spending growing by 6.4 percent almost matching our projected increase of 6.5 percent. A key driver of this growth was Internet access spending, which rose by 16.7 percent in 2007 very close to our projection of 16.5 percent. In most other categories, too, the rate of growth in 2007 was consistent with our expectations, yet in several areas, we had made robust predictions about the year ahead and consumers and the marketplace exceeded our expectations. We forecast a 28.4 percent rise in Internet advertising; the actual jump was 33.2 percent. We knew consumers would respond with enthusiasm to a new generation of connected video game consoles, yet our projected 18.5 percent increase for the video game sector fell short of the actual 27.3 percent increase. As the digital migration accelerated, so did the vulnerability of physical media. Global newspaper advertising fell 0.2 percent, and radio declined 1.1 percent. We had forecast modest increases. A weakening US economy added to the shortfall. Another sector suffering from the impact of digital migration was recorded music, a segment where overall spending fell by 4.1 percent in 2007 far steeper than our projected 1.3 percent decline. There was a modest silver lining in that the digital component of this market rose by 57.7 percent ahead of our 42.7 percent projection. Physical spending, however, fell by 13.6 percent somewhat faster than our 11.8 percent expectation. In sports, the 4.1 percent increase was higher than our 3.4 percent projection, in large part because of the growing importance and value of online and mobile rights, often packaged with TV rights and/or sponsorships. Last year, we forecast rapid growth in digital/mobile revenues and sluggish expansion in competing revenue streams. These trends played out even faster than we anticipated. We projected that digital/ mobile revenues would grow by 29.6 percent in 2007; they expanded by 35.5 percent. Revenues subject to digital/mobile competition rose by 0.9 percent, which was lower than our 2.1 percent forecast. A further trend that we highlighted in the 2007 2011 Outlook was growth in emerging markets. Of particular interest were Brazil, Russia, India, and China (BRIC). We projected the collective growth in their entertainment and media spending in 2007 at 17.8 percent, which proved to be slightly higher than the actual 16.7 percent increase. This territory will continue to be a prominent feature of the growth story for the industry as a whole. In BRIC and in virtually all entertainment and media segments around the world a key theme was the growing importance of online and mobile distribution to future revenue growth a developing story that continues to unfold as we look out over the next five years. The big picture for the next five years: 6.6 percent global E&M growth through 2012 With the exception of recorded music, our analysis indicates that all categories of the entertainment and media marketplace will continue to expand over the next five years. Across virtually every sector of the marketplace, growth is driven by the rising value of online and mobile opportunities. While the rate of growth in Internet advertising will moderate from that in recent years, this segment is projected to see the most robust growth: at a rate of 19.5 percent compounded annually through 2012. Also expected to experience double-digit growth are Internet access, video games, and television subscriptions and license fees. More-established forms of entertainment television advertising, theme parks, casino Executive Summary Introduction 9

gaming, and sports are all set to grow at 5 to 7 percent compounded annually. The sectors facing the stiffest challenges are publishing and music, where the declines in physical distribution are at their most significant and where growth in digital distribution albeit rapid is struggling to make up for the shortfall. Global Entertainment and Media Market by Segment (US$ Millions) Segment 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Internet Access: Wired and Mobile 85,371 108,529 135,837 165,337 192,905 224,205 255,742 284,350 313,322 340,993 PricewaterhouseCoopers 10 Global Entertainment and Media Outlook: 2008 2012 % Change 26.1 27.1 25.2 21.7 16.7 16.2 14.1 11.2 10.2 8.8 12.1 Internet Advertising: Wired and Mobile 12,568 17,743 25,481 37,161 49,491 63,191 77,151 91,489 106,235 120,365 % Change 29.4 41.2 43.6 45.8 33.2 27.7 22.1 18.6 16.1 13.3 19.5 TV Subscriptions and License Fees 125,501 136,073 148,222 160,070 173,541 188,663 208,827 232,568 255,814 280,791 % Change 10.3 8.4 8.9 8.0 8.4 8.7 10.7 11.4 10.0 9.8 10.1 TV Advertising 128,307 142,269 147,086 156,440 162,302 176,289 181,555 194,876 200,801 215,822 % Change 4.7 10.9 3.4 6.4 3.7 8.6 3.0 7.3 3.0 7.5 5.9 Recorded Music 36,228 36,526 35,765 34,861 33,437 32,180 31,802 31,659 32,016 32,478 % Change 6.5 0.8 2.1 2.5 4.1 3.8 1.2 0.4 1.1 1.4 0.6 Filmed Entertainment 78,351 83,954 81,661 83,781 85,904 88,879 93,404 98,821 104,907 111,199 % Change 6.9 7.2 2.7 2.6 2.5 3.5 5.1 5.8 6.2 6.0 5.3 Video Games 23,667 26,869 28,395 32,954 41,948 48,322 52,815 57,279 61,558 68,345 % Change 6.8 13.5 5.7 16.1 27.3 15.2 9.3 8.5 7.5 11.0 10.3 Consumer Magazine Publishing 71,244 74,245 77,169 78,629 80,251 82,613 85,231 88,338 91,531 95,109 % Change 2.2 4.2 3.9 1.9 2.1 2.9 3.2 3.6 3.6 3.9 3.5 Newspaper Publishing 171,067 177,124 182,323 185,891 186,164 187,315 190,442 195,917 201,675 207,817 % Change 1.9 3.5 2.9 2.0 0.1 0.6 1.7 2.9 2.9 3.0 2.2 Radio/Out-of-Home Advertising 61,610 65,210 68,327 72,097 74,493 76,757 79,938 83,639 87,488 91,626 % Change 3.4 5.8 4.8 5.5 3.3 3.0 4.1 4.6 4.6 4.7 4.2 Theme Parks and Amusement Parks 20,538 21,441 22,155 23,090 24,051 25,131 26,288 27,682 29,007 30,701 % Change 2.4 4.4 3.3 4.2 4.2 4.5 4.6 5.3 4.8 5.8 5.0 Casino and Other Regulated Gaming 76,600 87,329 97,342 106,300 113,875 118,940 124,284 134,325 144,528 155,666 % Change 10.9 14.0 11.5 9.2 7.1 4.4 4.5 8.1 7.6 7.7 6.5 Consumer and Educational Book 98,301 99,837 104,905 106,061 112,899 113,995 117,589 121,497 125,633 129,791 Publishing % Change 2.9 1.6 5.1 1.1 6.4 1.0 3.2 3.3 3.4 3.3 2.8 Business-to-Business Publishing 144,264 149,121 155,640 163,565 169,107 171,190 174,925 180,678 188,566 197,845 % Change 0.3 3.4 4.4 5.1 3.4 1.2 2.2 3.3 4.4 4.9 3.2 Sports 78,166 84,345 88,092 98,578 102,634 114,339 114,821 127,654 127,995 140,619 % Change 3.7 7.9 4.4 11.9 4.1 11.4 0.4 11.2 0.3 9.9 6.5 Total 1,210,567 1,309,074 1,395,004 1,499,340 1,595,548 1,702,521 1,802,895 1,936,039 2,053,136 2,197,756 % Change 5.4 8.1 6.6 7.5 6.4 6.7 5.9 7.4 6.0 7.0 6.6 Note: Newspaper, consumer magazine and trade magazine Web site and mobile advertising are included in their respective segments and in most countries also in the Internet advertising segment, but only once in the overall total.

Finding growth in emerging markets The increasing globalization of the industry will continue to be a primary source of growth throughout the entertainment and media sector. For example, major US film studios now receive a majority of their filmed entertainment and home video revenues from sales in foreign markets. BRIC will continue to drive growth along with a host of other emerging economies throughout the world whose influence is increasing. By contrast, more-mature economies will experience a period of slower growth. While consumer prices are generally lower in emerging economies than in more-developed nations, rising incomes, infrastructure enhancements, and the potential for far higher sales volumes make these markets highly attractive for the long term. Trend: BRIC forays growing more sophisticated BRIC will continue to be among the fastest-growing entertainment and media markets during the next five years, averaging a compound annual growth rate of 13.6 percent. By contrast, the rest of the world will expand at a more modest, 5.9 percent pace. Entertainment and media growth in BRIC will healthily outpace gross domestic product (GDP) growth, as the rising disposable incomes of an expanding and increasingly urbanized middle class translate into increased consumer spending on entertainment and media. E&M Market in BRIC (US$ Millions) BRIC 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Brazil 13,727 15,410 17,734 19,869 21,891 23,979 26,058 28,605 31,000 33,835 % Change 3.2 12.3 15.1 12.0 10.2 9.5 8.7 9.8 8.4 9.1 9.1 Russia 12,128 16,159 20,658 23,526 26,398 29,636 31,933 36,600 41,151 45,275 % Change 35.4 33.2 27.8 13.9 12.2 12.3 7.8 14.6 12.4 10.0 11.4 India 8,790 9,705 11,230 13,432 15,548 18,610 21,877 26,316 31,096 36,331 % Change 9.2 10.4 15.7 19.6 15.8 19.7 17.6 20.3 18.2 16.8 18.5 China 34,454 41,044 48,839 56,220 68,138 83,487 94,928 108,140 121,088 134,544 % Change 18.7 19.1 19.0 15.1 21.2 22.5 13.7 13.9 12.0 11.1 14.6 BRIC Total 69,099 82,318 98,461 113,047 131,975 155,712 174,796 199,661 224,335 249,985 % Change 16.5 19.1 19.6 14.8 16.7 18.0 12.3 14.2 12.4 11.4 13.6 Rest of the World 1,141,468 1,226,756 1,296,543 1,386,293 1,463,573 1,546,809 1,628,099 1,736,378 1,828,801 1,947,771 % Change 4.7 7.5 5.7 6.9 5.6 5.7 5.3 6.7 5.3 6.5 5.9 Global Total 1,210,567 1,309,074 1,395,004 1,499,340 1,595,548 1,702,521 1,802,895 1,936,039 2,053,136 2,197,756 % Change 5.4 8.1 6.6 7.5 6.4 6.7 5.9 7.4 6.0 7.0 6.6 The country projected to experience the fastest growth is India. During the past year, India has become the focus of intensive collaboration and investment by many of the world s leading entertainment and media companies, which are seeking both to enter this market and to participate together with thriving local players in local content opportunities such as the Bollywood film industry. This focus reflects not only the market growth opportunity but also a comparatively favorable investment climate. The extent of foreign participation in local entertainment and media markets varies in different countries in no small part due to restrictions and in some cases, outright bans on foreign direct investment. Executive Summary Introduction 11

Trend: Diverse emerging markets set for rapid growth Beyond BRIC, a large and diverse group of countries is also breaking away from the pack. We project there will be 15 countries with entertainment and media markets that expand at double-digit annual rates during the next five years, with Saudi Arabia and the Pan-Arab region experiencing the fastest growth. In each of these countries, the entertainment and media market is growing more quickly than the nation s GDP. Another common feature is fast-growing spending on Internet access markets both wired and wireless. In each of these countries, the broadband household universe will expand at a compound annual rate of more than 20 percent. Strong economic expansion is helping drive the large increases expected in most of the high-growth countries. Infrastructure improvements, particularly in the areas of broadband and multichannel television, will also be principal drivers. Because of low penetration in these categories, there is still substantial room for growth. In line with global trends, we expect Internet advertising, Internet access spending, and TV subscriptions to lead the industry s expansion in these fast-growing territories. 2008 2012 E&M Saudi Arabia/Pan Arab India Indonesia Vietnam Turkey Pakistan China Colombia Philippines South Africa Venezuela Romania Argentina Russia Mexico 19.1 18.5 18.1 17.3 16.7 15.5 14.6 14.5 14.2 13.9 12.6 12.0 11.5 11.4 11.0 0.0 5.0 10.0 15.0 20.0 25.0 Each of these countries has a different story to tell. Vietnam will be the world s fastest-growing television subscription and license fee market over the next five years, growing at 29.3 percent compounded annually. Colombia will be the fastest-growing entertainment and media market in Latin America. The Internet access market in Saudi Arabia and the Pan-Arab states will grow at 30.1 percent compounded annually, rising to $13.8 billion in 2012 surpassing Russia and rivaling France. PricewaterhouseCoopers 12 Global Entertainment and Media Outlook: 2008 2012

Trend: Growing global incomes ruling consumer E&M spending Rising disposable incomes and a growing global and urbanized middle class will translate into higher spending on entertainment and media. In wealthier countries such as the United States, the United Kingdom, and South Korea, entertainment and media constitutes around 6 percent of consumer spending. By contrast, entertainment and media in fast-growing, emerging markets capture only 3 percent or less of consumer spending. As incomes increase, more spending will shift to entertainment and media, driving growth. 2007 E&M Spending as a Percentage of Total Consumer Spending (%) United States United Kingdom South Korea 5.8 6.0 6.2 Saudi Arabia/Pan Arab India 1.9 1.9 Indonesia 1.5 Vietnam 2.8 Turkey 1.8 Pakistan China Colombia Philippines South Africa Venezuela Romania Argentina Russia Mexico 1.1 1.1 2.2 2.9 2.8 3.0 4.0 4.6 4.2 3.6 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 Rise of those in the Net generation and continued influence of their parents The pace and direction of change in our industry are being set by the so-called Net generation. The first to grow up digital, this global, connected youth generation was born from 1977 to 1997. To these young people, new media technologies are intuitively familiar, everyday components of their technologysaturated lives. Trend: Connectivity and interactive entertainment The Net generation s large demographic cohort is accelerating the digital/mobile transition and driving the industry toward a future in which content and advertising are tailored to the wants and needs of individual consumers. Their prodigious appetite for multitasking; their preference for free, ad-supported content; their desire for participatory, interactive entertainment and media experiences; and their demand for content untethered from specific devices and time slots are having a profound impact on future business models. Entertainment and media companies are reacting by going to increasing lengths to better understand and cater to these influential customers. Executive Summary Introduction 13

In the US, the Net generation not only outnumbers its baby boomer parents but also has a profound influence on the technology engagement of prior generations often serving as the tech support in their homes and throughout their extended family networks. Where their parents spend on average 20 hours every week watching television, Net gen ers can consume 20 hours of media every day, but they do it in a 7-hour period, actively multitasking their way through social networking sites, user-generated content, video games, television, and other content, creating a more individualized and interactive experience with the content of their choice. In addition, and, without question, the increasingly ubiquitous connectivity that defines the Net generation makes it a truly global phenomenon a fact that is highly relevant to future business planning. In the following chart, we see the need for companies to expand their global reach, with the lion s share of entertainment and media companies future consumers residing in emerging markets. In India and China alone, there are more than 1 billion people under 25 years old. Half of India s population is under 25. And Latin America also has a young population, with more than 40 percent in Brazil and Mexico under 25. The high proportion of young people in India and Latin America will propel spending on Internet access and digital entertainment and media during the coming years. Net Generation Country 2007 Under-25 Population (Millions) % of Total Population Under 25 India 568.288 50 China 496.616 38 United States 103.630 34 Brazil 82.299 43 Mexico 53.221 49 Russia 43.412 31 Japan 31.010 24 Germany 20.988 25 France 19.867 31 United Kingdom 18.430 30 Canada 10.217 31 Spain 10.199 25 Sources: PricewaterhouseCoopers LLP, US Census Bureau international database, Wilkofsky Gruen Associates PricewaterhouseCoopers has regular conversations with entertainment and media consumers around the world on the streets, in their homes, in focus groups, and through an ongoing relationship with a large global Net generation research project all to gain a better understanding of how their changing media behavior and preferences are altering the industry landscape. Growing up in the connected, collaborative environment of the Internet, these young global consumers exhibit a unique set of expectations and behaviors in their natural digital habitat. So long as companies are clear and up-front about specific policies and practices, Net gen ers are comfortable sharing private information in exchange for a more relevant and customized entertainment and media experience. They are authenticators who will seek to verify so-called official information through independent product reviews, online community ratings, and other trusted sources. PricewaterhouseCoopers 14 Global Entertainment and Media Outlook: 2008 2012

Advertising, like content, must be relevant and/or entertaining to catch and keep their attention. Access to Net gen ers cell phones, social networks, and other intimate environments deemed my personal space is by permission only, something most likely to be granted in exchange for free content and other deals. This generation is driving new business models that emphasize a more personal two-way relationship between companies and their customers. Toward that end, entertainment and media companies are increasingly open to sharing their brands by inviting customers who have grown up with the interactive culture of the Web to talk back and have a say in everything from research and development to product marketing. Trend: Consumers over the age of 50 who maintain the health of established media Throughout the forecast period covered by this edition of the Outlook, traditional revenue streams television, radio, physical books, and beyond will continue to dominate entertainment and media revenues in each category except recorded music. While the Net generation drives rapid digital and mobile growth, the 50-and-older demographic is a stabilizing influence, devoting substantial attention to the more-established media with which they are more familiar. This older demographic is the fastest growing and consumes traditional media at higher rates than its youthful counterparts do. Globally, the 50-andolder population will increase from 1.1 billion to 1.25 billion, a 13.1 percent rise through 2012. While their consumer preferences will sustain traditional formats for the remainder of the forecast period, what remains to be seen and this continues to be a point of active debate among entertainment and media executives today is whether the Net generation will retain its current unique behavior or whether its members will age into habits that more closely resemble those of their parents. Of course, the reverse is already apparent, with 50-and-older consumers taking a growing interest in many of the platforms that their children and grandchildren are embracing. This trend is clearly already under way today for example, in the expanding demographic appeal of video games. Population Demographics (Millions) Region 2007 2012 Percent Change (%) United States 15 24 42.700 42.932 0.5 25 34 40.193 42.824 6.5 35 49 65.775 62.584 4.9 50 and older 91.541 103.157 12.7 EMEA 15 24 149.560 141.868 5.1 25 34 147.177 151.474 2.9 35 49 202.217 205.685 1.7 50 and older 265.394 289.531 9.1 Asia Pacific 15 24 591.708 598.405 1.1 25 34 530.055 546.324 3.1 35 49 698.727 771.003 10.3 50 and older 661.417 753.858 14.0 Latin America 15 24 76.855 77.810 1.2 25 34 70.935 73.550 3.7 35 49 84.637 92.656 9.5 50 and older 76.972 91.690 19.1 Canada 15 24 4.426 4.494 1.5 25 34 4.483 4.679 4.4 35 49 7.863 7.499 4.6 50 and older 10.826 12.448 15.0 Global 15 24 865.249 865.509 0.0 25 34 792.843 818.851 3.3 35 49 1,059.219 1,139.427 7.6 50 and older 1,106.149 1,250.684 13.1 Sources: PricewaterhouseCoopers LLP, US Census Bureau international database, Wilkofsky Gruen Associates Executive Summary Introduction 15

Multiple technology tipping points Combine a powerful and behaviorally distinct new demographic the Net generation with a breakthrough period for fast-emerging technologies, and you have the raw ingredients of market transformation. Several critical technologies are now reaching tipping points that will deeply influence both the pace and direction of entertainment and media growth over the next five years. Broadband penetration continues to expand rapidly across the world. Mobile is gaining ground quickly adding subscribers and upgrading infrastructure to facilitate the next wave of mobile expansion, driven by Internet access, advertising, and television. Modern movie houses, digital cinemas, and 3-D upgrades are enhancing the moviegoing experience, while high-definition television (HDTV) subscriptions and resolution of the high-definition DVD format wars will invigorate digital living rooms. Even with sports, casino gaming, publishing, and radio, the migration to digital will lead the next five years growth. Trend: The global broadband boom Wired broadband spending is growing rapidly in every region of the world, driving global Internet access spending to $341 billion in 2012 a 12.1 percent compound annual growth rate. Rapid consumer adoption in combination with the soaring popularity of Web video and social networking applications is driving huge increases in bandwidth consumption. In 2007, there were 310 million broadband households an increase of 25.5 percent from 2006. During the next five years, the broadband household universe will more than double again, rising to 661.1 million in 2012 a 16.4 percent compound annual increase. This year, the People s Republic of China (PRC) will pass the US to become the world s largest broadband market, with 80 million households. Meanwhile, the fastest growth is taking place in Latin America, which has lagged other parts of the world. Canada is slowest because broadband penetration is already quite high in that country. This global growth in the broadband universe will expand the scope of digital distribution and feed overall entertainment and media growth. Broadband Households (Millions) Region 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 United States 21.70 30.60 39.60 51.10 61.40 71.00 80.00 88.00 95.00 101.00 % Change 52.8 41.0 29.4 29.0 20.2 15.6 12.7 10.0 8.0 6.3 10.5 EMEA 19.14 40.22 56.06 80.24 105.08 127.56 149.12 170.77 189.58 206.00 % Change 76.1 110.1 39.4 43.1 31.0 21.4 16.9 14.5 11.0 8.7 14.4 Asia Pacific 36.60 59.49 79.20 97.42 120.10 147.46 179.81 211.81 249.20 286.80 % Change 56.8 62.5 33.1 23.0 23.3 22.8 21.9 17.8 17.7 15.1 19.0 Latin America 1.79 3.88 7.09 10.51 14.93 21.55 29.30 37.15 46.55 55.90 % Change 82.7 116.8 82.7 48.2 42.1 44.3 36.0 26.8 25.3 20.1 30.2 Canada 4.51 5.42 6.43 7.68 8.50 9.20 9.90 10.50 11.00 11.40 % Change 27.8 20.2 18.6 19.4 10.7 8.2 7.6 6.1 4.8 3.6 6.0 Total 83.74 139.61 188.38 246.95 310.01 376.77 448.13 518.23 591.33 661.10 % Change 58.2 66.7 34.9 31.1 25.5 21.5 18.9 15.6 14.1 11.8 16.4 PricewaterhouseCoopers 16 Global Entertainment and Media Outlook: 2008 2012

Trend: Mobile becoming an extension of the Internet Wireless network upgrades and the rollout of third-generation (3G) and in some countries fourthgeneration wireless services will stimulate demand for mobile Internet access in every region, but ongoing penetration is only part of the story. Outside the home, the mobile phone is rapidly becoming an extension of the Internet. Global mobile access spending will be the fastest-growing segment of the Internet access market, expanding at an 18.9 percent compound annual rate to $117.5 billion in 2012. This compares to wired Internet access spending, which will increase at around half that rate 9.3 percent compounded annually but adding up to a much larger overall market of $223.5 billion in 2012. Wireless Internet access is most developed in Japan, which by itself accounted for 45 percent of global wireless Internet access spending in 2007. Consumers are purchasing more mobile Internet access and graphic-rich handsets tailored to gaming, television, social networking, and other content viewing. This lays the groundwork for the next wave of wireless innovation, which will be fueled by rising consumer interest in both mobile connectivity and content. Mobile TV subscriptions, in particular, are poised for breakout growth, rising to $19 billion in 2012 from only $408 million in 2007. This will help fuel mobile advertising as budget-conscious consumers seek to do more with their mobile phones while controlling costs, making them more open to the idea of targeted advertising on their wireless devices. Indeed, global revenues from mobile advertising will surge sixfold to $16.4 billion over the next five years. This 44 percent compound annual growth rate is more than two and a half times the rate of growth in wired Internet advertising over the same period. Global wireless spending has experienced double-digit annual growth for the past five years. In 2007, the number of wireless telephone subscribers rose by 12.9 percent to 2.7 billion. Wireless telephone subscriptions will expand to 4.1 billion in 2012, an 8.9 percent compound annual increase. Much of this growth will occur in Asia Pacific. From 2007 to 2012, Asia Pacific will account for 80 percent of wireless telephone subscription growth, with the result that 58 percent of the world s wireless subscribers will reside in the region. This growing wireless base, in combination with a sophisticated new generation of handsets, will expand opportunities throughout entertainment and media, including film and television, Internet access, advertising, video games, music, wagering, and sports. Wireless Telephone Subscribers (Millions) Region 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 United States 148 170 195 220 239 255 267 275 282 288 % Change 9.6 14.9 14.7 12.8 8.6 6.7 4.7 3.0 2.5 2.1 3.8 EMEA 496 595 738 840 876 903 926 944 961 976 % Change 16.7 20.0 24.0 13.8 4.3 3.1 2.5 1.9 1.8 1.6 2.2 Asia Pacific 557 685 830 1,046 1,252 1,469 1,707 1,940 2,169 2,395 % Change 27.2 23.0 21.2 26.0 19.7 17.3 16.2 13.6 11.8 10.4 13.9 Latin America 105 146 200 249 292 320 346 371 393 413 % Change 7.1 39.0 37.0 24.5 17.3 9.6 8.1 7.2 5.9 5.1 7.2 Canada 13 15 17 19 21 24 26 29 32 34 % Change 8.3 15.4 13.3 11.8 10.5 14.3 8.3 11.5 10.3 6.3 10.1 Total 1,319 1,611 1,980 2,374 2,680 2,971 3,272 3,559 3,837 4,106 % Change 19.0 22.1 22.9 19.9 12.9 10.9 10.1 8.8 7.8 7.0 8.9 Executive Summary Introduction 17

Trend: Digital driving home viewing and theatrical revenue growth In the home, high-definition television will make TV shows more appealing, while the emergence of the Blu-ray format as the industry standard for high-definition DVDs will help revive what has been a stagnant home video market for the past three years. Modern theaters with digital screens and 3-D upgrades will fuel expansion of filmed entertainment. The trend toward digital cinema will also help low-budget films gain wider distribution because digital prints are much less expensive to duplicate. Trend: Regulation s struggle to keep pace with technology Rapid changes in the entertainment and media landscape are rendering portions of the existing regulatory structure obsolete, creating uncertainty over the future environment in which entertainment and media companies will do business. Copyright laws differ across countries. Antitrust regulations are being reevaluated as the rise of electronic distribution alters the definition of marketplace competition. In the US, for example, a proposed merger of the two satellite radio companies was tentatively approved in 2008, whereas earlier in the decade, a proposed merger between the two satellite television providers was rejected. The regulatory structure under which over-the-air networks operate is also coming under review, reflecting the erosion of networks control over the television market. On one hand, in the European Union, rules regarding product placement advertising and the frequency of commercial interruptions on television are being relaxed. In Mexico, on the other hand, networks are now prohibited from selling political advertising. As these examples demonstrate, regulatory policies often move in different directions. In the European Union, telephone companies are facing stricter requirements in sharing their broadband infrastructure with competitors, while in the US, telephone companies are now no longer required to share elements of their broadband infrastructure. Privacy concerns, too, are registering on the regulatory radar, as advancing technology facilitates ever greater use of personal information to ensure targeted, relevant advertising. All of these factors create uncertainty, thereby applying cautionary pressure on investment. Recent studies show a clear correlation between the level of investment, the size of the local entertainment and media industry, and the regulatory environment. Many markets are still struggling with the adoption of best practices, and under such circumstances, regulation is viewed as a barrier to growth. Both emerging and more developed markets are encountering (1) challenges arising from the adoption of rapidly developing technologies and (2) the competitive challenge from new market entrants, and thus arises the need to balance consumer protection with regulating for the public good. PricewaterhouseCoopers 18 Global Entertainment and Media Outlook: 2008 2012

Welcome to the on-demand world Entertainment and media companies push to deliver and monetize their content across multiple screens on the PC, on TV, and on a growing array of content-friendly mobile devices will be a significant driver of revenue growth over the next five years. Companies are racing to respond to consumers anytime, anywhere demand for content when, where, and how they prefer to experience it in their lives. Today, intensive strategic focus is being devoted to emerging business models and partnerships that aim to support that rising consumer imperative and to monetize the delivery of content across both established and emerging platforms. Trend: Multiplatform going mainstream The Internet and mobile phones are becoming primary distribution channels for entertainment and media. Rather than focusing on audience fragmentation, the buzzword of the moment is ubiquity the omnipresent availability of content in whatever form people prefer to consume it. More and more television content is being made available online, often free in an ad-supported format. Increasing numbers of premium films are being made available for digital download earlier during the home video distribution window. Sports rights and sponsorship deals are becoming more lucrative, thanks to the rising value of online and mobile rights. Online and mobile newspaper and magazine sites are recapturing a portion of the ad revenues lost by print advertising. The new generation of video game platforms is defined by connectivity, opening up dynamic advertising opportunities in combination with the evolution of the gaming console into a true media center, connecting the television and the Internet, and offering not only video games but also film, television, gaming, and other content. As entertainment and media companies spread their products and services across multiple platforms, building and maintaining a cohesive and distinct brand identity will be critical to aggregating and monetizing future audiences and customers. Trend: Consumer preference for ad-supported content Entertainment and media consumers across the world have long shown a liking for free, or heavily discounted, ad-supported content and services and they are taking this preference with them into the new digital and mobile environment. This ensures that the importance of advertising will continue to grow for both entertainment and media companies themselves and their customers. In 2007, the Internet advertising market expanded by 33.2 percent the fourth consecutive annual increase in excess of 30 percent, making it the fastest-growing entertainment and media segment of 2007. Looking ahead, spending will increase from $49.5 billion last year to $120.4 billion in 2012. While this more modest, 19.5 percent compound annual growth rate reflects the market s budding maturity, it is robust enough to ensure Internet advertising will remain the fastest-growing entertainment and media category through 2012. Search, online classifieds, and video advertising will be the fastest-growing areas. Of course, the challenge lies in ensuring that consumers view and respond to the advertising they are exposed to. One of the factors propelling out-of-home advertising, which will be the fastest-growing advertising medium after Internet and the small but burgeoning video game advertising market, is that out-of-home ads are more difficult to avoid than television, radio, or print advertising. Trend: Intellectual property: Legal marketplace advances Entertainment and media companies are increasingly sure-footed in their efforts to build a viable, healthy, and legal digital marketplace. Popular television content and premium movies are rapidly making their way Executive Summary Introduction 19

to the Internet both legally and in a more timely fashion. Our forecast predicts that these efforts will yield an increasingly healthy and viable legitimate marketplace. One development that exemplifies this progress is the home video market, which dominates filmed entertainment. Through 2012, online rentals and digital streaming will constitute 52 percent of the projected increase in home video revenues, accounting for more than $8 billion of spending. Intellectual property theft affects virtually all segments of entertainment and media and makes it difficult for legal online services to thrive. At the same time, copy protection impedes consumers ability to make flexible use of legally acquired content. Recorded music companies in 2007 and early 2008 began discontinuing their use of digital rights management (DRM) software. We believe that the added convenience of being able to listen to music on any device will offset the potential for unauthorized distribution. The rise of DRM-free music deserves partial credit for the double-digit growth we expect in the legal digital distribution of recorded music. Similarly, companies distributing audio books online are cutting back on DRM software in the hope that being able to sample a book online will lead to more physical book sales. At the same time, prosecutions for copyright infringement have become more aggressive and are often targeted higher up the food chain, seeking to cut off distribution networks, shut down unauthorized filesharing sites, and eliminate illegal street markets. Also, with growing numbers of countries becoming involved in increasingly sophisticated activities in the global information economy, intellectual property rights are gaining momentum as more nations have a shared stake in protecting the power of ideas. Media categories that are now experiencing the shift from established formats to emerging digital and mobile formats have learned from the experience of recorded music. Companies are experimenting with different approaches to intellectual property management. We expect that technologies, methodologies, and innovative legitimate business models and customer service offerings will continue to evolve during the next five years. As a result of these concerted efforts, we project that the legal online music marketplace will expand by $6 billion during the next five years, thereby helping recoup some of the revenues previously lost to digital piracy. Traditional foundation, digital migration Although digital and mobile distribution constituted only 5 percent of global entertainment and media spending in 2007, these revenues will account for 24 percent of all growth throughout the industry during the next five years. However, the equally important headline is that established business segments will continue to dominate revenues throughout the next five years. The sole exception is recorded music, wherein digital distribution will surpass physical distribution in 2011. By 2012, digital/mobile revenues will account for just 11 percent of total entertainment and media spending, or $234 billion of the $2.2 trillion global market. On the upside, the oft-reported death of traditional media remains greatly exaggerated, but that reality also underscores the fact that while companies are making bold moves to follow consumers into the digital/mobile future, they continue to wrestle with the challenge of creating business models that adequately monetize their efforts. As the following tables indicate, we see this same story traditional lines of the business paying the bills, digital and mobile opportunities driving the growth playing out in virtually every sector. PricewaterhouseCoopers 20 Global Entertainment and Media Outlook: 2008 2012

Global Digital/Mobile Revenues (US$ Millions) Category 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Online Rental Subscriptions/ Digital Streaming 346 809 1,221 1,639 2,664 3,894 5,531 7,263 9,151 10,842 Video-on-Demand 866 1,378 1,932 2,919 4,196 5,631 7,235 8,921 10,495 12,061 Mobile TV 57 408 1,184 3,204 7,259 12,152 18,771 Internet/Mobile Music 443 1,223 2,766 4,640 7,315 9,357 11,707 13,987 16,497 18,832 Internet Advertising: Wired and Mobile 12,568 17,743 25,481 37,161 49,491 63,191 77,151 91,489 106,235 120,365 Satellite Radio 125 385 1,012 1,796 2,526 3,160 3,619 4,103 4,571 4,933 Online Video Games 1,450 2,399 3,810 5,095 6,577 8,062 9,565 11,133 12,764 14,361 Wireless Video Games 797 1,709 2,954 4,208 5,636 7,252 8,864 10,523 12,045 13,465 Video Game Advertising 30 176 680 1,044 1,367 1,700 1,932 2,098 2,262 Electronic Professional Books 288 450 543 662 819 1,020 1,330 1,770 2,318 2,846 Electronic Consumer and Educational Books 347 544 737 1,002 1,340 1,844 2,533 3,555 4,972 6,750 Online and Mobile Gaming 1,794 2,750 3,834 4,577 5,303 5,303 6,105 6,937 7,801 8,696 Total 19,024 29,420 44,466 64,436 87,319 111,265 138,544 168,872 201,099 234,184 Global Digital/Mobile Revenue Growth (%) Category 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Online Rental Subscriptions/ Digital Streaming 133.8 50.9 34.2 62.5 46.2 42.0 31.3 26.0 18.5 32.4 Video-on-Demand 116.5 59.1 40.2 51.1 43.7 34.2 28.5 23.3 17.6 14.9 23.5 Mobile TV 615.8 190.2 170.6 126.6 67.4 54.5 115.1 Internet/Mobile Music 278.6 176.1 126.2 67.8 57.7 27.9 25.1 19.5 17.9 14.2 20.8 Internet Advertising: Wired and Mobile 29.4 41.2 43.6 45.8 33.2 27.7 22.1 18.6 16.1 13.3 19.5 Satellite Radio 420.8 208.0 162.9 77.5 40.6 25.1 14.5 13.4 11.4 7.9 14.3 Online Video Games 78.1 65.4 58.8 33.7 29.1 22.6 18.6 16.4 14.7 12.5 16.9 Wireless Video Games 176.7 114.4 72.8 42.5 33.9 28.7 22.2 18.7 14.5 11.8 19.0 Video Game Advertising 486.7 286.4 53.5 30.9 24.4 13.6 8.6 7.8 16.7 Electronic Professional Books 136.1 56.3 20.7 21.9 23.7 24.5 30.4 33.1 31.0 22.8 28.3 Electronic Consumer and Educational Books 139.3 56.8 35.5 36.0 33.7 37.6 37.4 40.3 39.9 35.8 38.2 Online and Mobile Gaming 36.4 53.3 39.4 19.4 15.9 0.0 15.1 13.6 12.5 11.5 10.4 Total 47.1 54.6 51.1 44.9 35.5 27.4 24.5 21.9 19.1 16.5 21.8 Executive Summary Introduction 21

This digital/mobile growth is essential to the ongoing health of most sectors of the entertainment and media market because it offsets flat or declining growth in more-established areas of the business. Spending on several traditional entertainment and media categories facing digital competition music on CDs, print newspapers, and movie DVDs rose just 0.9 percent in 2007. Over the next five years, this growth will average only 2.1 percent compounded annually. While established areas of entertainment and media will continue to dominate revenues, their growth is slowing substantially as consumers migrate to digital and mobile opportunities. However, a segment that is leading the defiance of conventional wisdom is terrestrial advertising on over-the-air broadcast television. While audiences continue to fragment across a growing array of platforms, terrestrial television will retain the largest audience of any platform throughout the forecast period. As a result, terrestrial television advertising will be the fastest-growing industry segment that faces direct competition from digital media. HDTV, which is generally digital, will also boost advertising on free-to-air channels. Overall, worldwide terrestrial television advertising will grow 5 percent on a compound annual basis through 2012, a figure boosted by the inflow of Olympic-related advertising in 2012 that was not present in 2007. Although multichannel advertising has an established nondigital existence, it will benefit from large increases in the number of digital households and will gain advertising share from terrestrial broadcasters. Global Revenues Subject to Digital Competition (US$ Millions) Category 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Physical Home Video 53,646 57,531 55,786 55,862 55,837 56,519 57,725 59,345 61,255 63,505 Physical Recorded Music 35,785 35,303 32,999 30,221 26,122 22,823 20,095 17,672 15,519 13,646 Print Professional Books 18,307 18,414 18,265 18,864 19,444 19,566 19,654 19,775 19,922 20,121 Print Consumer and Educational Books 97,954 99,293 104,168 105,059 111,559 112,151 115,056 117,942 120,661 123,041 Consumer Magazine Circulation 40,631 41,866 43,245 43,372 43,813 44,596 45,534 46,431 47,366 48,357 Trade Magazine Circulation 8,146 8,164 8,171 8,345 8,438 8,465 8,552 8,677 8,821 8,964 Newspaper Circulation 65,268 66,073 66,912 67,333 67,864 68,475 69,145 69,801 70,404 71,062 Terrestrial TV Advertising 101,588 111,411 113,053 119,574 122,047 132,045 134,298 143,511 146,081 155,636 Radio Advertising 30,352 31,708 32,412 33,264 32,908 32,509 32,810 33,634 34,635 35,966 Consumer Magazine Print Advertising 30,613 32,379 33,796 34,863 35,800 36,958 38,140 39,653 40,994 42,506 Trade Magazine Print Advertising 17,584 18,102 19,044 19,340 19,257 18,808 18,913 19,376 20,031 20,976 Newspaper Print Advertising 104,583 109,510 112,420 114,293 112,738 111,942 112,887 116,086 119,541 123,326 Directory Advertising 28,854 29,581 30,464 31,051 31,672 31,888 32,122 32,715 33,424 34,245 Total 633,311 659,335 670,735 681,441 687,499 696,745 704,931 724,618 738,654 761,351 PricewaterhouseCoopers 22 Global Entertainment and Media Outlook: 2008 2012

Growth of Global Revenues Subject to Digital Competition (%) Category 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Physical Home Video 9.3 7.2 3.0 0.1 0.0 1.2 2.1 2.8 3.2 3.7 2.6 Physical Recorded Music 7.4 1.3 6.5 8.4 13.6 12.6 12.0 12.1 12.2 12.1 12.2 Print Professional Books 2.1 0.6 0.8 3.3 3.1 0.6 0.4 0.6 0.7 1.0 0.7 Print Consumer and Educational Books 2.7 1.4 4.9 0.9 6.2 0.5 2.6 2.5 2.3 2.0 2.0 Consumer Magazine Circulation 1.7 3.0 3.3 0.3 1.0 1.8 2.1 2.0 2.0 2.1 2.0 Trade Magazine Circulation 1.2 0.2 0.1 2.1 1.1 0.3 1.0 1.5 1.7 1.6 1.2 Newspaper Circulation 0.9 1.2 1.3 0.6 0.8 0.9 1.0 0.9 0.9 0.9 0.9 Terrestrial TV Advertising 1.9 9.7 1.5 5.8 2.1 8.2 1.7 6.9 1.8 6.5 5.0 Radio Advertising 2.3 4.5 2.2 2.6 1.1 1.2 0.9 2.5 3.0 3.8 1.8 Consumer Magazine Print Advertising 2.8 5.8 4.4 3.2 2.7 3.2 3.2 4.0 3.4 3.7 3.5 Trade Magazine Print Advertising 1.0 2.9 5.2 1.6 0.4 2.3 0.6 2.4 3.4 4.7 1.7 Newspaper Print Advertising 1.3 4.7 2.7 1.7 1.4 0.7 0.8 2.8 3.0 3.2 1.8 Directory Advertising 2.4 2.5 3.0 1.9 2.0 0.7 0.7 1.8 2.2 2.5 1.6 Total 1.7 4.1 1.7 1.6 0.9 1.3 1.2 2.8 1.9 3.1 2.1 Recorded music is the only entertainment and media category in which digital distribution will surpass physical distribution in the forecast period. Overall global spending will decrease 0.6 percent by 2012 on a compound annual basis from 2007 relative stability after the 4.1 percent decline seen in 2007. However, beneath this apparently calm surface, there are turbulent waters. The industry will experience steep, 12.2 percent compound annual declines in physical distribution to $13.6 billion in 2012. Meanwhile, digital distribution will expand by 20.8 percent compounded annually to $18.8 billion in 2012. Trend: Digital/mobile able to both drive and replace core revenues The clear near-term risk inherent in the multiplatform future is a period of disruptive change as new media cannibalize more-established revenues. However, many companies are exploring new business models that seek out a more symbiotic approach one under which digital and mobile revenues and content not only grow but also help promote the ongoing health of the more-established activities that will continue to represent the industry s economic lifeblood for the foreseeable future. Major book publishers are making more of their titles available in electronic formats. The college textbook market, in particular, is shifting to online distribution. Publishers also are providing books online for free with the expectation that consumers ability to sample books will actually drive print sales. Television shows are increasingly available online. Films, too, are becoming more readily available for download and in-home viewing. This can drive greater consumption of content and higher levels of customer satisfaction with the legally available choices in the marketplace. Executive Summary Introduction 23

The new collaboration imperative As companies race to adapt to changing consumer media behavior and a host of emerging technologies and fast-growing markets, we see collaboration emerging as a new imperative across the business landscape of content, advertising, and technology. As the pace of change accelerates, companies are entering into more-sophisticated alliances to rapidly gain an on-the-ground presence in emerging markets and/or to quickly secure complementary assets and skills. Partnerships between content and technology companies are particularly rife at the moment, as entertainment, media, and advertising all grow more personalized to the individual consumer. With the rise of sophisticated new consumer metrics, collaboration also extends from companies to their consumers, who are increasingly playing an active role in shaping the products and services they receive from brands seeking to earn and keep their loyalty. Despite the continued presence of restrictions on foreign direct investment, we see this collaboration trend playing out particularly strongly in BRIC. These countries are increasingly viewed not only as promising and potentially lucrative markets but also as fertile territory for local partnerships. As a result, we see an abundance of increasingly sophisticated relationships developing around the globe among content, technology, advertising, and other complementary ventures. India, for example, is opening up to foreign investment and collaborations of this type. Warner Brothers has a deal to fund three films that will be produced locally; SPE Films India, part of Sony Pictures Releasing International, entered the market in 2007; and Viacom has formed a joint venture with TV-18. In Europe, libraries are teaming up with private companies, such as Google, to develop the European Digital Library. In the Middle East, international theme park companies are joining with local enterprises to create destination resorts in the United Arab Emirates. In PricewaterhouseCoopers 2008 Annual Global CEO Survey, 25 percent of entertainment and media CEOs strongly agreed that collaborative networks will represent a defining organizational principle for their businesses 50 percent higher than the global CEO average across all industries. In today s fastchanging environment, companies collaborate to create value more quickly and effectively than they could on their own. Case studies show that collaborative business networks can deliver greater agility, increased consumer engagement, more innovation, and additional cost savings. The collaboration can take many forms. Collaboration can involve working collectively to manage global risks; rising support for intellectual property rights and concern over global climate change are prime examples. Collaboration among the right partners also advances innovation. A particularly popular form of collaboration in today s entertainment and media sector consists in partnerships between content and technology companies to rapidly aggregate and monetize multiplatform content audiences, catering to Net generation consumers with high expectations of a customized, technology-rich, and engaging experience with content and media across multiple platforms. Collaboration is also increasingly occurring directly between brands and their customers. Entertainment and media companies, like many leading global brands, routinely tune in to their customers conversations on blogs, social networking sites, and other digital watering holes. The leaders in this field have established mechanisms to embed these perspectives into their day-to-day operations, enabling them to anticipate customer demands and gain the ability to respond rapidly to unfiltered feedback and shifting market winds. These strategies are explored in PricewaterhouseCoopers white paper How Consumer Conversation Will Transform Business. A connected, global business landscape offers a world of greater competition, transparency, and opportunity. As the pace of change increases, going it alone presents its own set of increasingly unattractive risks. As competition intensifies, more companies across technology, content, and advertising are finding innovative ways to collaborate and advance their mutual interests and growth. PricewaterhouseCoopers 24 Global Entertainment and Media Outlook: 2008 2012

Economic activity Most of the segments of the entertainment and media industry are sensitive to economic cycles, with the result that the state of the underlying economy plays a significant role in the industry s growth pattern. During the next two years, a relatively weak US economy will contribute to comparatively slow growth in entertainment and media spending in that country. In Asia Pacific, by contrast, the PRC, India, and a number of other countries are set to experience continued strong economic conditions, and we expect that region to register large gains in entertainment and media spending during 2008 and 2009. In 2007, the global economy expanded by 6 percent, following three consecutive years of 7 percent increases. Over the next five years, global economic expansion will soften slightly more, to a 5.7 percent compound annual rate. The US economy will be the slowest growing in 2008, which will adversely affect Canada in turn. We expect nominal GDP in North America to expand by less than 4 percent annually during the next two years, followed by a recovery beginning in 2010 and faster growth thereafter. Leading the global expansion by more than two percentage points over the next five years is Asia Pacific, which will remain robust through 2012 with a projected 8.0 percent rate of growth compounded annually. Nominal GDP Growth by Region (%) Region 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 United States 4.7 6.6 6.4 6.1 4.9 3.0 3.9 6.1 6.4 6.3 5.1 EMEA 4.6 6.4 6.0 6.6 5.3 4.8 4.9 5.0 4.9 4.8 4.9 Asia Pacific 4.7 7.3 7.0 7.2 8.8 8.1 8.0 8.5 8.1 7.5 8.0 Latin America 4.1 15.0 21.5 15.0 4.7 4.4 4.2 4.2 4.2 4.0 4.2 Canada 5.2 6.2 6.1 5.1 4.8 3.8 3.8 4.0 4.5 4.5 4.1 Total 4.6 7.0 7.0 7.0 6.0 5.1 5.4 6.1 6.1 5.9 5.7, World Bank Regional averages can mask substantial differences between countries. In EMEA (Europe, Middle East, Africa), Western Europe will expand most slowly, at a 4.2 percent compound annual rate. Central and Eastern Europe had generated double-digit increases during 2003 06, principally because of rapid growth in Russia and Turkey. The latter two countries suffered severe economic downturns during the late 1990s and the early years of the current decade and have been rebounding during the ensuing years. Now that those territories have largely recovered, growth has moderated to mid-single-digit gains, and we project that Central and Eastern Europe will expand at a 6.6 percent compound annual rate during the next five years. In the Middle East/Africa portion of EMEA, South Africa and Saudi Arabia/Pan Arab will be the fastest-growing territories, at 9.8 percent and 9.2 percent, respectively, on a compound annual basis, with Israel projected at 6.1 percent. Middle East/Africa as a whole will grow at an 8.9 percent compound annual rate. Executive Summary Introduction 25

Nominal GDP Growth by Country in EMEA (%) EMEA 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Western Europe Austria 2.4 4.4 3.9 5.1 5.3 4.2 4.2 4.4 4.2 4.4 4.3 Belgium 2.6 5.4 3.1 5.0 4.4 3.5 4.0 3.4 3.3 3.2 3.5 Denmark 2.6 2.8 3.4 4.0 4.0 3.3 3.5 3.4 3.3 3.2 3.4 Finland 1.4 4.3 3.2 6.9 5.8 4.3 5.1 4.6 4.6 4.7 4.7 France 3.0 4.1 3.5 4.3 3.5 3.4 3.9 4.0 4.3 4.4 4.0 Germany 0.9 2.1 1.5 3.0 4.6 3.6 3.8 3.6 3.7 3.6 3.7 Greece 8.3 8.3 7.5 7.7 7.2 6.9 6.7 7.0 6.7 6.6 6.8 Ireland 7.0 6.5 8.8 8.2 7.1 6.0 5.5 5.7 5.9 5.9 5.8 Italy 3.1 4.1 2.3 3.7 3.6 3.2 3.5 3.7 3.5 3.4 3.5 Netherlands 2.5 3.0 3.6 4.9 4.7 4.6 4.9 5.0 4.6 4.4 4.7 Norway 4.0 9.4 11.5 10.7 4.3 5.6 6.1 5.4 5.3 5.4 5.6 Portugal 2.3 4.0 3.2 4.3 4.4 4.2 4.4 4.5 4.3 4.1 4.3 Spain 7.4 7.4 8.0 8.0 7.1 6.2 6.3 6.3 5.5 5.6 6.0 Sweden 3.7 4.3 4.1 6.0 5.6 4.8 4.6 4.6 4.4 4.2 4.5 Switzerland 1.0 2.9 1.9 4.1 3.0 3.0 3.0 2.9 2.8 2.7 2.9 United Kingdom 5.9 5.9 4.2 5.3 5.6 4.0 4.2 4.7 4.5 4.3 4.4 Western Europe Total 3.3 4.4 3.7 4.8 4.8 4.0 4.3 4.4 4.3 4.2 4.2 Central and Eastern Europe Czech Republic 4.6 7.9 6.8 7.8 8.7 9.1 9.2 9.4 9.0 8.7 9.1 Hungary 10.2 9.4 11.3 3.0 8.6 6.6 6.8 6.9 6.7 6.3 6.7 Poland 4.2 9.7 6.4 7.6 8.9 8.6 8.0 7.8 7.2 7.0 7.7 Romania 29.8 26.9 30.8 23.5 6.3 6.0 5.5 5.2 5.1 4.9 5.3 Russia 24.9 37.1 29.2 28.8 7.0 6.7 6.4 6.5 6.3 6.3 6.4 Turkey 30.2 26.0 20.1 8.6 5.0 5.2 5.3 5.3 5.2 5.4 5.3 Central and Eastern Europe Total 17.2 22.8 19.4 17.0 7.1 6.9 6.6 6.7 6.4 6.4 6.6 Middle East/Africa Israel 5.3 6.4 5.9 8.2 5.6 6.2 6.3 6.1 6.0 5.9 6.1 Saudi Arabia/Pan Arab 9.0 18.2 24.7 14.7 10.0 10.9 9.2 8.9 8.6 8.3 9.2 South Africa 7.9 10.9 10.1 12.2 11.6 10.5 10.1 9.8 9.5 9.2 9.8 Middle East/Africa Total 8.1 14.6 18.7 13.3 9.8 10.2 9.0 8.8 8.5 8.2 8.9 Total 4.6 6.4 6.0 6.6 5.3 4.8 4.9 5.0 4.9 4.8 4.9 Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. PricewaterhouseCoopers 26 Global Entertainment and Media Outlook: 2008 2012

Similarly, average growth rates in Asia Pacific mask wide disparities at the national level. Japan, the dominant territory in entertainment and media spending, rose by only 2.6 percent in 2007, while India, Indonesia, Pakistan, the PRC, and Vietnam expanded at double-digit rates. We expect continued double-digit average annual increases compounded annually in the PRC, India, Pakistan, and Vietnam. Excluding Japan, nominal GDP growth in Asia Pacific will average 10.4 percent compounded annually. Nominal GDP Growth by Country in Asia Pacific (%) Asia Pacific 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Australia 6.3 3.9 6.7 7.8 6.8 6.7 6.5 6.4 6.0 5.7 6.3 China 13.3 17.5 16.5 12.2 16.5 14.3 14.2 14.0 12.3 10.9 13.1 Hong Kong 3.4 4.6 7.1 6.6 7.8 8.1 8.0 8.1 8.0 7.6 7.9 India 12.5 13.1 14.1 15.7 15.7 13.2 13.0 13.1 11.6 10.4 12.2 Indonesia 9.3 12.7 21.3 26.5 15.9 8.1 5.3 6.0 7.9 8.0 7.0 Japan 0.2 1.6 0.6 1.3 2.6 2.7 2.2 3.3 3.5 3.4 3.0 Malaysia 9.1 13.9 10.0 10.3 8.3 8.2 8.6 7.9 8.0 8.0 8.1 New Zealand 6.6 6.5 4.8 2.6 5.2 5.0 5.1 5.4 5.6 5.3 5.3 Pakistan 9.7 17.0 16.6 17.3 14.7 14.2 13.8 13.9 12.2 10.9 13.0 Philippines 9.0 12.8 11.7 11.0 9.4 9.9 9.9 9.7 9.1 8.9 9.5 Singapore 2.2 12.7 7.0 8.2 9.3 7.5 7.3 7.6 7.0 6.5 7.2 South Korea 5.9 7.6 4.0 4.6 7.5 7.4 7.3 7.1 6.7 6.2 6.9 Taiwan 1.2 4.4 3.4 4.6 5.3 5.4 5.3 5.3 5.3 5.3 5.3 Thailand 8.7 9.7 9.2 10.0 6.1 6.5 7.6 8.4 7.8 7.2 7.5 Vietnam 14.6 16.4 17.2 16.6 16.2 16.2 16.4 15.6 13.5 11.9 14.7 Total 4.7 7.3 7.0 7.2 8.8 8.1 8.0 8.5 8.1 7.5 8.0 Executive Summary Introduction 27

Latin America has now moved to a postrecovery phase characterized by sustained mid-single-digit growth. In 2007, growth in the region slowed to 4.7 percent following three years of double-digit expansion. Although nominal GDP growth is now expanding at slower rates, the underlying economy is stronger. Incomes are up, the middle class is expanding, and there is enough discretionary income to fuel growth in entertainment and media spending. In Argentina and Colombia, for example, the percentage of consumer spending devoted to entertainment and media was on a par with most countries in Western Europe a development that is making the region attractive to investors. Moreover, Latin America now has the resources to improve its infrastructure. The broadband universe in Latin America will triple during the next five years, providing significant further impetus for growth. Nominal GDP Growth by Country in Latin America (%) Latin America 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Argentina 26.9 18.1 19.7 17.0 7.4 5.6 4.5 4.5 4.3 4.1 4.6 Brazil 9.2 20.2 32.9 21.0 4.4 4.0 3.9 3.7 4.0 3.8 3.9 Chile 10.5 14.1 14.0 16.1 7.9 8.2 8.6 7.1 6.7 6.3 7.4 Colombia 2.2 23.6 25.5 10.3 6.6 5.7 4.6 4.4 4.2 4.0 4.6 Mexico 1.5 6.9 12.4 9.4 2.9 3.0 3.0 3.5 3.4 3.3 3.2 Venezuela 10.1 30.5 14.7 8.0 8.1 8.2 7.6 7.1 6.6 6.2 7.1 Total 4.1 15.0 21.5 15.0 4.7 4.4 4.2 4.2 4.2 4.0 4.2 PricewaterhouseCoopers 28 Global Entertainment and Media Outlook: 2008 2012

Executive Summary Introduction 29

Global Entertainment and Media Industry Summary Industry size and expected growth We project the entertainment and media industry in the United States, EMEA, Asia Pacific, Latin America, and Canada will increase from $1.6 trillion in 2007 to $2.2 trillion in 2012, growing at a compound annual rate of 6.6 percent. The United States will expand at a 4.8 percent compound annual rate, slowest of the five regions, rising from $601 billion in 2007 to $759 billion in 2012. EMEA will increase from $570 billion in 2007 to $792 billion in 2012, growing at 6.8 percent compounded annually. Spending in Asia Pacific will average 8.8 percent annual growth, increasing from $333 billion in 2007 to $508 billion in 2012. Excluding Japan, which will experience relatively slower growth, Asia Pacific will grow at a 12.0 percent compound annual rate. The market in Latin America will total $85 billion in 2012, up from $51 billion in 2007, advancing from a relatively small base at a compound annual rate of 10.6 percent, the fastest of any region. In Canada, spending will increase from $41 billion in 2007 to $54 billion in 2012, for an average annual gain of 5.8 percent. In total, compared with the past five years, when growth averaged 6.8 percent compounded annually, the projected 6.6 percent compound annual growth will represent a modest slowdown. Global Entertainment and Media Market by Region (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 United States 486,186 520,588 545,295 576,762 600,746 622,534 646,925 683,501 714,931 758,877 % Change 4.8 7.1 4.7 5.8 4.2 3.6 3.9 5.7 4.6 6.1 4.8 EMEA 429,277 462,875 494,202 533,473 569,691 609,784 649,244 699,296 740,869 791,780 % Change 5.3 7.8 6.8 7.9 6.8 7.0 6.5 7.7 5.9 6.9 6.8 Asia Pacific 229,674 254,478 278,861 304,404 333,114 370,102 398,202 433,552 469,270 508,266 % Change 6.5 10.8 9.6 9.2 9.4 11.1 7.6 8.9 8.2 8.3 8.8 Latin America 33,022 36,582 40,989 45,982 51,278 57,280 63,199 70,416 76,971 84,744 % Change 2.8 10.8 12.0 12.2 11.5 11.7 10.3 11.4 9.3 10.1 10.6 Canada 32,408 34,551 35,657 38,719 40,719 42,821 45,325 49,274 51,095 54,089 % Change 8.4 6.6 3.2 8.6 5.2 5.2 5.8 8.7 3.7 5.9 5.8 Total 1,210,567 1,309,074 1,395,004 1,499,340 1,595,548 1,702,521 1,802,895 1,936,039 2,053,136 2,197,756 % Change 5.4 8.1 6.6 7.5 6.4 6.7 5.9 7.4 6.0 7.0 6.6 Internet access Internet access is not an entertainment and media segment in itself, but it is a key driver of entertainment and media spending in most segments. Figures do not include purchase of such E&M content as music. Spending on E&M content downloaded over the Internet or through mobile phones is included in the respective entertainment and media segments. PricewaterhouseCoopers 30 Global Entertainment and Media Outlook: 2008 2012

The Internet access market rose by 16.7 percent in 2007, falling below 20 percent growth for the first time during the past five years as rising penetration rates continue to take the market toward saturation in some territories. Increased broadband penetration will boost wired access, while wireless network upgrades, 3G rollouts, and flat-rate pricing will drive mobile access. We look for an additional four years of double-digit growth followed by an 8.8 percent advance in 2012. Spending will rise from $193 billion in 2007 to $341 billion in 2012, a 12.1 percent compound annual increase. Global Internet Access Market: Wired and Mobile (US$ Millions) Segment 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Internet Access: Wired and Mobile 85,371 108,529 135,837 165,337 192,905 224,205 255,742 284,350 313,322 340,993 % Change 26.1 27.1 25.2 21.7 16.7 16.2 14.1 11.2 10.2 8.8 12.1 Advertising We project global advertising will increase at a 6.1 percent compound annual rate during the 2008 2012 period, rising to $634 billion in 2012 from $473 billion in 2007. The market is characterized by spikes occurring during even-numbered years related to advertising associated with the Olympic Games and in 2010, to advertising associated with the FIFA World Cup. We do not expect growth in any of the forecast years to match the 8.1 percent increase during 2004, as GDP growth is not expected to reach the levels it achieved during the 2004 06 period. Internet advertising has grown at annual rates in excess of 30 percent during each of the past four years, and we expect the Internet to remain the fastest-growing advertising medium, with a projected 19.5 percent compound annual increase to $120 billion in 2012. As the market begins to mature, growth will moderate. The Internet will constitute 19 percent of global advertising in 2012 compared with 10 percent in 2007 and only 3 percent in 2003. A small, video game advertising sector will increase at a 16.7 percent compound annual rate to $2.3 billion in 2012. Out-of-home will be the next fastest-growing advertising medium, with a projected 6.8 percent compound annual increase to $37.7 billion. Digital billboards are expanding the effective inventory by allowing the same display to be sold to multiple advertisers. Television will expand at a 5.9 percent compound annual rate, boosted by advertising on new channels supported by expanding digital platforms. Advertising associated with the Beijing Summer Olympics in 2008 will generate an 8.6 percent increase that year. The 2010 FIFA World Cup in South Africa and the Winter Olympics in Vancouver, Canada, will also attract incremental advertising, as will the 2012 Summer Olympics in London. Television is the largest advertising medium, at $162 billion in 2007, and will rise to a projected $216 billion in 2012. Consumer magazines will increase at a 5.1 percent compound annual rate to $46.8 billion, helped by new titles and an expanding digital sector. Trade magazines, radio, newspapers, and directories will each grow by less than 5 percent annually and will therefore see their share of total spending decrease during the next five years. Executive Summary Industry Summary 31

Global Advertising (US$ Millions) Segment 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Internet: Wired and Mobile 12,568 17,743 25,481 37,161 49,491 63,191 77,151 91,489 106,235 120,365 % Change 29.4 41.2 43.6 45.8 33.2 27.7 22.1 18.6 16.1 13.3 19.5 Television 128,307 142,269 147,086 156,440 162,302 176,289 181,555 194,876 200,801 215,822 % Change 4.7 10.9 3.4 6.4 3.7 8.6 3.0 7.3 3.0 7.5 5.9 Video Games NA 30 176 680 1,044 1,367 1,700 1,932 2,098 2,262 % Change 486.7 286.4 53.5 30.9 24.4 13.6 8.6 7.8 16.7 Consumer Magazines 30,613 32,379 33,924 35,257 36,438 38,017 39,697 41,907 44,165 46,752 % Change 2.8 5.8 4.8 3.9 3.3 4.3 4.4 5.6 5.4 5.9 5.1 Newspapers 105,799 111,051 115,411 118,558 118,300 118,840 121,297 126,116 131,271 136,755 % Change 2.5 5.0 3.9 2.7 0.2 0.5 2.1 4.0 4.1 4.2 2.9 Radio 30,352 31,708 32,412 33,264 32,908 32,509 32,810 33,634 34,635 35,966 % Change 2.3 4.5 2.2 2.6 1.1 1.2 0.9 2.5 3.0 3.8 1.8 Out-of-Home 20,545 22,165 23,525 25,434 27,186 29,093 31,103 33,235 35,454 37,735 % Change 5.6 7.9 6.1 8.1 6.9 7.0 6.9 6.9 6.7 6.4 6.8 Directories 28,854 29,581 30,464 31,051 31,672 31,888 32,122 32,715 33,424 34,245 % Change 2.4 2.5 3.0 1.9 2.0 0.7 0.7 1.8 2.2 2.5 1.6 Trade Magazines 17,584 18,102 19,368 20,255 20,682 20,594 21,218 22,278 23,646 25,418 % Change 1.0 2.9 7.0 4.6 2.1 0.4 3.0 5.0 6.1 7.5 4.2 Total 373,406 403,487 424,451 452,625 472,569 502,300 526,734 563,449 593,789 633,909 % Change 3.6 8.1 5.2 6.6 4.4 6.3 4.9 7.0 5.4 6.8 6.1 Note: Newspaper, consumer magazine, and trade magazine Web site advertising and mobile advertising are included in their respective segments and in most countries also in the Internet advertising segment, but only once in the overall total. Consumer/end-user spending Global consumer/end-user spending will increase from $930 billion in 2007 to $1.2 trillion in 2012, growing by 5.6 percent compounded annually. TV subscriptions and license fees and video games will be the fastest-growing segments, each expanding by 10.1 percent compounded annually. TV subscriptions will be fueled by growth in subscription households, the entrance of telephone companies into TV distribution, a surging video-on-demand market, and an emerging mobile TV market. Video games will continue to be fueled by new games associated with the current console platforms and by entrance of the next generation of consoles in 2012, along with growing online and wireless universes, which will stimulate the video game market. Sports, casino and other regulated gaming, filmed entertainment, and theme parks will be the next fastestgrowing segments. Sports will expand at a 6.5 percent compound annual rate, boosted by growing sponsorships and rights fees and by the influx of revenue associated with the 2012 Olympics. New resort casinos will drive casino and other regulated gaming to a 6.5 percent compound annual increase. Digital cinemas, new multiplexes, and high-definition videos will contribute to the projected 5.3 percent annual increase in filmed entertainment. New parks in the Middle East and other areas will help drive theme park spending by 5.0 percent compounded annually. PricewaterhouseCoopers 32 Global Entertainment and Media Outlook: 2008 2012

The remaining segments in consumer/end-user spending will each grow by less than 5 percent compounded annually, while recorded music will decrease at a 0.6 percent compound annual rate. Global Consumer/End-User Spending (US$ Millions) Segment 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 TV Subscriptions and License Fees 125,501 136,073 148,222 160,070 173,541 188,663 208,827 232,568 255,814 280,791 % Change 10.3 8.4 8.9 8.0 8.4 8.7 10.7 11.4 10.0 9.8 10.1 Recorded Music 36,228 36,526 35,765 34,861 33,437 32,180 31,802 31,659 32,016 32,478 % Change 6.5 0.8 2.1 2.5 4.1 3.8 1.2 0.4 1.1 1.4 0.6 Filmed Entertainment 78,351 83,954 81,661 83,781 85,904 88,879 93,404 98,821 104,907 111,199 % Change 6.9 7.2 2.7 2.6 2.5 3.5 5.1 5.8 6.2 6.0 5.3 Video Games 23,667 26,839 28,219 32,274 40,904 46,955 51,115 55,347 59,460 66,083 % Change 6.8 13.4 5.1 14.4 26.7 14.8 8.9 8.3 7.4 11.1 10.1 Consumer Magazines 40,631 41,866 43,245 43,372 43,813 44,596 45,534 46,431 47,366 48,357 % Change 1.7 3.0 3.3 0.3 1.0 1.8 2.1 2.0 2.0 2.1 2.0 Newspapers 65,268 66,073 66,912 67,333 67,864 68,475 69,145 69,801 70,404 71,062 % Change 0.9 1.2 1.3 0.6 0.8 0.9 1.0 0.9 0.9 0.9 0.9 Radio 10,713 11,337 12,390 13,399 14,399 15,155 16,025 16,770 17,399 17,925 % Change 2.5 5.8 9.3 8.1 7.5 5.3 5.7 4.6 3.8 3.0 4.5 Theme Parks and Amusement Parks 20,538 21,441 22,155 23,090 24,051 25,131 26,288 27,682 29,007 30,701 % Change 2.4 4.4 3.3 4.2 4.2 4.5 4.6 5.3 4.8 5.8 5.0 Casino and Other Regulated Gaming 76,600 87,329 97,342 106,300 113,875 118,940 124,284 134,325 144,528 155,666 % Change 10.9 14.0 11.5 9.2 7.1 4.4 4.5 8.1 7.6 7.7 6.5 Consumer and Educational Books 98,301 99,837 104,905 106,061 112,899 113,995 117,589 121,497 125,633 129,791 % Change 2.9 1.6 5.1 1.1 6.4 1.0 3.2 3.3 3.4 3.3 2.8 Business-to-Business Publishing 97,826 101,438 105,808 112,259 116,753 118,708 121,585 125,685 131,496 138,182 % Change 0.1 3.7 4.3 6.1 4.0 1.7 2.4 3.4 4.6 5.1 3.4 Sports 78,166 84,345 88,092 98,578 102,634 114,339 114,821 127,654 127,995 140,619 % Change 3.7 7.9 4.4 11.9 4.1 11.4 0.4 11.2 0.3 9.9 6.5 Total 751,790 797,058 834,716 881,378 930,074 976,016 1,020,419 1,088,240 1,146,025 1,222,854 % Change 4.3 6.0 4.7 5.6 5.5 4.9 4.5 6.6 5.3 6.7 5.6 Executive Summary Industry Summary 33

PricewaterhouseCoopers 34 Global Entertainment and Media Outlook: 2008 2012

Global Entertainment and Media Market by Segment Internet access Global Internet access, which includes both wired and mobile access, rose by 16.7 percent in 2007, continuing its pattern of double-digit annual growth. Wired broadband is growing rapidly in each region and driving spending. Competition between providers is reducing prices for basic broadband services, while faster speeds at premium rates are enhancing spending. Wired broadband access will increase at a 12.7 percent compound annual rate to $209 billion in 2012. Broadband growth is coming at the expense of dial-up, which is declining. Accessing the Internet via mobile phone is generating an additional source of spending. Mobile access is particularly prevalent in Japan, which alone accounted for 45 percent of global spending in 2007. Wireless network upgrades and the rollout of 3G wireless services will stimulate demand for mobile Internet access in each region. We expect that by 2012, mobile subscribers will spend $118 billion accessing the Internet through their wireless telephones. The overall access market will expand by 12.1 percent compounded annually to $341 billion in 2012. Global Internet Access Market: Wired and Mobile by Region (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 United States 23,176 25,345 29,702 34,955 41,252 47,815 54,780 59,544 64,302 69,267 % Change 18.9 9.4 17.2 17.7 18.0 15.9 14.6 8.7 8.0 7.7 10.9 EMEA 34,031 44,368 54,148 68,001 81,106 95,356 108,797 122,078 134,631 145,175 % Change 29.9 30.4 22.0 25.6 19.3 17.6 14.1 12.2 10.3 7.8 12.3 Asia Pacific 23,486 33,136 45,014 53,642 60,311 68,578 77,307 85,200 93,974 103,056 % Change 28.9 41.1 35.8 19.2 12.4 13.7 12.7 10.2 10.3 9.7 11.3 Latin America 2,557 3,330 4,374 5,598 6,853 8,656 10,644 12,751 15,289 17,892 % Change 22.9 30.2 31.4 28.0 22.4 26.3 23.0 19.8 19.9 17.0 21.2 Canada 2,121 2,350 2,599 3,141 3,383 3,800 4,214 4,777 5,126 5,603 % Change 23.5 10.8 10.6 20.9 7.7 12.3 10.9 13.4 7.3 9.3 10.6 Total 85,371 108,529 135,837 165,337 192,905 224,205 255,742 284,350 313,322 340,993 % Change 26.1 27.1 25.2 21.7 16.7 16.2 14.1 11.2 10.2 8.8 12.1 Executive Summary Global Entertainment and Media Market by Segment 35

Global Internet Access: Wired and Mobile by Component (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Dial-Up 41,327 37,135 35,613 31,361 28,503 25,565 22,475 19,941 17,302 14,966 % Change 2.7 10.1 4.1 11.9 9.1 10.3 12.1 11.3 13.2 13.5 12.1 Broadband 38,485 57,629 74,180 94,906 114,865 134,535 154,179 173,023 191,425 208,507 % Change 51.9 49.7 28.7 27.9 21.0 17.1 14.6 12.2 10.6 8.9 12.7 Total Wired Internet Access 79,812 94,764 109,793 126,267 143,368 160,100 176,654 192,964 208,727 223,473 % Change 21.7 18.7 15.9 15.0 13.5 11.7 10.3 9.2 8.2 7.1 9.3 Mobile Access 5,559 13,765 26,044 39,070 49,537 64,105 79,088 91,386 104,595 117,520 % Change 159.9 147.6 89.2 50.0 26.8 29.4 23.4 15.5 14.5 12.4 18.9 Total 85,371 108,529 135,837 165,337 192,905 224,205 255,742 284,350 313,322 340,993 % Change 26.1 27.1 25.2 21.7 16.7 16.2 14.1 11.2 10.2 8.8 12.1 Internet advertising Global Internet advertising, including advertising on Web sites accessed by computer and mobile sites intended for access by mobile phone, rose by 33.2 percent, the fastest-growing segment in 2007 and the fourth consecutive increase in excess of 30 percent. Broadband growth is stimulating wired Internet advertising. Broadband users spend more time online than dial-up users do; they buy more products online; and they use search engines to visit more Web sites. Advertisers are following users and allocating more resources to the Internet. Keyword search, classified advertising, and online video advertising will be the fastest-growing components. In the mobile market, wireless network upgrades will similarly drive mobile advertising. Rapid growth in mobile Internet access and mobile television subscribers will attract advertisers in their mobile formats as they do in their traditional formats. We project global online wired advertising to expand at a 17.3 percent compound annual rate to $104 billion in 2012. Mobile advertising will increase by a factor of 6.3, from $2.6 billion in 2007 to $16.4 billion in 2012, a 44 percent compound annual increase. Global Internet advertising as a whole will increase to $120 billion in 2012, growing at a 19.5 percent compound annual rate from $49.5 billion in 2007 and continuing to be the fastest-growing segment during the next five years. PricewaterhouseCoopers 36 Global Entertainment and Media Outlook: 2008 2012

Global Internet Advertising Market: Wired and Mobile by Region (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 United States 7,304 9,728 12,737 17,296 21,996 26,603 31,169 35,850 40,448 44,496 % Change 21.5 33.2 30.9 35.8 27.2 20.9 17.2 15.0 12.8 10.0 15.1 EMEA 3,177 4,745 7,556 12,334 17,022 22,151 27,672 33,615 39,968 46,228 % Change 40.3 49.4 59.2 63.2 38.0 30.1 24.9 21.5 18.9 15.7 22.1 Asia Pacific 1,761 2,775 4,428 6,252 8,720 12,164 15,448 18,559 21,687 24,815 % Change 49.9 57.6 59.6 41.2 39.5 39.5 27.0 20.1 16.9 14.4 23.3 Latin America 99 145 213 286 430 581 748 922 1,140 1,379 % Change 4.2 46.5 46.9 34.3 50.3 35.1 28.7 23.3 23.6 21.0 26.2 Canada 227 350 547 993 1,323 1,692 2,114 2,543 2,992 3,447 % Change 38.4 54.2 56.3 81.5 33.2 27.9 24.9 20.3 17.7 15.2 21.1 Total 12,568 17,743 25,481 37,161 49,491 63,191 77,151 91,489 106,235 120,365 % Change 29.4 41.2 43.6 45.8 33.2 27.7 22.1 18.6 16.1 13.3 19.5 Global Internet Advertising Market: Wired and Mobile by Component (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Internet Advertising 12,420 17,404 24,778 35,734 46,843 58,809 70,733 82,324 93,461 103,958 % Change 27.9 40.1 42.4 44.2 31.1 25.5 20.3 16.4 13.5 11.2 17.3 Mobile Advertising 148 339 703 1,427 2,648 4,382 6,418 9,165 12,774 16,407 % Change 129.1 107.4 103.0 85.6 65.5 46.5 42.8 39.4 28.4 44.0 Total 12,568 17,743 25,481 37,161 49,491 63,191 77,151 91,489 106,235 120,365 % Change 29.4 41.2 43.6 45.8 33.2 27.7 22.1 18.6 16.1 13.3 19.5 Television subscriptions and license fees The global television subscription and license fee market increased by 8.4 percent in 2007, comparable to the gains during the prior three years. The entrance of telephone companies into the TV distribution market will increase competition and enhance subscriber growth in each region. Expanding digital terrestrial platforms digital cable and Internet protocol television will also stimulate growth in video-on-demand usage. Cable operators are migrating their subscribers to digital platforms that not only boost monthly subscription revenues but also expand the market for video-on-demand, which we project will increase to $12 billion in 2012 from $4.2 billion in 2007. Mobile television will become a factor in each region, with spending totaling $19 billion in 2012, and will be particularly significant in Asia Pacific. Asia Pacific will also benefit from a large increase in number of TV households. Subscription household penetration growth will drive subscription spending in Latin America, EMEA, and Asia Pacific. In the United States and Canada, where penetration is already approaching the 90 percent level, subscription household growth will play less of a role, accounting for slower increases in those regions. Global subscription spending will rise at a 9.3 percent compound annual rate to $214 billion in 2012. We expect the total market, including public TV license fees in EMEA and Asia Pacific, to reach $281 billion in 2012 from $174 billion in 2007, a 10.1 percent compound annual increase. Growth will be faster during the next five years compared with the past five years because of the emerging mobile television market. Executive Summary Global Entertainment and Media Market by Segment 37

Global TV Subscription and License Fee Market by Region (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 United States 49,541 54,449 58,641 62,653 66,587 70,492 76,644 83,827 89,339 94,231 % Change 8.8 9.9 7.7 6.8 6.3 5.9 8.7 9.4 6.6 5.5 7.2 EMEA 48,888 51,585 55,805 60,163 65,206 71,120 78,138 85,715 93,609 103,019 % Change 11.7 5.5 8.2 7.8 8.4 9.1 9.9 9.7 9.2 10.1 9.6 Asia Pacific 18,588 21,032 23,853 26,168 29,230 32,996 38,206 45,325 53,118 61,585 % Change 14.8 13.1 13.4 9.7 11.7 12.9 15.8 18.6 17.2 15.9 16.1 Latin America 5,100 5,437 6,073 6,837 7,966 9,212 10,661 12,264 13,994 15,956 % Change 0.1 6.6 11.7 12.6 16.5 15.6 15.7 15.0 14.1 14.0 14.9 Canada 3,384 3,570 3,850 4,249 4,552 4,843 5,178 5,437 5,754 6,000 % Change 8.0 5.5 7.8 10.4 7.1 6.4 6.9 5.0 5.8 4.3 5.7 Total 125,501 136,073 148,222 160,070 173,541 188,663 208,827 232,568 255,814 280,791 % Change 10.3 8.4 8.9 8.0 8.4 8.7 10.7 11.4 10.0 9.8 10.1 Global TV Subscription and License Fee Market by Component (US$ Millions) Component 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Subscriptions 97,298 106,208 116,298 126,121 137,055 149,428 164,803 181,829 197,990 214,196 % Change 10.1 9.2 9.5 8.4 8.7 9.0 10.3 10.3 8.9 8.2 9.3 Pay-Per-View 2,673 3,121 3,501 3,878 4,135 4,346 4,626 4,904 5,105 5,263 % Change 15.2 16.8 12.2 10.8 6.6 5.1 6.4 6.0 4.1 3.1 4.9 Video-on-Demand 866 1,378 1,932 2,919 4,196 5,631 7,235 8,921 10,495 12,061 % Change 116.5 59.1 40.2 51.1 43.7 34.2 28.5 23.3 17.6 14.9 23.5 Public TV License Fees 24,664 25,366 26,491 27,095 27,747 28,074 28,959 29,655 30,072 30,500 % Change 9.0 2.8 4.4 2.3 2.4 1.2 3.2 2.4 1.4 1.4 1.9 Mobile TV 57 408 1,184 3,204 7,259 12,152 18,771 % Change 615.8 190.2 170.6 126.6 67.4 54.5 115.1 Total 125,501 136,073 148,222 160,070 173,541 188,663 208,827 232,568 255,814 280,791 % Change 10.3 8.4 8.9 8.0 8.4 8.7 10.7 11.4 10.0 9.8 10.1 PricewaterhouseCoopers 38 Global Entertainment and Media Outlook: 2008 2012

Television advertising The TV advertising market rose by 3.7 percent in 2007, down from the 6.4 percent rise in 2006 that was enhanced by advertising associated with the FIFA World Cup and the Winter Olympics. Multichannel advertising will be the fastest-growing sector in each region, driven by large increases in numbers of digital households. Growth will average 8.4 percent compounded annually during the next five years. HDTV will also boost advertising on free-to-air channels, which we project will increase at a 5.0 percent compound annual rate. In the United States, inventory shortages on the broadcast networks and the rising penetration of digital video recorders will limit near-term growth. In EMEA, the relaxation of advertising restrictions will support terrestrial television. In Asia Pacific, new channels will enhance multichannel advertising. In Latin America, new regulations in some countries will dampen growth. In Canada, increased inventory will help revive the terrestrial market, while the shift toward high-definition terrestrial will limit the capacity of cable companies to carry specialty channels. We project total television advertising to rise at a 5.9 percent rate compounded annually to $216 billion in 2012 from $162 billion in 2007. Global Television Advertising Market by Region (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 United States 58,332 65,264 65,254 69,428 70,020 76,090 76,120 81,125 81,450 88,850 % Change 3.6 11.9 0.0 6.4 0.9 8.7 0.0 6.6 0.4 9.1 4.9 EMEA 34,943 38,606 40,908 43,577 46,344 49,774 53,105 57,400 60,339 64,051 % Change 4.8 10.5 6.0 6.5 6.3 7.4 6.7 8.1 5.1 6.2 6.7 Asia Pacific 27,273 29,483 30,660 31,908 33,359 36,650 37,754 40,163 42,089 44,631 % Change 5.8 8.1 4.0 4.1 4.5 9.9 3.0 6.4 4.8 6.0 6.0 Latin America 5,127 6,157 7,459 8,611 9,707 10,811 11,472 12,973 13,604 14,870 % Change 7.8 20.1 21.1 15.4 12.7 11.4 6.1 13.1 4.9 9.3 8.9 Canada 2,632 2,759 2,805 2,916 2,872 2,964 3,104 3,215 3,319 3,420 % Change 9.0 4.8 1.7 4.0 1.5 3.2 4.7 3.6 3.2 3.0 3.6 Total 128,307 142,269 147,086 156,440 162,302 176,289 181,555 194,876 200,801 215,822 % Change 4.7 10.9 3.4 6.4 3.7 8.6 3.0 7.3 3.0 7.5 5.9 Global Television Advertising Market by Component (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Terrestrial 101,588 111,411 113,053 119,574 122,047 132,045 134,298 143,511 146,081 155,636 % Change 1.9 9.7 1.5 5.8 2.1 8.2 1.7 6.9 1.8 6.5 5.0 Multichannel 26,719 30,858 34,033 36,866 40,255 44,244 47,257 51,365 54,720 60,186 % Change 16.9 15.5 10.3 8.3 9.2 9.9 6.8 8.7 6.5 10.0 8.4 Total 128,307 142,269 147,086 156,440 162,302 176,289 181,555 194,876 200,801 215,822 % Change 4.7 10.9 3.4 6.4 3.7 8.6 3.0 7.3 3.0 7.5 5.9 Executive Summary Global Entertainment and Media Market by Segment 39

Recorded music The global recorded music market fell by 4.1 percent in 2007, the result of a double-digit decline in spending on physical formats that offset a 58 percent increase in spending on digital formats, from a relatively small base. The composition of the market is rapidly migrating from physical to digital formats. We expect spending on physical formats to fall nearly in half during the next five years. Internet distribution will be fueled by rising broadband subscribership and the elimination of copy protection software. Sideloading the downloading of music from the Internet and transfer of it to mobile phones will cut into mobile phone market growth. Internet distribution will more than triple to $8.6 billion in 2012. An expanding wireless universe, upgrades to next-generation wireless networks that can support highcapacity applications such as music, and the introduction of handsets designed to play music will propel distribution to mobile phones, which we project will rise at a 16.7 percent compound annual rate. We expect digital distribution of music to expand by 20.8 percent compounded annually to $18.8 billion. Declines in physical distribution will continue to offset gains in digital distribution during the next three years. By 2011, the physical market will have fallen below the digital market, with the result that further declines in spending on physical formats will have a less adverse impact on total spending. We expect modest growth in total spending to begin in 2011, although spending in 2012 will still be lower than in 2007. Piracy remains a major problem in all regions, reducing spending on physical distribution as well as limiting the potential for sustainable Internet distribution. In Asia Pacific and Latin America, piracy has had a particularly severe impact on physical spending. With legitimate physical spending already low in those regions, gains in digital will generate growth in total spending throughout the forecast period. We project that global spending will fall at a 0.6 percent compound annual rate to $32.5 billion in 2012 from $33.4 billion in 2007. Global Recorded Music Market by Region (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 United States 12,025 12,728 12,270 11,728 10,324 9,260 8,710 8,228 8,004 7,863 % Change 4.9 5.8 3.6 4.4 12.0 10.3 5.9 5.5 2.7 1.8 5.3 EMEA 15,049 14,453 13,848 13,075 12,221 11,600 11,311 11,192 11,246 11,310 % Change 7.9 4.0 4.2 5.6 6.5 5.1 2.5 1.1 0.5 0.6 1.5 Asia Pacific 7,236 7,296 7,596 8,055 8,989 9,393 9,776 10,156 10,606 11,069 % Change 5.8 0.8 4.1 6.0 11.6 4.5 4.1 3.9 4.4 4.4 4.3 Latin America 1,036 1,193 1,214 1,221 1,209 1,300 1,382 1,452 1,519 1,576 % Change 12.6 15.2 1.8 0.6 1.0 7.5 6.3 5.1 4.6 3.8 5.4 Canada 882 856 837 782 694 627 623 631 641 660 % Change 2.8 2.9 2.2 6.6 11.3 9.7 0.6 1.3 1.6 3.0 1.0 Total 36,228 36,526 35,765 34,861 33,437 32,180 31,802 31,659 32,016 32,478 % Change 6.5 0.8 2.1 2.5 4.1 3.8 1.2 0.4 1.1 1.4 0.6 Sources: PricewaterhouseCoopers LLP, Recording Industry Association of America, Wilkofsky Gruen Associates PricewaterhouseCoopers 40 Global Entertainment and Media Outlook: 2008 2012

Global Recorded Music Market by Component (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Physical Distribution 35,785 35,303 32,999 30,221 26,122 22,823 20,095 17,672 15,519 13,646 % Change 7.4 1.3 6.5 8.4 13.6 12.6 12.0 12.1 12.2 12.1 12.2 Internet 76 370 991 1,719 2,576 3,523 4,743 5,921 7,307 8,579 % Change 484.6 386.8 167.8 73.5 49.9 36.8 34.6 24.8 23.4 17.4 27.2 Mobile Phones 367 853 1,775 2,921 4,739 5,834 6,964 8,066 9,190 10,253 % Change 252.9 132.4 108.1 64.6 62.2 23.1 19.4 15.8 13.9 11.6 16.7 Digital Total 443 1,223 2,766 4,640 7,315 9,357 11,707 13,987 16,497 18,832 % Change 278.6 176.1 126.2 67.8 57.7 27.9 25.1 19.5 17.9 14.2 20.8 Total 36,228 36,526 35,765 34,861 33,437 32,180 31,802 31,659 32,016 32,478 % Change 6.5 0.8 2.1 2.5 4.1 3.8 1.2 0.4 1.1 1.4 0.6 Sources: PricewaterhouseCoopers LLP, Recording Industry Association of America, Wilkofsky Gruen Associates Executive Summary Global Entertainment and Media Market by Segment 41

Filmed entertainment Filmed entertainment continued to expand in 2007 with a 2.5 percent increase, fueled by a 4.3 percent increase in box office that offset a relatively flat home video market. A key factor affecting the market in any given year is the quality of releases and their appeal to consumers, a development we cannot predict. The underlying box office market will be enhanced by digital cinemas, upgrades to 3-D and by more modern theaters and more screens in a number of countries in EMEA, Asia Pacific, and Latin America. High-definition DVDs will stimulate home video sell-through, now that the Blu-ray format has become the industry standard. Online DVD rental services and the introduction of digital streaming services will boost home video in each region except Latin America. In Latin America, rising DVD penetration will stimulate home video spending. Piracy will continue to hold down spending, particularly in Asia Pacific and Latin America. We expect the market to expand at a 5.3 percent compound annual rate, rising to $111 billion in 2012. Global Filmed Entertainment Market by Region (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 United States 32,973 34,647 34,076 34,862 35,517 36,175 37,832 39,821 42,027 44,528 PricewaterhouseCoopers 42 Global Entertainment and Media Outlook: 2008 2012 % Change 4.8 5.1 1.6 2.3 1.9 1.9 4.6 5.3 5.5 6.0 4.6 EMEA 24,432 26,572 24,978 24,842 25,095 25,858 26,897 28,148 29,525 31,011 % Change 7.3 8.8 6.0 0.5 1.0 3.0 4.0 4.7 4.9 5.0 4.3 Asia Pacific 14,093 14,964 14,875 16,040 17,081 18,326 19,735 21,381 23,298 24,979 % Change 6.5 6.2 0.6 7.8 6.5 7.3 7.7 8.3 9.0 7.2 7.9 Latin America 1,759 1,991 1,963 2,170 2,303 2,449 2,616 2,798 2,983 3,182 % Change 7.5 13.2 1.4 10.5 6.1 6.3 6.8 7.0 6.6 6.7 6.7 Canada 5,094 5,780 5,769 5,867 5,908 6,071 6,324 6,673 7,074 7,499 % Change 22.5 13.5 0.2 1.7 0.7 2.8 4.2 5.5 6.0 6.0 4.9 Total 78,351 83,954 81,661 83,781 85,904 88,879 93,404 98,821 104,907 111,199 % Change 6.9 7.2 2.7 2.6 2.5 3.5 5.1 5.8 6.2 6.0 5.3 Global Filmed Entertainment Market by Component (US$ Millions) Component 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Box Office 24,359 25,614 24,654 26,280 27,403 28,466 30,148 32,213 34,501 36,852 % Change 0.7 5.2 3.7 6.6 4.3 3.9 5.9 6.8 7.1 6.8 6.1 Physical Sell-Through 33,680 38,635 37,731 37,793 37,577 38,221 39,348 40,877 42,688 44,878 % Change 19.6 14.7 2.3 0.2 0.6 1.7 2.9 3.9 4.4 5.1 3.6 In-Store Rentals 19,966 18,896 18,055 18,069 18,260 18,298 18,377 18,468 18,567 18,627 % Change 4.5 5.4 4.5 0.1 1.1 0.2 0.4 0.5 0.5 0.3 0.4 Online Rental Subscriptions/ Digital Streaming 346 809 1,221 1,639 2,664 3,894 5,531 7,263 9,151 10,842 % Change 133.8 50.9 34.2 62.5 46.2 42.0 31.3 26.0 18.5 32.4 Home Video Total 53,992 58,340 57,007 57,501 58,501 60,413 63,256 66,608 70,406 74,347 % Change 10.0 8.1 2.3 0.9 1.7 3.3 4.7 5.3 5.7 5.6 4.9 Total 78,351 83,954 81,661 83,781 85,904 88,879 93,404 98,821 104,907 111,199 % Change 6.9 7.2 2.7 2.6 2.5 3.5 5.1 5.8 6.2 6.0 5.3

Video games The introduction of the new generation of video game consoles the Xbox 360 from Microsoft, the Wii from Nintendo, and the PlayStation 3 from Sony and the associated increase in video game software purchases for those consoles helped boost spending by 27.3 percent in 2007. We anticipate another year of double-digit growth in software in 2008 as a result of these newly introduced consoles, followed by low-single-digit increases until the next generation begins to enter the market in 2012. Console sales will expand at a projected 6.9 percent compound annual rate through 2012. These new consoles, which have Internet capabilities as a primary focus, will also spur growth in the online game market, as will growing broadband penetration. We look for online growth to average 16.9 percent compounded annually. New wireless handsets with enhanced graphics designed to play video games will drive demand for wireless games. High-speed wireless networks will provide an environment for wireless games that will approach the quality of console games. Spending on wireless games will increase by 19 percent on a compound annual basis. While we expect the market for PC games to continue to decline as consumers turn their attention to newer technologies, the purchase of a PC game is often required before a user can play online games, which will limit decreases to a projected 1.2 percent compounded annually. There also is an emerging video game advertising market that will benefit from dynamic in-game advertising on online games. This will help video game advertising more than double to $2.3 billion in 2012. We project the overall video game market to expand from $42 billion in 2007 to $68 billion in 2012, a 10.3 percent compound annual increase. Executive Summary Global Entertainment and Media Market by Segment 43

Global Video Game Market by Region (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 United States 7,497 8,230 8,270 9,342 12,114 13,773 14,626 15,390 16,071 17,677 % Change 4.3 9.8 0.5 13.0 29.7 13.7 6.2 5.2 4.4 10.0 7.9 EMEA 6,891 8,087 8,718 10,004 12,653 14,636 16,200 17,831 19,441 21,590 % Change 10.4 17.4 7.8 14.8 26.5 15.7 10.7 10.1 9.0 11.1 11.3 Asia Pacific 8,057 9,179 9,934 11,760 14,833 17,208 18,993 20,829 22,604 25,328 % Change 4.8 13.9 8.2 18.4 26.1 16.0 10.4 9.7 8.5 12.1 11.3 Latin America 547 606 640 787 1,006 1,173 1,291 1,405 1,514 1,667 % Change 19.2 10.8 5.6 23.0 27.8 16.6 10.1 8.8 7.8 10.1 10.6 Canada 675 767 833 1,061 1,342 1,532 1,705 1,824 1,928 2,083 % Change 16.6 13.6 8.6 27.4 26.5 14.2 11.3 7.0 5.7 8.0 9.2 Total 23,667 26,869 28,395 32,954 41,948 48,322 52,815 57,279 61,558 68,345 % Change 6.8 13.5 5.7 16.1 27.3 15.2 9.3 8.5 7.5 11.0 10.3 Global Video Game Market by Component (US$ Millions) Component 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Console Games 17,228 18,816 17,631 19,039 24,869 27,831 28,907 29,949 30,949 34,666 % Change 4.8 9.2 6.3 8.0 30.6 11.9 3.9 3.6 3.3 12.0 6.9 Online Games 1,450 2,399 3,810 5,095 6,577 8,062 9,565 11,133 12,764 14,361 % Change 78.1 65.4 58.8 33.7 29.1 22.6 18.6 16.4 14.7 12.5 16.9 Wireless Games 797 1,709 2,954 4,208 5,636 7,252 8,864 10,523 12,045 13,465 % Change 176.7 114.4 72.8 42.5 33.9 28.7 22.2 18.7 14.5 11.8 19.0 PC Games 4,192 3,915 3,824 3,932 3,822 3,810 3,779 3,742 3,702 3,591 % Change 9.0 6.6 2.3 2.8 2.8 0.3 0.8 1.0 1.1 3.0 1.2 Total End-User Spending 23,667 26,839 28,219 32,274 40,904 46,955 51,115 55,347 59,460 66,083 % Change 6.8 13.4 5.1 14.4 26.7 14.8 8.9 8.3 7.4 11.1 10.1 Advertising NA 30 176 680 1,044 1,367 1,700 1,932 2,098 2,262 % Change 486.7 286.4 53.5 30.9 24.4 13.6 8.6 7.8 16.7 Total 23,667 26,869 28,395 32,954 41,948 48,322 52,815 57,279 61,558 68,345 % Change 6.8 13.5 5.7 16.1 27.3 15.2 9.3 8.5 7.5 11.0 10.3 PricewaterhouseCoopers 44 Global Entertainment and Media Outlook: 2008 2012

Consumer magazine publishing Consumer magazine publishing increased 2.1 percent in 2007, a modest improvement from the 1.9 percent rise in 2006. Faster circulation spending growth and an expanding digital advertising market advertising on magazine Web sites and mobile phone sites offset slower growth in print advertising. Rising incomes will fuel advertising and circulation growth in Eastern Europe, Middle East/Africa, Latin America, and a number of countries in Asia Pacific. Growing affluence in these areas will attract upscale titles and advertisers looking to reach the upscale market. Enhanced Web sites containing video and audio content, including user-generated content, will attract online advertising, while the launch of mobile sites will propel an emerging digital advertising market in each region. Migration of readers to the Internet will contribute to Web site advertising growth while cutting into circulation spending and print advertising growth. We expect print advertising to increase at a 3.5 percent compound annual rate. Digital advertising will reach $4.2 billion in 2012 and boost total advertising to a 5.1 percent gain on a compound annual basis. Circulation spending will grow at a 2 percent rate compounded annually. We project consumer magazine publishing to expand at a 3.5 percent compound annual rate to $95 billion in 2012. Global Consumer Magazine Publishing Market by Region (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 United States 21,469 22,577 23,444 23,277 24,091 24,772 25,625 26,637 27,689 28,970 % Change 1.9 5.2 3.8 0.7 3.5 2.8 3.4 3.9 3.9 4.6 3.8 EMEA 33,172 34,232 35,358 36,357 36,831 37,813 38,897 40,171 41,451 42,819 % Change 1.6 3.2 3.3 2.8 1.3 2.7 2.9 3.3 3.2 3.3 3.1 Asia Pacific 13,231 13,825 14,495 14,927 14,959 15,390 15,809 16,360 16,937 17,572 % Change 3.5 4.5 4.8 3.0 0.2 2.9 2.7 3.5 3.5 3.7 3.3 Latin America 2,269 2,481 2,721 2,898 3,162 3,401 3,636 3,873 4,118 4,370 % Change 4.5 9.3 9.7 6.5 9.1 7.6 6.9 6.5 6.3 6.1 6.7 Canada 1,103 1,130 1,151 1,170 1,208 1,237 1,264 1,297 1,336 1,378 % Change 4.6 2.4 1.9 1.7 3.2 2.4 2.2 2.6 3.0 3.1 2.7 Total 71,244 74,245 77,169 78,629 80,251 82,613 85,231 88,338 91,531 95,109 % Change 2.2 4.2 3.9 1.9 2.1 2.9 3.2 3.6 3.6 3.9 3.5 Global Consumer Magazine Publishing Market by Component (US$ Millions) Component 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Print Advertising 30,613 32,379 33,796 34,863 35,800 36,958 38,140 39,653 40,994 42,506 % Change 2.8 5.8 4.4 3.2 2.7 3.2 3.2 4.0 3.4 3.7 3.5 Digital Advertising NA NA 128 394 638 1,059 1,557 2,254 3,171 4,246 % Change 207.8 61.9 66.0 47.0 44.8 40.7 33.9 46.1 Total Advertising 30,613 32,379 33,924 35,257 36,438 38,017 39,697 41,907 44,165 46,752 % Change 2.0 5.8 4.8 3.9 3.3 4.3 4.4 5.6 5.4 5.9 5.1 Circulation 40,631 41,866 43,245 43,372 43,813 44,596 45,534 46,431 47,366 48,357 % Change 1.7 3.0 3.3 0.3 1.0 1.8 2.1 2.0 2.0 2.1 2.0 Total 71,244 74,245 77,169 78,629 80,251 82,613 85,231 88,338 91,531 95,109 % Change 1.8 4.2 3.9 1.9 2.1 2.9 3.2 3.6 3.6 3.9 3.5 Executive Summary Global Entertainment and Media Market by Segment 45

Newspaper publishing Newspaper publishing edged up a modest, 0.1 percent in 2007, its slowest increase during the past five years. The overall performance masks wide disparities between regions. The United States fell by 6.7 percent; EMEA, Asia Pacific, and Canada posted low-single-digit gains; and Latin America rose by 10.5 percent. Weakening economies in North America will lead to a drop in print advertising in 2008. Free papers will augment overall circulation in EMEA, Asia Pacific, and Canada, which will help support print advertising while cutting into paid circulation in countries where free papers are strong. Newspapers are losing readers and advertising to other entertainment opportunities on the Internet. A portion of that shift will be recaptured by newspapers through their Web sites and other distribution channels. We expect print advertising to rise at a 1.8 percent compound annual rate to $123 billion in 2012. Digital advertising will add another $13 billion and raise overall advertising growth to 2.9 percent on a compound annual basis. Declines in paid circulation in the United States, EMEA, and Canada will adversely affect circulation spending, while rising circulation in Latin America, India, the People s Republic of China, and several other territories in Asia Pacific will boost paid circulation spending. We expect circulation spending to grow at a 0.9 percent compound annual rate to $71 billion. The overall newspaper market will expand from $186 billion in 2007 to $208 billion in 2012, growing at a 2.2 percent compound annual rate. PricewaterhouseCoopers 46 Global Entertainment and Media Outlook: 2008 2012

Global Newspaper Publishing Market by Region (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 United States 57,380 59,232 60,182 59,857 55,833 52,263 51,209 51,638 52,535 53,775 % Change 4.1 3.2 1.6 0.5 6.7 6.4 2.0 0.8 1.7 2.4 0.7 EMEA 64,354 66,537 68,712 70,459 72,282 74,297 76,545 78,829 81,013 83,228 % Change 0.6 3.4 3.3 2.5 2.6 2.8 3.0 3.0 2.8 2.7 2.9 Asia Pacific 42,028 43,719 45,304 46,898 48,727 50,986 52,489 54,800 57,015 59,230 % Change 3.3 4.0 3.6 3.5 3.9 4.6 2.9 4.4 4.0 3.9 4.0 Latin America 4,260 4,471 4,863 5,321 5,882 6,296 6,671 7,050 7,438 7,829 % Change 2.2 5.0 8.8 9.4 10.5 7.0 6.0 5.7 5.5 5.3 5.9 Canada 3,045 3,165 3,262 3,356 3,440 3,473 3,528 3,600 3,674 3,755 % Change 1.5 3.9 3.1 2.9 2.5 1.0 1.6 2.0 2.1 2.2 1.8 Total 171,067 177,124 182,323 185,891 186,164 187,315 190,442 195,917 201,675 207,817 % Change 1.9 3.5 2.9 2.0 0.1 0.6 1.7 2.9 2.9 3.0 2.2 Global Newspaper Publishing Market by Component (US$ Millions) Component 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Print Advertising 104,583 109,510 112,420 114,293 112,738 111,942 112,887 116,086 119,541 123,326 % Change 1.3 4.7 2.7 1.7 1.4 0.7 0.8 2.8 3.0 3.2 1.8 Digital Advertising 1,216 1,541 2,991 4,265 5,562 6,898 8,410 10,030 11,730 13,429 % Change 26.7 94.1 42.6 30.4 24.0 21.9 19.3 16.9 14.5 19.3 Total Advertising 105,799 111,051 115,411 118,558 118,300 118,840 121,297 126,116 131,271 136,755 % Change 2.5 5.0 3.9 2.7 0.2 0.5 2.1 4.0 4.1 4.2 2.9 Circulation 65,268 66,073 66,912 67,333 67,864 68,475 69,145 69,801 70,404 71,062 % Change 0.9 1.2 1.3 0.6 0.8 0.9 1.0 0.9 0.9 0.9 0.9 Total 171,067 177,124 182,323 185,891 186,164 187,315 190,442 195,917 201,675 207,817 % Change 1.9 3.5 2.9 2.0 0.1 0.6 1.7 2.9 2.9 3.0 2.2 Executive Summary Global Entertainment and Media Market by Segment 47

Radio and out-of-home advertising The radio and out-of-home market rose by 3.3 percent in 2007, the slowest growth during the past five years. Out-of-home was the faster-growing component, with a 6.9 percent increase, while radio rose by only 1.4 percent. Out-of-home will be fueled by digital billboards that expand the effective out-ofhome inventory because multiple ads can be shown on the same display, generating many times the revenue of a traditional billboard. Improved out-of-home audience measurement will attract advertisers, and the expansion of captive video networks will also fuel growth. Digital technologies will also allow for the creation of visually striking displays that will stimulate spending. Radio advertising will face growing competition from the Internet. In the United States, weak economic conditions will lead to a near-term decline in radio advertising. Satellite radio will boost spending in the US and Canada. Slow-growing public radio license fees will continue to hold down growth in EMEA and Asia Pacific. We expect out-of-home advertising to expand at a 6.8 percent compound annual rate during the next five years to $38 billion in 2012 from $27 billion in 2007. We project that radio will grow at a 2.6 percent compound annual rate from $47 billion in 2007 to $54 billion in 2012. The overall radio and out-of-home market will increase to $92 billion in 2012, a 4.2 percent compound annual increase from $74.5 billion in 2007. Global Radio/Out-of-Home Advertising Market by Region (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 United States 24,734 25,809 26,973 28,285 28,435 28,104 28,620 29,617 30,870 32,494 % Change 2.5 4.3 4.5 4.9 0.5 1.2 1.8 3.5 4.2 5.3 2.7 EMEA 22,659 23,948 25,261 26,651 28,055 29,275 30,803 32,191 33,426 34,609 % Change 4.2 5.7 5.5 5.5 5.3 4.3 5.2 4.5 3.8 3.5 4.3 Asia Pacific 12,031 13,101 13,517 14,323 14,918 16,003 16,850 17,814 18,793 19,798 % Change 4.7 8.9 3.2 6.0 4.2 7.3 5.3 5.7 5.5 5.3 5.8 Latin America 834 945 1,118 1,270 1,344 1,433 1,524 1,625 1,735 1,846 % Change 12.2 13.3 18.3 13.6 5.8 6.6 6.4 6.6 6.8 6.4 6.6 Canada 1,352 1,407 1,458 1,568 1,741 1,942 2,141 2,392 2,664 2,879 % Change 7.4 4.1 3.6 7.5 11.0 11.5 10.2 11.7 11.4 8.1 10.6 Total 61,610 65,210 68,327 72,097 74,493 76,757 79,938 83,639 87,488 91,626 % Change 3.4 5.8 4.8 5.5 3.3 3.0 4.1 4.6 4.6 4.7 4.2 PricewaterhouseCoopers 48 Global Entertainment and Media Outlook: 2008 2012

Global Radio/Out-of-Home Advertising Market by Component (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Radio Advertising 30,352 31,708 32,412 33,264 32,908 32,509 32,810 33,634 34,635 35,966 % Change 2.3 4.5 2.2 2.6 1.1 1.2 0.9 2.5 3.0 3.8 1.8 Public Radio License Fees 10,588 10,952 11,378 11,603 11,873 11,995 12,406 12,667 12,828 12,992 % Change 1.5 3.4 3.9 2.0 2.3 1.0 3.4 2.1 1.3 1.3 1.8 Satellite Radio Subscriptions 125 385 1,012 1,796 2,526 3,160 3,619 4,103 4,571 4,933 % Change 420.8 208.0 162.9 77.5 40.6 25.1 14.5 13.4 11.4 7.9 14.3 Total Radio 41,065 43,045 44,802 46,663 47,307 47,664 48,835 50,404 52,034 53,891 % Change 2.4 4.8 4.1 4.2 1.4 0.8 2.5 3.2 3.2 3.6 2.6 Out-of-Home Advertising 20,545 22,165 23,525 25,434 27,186 29,093 31,103 33,235 35,454 37,735 % Change 5.6 7.9 6.1 8.1 6.9 7.0 6.9 6.9 6.7 6.4 6.8 Total 61,610 65,210 68,327 72,097 74,493 76,757 79,938 83,639 87,488 91,626 % Change 3.4 5.8 4.8 5.5 3.3 3.0 4.1 4.6 4.6 4.7 4.2 Theme parks and amusement parks The theme park market rose by 4.2 percent in 2007, matching the increase of 2006. Looking forward, new attractions and the weak US dollar will help destination parks in the United States. Ownership changes will increase investments in the regional parks in the United States, and in EMEA, consolidation of the industry will lead to an increase in investment to improve the parks. Development of the United Arab Emirates as a major tourist destination area will spur growth in EMEA in 2012. The opening of Hong Kong Disneyland in late 2005 and new parks in India, the PRC, and South Korea throughout the period will boost attendance in Asia Pacific. In Latin America, rising disposable income will help the market, although low per capita spending will limit investment in major new parks. The major Canadian parks will be hurt by the reduction in American tourism, while the smaller parks will continue to grow because of new attractions and rising gate prices, which will boost per capita spending. We project spending to increase from $24 billion in 2007 to $31 billion in 2012, growing at a 5.0 percent compound annual rate. Global Theme Parks and Amusement Parks Market (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 United States 10,300 10,775 11,230 11,524 11,990 12,476 12,959 13,540 14,034 14,538 % Change 4.0 4.6 4.2 2.6 4.0 4.1 3.9 4.5 3.6 3.6 3.9 EMEA 4,099 4,320 4,511 4,727 4,946 5,174 5,455 5,795 6,198 6,828 % Change 1.2 5.4 4.4 4.8 4.6 4.6 5.4 6.2 7.0 10.2 6.7 Asia Pacific 5,487 5,640 5,710 6,110 6,367 6,697 7,062 7,499 7,896 8,419 % Change 0.5 2.8 1.2 7.0 4.2 5.2 5.5 6.2 5.3 6.6 5.7 Latin America 248 252 241 247 261 273 285 299 313 328 % Change 2.4 1.6 4.4 2.5 5.7 4.6 4.4 4.9 4.7 4.8 4.7 Canada 404 454 463 482 487 511 527 549 566 588 % Change 0.7 12.4 2.0 4.1 1.0 4.9 3.1 4.2 3.1 3.9 3.8 Total 20,538 21,441 22,155 23,090 24,051 25,131 26,288 27,682 29,007 30,701 % Change 2.4 4.4 3.3 4.2 4.2 4.5 4.6 5.3 4.8 5.8 5.0 Executive Summary Global Entertainment and Media Market by Segment 49

Casino and other regulated gaming Casino and other regulated gaming consists of casinos, slot machines in other locations, and online and sports betting where permitted. The market expanded by 7.1 percent in 2007, led by new casinos in Macau. Casino revenues in Macau, which has become a major gaming destination center, surpassed the Las Vegas Strip in 2006 and are on track to pass all of Nevada in 2008. The introduction of additional destination-style resort casinos in Macau and integrated resorts in Singapore and the Philippines will generate large increases in Asia Pacific. In EMEA, a destination resort casino in Spain and new casinos in the United Kingdom will enhance revenues, although steep declines in Russia due to casino closings will limit overall growth. In the United States, the economic slowdown will adversely affect casino gaming, particularly in Nevada and Atlantic City, in 2008. New casinos and slot parlors will boost the regional casino market in the United States. Canada also will be adversely affected by a slower economy in 2008. New border casinos in Mexico and new casinos in Chile will boost growth in Latin America. We project casino revenues to rise at a 6.2 percent compound annual rate during the next five years. New licensed services will boost online gaming and sports wagering in EMEA, and mobile devices that process wagers will enhance the online and mobile markets in Asia Pacific. We look for online and mobile gaming in countries where we have data to expand at a 10.4 percent compound annual rate, while sports betting will increase by 7.0 percent compounded annually. We expect overall spending to increase from $114 billion in 2007 to $156 billion in 2012, a 6.5 percent compound annual increase. Global Casino and Other Regulated Gaming Market by Region (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 United States 43,964 48,451 52,924 57,692 60,337 60,382 61,711 64,945 69,056 73,335 % Change 6.3 10.2 9.2 9.0 4.6 0.1 2.2 5.2 6.3 6.2 4.0 EMEA 19,855 23,764 27,908 29,727 30,316 30,693 30,652 33,440 35,702 38,449 % Change 19.3 19.7 17.4 6.5 2.0 1.2 0.1 9.1 6.8 7.7 4.9 Asia Pacific 9,250 11,293 12,267 14,375 18,317 22,772 26,508 30,088 33,479 37,192 % Change 17.5 22.1 8.6 17.2 27.4 24.3 16.4 13.5 11.3 11.1 15.2 Latin America 199 224 248 271 297 322 358 411 460 514 % Change 1.0 12.6 10.7 9.3 9.6 8.4 11.2 14.8 11.9 11.7 11.6 Canada 3,332 3,597 3,995 4,235 4,608 4,771 5,055 5,441 5,831 6,176 % Change 11.0 8.0 11.1 6.0 8.8 3.5 6.0 7.6 7.2 5.9 6.0 Total 76,600 87,329 97,342 106,300 113,875 118,940 124,284 134,325 144,528 155,666 % Change 10.9 14.0 11.5 9.2 7.1 4.4 4.5 8.1 7.6 7.7 6.5 PricewaterhouseCoopers 50 Global Entertainment and Media Outlook: 2008 2012

Global Casino and Other Regulated Gaming Market by Component (US$ Millions) Component 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Casino Gaming 71,249 80,777 89,194 96,426 103,181 107,959 112,275 120,600 129,852 139,413 % Change 11.1 13.4 10.4 8.1 7.0 4.6 4.0 7.4 7.7 7.4 6.2 Online and Mobile Gaming 1,794 2,750 3,834 4,577 5,303 5,303 6,105 6,937 7,801 8,696 % Change 36.4 53.3 39.4 19.4 15.9 0.0 15.1 13.6 12.5 11.5 10.4 Sports Betting 3,557 3,802 4,314 5,297 5,391 5,678 5,904 6,788 6,875 7,557 % Change 1.3 6.9 13.5 22.8 1.8 5.3 4.0 15.0 1.3 9.9 7.0 Total 76,600 87,329 97,342 106,300 113,875 118,940 124,284 134,325 144,528 155,666 % Change 10.9 14.0 11.5 9.2 7.1 4.4 4.5 8.1 7.6 7.7 6.5 Consumer and educational book publishing The consumer and educational book publishing market rose by 6.4 percent in 2007, the largest increase during the past five years, helped by strong sales of the seventh and final Harry Potter title. There also was a pickup in educational publishing stemming from increased funding in a number of countries. Electronic browsing technologies will raise awareness of titles and stimulate consumer book sales, which we project will grow at a 2.1 percent compound annual rate from the inflated total in 2007. An expanding electronic book market will cut into print book sales, particularly in the college textbook market, during the latter part of the forecast period. Declining school-age populations will dampen print sales of educational books. We expect print educational books to increase at a 1.7 percent annual rate. Electronic books will add $3 billion to consumer book spending in 2012 and $3.8 billion in educational books, raising the total consumer book compound annual growth rate to 2.7 percent and the total educational book compound annual growth rate to 3.1 percent. We project total spending to increase at a 2.8 percent compound annual rate to $130 billion in 2012 from $113 billion in 2007. Global Consumer and Educational Book Publishing Market by Region (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 United States 28,877 28,871 31,085 30,579 32,740 32,114 33,062 34,232 35,584 36,996 % Change 6.4 0.0 7.7 1.6 7.1 1.9 3.0 3.5 3.9 4.0 2.5 EMEA 44,152 44,868 46,781 47,034 49,570 49,874 51,210 52,771 54,405 56,183 % Change 1.6 1.6 4.3 0.5 5.4 0.6 2.7 3.0 3.1 3.3 2.5 Asia Pacific 19,761 20,512 21,294 22,570 24,503 25,775 26,907 27,906 28,879 29,667 % Change 1.7 3.8 3.8 6.0 8.6 5.2 4.4 3.7 3.5 2.7 3.9 Latin America 4,066 4,129 4,229 4,341 4,471 4,591 4,706 4,819 4,930 5,041 % Change 0.4 1.5 2.4 2.6 3.0 2.7 2.5 2.4 2.3 2.3 2.4 Canada 1,445 1,457 1,516 1,537 1,615 1,641 1,704 1,769 1,835 1,904 % Change 0.2 0.8 4.0 1.4 5.1 1.6 3.8 3.8 3.7 3.8 3.3 Total 98,301 99,837 104,905 106,061 112,899 113,995 117,589 121,497 125,633 129,791 % Change 2.9 1.6 5.1 1.1 6.4 1.0 3.2 3.3 3.4 3.3 2.8 Executive Summary Global Entertainment and Media Market by Segment 51

Global Consumer and Educational Book Publishing Market by Component (US$ Millions) Component 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Print Consumer Books 62,299 63,101 66,702 67,261 71,859 71,205 73,031 75,294 77,586 79,776 % Change 3.4 1.3 5.7 0.8 6.8 0.9 2.6 3.1 3.0 2.8 2.1 Print Educational Books 35,655 36,192 37,466 37,798 39,700 40,946 42,025 42,648 43,075 43,265 % Change 1.5 1.5 3.5 0.9 5.0 3.1 2.6 1.5 1.0 0.4 1.7 Total Print 97,954 99,293 104,168 105,059 111,559 112,151 115,056 117,942 120,661 123,041 % Change 2.7 1.4 4.9 0.9 6.2 0.5 2.6 2.5 2.3 2.0 2.0 Electronic Consumer Books 110 176 297 475 682 1,033 1,458 1,868 2,370 2,965 % Change 144.4 60.0 68.8 59.9 43.6 51.5 41.1 28.1 26.9 25.1 34.2 Electronic Educational Books 237 368 440 527 658 811 1,075 1,687 2,602 3,785 % Change 137.0 55.3 19.6 19.8 24.9 23.3 32.6 56.9 54.2 45.5 41.9 Total Electronic 347 544 737 1,002 1,340 1,844 2,533 3,555 4,972 6,750 % Change 139.3 56.8 35.5 36.0 33.7 37.6 37.4 40.3 39.9 35.8 38.2 Total Consumer 62,409 63,277 66,999 67,736 72,541 72,238 74,489 77,162 79,956 82,741 % Change 3.5 1.4 5.9 1.1 7.1 0.4 3.1 3.6 3.6 3.5 2.7 Total Educational 35,892 36,560 37,906 38,325 40,358 41,757 43,100 44,335 45,677 47,050 % Change 1.9 1.9 3.7 1.1 5.3 3.5 3.2 2.9 3.0 3.0 3.1 Total 98,301 99,837 104,905 106,061 112,899 113,995 117,589 121,497 125,633 129,791 % Change 2.9 1.6 5.1 1.1 6.4 1.0 3.2 3.3 3.4 3.3 2.8 PricewaterhouseCoopers 52 Global Entertainment and Media Outlook: 2008 2012

Business-to-business publishing Business-to-business publishing includes business information, trade magazines, professional books, and directory advertising. Spending rose by 3.4 percent in 2007, the slowest increase during the past three years. Each segment of the market is sensitive to the economy. Slower economic growth in the near term in the United States, Canada, and EMEA will cut into business information spending growth in 2008 09, while Asia Pacific and Latin America will benefit from expanding economies during the next five years. Global business information will average 3.8 percent growth compounded annually. Competition from online directories will reduce directory advertising growth, which we expect will increase at a 1.6 percent compound annual rate. Print advertising in trade magazines will be affected by a shift of advertising to the Internet, some of which will be recaptured on trade magazine Web sites. The trade magazine market as a whole, including circulation spending, will expand at a 3.4 percent compound annual rate. Electronic books will compete with print books in each region except Latin America, where we do not expect the electronic book to be a factor. The professional book market will rise at a 2.5 percent rate compounded annually. We expect the total business-to-business publishing market to rise at a 3.2 percent compound annual rate to $198 billion in 2012 from $169 billion in 2007. Global Business-to-Business Publishing Market by Region (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 United States 69,946 72,841 76,605 80,692 82,750 82,046 82,960 85,273 89,215 94,293 % Change 1.0 4.1 5.2 5.3 2.6 0.9 1.1 2.8 4.6 5.7 2.6 EMEA 49,404 50,552 52,034 54,657 56,618 58,139 59,705 61,708 64,134 66,824 % Change 0.2 2.3 2.9 5.0 3.6 2.7 2.7 3.4 3.9 4.2 3.4 Asia Pacific 16,399 16,853 17,676 18,374 19,420 20,350 21,237 22,181 23,165 24,122 % Change 1.6 2.8 4.9 3.9 5.7 4.8 4.4 4.4 4.4 4.1 4.4 Latin America 2,693 2,893 3,132 3,380 3,620 3,835 4,045 4,259 4,485 4,723 % Change 2.7 7.4 8.3 7.9 7.1 5.9 5.5 5.3 5.3 5.3 5.5 Canada 5,822 5,982 6,193 6,462 6,699 6,820 6,978 7,257 7,567 7,883 % Change 0.4 2.7 3.5 4.3 3.7 1.8 2.3 4.0 4.3 4.2 3.3 Total 144,264 149,121 155,640 163,565 169,107 171,190 174,925 180,678 188,566 197,845 % Change 0.3 3.4 4.4 5.1 3.4 1.2 2.2 3.3 4.4 4.9 3.2 Executive Summary Global Entertainment and Media Market by Segment 53

Global Business-to-Business Publishing Market by Component (US$ Millions) Component 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Business Information 71,085 74,410 78,829 84,388 88,052 89,657 92,049 95,463 100,435 106,251 % Change 0.3 4.7 5.9 7.1 4.3 1.8 2.7 3.7 5.2 5.8 3.8 Directory Advertising 28,854 29,581 30,464 31,051 31,672 31,888 32,122 32,715 33,424 34,245 % Change 2.4 2.5 3.0 1.9 2.0 0.7 0.7 1.8 2.2 2.5 1.6 Trade Magazines Print Advertising 17,584 18,102 19,044 19,340 19,257 18,808 18,913 19,376 20,031 20,976 % Change 1.0 2.9 5.2 1.6 0.4 2.3 0.6 2.4 3.4 4.7 1.7 Digital Advertising NA NA 324 915 1,425 1,786 2,305 2,902 3,615 4,442 % Change 182.4 55.7 25.3 29.1 25.9 24.6 22.9 25.5 Total Advertising 17,584 18,102 19,368 20,255 20,682 20,594 21,218 22,278 23,646 25,418 % Change 1.0 2.9 7.0 4.6 2.1 0.4 3.0 5.0 6.1 7.5 4.2 Circulation Spending 8,146 8,164 8,171 8,345 8,438 8,465 8,552 8,677 8,821 8,964 % Change 1.2 0.2 0.1 2.1 1.1 0.3 1.0 1.5 1.7 1.6 1.2 Total Trade Magazines 25,730 26,266 27,539 28,600 29,120 29,059 29,770 30,955 32,467 34,382 % Change 1.0 2.1 4.8 3.9 1.8 0.2 2.4 4.0 4.9 5.9 3.4 Professional Books Print 18,307 18,414 18,265 18,864 19,444 19,566 19,654 19,775 19,922 20,121 % Change 2.1 0.6 0.8 3.3 3.1 0.6 0.4 0.6 0.7 1.0 0.7 Electronic 288 450 543 662 819 1,020 1,330 1,770 2,318 2,846 % Change 136.1 56.3 20.7 21.9 23.7 24.5 30.4 33.1 31.0 22.8 28.3 Total Professional Books 18,595 18,864 18,808 19,526 20,263 20,586 20,984 21,545 22,240 22,967 % Change 1.2 1.4 0.3 3.8 3.8 1.6 1.9 2.7 3.2 3.3 2.5 Total Advertising 46,438 47,683 49,832 51,306 52,354 52,482 53,340 54,993 57,070 59,663 % Change 1.1 2.7 4.5 3.0 2.0 0.2 1.6 3.1 3.8 4.5 2.6 Total End User 97,826 101,438 105,808 112,259 116,753 118,708 121,585 125,685 131,496 138,182 % Change 0.1 3.7 4.3 6.1 4.0 1.7 2.4 3.4 4.6 5.1 3.4 Total 144,264 149,121 155,640 163,565 169,107 171,190 174,925 180,678 188,566 197,845 % Change 0.3 3.4 4.4 5.1 3.4 1.2 2.2 3.3 4.4 4.9 3.2 PricewaterhouseCoopers 54 Global Entertainment and Media Outlook: 2008 2012

Sports Sports increased by 4.1 percent in 2007, down from the 11.9 percent gain in 2006, when revenues were buoyed by the FIFA World Cup, the Winter Olympics, and the return of the National Hockey League in North America. Competition in the TV distribution market is fueling demand for TV rights fees, leading to deals of record size. Mobile and online rights are also expanding the market, and companies are spending more on naming rights and sponsorship deals. New stadiums will boost gate receipts and provide opportunities for price increases, naming rights, and other sponsorship deals. The Beijing Olympics in 2008, the Vancouver Olympics in 2010, the London Olympics in 2012, and the FIFA World Cup to be held in South Africa in 2010 will boost TV rights fees and sponsorship revenues in all regions in those years and gate revenues in the regions in which they will be held. We look for sponsorships, merchandising, and other revenue to expand at a 7.0 percent compound annual rate to $60 billion in 2012. TV rights will also increase at a 7.0 percent rate compounded annually, to $30 billion, and gate revenues will rise by 5.7 percent on a compound annual basis to $51 billion. We expect the overall sports market to expand at a 6.5 percent compound annual rate to $141 billion in 2012 from $103 billion in 2007. Global Sports Market by Region (US$ Millions) Region 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 United States 39,884 43,182 44,381 48,110 51,319 55,575 57,419 61,819 63,933 69,052 % Change 7.6 8.3 2.8 8.4 6.7 8.3 3.3 7.7 3.4 8.0 6.1 EMEA 24,171 26,238 28,338 33,237 33,318 36,603 37,288 42,761 41,186 46,934 % Change 1.0 8.6 8.0 17.3 0.2 9.9 1.9 14.7 3.7 14.0 7.1 Asia Pacific 10,993 11,670 12,443 13,487 14,200 18,037 15,703 17,188 17,995 19,437 % Change 2.6 6.2 6.6 8.4 5.3 27.0 12.9 9.5 4.7 8.0 6.5 Latin America 2,228 2,328 2,501 2,744 2,798 3,018 3,274 3,676 3,675 3,876 % Change 0.3 4.5 7.4 9.7 2.0 7.9 8.5 12.3 0.0 5.5 6.7 Canada 890 927 429 1,000 999 1,106 1,137 2,210 1,206 1,320 % Change 1.9 4.2 53.7 133.1 0.1 10.7 2.8 94.4 45.4 9.5 5.7 Total 78,166 84,345 88,092 98,578 102,634 114,339 114,821 127,654 127,995 140,619 % Change 3.7 7.9 4.4 11.9 4.1 11.4 0.4 11.2 0.3 9.9 6.5 Global Sports Market by Component (US$ Millions) Component 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Gate Revenues 31,484 33,706 34,989 38,834 38,813 41,914 43,003 46,504 47,368 51,154 % Change 3.5 7.1 3.8 11.0 0.1 8.0 2.6 8.1 1.9 8.0 5.7 TV Rights 15,849 16,988 17,273 20,028 21,131 24,678 23,375 27,085 25,974 29,581 % Change 7.9 7.2 1.7 15.9 5.5 16.8 5.3 15.9 4.1 13.9 7.0 Sponsorships, Merchandising, and Other Revenue 30,833 33,651 35,830 39,716 42,690 47,747 48,443 54,065 54,653 59,884 % Change 11.0 9.1 6.5 10.8 7.5 11.8 1.5 11.6 1.1 9.6 7.0 Total 78,166 84,345 88,092 98,578 102,634 114,339 114,821 127,654 127,995 140,619 % Change 3.7 7.9 4.4 11.9 4.1 11.4 0.4 11.2 0.3 9.9 6.5 Executive Summary Global Entertainment and Media Market by Segment 55

PricewaterhouseCoopers 56 Global Entertainment and Media Outlook: 2008 2012

Global Entertainment and Media Market by Region United States The United States expanded by 4.2 percent in 2007, led by double-digit growth in Internet access, Internet advertising, and video games and by increases in excess of 6 percent in consumer and educational book publishing, sports, and TV subscriptions and license fees. Those gains offset declines in recorded music and newspaper publishing. The weakening US economy will dampen growth in 2008 and 2009. Thereafter, E&M growth will improve as economic conditions strengthen. We expect Internet advertising and Internet access spending to be the only segments to average double-digit growth during the next five years, boosted by continued growth in broadband. New technologies will contribute to growth in other segments: in HDTV for television and home video, 3-D for movies, the next generation of consoles for video games, mobile TV for TV subscriptions, satellite radio, and Internet and mobile distribution for recorded music and publishing. Despite the boost from digital distribution, we expect recorded music to continue to decline throughout the forecast period as decreases in physical formats offset gains in digital spending. We also expect lower newspaper spending in 2012 than in 2007 the result of a sharp decline in classified advertising in the near term due to the weak economy and a relatively modest rebound during 2010 12 as circulation continues to fall and advertising migrates to the Internet. The overall market will expand at a 4.8 percent compound annual rate to $759 billion in 2012 from $601 billion in 2007. Executive Summary Global Entertainment and Media Market by Region 57

Entertainment and Media Market by Segment (US$ Millions) United States 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Internet Access: Wired and Mobile 23,176 25,345 29,702 34,955 41,252 47,815 54,780 59,544 64,302 69,267 % Change 18.9 9.4 17.2 17.7 18.0 15.9 14.6 8.7 8.0 7.7 10.9 Internet Advertising: Wired and Mobile 7,304 9,728 12,737 17,296 21,996 26,603 31,169 35,850 40,448 44,496 % Change 21.5 33.2 30.9 35.8 27.2 20.9 17.2 15.0 12.8 10.0 15.1 TV Subscriptions and License Fees 49,541 54,449 58,641 62,653 66,587 70,492 76,644 83,827 89,339 94,231 % Change 8.8 9.9 7.7 6.8 6.3 5.9 8.7 9.4 6.6 5.5 7.2 TV Advertising 58,332 65,264 65,254 69,428 70,020 76,090 76,120 81,125 81,450 88,850 % Change 3.6 11.9 0.0 6.4 0.9 8.7 0.0 6.6 0.4 9.1 4.9 Recorded Music 12,025 12,728 12,270 11,728 10,324 9,260 8,710 8,228 8,004 7,863 % Change 4.9 5.8 3.6 4.4 12.0 10.3 5.9 5.5 2.7 1.8 5.3 Filmed Entertainment 32,973 34,647 34,076 34,862 35,517 36,175 37,832 39,821 42,027 44,528 % Change 4.8 5.1 1.6 2.3 1.9 1.9 4.6 5.3 5.5 6.0 4.6 Video Games 7,497 8,230 8,270 9,342 12,114 13,773 14,626 15,390 16,071 17,677 % Change 4.3 9.8 0.5 13.0 29.7 13.7 6.2 5.2 4.4 10.0 7.9 Consumer Magazine Publishing 21,469 22,577 23,444 23,277 24,091 24,772 25,625 26,637 27,689 28,970 % Change 1.9 5.2 3.8 0.7 3.5 2.8 3.4 3.9 3.9 4.6 3.8 Newspaper Publishing 57,380 59,232 60,182 59,857 55,833 52,263 51,209 51,638 52,535 53,775 % Change 4.1 3.2 1.6 0.5 6.7 6.4 2.0 0.8 1.7 2.4 0.7 Radio/Out-of-Home Advertising 24,734 25,809 26,973 28,285 28,435 28,104 28,620 29,617 30,870 32,494 % Change 2.5 4.3 4.5 4.9 0.5 1.2 1.8 3.5 4.2 5.3 2.7 Theme Parks and Amusement Parks 10,300 10,775 11,230 11,524 11,990 12,476 12,959 13,540 14,034 14,538 % Change 4.0 4.6 4.2 2.6 4.0 4.1 3.9 4.5 3.6 3.6 3.9 Casino and Other Regulated Gaming 43,964 48,451 52,924 57,692 60,337 60,382 61,711 64,945 69,056 73,335 % Change 6.3 10.2 9.2 9.0 4.6 0.1 2.2 5.2 6.3 6.2 4.0 Consumer and Educational Book Publishing 28,877 28,871 31,085 30,579 32,740 32,114 33,062 34,232 35,584 36,996 % Change 6.4 0.0 7.7 1.6 7.1 1.9 3.0 3.5 3.9 4.0 2.5 Business-to-Business Publishing 69,946 72,841 76,605 80,692 82,750 82,046 82,960 85,273 89,215 94,293 % Change 1.0 4.1 5.2 5.3 2.6 0.9 1.1 2.8 4.6 5.7 2.6 Sports 39,884 43,182 44,381 48,110 51,319 55,575 57,419 61,819 63,933 69,052 % Change 7.6 8.3 2.8 8.4 6.7 8.3 3.3 7.7 3.4 8.0 6.1 Total 486,186 520,588 545,295 576,762 600,746 622,534 646,925 683,501 714,931 758,877 % Change 4.8 7.1 4.7 5.8 4.2 3.6 3.9 5.7 4.6 6.1 4.8 Note: Newspaper, consumer magazine, and trade magazine Web site advertising and mobile advertising are included in their respective segments and in the Internet advertising segment, but only once in the overall total. PricewaterhouseCoopers 58 Global Entertainment and Media Outlook: 2008 2012

Internet access Internet access is not an entertainment and media segment in itself, but it is a key driver of entertainment and media spending in most segments. Figures do not include the purchase of E&M content such as music. Spending on E&M content downloaded over the Internet or through mobile phones is included in the respective entertainment and media segments. The Internet access market rose by 18.0 percent in 2007 and will increase at a projected 10.9 percent compound annual rate during the next five years to $69 billion in 2012 from $41 billion in 2007. Broadband growth will fuel wired access spending, while upgraded wireless networks and new handsets will expand mobile access. Internet Access Market: Wired and Mobile (US$ Millions) United States 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Internet Access: Wired and Mobile 23,176 25,345 29,702 34,955 41,252 47,815 54,780 59,544 64,302 69,267 % Change 18.9 9.4 17.2 17.7 18.0 15.9 14.6 8.7 8.0 7.7 10.9 Advertising Advertising rose by 0.5 percent in 2007, down from the 4.9 percent increase in 2006. The absence of TV advertising associated with the Winter Olympics and the decline in election spending slowed growth in overall TV advertising. The weakening economy hurt the newspaper and radio markets, which generate most of their revenues from local advertisers. Overall newspaper advertising fell 7.9 percent, with print advertising falling by 9.4 percent and print classifieds by 16.5 percent. Overall radio advertising decreased by 5.1 percent, and terrestrial radio advertising, by 5.4 percent. Trade magazines also were adversely affected by the economy, with overall growth falling to 1.5 percent and print advertising declining by 2.0 percent. Directory advertising has been sluggish for a number of years, hurt by migration of advertising to online directories. Directory advertising increased 1.0 percent in 2007. Internet wired and mobile advertising rose by 27.2 percent, out-of-home remained strong with a 7.6 percent increase, consumer magazines increased at a relatively healthy, 5.0 percent, and a small, video game advertising market jumped by two-thirds. The Internet benefited from broadband growth, which is attracting advertisers, and from migration from print newspapers, radio, and print directories. Out-ofhome was spurred by increased use of digital billboards that expand the effective inventory. Consumer magazines, which target a more upscale audience than most other media do, experienced improved growth in print advertising and an increase in Web site advertising. Dynamic advertising in online video games boosted that category. We expect continued double-digit growth in Internet advertising, with increases averaging 15.1 percent compounded annually through 2012. Out-of-home will increase at a projected 7.0 percent compound annual rate, helped by revenue growth from digital billboards, captive video networks, and other new venues, as well as by improved audience measurement that will make it easier for advertisers to incorporate out-of-home in their campaigns. TV networks will average 4.9 percent compounded annually. Although digital video recorders are having an adverse impact over the near term, over time the shift to commercial ratings will reduce uncertainty with respect to actual viewing levels, thereby giving advertisers more confidence in the medium. In 2008, 2010, and 2012, advertising associated with the Olympics and elections will boost spending. Executive Summary Global Entertainment and Media Market by Region 59

Consumer and trade magazines will each benefit from Web site advertising and will grow at compound annual rates of 5.6 percent and 3.4 percent, respectively. Print advertising growth will average 3.2 percent and 0.9 percent in consumer and trade magazines, respectively. We expect near-term declines in newspapers and radio that will not be offset by increases during 2010 12. Newspaper advertising will fall at an 0.8 percent compound annual rate and at a 2.5 percent annual rate for print alone. Radio will decline at a 0.6 percent rate compounded annually and by 0.9 percent for terrestrial radio alone. Directory advertising will be relatively flat, with modest decreases during 2008 09 and modest gains during 2010 12. The small, video game advertising market will grow explosively during the next three years and then moderate to mid-single-digit gains during 2011 12 as growth in online games slows. The US advertising market as a whole will increase at a 3.9 percent compound annual rate to $242 billion in 2012 from $200 billion in 2007. Advertising by Segment (US$ Millions) United States 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Internet: Wired and Mobile 7,304 9,728 12,737 17,296 21,996 26,603 31,169 35,850 40,448 44,496 % Change 21.5 33.2 30.9 35.8 27.2 20.9 17.2 15.0 12.8 10.0 15.1 Television 58,332 65,264 65,254 69,428 70,020 76,090 76,120 81,125 81,450 88,850 % Change 3.6 11.9 0.0 6.4 0.9 8.7 0.0 6.6 0.4 9.1 4.9 Video Games NA 30 100 300 500 650 825 925 975 1,025 % Change 233.3 200.0 66.7 30.0 26.9 12.1 5.4 5.1 15.4 Consumer Magazines 11,435 12,247 12,975 13,366 14,037 14,560 15,211 16,167 17,171 18,400 % Change 4.0 7.1 5.9 3.0 5.0 3.7 4.5 6.3 6.2 7.2 5.6 Newspapers 46,155 48,244 49,435 49,276 45,375 41,890 40,875 41,350 42,300 43,600 % Change 4.7 4.5 2.5 0.3 7.9 7.7 2.4 1.2 2.3 3.1 0.8 Radio 19,104 19,590 19,660 19,708 18,701 17,559 17,224 17,300 17,548 18,164 % Change 1.2 2.5 0.4 0.2 5.1 6.1 1.9 0.4 1.4 3.5 0.6 Out-of-Home 5,505 5,834 6,301 6,805 7,325 7,670 8,210 8,820 9,530 10,290 % Change 5.2 6.0 8.0 8.0 7.6 4.7 7.0 7.4 8.0 8.0 7.0 Directories 13,896 14,002 14,229 14,393 14,538 14,400 14,200 14,250 14,350 14,500 % Change 0.9 0.8 1.6 1.2 1.0 0.9 1.4 0.4 0.7 1.0 0.1 Trade Magazines 9,730 10,104 11,131 11,596 11,772 11,256 11,385 11,918 12,705 13,888 % Change 0.7 3.8 10.2 4.2 1.5 4.4 1.1 4.7 6.6 9.3 3.4 Total 170,245 183,502 189,343 198,650 199,705 205,272 208,698 219,720 226,851 241,725 % Change 3.2 7.8 3.2 4.9 0.5 2.8 1.7 5.3 3.2 6.6 3.9 Note: Newspaper, consumer magazine, and trade magazine Web site advertising and mobile advertising are included in their respective segments and in the Internet advertising segment, but only once in the overall total. PricewaterhouseCoopers 60 Global Entertainment and Media Outlook: 2008 2012

Consumer/end-user spending Consumer/end-user spending rose by 4.8 percent in 2007, down from the 5.2 percent gain in 2006. Double-digit growth in satellite radio subscriptions and video games, a 7.1 percent rise in consumer and educational publishing, and increases of 6.7 percent and 6.3 percent, respectively, in sports and TV subscriptions and license fees offset declines in recorded music and newspaper publishing. Satellite radio subscriptions rose by 35.9 percent, boosted by factory-installed receivers in new cars, which introduced people to the service. The new video game consoles stimulated the video game market; the latest and final Harry Potter title drove spending on books; a rise in sponsorships and national TV rights fees boosted sports; and subscription growth and expanding video-on-demand enhanced the TV subscription market. Casino and other regulated gaming and theme parks were the next-fastest-growing segments, at 4.6 percent and 4.0 percent, respectively. Casino growth was down from the 9.0 percent rise in 2006 as the slowing economy cut into growth. Theme parks improved from 2.6 percent growth in 2006, helped principally by rising attendance at regional parks. Recorded music and newspaper circulation declined. Business-tobusiness publishing and filmed entertainment rose by 3.2 percent and 1.9 percent, respectively. During the next five years, growth in consumer/end-user spending will average 4.5 percent compounded annually, increasing from $360 billion in 2007 to $448 billion in 2012. We project continued declines in recorded music and newspaper circulation spending and single-digit compound annual increases for all other segments except satellite radio, which will continue to average double-digit annual growth. Video games will be the second-fastest-growing segment, at a projected 7.5 percent compound annual increase, fueled by expanding online and wireless markets, an additional year of double-digit growth in console games, and a new console cycle beginning in 2012. TV subscription spending will grow at a 7.2 percent compound annual rate, spurred by increased penetration from the participation of telephone companies into the market and the mandated shutdown of analog broadcasts, a growing video-on-demand market stemming from the expanding digital universe, and an emerging mobile TV market. Sports will grow at a 6.1 percent compound annual rate, helped by continued growth in sponsorships and gate receipts and by rights fees associated with the 2012 Olympics. Rapid growth in online and wireless games, an additional boost in console games in 2008 from the new generation of consoles, and the expectation that the next generation of consoles entering the market in 2012 will propel video game spending. Filmed entertainment will grow at a 4.6 percent annual rate, fueled by digital cinemas, 3-D screens, high-definition DVDs, and download-to-own streaming and online subscription rentals. Casino and other regulated gaming and theme parks will be the next fastest-growing segments, at 4.0 percent and 3.9 percent, respectively. Casinos will be helped by growth in regional and tribal casinos and a rebound in Nevada and Atlantic City following decreases during 2008 and 2009. New rides and attractions will help destination parks, while new capital will lead to upgrades in regional parks. Business-to-business publishing will expand at a 3.1 percent compound annual rate, helped by trade magazine Web site advertising, electronic professional books, and a rebound in print advertising and business information during the latter part of the forecast period as the economy improves. Consumer and educational publishing will increase at a 2.5 percent rate compounded annually, helped by electronic browsing, an expanding electronic book market, and rising college enrollment. Consumer magazine circulation spending will grow at a 1.0 percent compound annual rate, boosted by rising prices. Newspapers will fall at a 0.5 percent rate, the result of declines in unit circulation. And the recorded music market will decrease at a 5.3 percent compound annual rate as spending on physical formats continues to decline at double-digit annual rates. Executive Summary Global Entertainment and Media Market by Region 61

Consumer/End-User Spending by Segment (US$ Millions) United States 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 TV Subscriptions and License Fees 49,541 54,449 58,641 62,653 66,587 70,492 76,644 83,827 89,339 94,231 % Change 8.8 9.9 7.7 6.8 6.3 5.9 8.7 9.4 6.6 5.5 7.2 Recorded Music 12,025 12,728 12,270 11,728 10,324 9,260 8,710 8,228 8,004 7,863 % Change 4.9 5.8 3.6 4.4 12.0 10.3 5.9 5.5 2.7 1.8 5.3 Filmed Entertainment 32,973 34,647 34,076 34,862 35,517 36,175 37,832 39,821 42,027 44,528 % Change 4.8 5.1 1.6 2.3 1.9 1.9 4.6 5.3 5.5 6.0 4.6 Video Games 7,497 8,200 8,170 9,042 11,614 13,123 13,801 14,465 15,096 16,652 % Change 4.3 9.4 0.4 10.7 28.4 13.0 5.2 4.8 4.4 10.3 7.5 Consumer Magazines 10,034 10,330 10,469 9,911 10,054 10,212 10,414 10,470 10,518 10,570 % Change 0.4 2.9 1.3 5.3 1.4 1.6 2.0 0.5 0.5 0.5 1.0 Newspapers 11,225 10,988 10,747 10,581 10,458 10,373 10,334 10,288 10,235 10,175 % Change 1.8 2.1 2.2 1.5 1.2 0.8 0.4 0.4 0.5 0.6 0.5 Radio 125 385 1,012 1,772 2,409 2,875 3,186 3,497 3,792 4,040 % Change 420.8 208.0 162.9 75.1 35.9 19.3 10.8 9.8 8.4 6.5 10.9 Theme Parks and Amusement Parks 10,300 10,775 11,230 11,524 11,990 12,476 12,959 13,540 14,034 14,538 % Change 4.0 4.6 4.2 2.6 4.0 4.1 3.9 4.5 3.6 3.6 3.9 Casino and Other Regulated Gaming 43,964 48,451 52,924 57,692 60,337 60,382 61,711 64,945 69,056 73,335 % Change 6.3 10.2 9.2 9.0 4.6 0.1 2.2 5.2 6.3 6.2 4.0 Consumer and Educational Books 28,877 28,871 31,085 30,579 32,740 32,114 33,062 34,232 35,584 36,996 % Change 6.4 0.0 7.7 1.6 7.1 1.9 3.0 3.5 3.9 4.0 2.5 Business-to-Business Publishing 46,320 48,735 51,245 54,703 56,440 56,390 57,375 59,105 62,160 65,905 % Change 1.1 5.2 5.2 6.7 3.2 0.1 1.7 3.0 5.2 6.0 3.1 Sports 39,884 43,182 44,381 48,110 51,319 55,575 57,419 61,819 63,933 69,052 % Change 7.6 8.3 2.8 8.4 6.7 8.3 3.3 7.7 3.4 8.0 6.1 Total 292,765 311,741 326,250 343,157 359,789 369,447 383,447 404,237 423,778 447,885 % Change 4.8 6.5 4.7 5.2 4.8 2.7 3.8 5.4 4.8 5.7 4.5 PricewaterhouseCoopers 62 Global Entertainment and Media Outlook: 2008 2012

Europe, Middle East, Africa (EMEA) Spending in Europe, Middle East, Africa totaled $570 billion in 2007, up 6.8 percent from 2006. Growth was paced by double-digit increases in Internet advertising, video games, and Internet access. TV subscriptions and license fees, TV advertising, and consumer and educational book publishing were the next-fastest-growing segments, at 8.4 percent, 6.3 percent, and 5.4 percent, respectively. The remaining segments rose by less than 5 percent each, and recorded music declined. Central and Eastern Europe and Middle East/Africa will fuel growth in EMEA. Although accounting for only 14 percent of spending in 2007, these two areas will contribute 30 percent of E&M revenue growth during the next five years. Expanding economies and developing E&M markets will propel these areas, while Western Europe will experience slower economic growth because its E&M market is more mature. We expect Internet advertising, Internet access spending, and video games to continue to average double-digit compound annual increases during the next five years, with near-double-digit growth projected for TV subscription. Broadband, mobile, and multichannel penetration growth will directly or indirectly boost spending in each of these segments. The entire market will expand at a 6.8 percent compound annual rate, with spending increasing to $792 billion by 2012. Executive Summary Global Entertainment and Media Market by Region 63

Entertainment and Media Market by Segment (US$ Millions) EMEA 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Internet Access: Wired and Mobile 34,031 44,368 54,148 68,001 81,106 95,356 108,797 122,078 134,631 145,175 % Change 29.9 30.4 22.0 25.6 19.3 17.6 14.1 12.2 10.3 7.8 12.3 Internet Advertising: Wired and Mobile 3,177 4,745 7,556 12,334 17,022 22,151 27,672 33,615 39,968 46,228 % Change 40.3 49.4 59.2 63.2 38.0 30.1 24.9 21.5 18.9 15.7 22.1 TV Subscriptions and License Fees 48,888 51,585 55,805 60,163 65,206 71,120 78,138 85,715 93,609 103,019 % Change 11.7 5.5 8.2 7.8 8.4 9.1 9.9 9.7 9.2 10.1 9.6 TV Advertising 34,943 38,606 40,908 43,577 46,344 49,774 53,105 57,400 60,339 64,051 % Change 4.8 10.5 6.0 6.5 6.3 7.4 6.7 8.1 5.1 6.2 6.7 Recorded Music 15,049 14,453 13,848 13,075 12,221 11,600 11,311 11,192 11,246 11,310 % Change 7.9 4.0 4.2 5.6 6.5 5.1 2.5 1.1 0.5 0.6 1.5 Filmed Entertainment 24,432 26,572 24,978 24,842 25,095 25,858 26,897 28,148 29,525 31,011 % Change 7.3 8.8 6.0 0.5 1.0 3.0 4.0 4.7 4.9 5.0 4.3 Video Games 6,891 8,087 8,718 10,004 12,653 14,636 16,200 17,831 19,441 21,590 % Change 10.4 17.4 7.8 14.8 26.5 15.7 10.7 10.1 9.0 11.1 11.3 Consumer Magazine Publishing 33,172 34,232 35,358 36,357 36,831 37,813 38,897 40,171 41,451 42,819 % Change 1.6 3.2 3.3 2.8 1.3 2.7 2.9 3.3 3.2 3.3 3.1 Newspaper Publishing 64,354 66,537 68,712 70,459 72,282 74,297 76,545 78,829 81,013 83,228 % Change 0.6 3.4 3.3 2.5 2.6 2.8 3.0 3.0 2.8 2.7 2.9 Radio/Out-of-Home Advertising 22,659 23,948 25,261 26,651 28,055 29,275 30,803 32,191 33,426 34,609 % Change 4.2 5.7 5.5 5.5 5.3 4.3 5.2 4.5 3.8 3.5 4.3 Theme Parks and Amusement Parks 4,099 4,320 4,511 4,727 4,946 5,174 5,455 5,795 6,198 6,828 % Change 1.2 5.4 4.4 4.8 4.6 4.6 5.4 6.2 7.0 10.2 6.7 Casino and Other Regulated Gaming 19,855 23,764 27,908 29,727 30,316 30,693 30,652 33,440 35,702 38,449 % Change 19.3 19.7 17.4 6.5 2.0 1.2 0.1 9.1 6.8 7.7 4.9 Consumer and Educational Book Publishing 44,152 44,868 46,781 47,034 49,570 49,874 51,210 52,771 54,405 56,183 % Change 1.6 1.6 4.3 0.5 5.4 0.6 2.7 3.0 3.1 3.3 2.5 Business-to-Business Publishing 49,404 50,552 52,034 54,657 56,618 58,139 59,705 61,708 64,134 66,824 % Change 0.2 2.3 2.9 5.0 3.6 2.7 2.7 3.4 3.9 4.2 3.4 Sports 24,171 26,238 28,338 33,237 33,318 36,603 37,288 42,761 41,186 46,934 % Change 1.0 8.6 8.0 17.3 0.2 9.9 1.9 14.7 3.7 14.0 7.1 Total 429,277 462,875 494,202 533,473 569,691 609,784 649,244 699,296 740,869 791,780 % Change 5.3 7.8 6.8 7.9 6.8 7.0 6.5 7.7 5.9 6.9 6.8 Note: Newspaper, consumer magazine, and trade magazine Web site advertising and mobile advertising are included in their respective segments and in most countries also in the Internet advertising segment, but only once in the overall total. PricewaterhouseCoopers 64 Global Entertainment and Media Outlook: 2008 2012

The United Kingdom is the largest market in the region, at $115 billion in 2007, followed by Germany at $102 billion and France at $72 billion. Middle East/Africa and Central and Eastern Europe were the fastestgrowing areas in EMEA in 2007, with increases of 16.2 percent and 13.9 percent, respectively. Western Europe expanded by 5.5 percent. Led by Saudi Arabia/Pan Arab and South Africa, Middle East/Africa will continue to be the growth leader, averaging 15.7 percent compounded annually during 2008 2012. Central and Eastern Europe will increase at an 11.2 percent compound annual rate, and Western Europe will grow by 5.4 percent compounded annually. Regional spending consists of those spending streams in EMEA for which we do not have country breakouts and typically consists of relatively new and rapidly growing digital sectors. Regional spending represented 1 percent of the total market in 2007. Executive Summary Global Entertainment and Media Market by Region 65

Entertainment and Media Market by Country (US$ Millions) EMEA 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Western Europe Austria 8,592 9,136 9,640 10,127 10,902 11,478 12,026 12,670 13,225 13,810 4.8 Belgium 8,420 9,101 9,693 10,409 10,963 11,391 11,930 12,534 13,122 13,700 4.6 Denmark 7,082 7,600 8,139 8,947 9,605 10,072 10,571 11,108 11,526 11,988 4.5 Finland 5,569 6,079 6,383 6,832 7,076 7,509 7,855 8,156 8,419 8,670 4.1 France 57,973 61,530 64,497 68,617 72,124 76,048 79,698 83,865 87,111 90,783 4.7 Germany 84,391 87,446 91,447 98,649 102,063 105,725 109,975 115,277 118,851 123,872 3.9 Greece 4,494 4,928 5,292 5,803 6,337 6,747 7,160 7,659 8,133 8,631 6.4 Ireland 2,940 3,276 3,534 3,980 4,454 4,852 5,214 5,585 5,994 6,435 7.6 Italy 41,128 44,944 47,517 51,239 53,458 57,428 61,837 67,328 71,226 75,742 7.2 Netherlands 15,774 16,561 17,141 18,238 19,352 20,468 21,513 22,562 23,611 24,831 5.1 Norway 7,661 8,495 9,192 9,936 10,456 11,044 11,672 12,290 12,916 13,507 5.3 Portugal 3,716 4,201 4,584 4,872 5,197 5,616 6,018 6,460 6,912 7,311 7.1 Spain 28,122 29,556 31,404 33,717 35,506 38,799 41,730 45,359 48,435 51,947 7.9 Sweden 10,772 11,284 11,791 12,421 13,175 13,824 14,465 15,106 15,746 16,328 4.4 Switzerland 8,209 8,773 9,441 10,075 10,675 11,177 11,696 12,248 12,729 13,234 4.4 United Kingdom 90,789 97,439 102,274 106,887 114,650 121,271 127,593 135,621 141,896 152,040 5.8 Western Europe Total 385,632 410,349 431,969 460,749 485,993 513,449 540,953 573,828 599,852 632,829 5.4 Central and Eastern Europe Czech Republic 2,779 3,077 3,494 3,858 4,125 4,454 4,845 5,360 5,843 6,281 8.8 Hungary 3,334 3,726 4,099 4,409 4,669 5,020 5,432 5,907 6,274 6,709 7.5 Poland 5,455 6,104 6,831 7,995 9,105 10,106 11,016 12,027 13,082 14,225 9.3 Romania 1,255 1,464 1,831 2,253 2,912 3,335 3,782 4,208 4,651 5,133 12.0 Russia 12,128 16,159 20,658 23,526 26,398 29,636 31,933 36,600 41,151 45,275 11.4 Turkey 2,480 3,122 3,664 4,489 5,776 6,971 8,377 9,881 11,192 12,477 16.7 Central and Eastern Europe Total 27,431 33,652 40,577 46,530 52,985 59,522 65,385 73,983 82,193 90,100 11.2 Middle East/Africa Israel 2,583 2,737 2,912 2,982 3,122 3,261 3,419 3,633 3,803 3,957 4.9 Saudi Arabia/Pan Arab 5,686 6,529 7,518 9,553 11,623 13,969 16,824 19,868 23,730 27,870 19.1 South Africa 4,772 5,597 6,477 7,676 8,744 10,040 11,452 13,220 15,025 16,770 13.9 Middle East/Africa Total 13,041 14,863 16,907 20,211 23,489 27,270 31,695 36,721 42,558 48,597 15.7 Country Subtotal 426,104 458,864 489,453 527,490 562,467 600,241 638,033 684,532 724,603 771,526 6.5 Regional Spending 3,173 4,011 4,749 5,983 7,224 9,543 11,211 14,764 16,266 20,254 22.9 Total 429,277 462,875 494,202 533,473 569,691 609,784 649,244 699,296 740,869 791,780 6.8 Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. PricewaterhouseCoopers 66 Global Entertainment and Media Outlook: 2008 2012

United Kingdom In the UK, the rate of growth will moderate during the next two years, the result of a slowing economy. However, growth will then pick up again during 2010 12, helped by an expanding mobile TV market, new casinos, and the 2012 Olympics in London. TV subscriptions and license fees will be the largest segment in 2012, at $21 billion, with total business-to-business publishing and Internet access at $17 billion each, newspaper publishing at $16 billion, and Internet advertising at $14 billion. Internet advertising will be the fastest-growing segment, with an 18.7 percent compound annual increase. Video games will be next, at 11.6 percent. Recorded music will fall at a 3.1 percent annual rate, and directory advertising will edge down by 0.1 percent compounded annually. Overall growth will average 5.8 percent compounded annually during the five-year forecast period. Entertainment and Media Spending United Kingdom Consumer/End-User Spending Advertising Total 2012 (US$ Millions) 2012 (US$ Millions) 2012 (US$ Millions) Internet Access: Wired and Mobile 16,628 8.4 16,628 8.4 Internet Advertising: Wired and Mobile 13,953 18.7 13,953 18.7 TV Subscriptions and License Fees 21,328 7.5 21,328 7.5 TV Advertising 7,802 2.4 7,802 2.4 Recorded Music 2,720 3.1 2,720 3.1 Filmed Entertainment 7,210 2.3 7,210 2.3 Video Games 6,952 11.6 6,952 11.6 Consumer Magazine Publishing 4,061 0.3 1,842 2.7 5,903 1.0 Newspaper Publishing 6,250 0.2 9,364 2.6 15,614 1.4 Radio 1,580 2.7 1,260 2.0 2,840 2.4 Out-of-Home 2,621 5.8 2,621 5.8 Theme Parks and Amusement Parks 1,300 3.7 1,300 3.7 Casino and Other Regulated Gaming 7,873 8.1 7,873 8.1 Consumer and Educational Book Publishing 8,267 3.6 8,267 3.6 Business-to-Business Publishing Total 16,691 3.0 Trade Magazines 1,900 0.2 2,563 4.0 4,463 2.3 Professional Books 1,176 2.8 1,176 2.8 Business Information 9,402 3.9 9,402 3.9 Directory Advertising 1,650 0.1 1,650 0.1 Sports 15,804 9.1 15,804 9.1 Total 95,823 5.2 39,589 6.4 152,040 5.8 Note: The total includes Internet access. Newspaper, consumer magazine, and trade magazine Web site advertising and mobile advertising are included in their respective segments and also in the Internet advertising segment, but only once in the overall total. Executive Summary Global Entertainment and Media Market by Region 67

Germany In Germany, sluggish economic growth will continue to restrain E&M spending as it has during the past five years. Except for 2006, when E&M revenues were bolstered by the FIFA World Cup, Germany was the slowest-growing territory in EMEA throughout that period. We expect Germany to continue to be the slowest-growing territory in EMEA during the next five years, with a 3.9 percent compound annual increase. Internet advertising and video games will be the exceptions, with double-digit annual increases. No other segments will expand by 6 percent or more, and recorded music will decline. Internet access will total $18 billion in 2012 followed by business-to-business publishing at $17 billion, TV subscriptions and license fees at $15 billion, and newspaper publishing at $14 billion. Entertainment and Media Spending Germany Consumer/End-User Spending Advertising Total 2012 (US$ Millions) 2012 (US$ Millions) 2012 (US$ Millions) Internet Access: Wired and Mobile 17,505 5.3 17,505 5.3 Internet Advertising: Wired and Mobile 7,697 17.6 7,697 17.6 TV Subscriptions and License Fees 14,911 5.5 14,911 5.5 TV Advertising 6,814 3.2 6,814 3.2 Recorded Music 2,202 1.3 2,202 1.3 Filmed Entertainment 3,726 3.0 3,726 3.0 Video Games 4,105 10.5 4,105 10.5 Consumer Magazine Publishing 2,114 0.2 2,938 2.7 5,052 1.6 Newspaper Publishing 6,282 1.4 7,582 2.0 13,864 1.7 Radio 3,900 1.5 1,190 3.7 5,090 2.0 Out-of-Home 1,450 4.3 1,450 4.3 Theme Parks and Amusement Parks 780 4.0 780 4.0 Casino and Other Regulated Gaming 4,686 1.4 4,686 1.4 Consumer and Educational Book Publishing 10,742 1.6 10,742 1.6 Business-to-Business Publishing Total 16,607 2.7 Trade Magazines 1,382 2.1 1,823 5.3 3,205 3.9 Professional Books 3,359 0.9 3,359 0.9 Business Information 8,415 3.5 8,415 3.5 Directory Advertising 1,628 0.2 1,628 0.2 Sports 9,852 5.6 9,852 5.6 Total 76,456 3.3 29,911 4.9 123,872 3.9 Note: The total includes Internet access. Newspaper, consumer magazine, and trade magazine Web site advertising and mobile advertising are included in their respective segments and also in the Internet advertising segment, but only once in the overall total. PricewaterhouseCoopers 68 Global Entertainment and Media Outlook: 2008 2012

France In France, by contrast, a pickup in economic growth will provide a near-term boost for E&M spending. We expect growth in France to be roughly midway between that in the UK and Germany, with a projected 4.7 percent compound annual increase. Internet access will be the largest segment in 2012, at $14 billion, with TV subscriptions and license fees next, at $12 billion. Internet advertising and video games will be the fastest-growing segments, with compound annual increases of 17.1 percent and 11.4 percent, respectively. Recorded music will decline at a 6.3 percent compound annual rate. Entertainment and Media Spending France Consumer/End-User Spending Advertising Total 2012 (US$ Millions) 2012 (US$ Millions) 2012 (US$ Millions) Internet Access: Wired and Mobile 14,129 8.3 14,129 8.3 Internet Advertising: Wired and Mobile 4,465 17.1 4,465 17.1 TV Subscriptions and License Fees 11,706 7.1 11,706 7.1 TV Advertising 4,926 4.1 4,926 4.1 Recorded Music 1,115 6.3 1,115 6.3 Filmed Entertainment 4,058 1.2 4,058 1.2 Video Games 3,640 11.4 3,640 11.4 Consumer Magazine Publishing 5,773 2.3 3,150 3.4 8,923 2.7 Newspaper Publishing 2,878 0.9 2,056 1.8 4,934 1.3 Radio 1,323 1.5 999 1.7 2,322 1.6 Out-of-Home 1,334 1.1 1,334 1.1 Theme Parks and Amusement Parks 1,478 4.2 1,478 4.2 Casino and Other Regulated Gaming 5,255 7.1 5,255 7.1 Consumer and Educational Book Publishing 8,744 1.5 8,744 1.5 Business-to-Business Publishing Total 9,150 3.0 Trade Magazines 932 1.4 1,335 3.7 2,267 2.7 Professional Books 1,197 0.5 1,197 0.5 Business Information 4,413 4.4 4,413 4.4 Directory Advertising 1,273 1.7 1,273 1.7 Sports 5,268 4.9 5,268 4.9 Total 57,780 3.9 18,874 4.8 90,783 4.7 Note: The total includes Internet access. Newspaper, consumer magazine, and trade magazine Web site advertising and mobile advertising are included in their respective segments and also in the Internet advertising segment, but only once in the overall total. Executive Summary Global Entertainment and Media Market by Region 69

Russia Russia is rapidly becoming one of the largest E&M markets in both EMEA and the world from what was until recently a small base, and spending in Russia will continue to grow at double-digit annual rates over the next five years. Except for casino and other regulated gaming, which will fall sharply because of casino closings, each segment will expand at mid-single-digit rates or better, and a number of segments will grow at double-digit compound annual rates during the next five years, led by Internet advertising at 43.6 percent and Internet access at 22.5 percent. TV advertising, trade magazines, TV subscriptions and license fees, filmed entertainment, radio, video games, and out-of-home advertising also will average double-digit compound annual increases. The overall market will expand at an 11.4 percent rate compounded annually. Excluding casino and other regulated gaming, the E&M market in Russia will grow at a 14.8 percent compound annual rate. We do not have data for theme parks and sports in Russia. Entertainment and Media Spending Russia Consumer/End-User Spending Advertising Total 2012 (US$ Millions) 2012 (US$ Millions) 2012 (US$ Millions) Internet Access: Wired and Mobile 12,458 22.5 12,458 22.5 Internet Advertising: Wired and Mobile 2,244 43.6 2,244 43.6 TV Subscriptions and License Fees 1,281 14.3 1,281 14.3 TV Advertising 9,578 17.4 9,578 17.4 Recorded Music 860 9.6 860 9.6 Filmed Entertainment 1,964 12.3 1,964 12.3 Video Games 790 11.8 790 11.8 Consumer Magazine Publishing 779 3.9 1,460 12.0 2,239 8.7 Newspaper Publishing 1,849 2.0 963 15.4 2,812 5.6 Radio 1,091 12.2 1,091 12.2 Out-of-Home 2,697 11.3 2,697 11.3 Theme Parks and Amusement Parks NA NA Casino and Other Regulated Gaming 1,701 17.9 1,701 17.9 Consumer and Educational Book Publishing 2,852 6.7 2,852 6.7 Business-to-Business Publishing Total 2,795 6.6 Trade Magazines 54 7.3 224 16.6 278 14.4 Professional Books 425 6.9 425 6.9 Business Information 1,271 6.7 1,271 6.7 Directory Advertising 821 4.4 821 4.4 Sports NA NA Total 13,826 1.3 18,991 16.3 45,275 11.4 Note: The total includes Internet access. Newspaper, consumer magazine, and trade magazine Web site advertising and mobile advertising are included in their respective segments and also in the Internet advertising segment, but only once in the overall total. PricewaterhouseCoopers 70 Global Entertainment and Media Outlook: 2008 2012

Internet access The Internet access market rose by 19.3 percent in 2007, dipping below 20 percent for the first time during the past five years. Increased broadband penetration will boost wired access, while wireless network upgrades, 3G rollouts, and flat-rate pricing will drive mobile access. We look for an additional four years of double-digit growth, with a 7.8 percent advance in 2012. Spending will rise from $81 billion in 2007 to $145 billion in 2012, a 12.3 percent compound annual increase. Internet Access Market: Wired and Mobile (US$ Millions) EMEA 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Internet Access: Wired and Mobile 34,031 44,368 54,148 68,001 81,106 95,356 108,797 122,078 134,631 145,175 % Change 29.9 30.4 22.0 25.6 19.3 17.6 14.1 12.2 10.3 7.8 12.3 Germany has the largest Internet access market, at $14 billion in 2007, with the UK next, at $11 billion, followed by France at $9 billion. Middle East/Africa and Central and Eastern Europe, the areas with the lowest broadband penetration, will be the fastest growing during the next five years as broadband penetration increases. Middle East/Africa will rise at a 27.8 percent compound annual rate, and Central and Eastern Europe will expand by 22.0 percent compounded annually. Western Europe will grow at a more moderate, 8.3 percent annual rate. Executive Summary Global Entertainment and Media Market by Region 71

Internet Access Market: Wired and Mobile by Country (US$ Millions) EMEA 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Western Europe Austria 926 1,099 1,295 1,460 1,660 1,857 2,030 2,185 2,326 2,439 8.0 Belgium 832 1,114 1,331 1,493 1,667 1,840 2,028 2,186 2,273 2,371 7.3 Denmark 1,539 1,893 2,139 2,497 2,830 3,063 3,260 3,404 3,494 3,584 4.8 Finland 884 1,152 1,483 1,801 1,829 2,096 2,274 2,389 2,463 2,528 6.7 France 3,542 4,887 5,908 7,931 9,491 10,874 11,951 12,884 13,672 14,129 8.3 Germany 7,562 8,926 10,178 12,155 13,537 14,663 15,639 16,614 17,147 17,505 5.3 Greece 133 159 213 354 438 517 608 707 841 956 16.9 Ireland 93 111 130 205 283 343 405 457 522 580 15.4 Italy 1,936 3,465 4,248 5,364 6,505 8,119 9,347 10,452 11,274 11,730 12.5 Netherlands 1,587 1,892 2,218 2,424 2,807 3,143 3,396 3,591 3,769 3,901 6.8 Norway 539 861 1,117 1,456 1,624 1,778 1,957 2,072 2,184 2,230 6.5 Portugal 456 709 977 1,270 1,478 1,732 1,954 2,192 2,428 2,596 11.9 Spain 2,839 3,401 3,969 4,781 5,281 6,642 7,680 8,675 9,360 9,810 13.2 Sweden 1,715 1,878 2,059 2,178 2,433 2,658 2,825 2,967 3,102 3,150 5.3 Switzerland 630 848 1,282 1,495 1,716 1,864 2,026 2,180 2,266 2,345 6.4 United Kingdom 5,353 6,658 7,980 9,466 11,131 12,537 13,717 14,822 15,870 16,628 8.4 Western Europe Total 30,566 39,053 46,527 56,330 64,710 73,726 81,097 87,777 92,991 96,482 8.3 Central and Eastern Europe Czech Republic 208 327 411 505 626 766 936 1,207 1,422 1,601 20.7 Hungary 236 345 421 521 671 832 1,024 1,208 1,370 1,537 18.0 Poland 537 657 728 1,007 1,260 1,555 1,815 2,203 2,621 3,042 19.3 Romania 167 277 520 766 1,213 1,446 1,699 1,931 2,198 2,505 15.6 Russia 455 1,087 2,023 3,280 4,522 5,960 7,579 9,292 10,970 12,458 22.5 Turkey 363 559 767 1,100 1,931 2,723 3,743 4,821 5,699 6,520 27.6 Central and Eastern Europe Total 1,966 3,252 4,870 7,179 10,223 13,282 16,796 20,662 24,280 27,663 22.0 Middle East/Africa Israel 372 466 563 618 677 749 826 891 955 1,010 8.3 Saudi Arabia/Pan Arab 640 872 1,319 2,549 3,724 5,188 6,910 8,701 11,241 13,892 30.1 South Africa 487 725 869 1,325 1,772 2,411 3,168 4,047 5,164 6,128 28.2 Middle East/Africa Total 1,499 2,063 2,751 4,492 6,173 8,348 10,904 13,639 17,360 21,030 27.8 Total 34,031 44,368 54,148 68,001 81,106 95,356 108,797 122,078 134,631 145,175 12.3 Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. PricewaterhouseCoopers 72 Global Entertainment and Media Outlook: 2008 2012

Advertising Advertising in EMEA grew by 7.2 percent in 2007, the fourth consecutive year of mid- to high-single-digit increases. Internet advertising rose by 38 percent, surpassing consumer magazines to become the thirdlargest advertising category, behind television and newspapers. Out-of-home increased by 7.9 percent, fueled by digital billboards that serve more advertisers and generate more revenue than traditional posters do. TV advertising rose by 6.3 percent, boosted by a surge in multichannel advertising. Radio expanded by 5.4 percent, buoyed by strong growth in Central and Eastern Europe and Middle East/Africa. A small, video game advertising market increased to $300 million in 2007, a 50 percent increase from 2006. The remaining segments grew by less than 5 percent, with directories the slowest-growing segment, at only 0.7 percent, as advertisers are shifting their resources from print directories to the Internet. Newspapers rose by 4.0 percent, trade magazines by 3.0 percent, and consumer magazines by 2.1 percent. We project advertising growth at 7.3 percent compounded annually over the next five years, comparable to the increase in 2007. Internet advertising will continue to expand at double-digit rates, averaging 22.1 percent on a compound annual basis and boosted by rising broadband penetration, the migration of advertisers from print, and an expanding mobile advertising market. Television advertising will increase by 6.7 percent compounded annually, buoyed by new digital multiplexes and HDTV rollouts. Out-ofhome will grow by 6.2 percent annually as digital billboards and improved audience measurement attract advertisers. Trade magazines will expand at a 5.4 percent annual rate, and consumer magazines by 4.7 percent compounded annually, in both cases helped by growth in Web site adverting. Digital radio and new radio licenses will lead to a 4.5 percent compound annual increase in radio. The small, video game advertising category will continue to expand at double-digit annual rates, and directory publishing will continue to grow slowly. An increase of 4.3 percent compounded annually is anticipated for newspapers. Advertising as a whole will increase to $219 billion in 2012 from $154 billion in 2007. Executive Summary Global Entertainment and Media Market by Region 73

Advertising by Segment (US$ Millions) EMEA 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Internet Advertising: Wired and Mobile 3,177 4,745 7,556 12,334 17,022 22,151 27,672 33,615 39,968 46,228 % Change 40.3 49.4 59.2 63.2 38.0 30.1 24.9 21.5 18.9 15.7 22.1 Television 34,943 38,606 40,908 43,577 46,344 49,774 53,105 57,400 60,339 64,051 % Change 4.8 10.5 6.0 6.5 6.3 7.4 6.7 8.1 5.1 6.2 6.7 Video Games NA NA 40 200 300 400 490 570 635 700 % Change 400.0 50.0 33.3 22.5 16.3 11.4 10.2 18.5 Consumer Magazines 13,318 13,919 14,378 15,102 15,421 16,092 16,803 17,658 18,493 19,381 % Change 1.0 4.5 3.3 5.0 2.1 4.4 4.4 5.1 4.7 4.8 4.7 Newspapers 34,488 36,245 37,965 39,558 41,152 42,874 44,842 46,875 48,853 50,807 % Change 1.3 5.1 4.7 4.2 4.0 4.2 4.6 4.5 4.2 4.0 4.3 Radio 6,191 6,771 7,143 7,534 7,941 8,338 8,745 9,155 9,544 9,894 % Change 7.0 9.4 5.5 5.5 5.4 5.0 4.9 4.7 4.2 3.7 4.5 Out-of-Home 7,739 8,185 8,812 9,634 10,394 11,129 11,875 12,627 13,347 14,052 % Change 5.2 5.8 7.7 9.3 7.9 7.1 6.7 6.3 5.7 5.3 6.2 Directories 9,312 9,584 9,892 10,192 10,260 10,281 10,384 10,591 10,862 11,198 % Change 2.9 2.9 3.2 3.0 0.7 0.2 1.0 2.0 2.6 3.1 1.8 Trade Magazines 6,172 6,276 6,390 6,737 6,938 7,267 7,681 8,105 8,566 9,032 % Change 3.8 1.7 1.8 5.4 3.0 4.7 5.7 5.5 5.7 5.4 5.4 Total 115,340 124,331 132,422 143,496 153,880 165,727 178,166 192,247 205,202 218,865 % Change 2.7 7.8 6.5 8.4 7.2 7.7 7.5 7.9 6.7 6.7 7.3 Note: Newspaper, consumer magazine, and trade magazine Web site advertising and mobile advertising are included in their respective segments and in most countries also in the Internet advertising segment, but only once in the overall total. The United Kingdom generated $29 billion in advertising in 2007, the highest in EMEA. Germany was next, at $24 billion, followed by Italy at $18 billion, France at $15 billion, and Spain at $11 billion. The top five territories constituted 63 percent of total advertising in EMEA. We expect Central and Eastern Europe to increase at a 13.0 percent compound annual rate, and Middle East/Africa at 12.8 percent annually during the next five years, fueled by expanding economies. Western Europe will average 6.0 percent growth compounded annually. PricewaterhouseCoopers 74 Global Entertainment and Media Outlook: 2008 2012

Advertising by Country (US$ Millions) EMEA 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Western Europe Austria 1,587 1,708 1,794 1,961 2,194 2,415 2,605 2,831 3,022 3,259 8.2 Belgium 2,726 2,979 3,209 3,595 3,859 4,084 4,285 4,560 4,802 5,087 5.7 Denmark 1,188 1,256 1,368 1,723 1,857 2,020 2,178 2,369 2,540 2,741 8.1 Finland 1,369 1,460 1,536 1,610 1,723 1,819 1,911 1,999 2,086 2,170 4.7 France 12,528 13,338 13,955 14,674 14,919 15,619 16,359 17,255 17,984 18,874 4.8 Germany 19,380 19,709 20,401 22,163 23,503 24,807 25,942 27,304 28,485 29,911 4.9 Greece 2,564 2,825 3,047 3,320 3,672 3,904 4,118 4,404 4,622 4,876 5.8 Ireland 1,002 1,130 1,265 1,426 1,608 1,804 1,971 2,148 2,324 2,510 9.3 Italy 15,447 16,348 16,904 17,631 18,034 18,838 19,938 21,381 22,776 24,238 6.1 Netherlands 4,317 4,481 4,654 5,278 5,564 5,941 6,271 6,626 6,962 7,346 5.7 Norway 2,200 2,370 2,550 2,690 2,844 3,019 3,189 3,372 3,548 3,745 5.7 Portugal 1,358 1,418 1,463 1,457 1,487 1,529 1,567 1,625 1,668 1,718 2.9 Spain 7,959 8,759 9,494 10,266 10,936 11,797 12,699 13,864 14,951 16,305 8.3 Sweden 2,422 2,527 2,774 3,104 3,359 3,577 3,824 4,082 4,336 4,610 6.5 Switzerland 3,038 3,091 3,216 3,517 3,802 4,026 4,280 4,515 4,782 5,038 5.8 United Kingdom 23,645 25,763 26,762 27,356 29,095 31,060 33,248 35,437 37,617 39,589 6.4 Western Europe Total 102,730 109,162 114,392 121,771 128,456 136,259 144,385 153,772 162,505 172,017 6.0 Central and Eastern Europe Czech Republic 1,150 1,267 1,429 1,626 1,688 1,805 1,945 2,092 2,251 2,397 7.3 Hungary 1,334 1,550 1,762 1,869 1,880 1,978 2,102 2,284 2,371 2,516 6.0 Poland 1,594 1,787 1,968 2,223 2,481 2,741 2,999 3,271 3,535 3,862 9.3 Romania 222 283 373 501 658 808 969 1,113 1,245 1,376 15.9 Russia 3,517 4,444 5,598 7,122 8,912 10,956 13,083 15,248 17,260 18,991 16.3 Turkey 863 1,148 1,381 1,691 2,006 2,266 2,497 2,758 3,007 3,291 10.4 Central and Eastern Europe Total 8,680 10,479 12,511 15,032 17,625 20,554 23,595 26,766 29,669 32,433 13.0 Middle East/Africa Israel 743 779 819 817 859 891 922 1,005 1,046 1,077 4.6 Saudi Arabia/Pan Arab 1,618 2,102 2,482 3,103 3,828 4,539 5,446 6,434 7,430 8,426 17.1 South Africa 1,569 1,809 2,178 2,573 2,812 3,084 3,328 3,700 3,917 4,212 8.4 Middle East/Africa Total 3,930 4,690 5,479 6,493 7,499 8,514 9,696 11,139 12,393 13,715 12.8 Country Subtotal 115,340 124,331 132,382 143,296 153,580 165,327 177,676 191,677 204,567 218,165 7.3 Regional Spending 40 200 300 400 490 570 635 700 18.5 Total 115,340 124,331 132,422 143,496 153,880 165,727 178,166 192,247 205,202 218,865 7.3 Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. Executive Summary Global Entertainment and Media Market by Region 75

Consumer/end-user spending The consumer/end-user market has been the slower-growing component since 2003, averaging 4.6 percent compounded annually compared with the 7.5 percent annual increase in advertising. In 2007, the consumer/end-user market rose by 4.0 percent. Video games grew by 26 percent as games for the new console platforms fueled spending. Rising multichannel penetration boosted TV subscriptions and license fees by 8.4 percent. Strong sales of Harry Potter books contributed to the 5.4 percent increase in consumer and educational books. Recorded music fell by 6.5 percent in 2007, its steepest drop since 2003. The remaining categories increased by less than 5 percent. Video games and TV subscriptions and license fees will continue to be the fastest-growing segments during the next five years, with compound annual increases of 11.1 percent and 9.6 percent, respectively. The current generation of console platforms will continue to propel spending in the near term, and a new generation will provide a lift in 2012, while ongoing growth in wireless and online games will continue to propel spending. Subscription household growth, a growing video-on-demand market, and an expanding mobile TV market will fuel TV subscriptions and license fees. The next-fastest-growing segments on a compound annual basis will be sports at 7.1 percent compounded annually, theme parks at 6.7 percent, casino and other regulated gaming at 4.9 percent, and filmed entertainment at 4.3 percent. A surging TV rights market, growing sponsorships, and the 2012 Olympics in London will boost sports. Theme parks will be buoyed by new parks in Eastern Europe and the Middle East and by upgrades at existing parks in Western Europe. New casinos in Spain and the UK and expansion in online and sports wagering will expand the casino and other regulated gaming market, although casino closings in Russia will dampen overall growth. Excluding Russia, casino and other regulated gaming in the remaining countries will increase by 7.4 percent compounded annually. Digital cinemas and 3-D rollouts in Western Europe, new theaters in Central and Eastern Europe, and highdefinition videos will boost filmed entertainment spending. We look for recorded music to continue to decline through 2010 and to total $11.3 billion in 2012, 1.5 percent lower than in 2007 on a compound annual basis. Increases of less than 4 percent annually are anticipated for the remaining segments. Total consumer/end-user spending will rise from $335 billion in 2007 to $428 billion in 2012, growing at a 5.0 percent compound annual rate. PricewaterhouseCoopers 76 Global Entertainment and Media Outlook: 2008 2012

Consumer/End-User Spending by Segment (US$ Millions) EMEA 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 TV Subscriptions and License Fees 48,888 51,585 55,805 60,163 65,206 71,120 78,138 85,715 93,609 103,019 % Change 11.7 5.5 8.2 7.8 8.4 9.1 9.9 9.7 9.2 10.1 9.6 Recorded Music 15,049 14,453 13,848 13,075 12,221 11,600 11,311 11,192 11,246 11,310 % Change 7.9 4.0 4.2 5.6 6.5 5.1 2.5 1.1 0.5 0.6 1.5 Filmed Entertainment 24,432 26,572 24,978 24,842 25,095 25,858 26,897 28,148 29,525 31,011 % Change 7.3 8.8 6.0 0.5 1.0 3.0 4.0 4.7 4.9 5.0 4.3 Video Games 6,891 8,087 8,678 9,804 12,353 14,236 15,710 17,261 18,806 20,890 % Change 10.4 17.4 7.3 13.0 26.0 15.2 10.4 9.9 9.0 11.1 11.1 Consumer Magazines 19,854 20,313 20,980 21,255 21,410 21,721 22,094 22,513 22,958 23,438 % Change 2.0 2.3 3.3 1.3 0.7 1.5 1.7 1.9 2.0 2.1 1.8 Newspapers 29,866 30,292 30,747 30,901 31,130 31,423 31,703 31,954 32,160 32,421 % Change 0.2 1.4 1.5 0.5 0.7 0.9 0.9 0.8 0.6 0.8 0.8 Radio 8,729 8,992 9,306 9,483 9,720 9,808 10,183 10,409 10,535 10,663 % Change 1.5 3.0 3.5 1.9 2.5 0.9 3.8 2.2 1.2 1.2 1.9 Theme Parks and Amusement Parks 4,099 4,320 4,511 4,727 4,946 5,174 5,455 5,795 6,198 6,828 % Change 1.2 5.4 4.4 4.8 4.6 4.6 5.4 6.2 7.0 10.2 6.7 Casino and Other Regulated Gaming 19,855 23,764 27,908 29,727 30,316 30,693 30,652 33,440 35,702 38,449 % Change 19.3 19.7 17.4 6.5 2.0 1.2 0.1 9.1 6.8 7.7 4.9 Consumer and Educational Books 44,152 44,868 46,781 47,034 49,570 49,874 51,210 52,771 54,405 56,183 % Change 1.6 1.6 4.3 0.5 5.4 0.6 2.7 3.0 3.1 3.3 2.5 Business-to-Business Publishing 33,920 34,692 35,752 37,728 39,420 40,591 41,640 43,012 44,706 46,594 % Change 0.4 2.3 3.1 5.5 4.5 3.0 2.6 3.3 3.9 4.2 3.4 Sports 24,171 26,238 28,338 33,237 33,318 36,603 37,288 42,761 41,186 46,934 % Change 1.0 8.6 8.0 17.3 0.2 9.9 1.9 14.7 3.7 14.0 7.1 Total 279,906 294,176 307,632 321,976 334,705 348,701 362,281 384,971 401,036 427,740 % Change 4.0 5.1 4.6 4.7 4.0 4.2 3.9 6.3 4.2 6.7 5.0 The United Kingdom and Germany are the leading territories in consumer/end-user spending, at $74 billion and $65 billion, respectively, in 2007. France is a distant third at $48 billion, with Italy at $29 billion, Spain at $19 billion, Russia at $13 billion, and the Netherlands at $11 billion. We expect Western Europe to expand at a 4.5 percent compound annual rate during the next five years. Central and Eastern Europe will increase by 3.6 percent compounded annually, with growth hurt by casino closings in Russia. Middle East/ Africa will be the fastest-growing area, with a projected 7.1 percent compound annual increase. Executive Summary Global Entertainment and Media Market by Region 77

Consumer/End-User Spending by Country (US$ Millions) EMEA 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Western Europe Austria 6,079 6,329 6,551 6,706 7,048 7,206 7,391 7,654 7,877 8,112 2.9 Belgium 4,862 5,008 5,153 5,321 5,437 5,467 5,617 5,788 6,047 6,242 2.8 Denmark 4,355 4,451 4,632 4,727 4,918 4,989 5,133 5,335 5,492 5,663 2.9 Finland 3,316 3,467 3,364 3,421 3,524 3,594 3,670 3,768 3,870 3,972 2.4 France 41,903 43,305 44,634 46,012 47,714 49,555 51,388 53,726 55,455 57,780 3.9 Germany 57,449 58,811 60,868 64,331 65,023 66,255 68,394 71,359 73,219 76,456 3.3 Greece 1,797 1,944 2,032 2,129 2,227 2,326 2,434 2,548 2,670 2,799 4.7 Ireland 1,845 2,035 2,139 2,349 2,563 2,705 2,838 2,980 3,148 3,345 5.5 Italy 23,745 25,131 26,365 28,244 28,919 30,471 32,552 35,495 37,176 39,774 6.6 Netherlands 9,870 10,188 10,269 10,536 10,981 11,384 11,846 12,345 12,880 13,584 4.3 Norway 4,922 5,264 5,525 5,790 5,988 6,247 6,526 6,846 7,184 7,532 4.7 Portugal 1,902 2,074 2,144 2,145 2,232 2,355 2,497 2,643 2,816 2,997 6.1 Spain 17,324 17,396 17,941 18,670 19,289 20,360 21,351 22,820 24,124 25,832 6.0 Sweden 6,635 6,879 6,958 7,139 7,383 7,589 7,816 8,057 8,308 8,568 3.0 Switzerland 4,541 4,834 4,943 5,063 5,157 5,287 5,390 5,553 5,681 5,851 2.6 United Kingdom 61,791 65,018 67,532 70,065 74,424 77,674 80,628 85,362 88,409 95,823 5.2 Western Europe Total 252,336 262,134 271,050 282,648 292,827 303,464 315,471 332,279 344,356 364,330 4.5 Central and Eastern Europe Czech Republic 1,421 1,483 1,654 1,727 1,811 1,883 1,964 2,061 2,170 2,283 4.7 Hungary 1,764 1,831 1,916 2,019 2,118 2,210 2,306 2,415 2,533 2,656 4.6 Poland 3,324 3,660 4,135 4,765 5,364 5,810 6,202 6,553 6,926 7,321 6.4 Romania 866 904 938 986 1,041 1,081 1,114 1,164 1,208 1,252 3.8 Russia 8,156 10,628 13,037 13,124 12,964 12,720 11,271 12,060 12,921 13,826 1.3 Turkey 1,254 1,415 1,516 1,698 1,839 1,982 2,137 2,302 2,486 2,666 7.7 Central and Eastern Europe Total 16,785 19,921 23,196 24,319 25,137 25,686 24,994 26,555 28,244 30,004 3.6 Middle East/Africa Israel 1,468 1,492 1,530 1,547 1,586 1,621 1,671 1,737 1,802 1,870 3.3 Saudi Arabia/Pan Arab 3,428 3,555 3,717 3,901 4,071 4,242 4,468 4,733 5,059 5,552 6.4 South Africa 2,716 3,063 3,430 3,778 4,160 4,545 4,956 5,473 5,944 6,430 9.1 Middle East/Africa Total 7,612 8,110 8,677 9,226 9,817 10,408 11,095 11,943 12,805 13,852 7.1 Country Subtotal 276,733 290,165 302,923 316,193 327,781 339,558 351,560 370,777 385,405 408,186 4.5 Regional Spending 3,173 4,011 4,709 5,783 6,924 9,143 10,721 14,194 15,631 19,554 23.1 Total 279,906 294,176 307,632 321,976 334,705 348,701 362,281 384,971 401,036 427,740 5.0 Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. PricewaterhouseCoopers 78 Global Entertainment and Media Outlook: 2008 2012

Asia Pacific The overall entertainment and media market in Asia Pacific rose by 9.4 percent in 2007, helped by double-digit increases in Internet advertising, casino and other regulated gaming, video games, Internet access, TV subscriptions and license fees, and recorded music. That growth was broadly in line with expectations in last year s Outlook. Excluding Japan, growth in the remaining countries was 13.1 percent. Broadband growth is driving both online advertising and access spending. New casinos in Macau (a semi-autonomous region of the PRC, although gaming is not permitted on the mainland) contributed to the 27.4 percent rise in casino and other regulated gaming. Console games associated with the new console platforms together with double-digit increases in online and wireless games boosted the video game market by 26.1 percent. Growth in number of subscription households boosted TV subscription spending by 11.7 percent. Recorded music rose by 11.6 percent in Asia Pacific, the only region to post an increase. The expanding digital component of the recorded music market constitutes a larger share of total spending in Asia Pacific than in other regions and therefore contributed more to growth. In general, large increases in the PRC and India are offsetting sluggish growth in Japan. Growth during the next five years will be led by double-digit increases in Internet advertising, TV subscriptions and license fees, casino and other regulated gaming, video games, and Internet access. We expect overall spending to increase to $508 billion in 2012 from $333 billion in 2007, growing at an 8.8 percent compound annual rate. The level of growth in 2008 will be significantly higher, at 11.1 percent, reflecting the level of activity associated with the Beijing Olympic Games, which will benefit a number of segments. Excluding Japan, growth in the rest of the region will average 12 percent compounded annually. Executive Summary Global Entertainment and Media Market by Region 79

Entertainment and Media Market by Segment (US$ Millions) Asia Pacific 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Internet Access: Wired and Mobile 23,486 33,136 45,014 53,642 60,311 68,578 77,307 85,200 93,974 103,056 % Change 28.9 41.1 35.8 19.2 12.4 13.7 12.7 10.2 10.3 9.7 11.3 Internet Advertising: Wired and Mobile 1,761 2,775 4,428 6,252 8,720 12,164 15,448 18,559 21,687 24,815 % Change 49.9 57.6 59.6 41.2 39.5 39.5 27.0 20.1 16.9 14.4 23.3 TV Subscriptions and License Fees 18,588 21,032 23,853 26,168 29,230 32,996 38,206 45,325 53,118 61,585 % Change 14.8 13.1 13.4 9.7 11.7 12.9 15.8 18.6 17.2 15.9 16.1 TV Advertising 27,273 29,483 30,660 31,908 33,359 36,650 37,754 40,163 42,089 44,631 % Change 5.8 8.1 4.0 4.1 4.5 9.9 3.0 6.4 4.8 6.0 6.0 Recorded Music 7,236 7,296 7,596 8,055 8,989 9,393 9,776 10,156 10,606 11,069 % Change 5.8 0.8 4.1 6.0 11.6 4.5 4.1 3.9 4.4 4.4 4.3 Filmed Entertainment 14,093 14,964 14,875 16,040 17,081 18,326 19,735 21,381 23,298 24,979 % Change 6.5 6.2 0.6 7.8 6.5 7.3 7.7 8.3 9.0 7.2 7.9 Video Games 8,057 9,179 9,934 11,760 14,833 17,208 18,993 20,829 22,604 25,328 % Change 4.8 13.9 8.2 18.4 26.1 16.0 10.4 9.7 8.5 12.1 11.3 Consumer Magazine Publishing 13,231 13,825 14,495 14,927 14,959 15,390 15,809 16,360 16,937 17,572 % Change 3.5 4.5 4.8 3.0 0.2 2.9 2.7 3.5 3.5 3.7 3.3 Newspaper Publishing 42,028 43,719 45,304 46,898 48,727 50,986 52,489 54,800 57,015 59,230 % Change 3.3 4.0 3.6 3.5 3.9 4.6 2.9 4.4 4.0 3.9 4.0 Radio/Out-of-Home Advertising 12,031 13,101 13,517 14,323 14,918 16,003 16,850 17,814 18,793 19,798 % Change 4.7 8.9 3.2 6.0 4.2 7.3 5.3 5.7 5.5 5.3 5.8 Theme Parks and Amusement Parks 5,487 5,640 5,710 6,110 6,367 6,697 7,062 7,499 7,896 8,419 % Change 0.5 2.8 1.2 7.0 4.2 5.2 5.5 6.2 5.3 6.6 5.7 Casino and Other Regulated Gaming 9,250 11,293 12,267 14,375 18,317 22,772 26,508 30,088 33,479 37,192 % Change 17.5 22.1 8.6 17.2 27.4 24.3 16.4 13.5 11.3 11.1 15.2 Consumer and Educational Book Publishing 19,761 20,512 21,294 22,570 24,503 25,775 26,907 27,906 28,879 29,667 % Change 1.7 3.8 3.8 6.0 8.6 5.2 4.4 3.7 3.5 2.7 3.9 Business-to-Business Publishing 16,399 16,853 17,676 18,374 19,420 20,350 21,237 22,181 23,165 24,122 % Change 1.6 2.8 4.9 3.9 5.7 4.8 4.4 4.4 4.4 4.1 4.4 Sports 10,993 11,670 12,443 13,487 14,200 18,037 15,703 17,188 17,995 19,437 % Change 2.6 6.2 6.6 8.4 5.3 27.0 12.9 9.5 4.7 8.0 6.5 Total 229,674 254,478 278,861 304,404 333,114 370,102 398,202 433,552 469,270 508,266 % Change 6.5 10.8 9.6 9.2 9.4 11.1 7.6 8.9 8.2 8.3 8.8 Note: Newspaper, consumer magazine, and trade magazine Web site advertising and mobile advertising are included in their respective segments and in most countries also in the Internet advertising segment, but only once in the overall total. PricewaterhouseCoopers 80 Global Entertainment and Media Outlook: 2008 2012

Japan remains the dominant market in the region, at $139 billion in 2007, with the PRC next, at $68 billion, followed by South Korea at $40 billion and Australia at $26 billion. Japan increased by 4.8 percent in 2007, led by double-digit growth in video games, Internet advertising, and recorded music. The PRC expanded by 21.2 percent, boosted by double-digit increases in each segment except theme parks and sports. Internet advertising in the PRC increased by 72.7 percent, casino and other regulated gaming rose by 46.2 percent, and gains of 30.3 percent and 30 percent were registered in video games and recorded music, respectively. South Korea grew by 6.4 percent in 2007, boosted by double-digit gains in Internet advertising, video games, casino and other regulated gaming, and recorded music. Australia rose by 7.8 percent, led by double-digit increases in Internet advertising, video games, TV subscriptions and license fees, and filmed entertainment. We expect India to be the fastest-growing territory during the next five years, at 18.5 percent compounded annually. The PRC will continue to record double-digit annual gains that will average 14.6 percent compounded annually. A number of the smaller markets with expanding economies Indonesia, Pakistan, the Philippines and Vietnam will also grow at double-digit annual rates. Japan will expand at a 3.6 percent compound annual rate, South Korea will grow by 5.8 percent compounded annually, and Australia will rise at a 6.1 percent compound annual rate. Regional spending consists of categories for which we do not have country breakouts, including several rapidly growing digital segments. Such spending accounted for 1 percent of the total market in 2007. Entertainment and Media Market by Country (US$ Millions) Asia Pacific 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Australia 20,109 21,846 22,963 24,149 26,040 27,957 29,381 31,275 33,182 35,089 6.1 China 34,454 41,044 48,839 56,220 68,138 83,487 94,928 108,140 121,088 134,544 14.6 Hong Kong 3,820 4,454 5,078 5,830 6,270 6,792 7,102 7,590 7,943 8,414 6.1 India 8,790 9,705 11,230 13,432 15,548 18,610 21,877 26,316 31,096 36,331 18.5 Indonesia 2,173 2,661 2,993 3,479 4,450 5,678 6,933 8,156 9,167 10,234 18.1 Japan 105,534 114,789 124,150 132,905 139,233 146,988 151,470 156,442 161,328 166,466 3.6 Malaysia 2,217 2,487 2,703 3,004 3,362 3,733 4,079 4,415 4,723 5,040 8.4 New Zealand 3,255 3,507 3,768 3,932 3,971 4,110 4,249 4,421 4,592 4,754 3.7 Pakistan 632 767 883 1,009 1,142 1,335 1,533 1,744 2,009 2,351 15.5 Philippines 1,839 2,046 2,361 2,584 2,887 3,304 3,704 4,218 4,841 5,599 14.2 Singapore 1,912 2,142 2,254 2,454 2,603 2,734 2,855 2,988 3,292 4,064 9.3 South Korea 30,799 33,237 34,721 37,181 39,548 42,634 44,281 46,883 49,329 52,426 5.8 Taiwan 6,884 7,603 7,901 8,203 8,474 8,823 9,191 9,619 9,996 10,436 4.3 Thailand 4,213 4,593 4,780 5,040 5,442 5,897 6,326 6,836 7,362 7,978 8.0 Vietnam 369 534 767 1,043 1,408 1,750 2,125 2,449 2,758 3,133 17.3 Country Subtotal 227,000 251,415 275,391 300,465 328,516 363,832 390,034 421,492 452,706 486,859 8.2 Regional Spending 2,674 3,063 3,470 3,939 4,598 6,270 8,168 12,060 16,564 21,407 36.0 Total 229,674 254,478 278,861 304,404 333,114 370,102 398,202 433,552 469,270 508,266 8.8 Executive Summary Global Entertainment and Media Market by Region 81

Japan Japan has had the slowest-growing economy in Asia Pacific during the past five years and will continue to be the slowest growing during the next five years. We expect Japan s sluggish economic growth to be reflected by sluggish E&M growth, which we project at 3.6 percent compounded annually slowest in the region. Nevertheless, we expect three segments to average double-digit increases during the next five years: Internet advertising will expand at a projected 19.9 percent compound annual rate; casino and other regulated gaming will rise by 14.3 percent, the result of the introduction of casinos; and video games will rise at a 10.9 percent compound annual rate. At the other end of the spectrum, directory advertising, consumer magazines, and newspapers will each be lower in 2012 than in 2007. Entertainment and Media Spending Japan Consumer/End-User Spending Advertising Total 2012 (US$ Millions) 2012 (US$ Millions) 2012 (US$ Millions) Internet Access: Wired and Mobile 37,004 3.7 37,004 3.7 Internet Advertising: Wired and Mobile 10,725 19.9 10,725 19.9 TV Subscriptions and License Fees 13,108 6.7 13,108 6.7 TV Advertising 14,642 0.7 14,642 0.7 Recorded Music 6,195 1.2 6,195 1.2 Filmed Entertainment 9,387 3.7 9,387 3.7 Video Games 10,228 10.9 10,228 10.9 Consumer Magazine Publishing 4,962 0.4 2,230 0.9 7,192 0.6 Newspaper Publishing 10,700 0.2 8,044 1.2 18,744 0.6 Radio 2,115 1.6 1,341 1.2 3,456 0.5 Out-of-Home 5,263 3.1 5,263 3.1 Theme Parks and Amusement Parks 4,626 4.5 4,626 4.5 Casino and Other Regulated Gaming 1,825 14.3 1,825 14.3 Consumer and Educational Book Publishing 8,497 2.2 8,497 2.2 Business-to-Business Publishing Total 8,699 1.6 Trade Magazines 835 1.1 972 2.0 1,807 1.6 Professional Books 1,528 1.7 1,528 1.7 Business Information 3,548 3.3 3,548 3.3 Directory Advertising 1,816 1.3 1,816 1.3 Sports 8,148 5.8 8,148 5.8 Total 85,702 3.9 43,760 3.1 166,466 3.6 Note: The total includes Internet access. Newspaper, consumer magazine, and trade magazine Web site advertising and mobile advertising are included in their respective segments and also in the Internet advertising segment, but only once in the overall total. PricewaterhouseCoopers 82 Global Entertainment and Media Outlook: 2008 2012

China In the PRC, by contrast, a surging economy will fuel E&M growth during the next five years, which we project will average 14.6 percent compounded annually. Internet advertising will be the fastest-growing segment, at 34 percent compounded annually, while Internet access spending will expand at a compound annual rate of 24.1 percent. Double-digit annual gains are also projected for filmed entertainment, TV advertising, TV subscriptions and license fees, recorded music, radio, out-of-home advertising, video games, directory advertising, and casino and other regulated gaming in Macau. Entertainment and Media Spending China Consumer/End-User Spending Advertising Total 2012 (US$ Millions) 2012 (US$ Millions) 2012 (US$ Millions) Internet Access: Wired and Mobile 31,627 24.1 31,627 24.1 Internet Advertising: Wired and Mobile 5,882 34.0 5,882 34.0 TV Subscriptions and License Fees 9,456 13.8 9,456 13.8 TV Advertising 11,093 12.4 11,093 12.4 Recorded Music 2,566 16.0 2,566 16.0 Filmed Entertainment 1,390 16.7 1,390 16.7 Video Games 2,481 12.4 2,481 12.4 Consumer Magazine Publishing 3,279 9.9 758 15.9 4,037 10.9 Newspaper Publishing 5,683 3.3 8,822 12.7 14,505 8.4 Radio 958 10.4 958 10.4 Out-of-Home 4,332 14.5 4,332 14.5 Consumer and Educational Book Publishing 11,222 4.8 11,222 4.8 Business-to-Business Publishing Total 6,619 8.1 Trade Magazines 266 7.0 146 12.8 412 8.8 Professional Books 1,731 4.4 1,731 4.4 Business Information 2,914 9.5 2,914 9.5 Directory Advertising 1,562 10.0 1,562 10.0 Theme Parks and Amusement Parks 2,061 6.8 2,061 6.8 Casino and Other Regulated Gaming 24,402 18.7 24,402 18.7 Sports 2,363 7.2 2,363 7.2 Total 69,814 11.3 33,103 15.0 134,544 14.6 Note: The total includes Internet access. Newspaper, consumer magazine, and trade magazine Web site advertising and mobile advertising are included in their respective segments and also in the Internet advertising segment, but only once in the overall total. Executive Summary Global Entertainment and Media Market by Region 83

India Rapid economic growth and the opening up of E&M markets will fuel expansion in India, which we expect will be the fastest-growing territory in Asia Pacific during the next five years, with a projected 18.5 percent compound annual increase. Double-digit annual growth is projected for every segment except recorded music, professional books, and consumer and educational book publishing. We do not have data for theme parks or casino and other regulated gaming in India. Entertainment and Media Spending India Consumer/End-User Spending Advertising Total 2012 (US$ Millions) 2012 (US$ Millions) 2012 (US$ Millions) Internet Access: Wired and Mobile 5,572 45.5 5,572 45.5 Internet Advertising: Wired and Mobile 326 35.3 326 35.3 TV Subscriptions and License Fees 10,012 24.8 10,012 24.8 TV Advertising 3,313 13.1 3,313 13.1 Recorded Music 235 5.6 235 5.6 Filmed Entertainment 3,883 15.0 3,883 15.0 Video Games 774 51.5 774 51.5 Consumer Magazine Publishing 196 11.8 560 13.5 756 13.1 Newspaper Publishing 1,896 9.7 3,540 13.9 5,436 12.3 Radio 484 25.3 484 25.3 Out-of-Home 580 13.9 580 13.9 Theme Parks and Amusement Parks NA NA Casino and Other Regulated Gaming NA NA Consumer and Educational Book Publishing 2,631 6.7 2,631 6.7 Business-to-Business Publishing Total 844 10.8 Trade Magazines 10 10.8 60 10.8 70 10.8 Professional Books 248 8.4 248 8.4 Business Information 479 12.3 479 12.3 Directory Advertising 47 10.1 47 10.1 Sports 1,523 8.4 1,523 8.4 Total 21,887 16.6 8,872 14.4 36,331 18.5 Note: The total includes Internet access. Newspaper, consumer magazine, and trade magazine Web site advertising and mobile advertising are included in their respective segments and also in the Internet advertising segment, but only once in the overall total. PricewaterhouseCoopers 84 Global Entertainment and Media Outlook: 2008 2012

Internet access Internet access spending will expand at an 11.3 percent compound annual rate to $103 billion in 2012 from $60 billion in 2007. Growth in broadband penetration is driving wired access spending, and wireless network upgrades are boosting mobile access. Internet Access Market: Wired and Mobile (US$ Millions) Asia Pacific 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Internet Access: Wired and Mobile 23,486 33,136 45,014 53,642 60,311 68,578 77,307 85,200 93,974 103,056 % Change 28.9 41.1 35.8 19.2 12.4 13.7 12.7 10.2 10.3 9.7 11.3 Japan accounted for more than half of access spending in 2007, at $31 billion, with the PRC next, at $11 billion, and then South Korea, at $9 billion. A number of countries with low broadband penetration will generate large increases from a small base as broadband penetration expands. Internet Access Market: Wired and Mobile by Country (US$ Millions) Asia Pacific 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Australia 1,317 1,532 1,819 2,059 2,230 2,408 2,595 2,783 2,981 3,133 7.0 China 3,358 4,586 7,122 8,394 10,744 14,196 18,344 22,208 26,673 31,627 24.1 Hong Kong 369 448 530 679 744 782 804 844 892 925 4.5 India 269 321 400 556 854 1,441 2,169 3,048 4,132 5,572 45.5 Indonesia 39 61 82 138 550 1,257 1,964 2,606 3,081 3,543 45.1 Japan 9,746 15,769 23,300 28,703 30,888 32,998 34,486 35,408 36,482 37,004 3.7 Malaysia 208 260 333 424 538 682 806 905 989 1,068 14.7 New Zealand 115 145 241 332 345 363 400 441 465 509 8.1 Pakistan 65 148 204 277 359 494 633 778 977 1,248 28.3 Philippines 190 219 273 329 403 547 712 879 1,104 1,390 28.1 Singapore 375 474 575 692 755 793 813 834 855 872 2.9 South Korea 6,012 7,367 7,908 8,291 8,676 8,893 9,286 9,632 9,899 10,009 2.9 Taiwan 998 1,196 1,402 1,658 1,735 1,821 1,958 2,111 2,254 2,382 6.5 Thailand 330 409 449 527 681 890 1,096 1,310 1,596 1,950 23.4 Vietnam 95 201 376 583 809 1,013 1,241 1,413 1,594 1,824 17.7 Total 23,486 33,136 45,014 53,642 60,311 68,578 77,307 85,200 93,974 103,056 11.3 Executive Summary Global Entertainment and Media Market by Region 85

Advertising Advertising rose by 7.1 percent in 2007, a rate of growth that increases to 11.8 percent if Japan is excluded. Internet advertising soared by 39.5 percent, and a small, video game advertising market rose by 40 percent. The remaining segments grew at low- to mid-single-digit rates. Newspapers increased 6.3 percent, directory advertising grew 5.9 percent, out-of-home advertising increased 5.4 percent, TV advertising rose by 4.5 percent, radio grew 2.8 percent, trade magazines increased 1.2 percent, and consumer magazines rose 0.6 percent. The Internet will continue to be the fastest-growing category, rising at a 23.3 percent compound annual rate and driven by increased broadband penetration and a growing mobile market. Digital technologies will propel out-of-home advertising at a 7.2 percent compound annual rate. TV advertising and newspapers will each grow by 6.0 percent compounded annually. TV advertising will be fueled by double-digit growth in multichannel advertising, and increased unit circulation in part from growth in free newspapers will expand newspaper advertising. New radio licenses in India and rapid growth in the PRC will contribute to a 4.7 percent compound annual increase in radio advertising. Consumer and trade magazines will each increase by 4.2 percent compounded annually, and directory advertising will expand at a 4.0 percent compound annual rate. Magazine advertising growth will be boosted by an expanding digital advertising sector. Video game advertising will add $300 million to the total in 2012. Advertising in Asia Pacific will increase from $91 billion in 2007 to $133 billion in 2012, a 7.8 percent compound annual increase. Excluding Japan, advertising will expand at a 10.7 percent rate compounded annually. Advertising by Segment (US$ Millions) Asia Pacific 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Internet Advertising: Wired and Mobile 1,761 2,775 4,428 6,252 8,720 12,164 15,448 18,559 21,687 24,815 PricewaterhouseCoopers 86 Global Entertainment and Media Outlook: 2008 2012 % Change 49.9 57.6 59.6 41.2 39.5 39.5 27.0 20.1 16.9 14.4 23.3 Television 27,273 29,483 30,660 31,908 33,359 36,650 37,754 40,163 42,089 44,631 % Change 5.8 8.1 4.0 4.1 4.5 9.9 3.0 6.4 4.8 6.0 6.0 Video Games NA NA 20 100 140 185 225 250 275 300 % Change 400.0 40.0 32.1 21.6 11.1 10.0 9.1 16.5 Consumer Magazines 4,534 4,763 4,968 5,071 5,102 5,333 5,496 5,733 5,976 6,260 % Change 4.1 5.1 4.3 2.1 0.6 4.5 3.1 4.3 4.2 4.8 4.2 Newspapers 20,554 21,709 22,765 24,069 25,583 27,514 28,660 30,590 32,422 34,248 % Change 4.5 5.6 4.9 5.7 6.3 7.5 4.2 6.7 6.0 5.6 6.0 Radio 3,324 3,497 3,634 3,895 4,006 4,261 4,387 4,596 4,818 5,043 % Change 2.9 5.2 3.9 7.2 2.8 6.4 3.0 4.8 4.8 4.7 4.7 Out-of-Home 6,848 7,644 7,811 8,308 8,759 9,555 10,240 10,960 11,682 12,426 % Change 6.4 11.6 2.2 6.4 5.4 9.1 7.2 7.0 6.6 6.4 7.2 Directories 4,350 4,599 4,824 4,827 5,113 5,319 5,532 5,754 5,981 6,206 % Change 6.1 5.7 4.9 0.1 5.9 4.0 4.0 4.0 3.9 3.8 4.0 Trade Magazines 1,288 1,307 1,406 1,455 1,472 1,540 1,589 1,654 1,734 1,810 % Change 0.2 1.5 7.6 3.5 1.2 4.6 3.2 4.1 4.8 4.4 4.2 Total 69,932 75,777 80,311 85,400 91,434 101,298 107,749 116,362 124,399 133,105 % Change 5.9 8.4 6.0 6.3 7.1 10.8 6.4 8.0 6.9 7.0 7.8 Note: Newspaper, consumer magazine and trade magazine, Web site advertising and mobile advertising are included in their respective segments and in most countries also in the Internet advertising segment, but only once in the overall total.

Japan is the dominant advertising market in Asia Pacific, at $38 billion, with the PRC next, at $16 billion. We expect the PRC to be the fastest-growing territory during the next five years, with a 15.0 percent compound annual increase, with India growing nearly as fast, at 14.4 percent. We also expect double-digit growth in Vietnam, Indonesia, and the Philippines. Advertising by Country (US$ Millions) Asia Pacific 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Australia 8,031 8,951 9,620 9,939 10,925 11,866 12,641 13,518 14,457 15,312 7.0 China 8,297 9,980 11,609 13,795 16,488 20,828 23,012 26,434 29,650 33,103 15.0 Hong Kong 1,535 1,823 2,049 2,274 2,432 2,699 2,829 3,056 3,236 3,462 7.3 India 2,445 2,779 3,182 3,917 4,524 5,227 6,004 6,977 7,926 8,872 14.4 Indonesia 1,268 1,637 1,886 2,245 2,692 3,118 3,584 4,075 4,534 5,032 13.3 Japan 34,697 36,083 36,862 37,283 37,630 39,290 40,566 41,716 42,763 43,760 3.1 Malaysia 518 608 639 688 782 879 964 1,065 1,151 1,256 9.9 New Zealand 1,303 1,459 1,571 1,563 1,543 1,605 1,639 1,701 1,788 1,841 3.6 Pakistan 110 123 137 166 192 219 237 262 281 307 9.8 Philippines 556 628 705 769 881 1,029 1,126 1,252 1,347 1,488 11.1 Singapore 671 755 760 795 826 872 921 983 1,042 1,110 6.1 South Korea 6,656 6,611 6,871 7,450 7,913 8,826 9,194 10,019 10,713 11,759 8.2 Taiwan 2,091 2,385 2,322 2,245 2,175 2,201 2,204 2,256 2,281 2,347 1.5 Thailand 1,591 1,756 1,849 1,909 1,977 2,087 2,178 2,311 2,416 2,551 5.2 Vietnam 163 199 229 262 314 367 425 487 539 605 14.0 Country Subtotal 69,932 75,777 80,291 85,300 91,294 101,113 107,524 116,112 124,124 132,805 7.8 Regional Spending 20 100 140 185 225 250 275 300 16.5 Total 69,932 75,777 80,311 85,400 91,434 101,298 107,749 116,362 124,399 133,105 7.8 Consumer/end-user spending Consumer/end-user spending increased by 9.7 percent in 2007, or by 12.4 percent excluding Japan. This expansion was fueled by 27.4 percent growth in casino and other regulated gaming, 26 percent growth in video games, and double-digit increases in TV subscriptions and license fees and recorded music. Subscription household growth and an emerging mobile TV subscription market will boost TV subscriptions and license fees by 16.1 percent compounded annually. New resort casinos and expansion in the existing casinos will contribute to a 15.2 percent compound annual increase in casino and other regulated gaming. Video games will average 11.2 percent compound annual growth, boosted by rising online and wireless growth and by new console games. Filmed entertainment will expand at a 7.9 percent annual rate as modern cinemas contribute to box office growth and high-definition videos expand the home video market. Sports will grow at a 6.5 percent compound annual rate, buoyed by growth in TV and mobile rights. New parks will boost theme park spending at a 5.7 percent compound annual rate. The remaining segments will grow by less than 5 percent compounded annually. Spending will total an estimated $272 billion in 2012, up from $181 billion in 2007, an 8.5 percent compound annual increase. Excluding Japan, growth will average 11 percent compounded annually. Executive Summary Global Entertainment and Media Market by Region 87

Consumer/End-User Spending by Segment (US$ Millions) Asia Pacific 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 TV Subscriptions and License Fees 18,588 21,032 23,853 26,168 29,230 32,996 38,206 45,325 53,118 61,585 % Change 14.8 13.1 13.4 9.7 11.7 12.9 15.8 18.6 17.2 15.9 16.1 Recorded Music 7,236 7,296 7,596 8,055 8,989 9,393 9,776 10,156 10,606 11,069 % Change 5.8 0.8 4.1 6.0 11.6 4.5 4.1 3.9 4.4 4.4 4.3 Filmed Entertainment 14,093 14,964 14,875 16,040 17,081 18,326 19,735 21,381 23,298 24,979 % Change 6.5 6.2 0.6 7.8 6.5 7.3 7.7 8.3 9.0 7.2 7.9 Video Games 8,057 9,179 9,914 11,660 14,693 17,023 18,768 20,579 22,329 25,028 % Change 4.8 13.9 8.0 17.6 26.0 15.9 10.3 9.6 8.5 12.1 11.2 Consumer Magazines 8,697 9,062 9,527 9,856 9,857 10,057 10,313 10,627 10,961 11,312 % Change 3.3 4.2 5.1 3.5 0.0 2.0 2.5 3.0 3.1 3.2 2.8 Newspapers 21,474 22,010 22,539 22,829 23,144 23,472 23,829 24,210 24,593 24,982 % Change 2.1 2.5 2.4 1.3 1.4 1.4 1.5 1.6 1.6 1.6 1.5 Radio 1,859 1,960 2,072 2,120 2,153 2,187 2,223 2,258 2,293 2,329 % Change 1.7 5.4 5.7 2.3 1.6 1.6 1.6 1.6 1.6 1.6 1.6 Theme Parks and Amusement Parks 5,487 5,640 5,710 6,110 6,367 6,697 7,062 7,499 7,896 8,419 % Change 0.5 2.8 1.2 7.0 4.2 5.2 5.5 6.2 5.3 6.6 5.7 Casino and Other Regulated Gaming 9,250 11,293 12,267 14,375 18,317 22,772 26,508 30,088 33,479 37,192 % Change 17.5 22.1 8.6 17.2 27.4 24.3 16.4 13.5 11.3 11.1 15.2 Consumer and Educational Books 19,761 20,512 21,294 22,570 24,503 25,775 26,907 27,906 28,879 29,667 % Change 1.7 3.8 3.8 6.0 8.6 5.2 4.4 3.7 3.5 2.7 3.9 Business-to-Business Publishing 10,761 10,947 11,446 12,092 12,835 13,491 14,116 14,773 15,450 16,106 % Change 4.6 1.7 4.6 5.6 6.1 5.1 4.6 4.7 4.6 4.2 4.6 Sports 10,993 11,670 12,443 13,487 14,200 18,037 15,703 17,188 17,995 19,437 % Change 2.6 6.2 6.6 8.4 5.3 27.0 12.9 9.5 4.7 8.0 6.5 Total 136,256 145,565 153,536 165,362 181,369 200,226 213,146 231,990 250,897 272,105 % Change 3.7 6.8 5.5 7.7 9.7 10.4 6.5 8.8 8.1 8.5 8.5 PricewaterhouseCoopers 88 Global Entertainment and Media Outlook: 2008 2012

Japan is the leading territory in consumer/end-user spending, at $71 billion, with the PRC next, at $41 billion. Vietnam will be the fastest-growing country, with a 19.8 percent compound annual increase. India will expand at a 16.6 percent annual rate followed by Singapore at 15.3 percent, the PRC at 11.3 percent, and the Philippines at 11.2 percent. Consumer/End-User Spending (Excluding Internet Access) by Country (US$ Millions) Asia Pacific 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Australia 10,761 11,363 11,524 12,151 12,885 13,683 14,145 14,974 15,744 16,644 5.3 China 22,799 26,478 30,108 34,031 40,906 48,463 53,572 59,498 64,765 69,814 11.3 Hong Kong 1,916 2,183 2,499 2,877 3,094 3,311 3,469 3,690 3,815 4,027 5.4 India 6,076 6,605 7,648 8,959 10,170 11,942 13,704 16,291 19,038 21,887 16.6 Indonesia 866 963 1,025 1,096 1,208 1,303 1,385 1,475 1,552 1,659 6.6 Japan 61,091 62,937 63,988 66,919 70,715 74,700 76,418 79,318 82,083 85,702 3.9 Malaysia 1,491 1,619 1,731 1,892 2,042 2,172 2,309 2,445 2,583 2,716 5.9 New Zealand 1,837 1,903 1,956 2,037 2,083 2,142 2,210 2,279 2,339 2,404 2.9 Pakistan 457 496 542 566 591 622 663 704 751 796 6.1 Philippines 1,093 1,199 1,383 1,486 1,603 1,728 1,866 2,087 2,390 2,721 11.2 Singapore 866 913 919 967 1,022 1,069 1,121 1,171 1,395 2,082 15.3 South Korea 18,131 19,259 19,942 21,440 22,959 24,915 25,801 27,232 28,717 30,658 6.0 Taiwan 3,795 4,022 4,177 4,300 4,564 4,801 5,029 5,252 5,461 5,707 4.6 Thailand 2,292 2,428 2,482 2,604 2,784 2,920 3,052 3,215 3,350 3,477 4.5 Vietnam 111 134 162 198 285 370 459 549 625 704 19.8 Country Subtotal 133,582 142,502 150,086 161,523 176,911 194,141 205,203 220,180 234,608 250,998 7.2 Regional Spending 2,674 3,063 3,450 3,839 4,458 6,085 7,943 11,810 16,289 21,107 36.5 Total 136,256 145,565 153,536 165,362 181,369 200,226 213,146 231,990 250,897 272,105 8.5 Executive Summary Global Entertainment and Media Market by Region 89

Latin America Latin America s entertainment and media market rose by 11.5 percent, the fastest-growing region in 2007. Spending was led by a 50.3 percent jump in Internet advertising, a 27.8 percent increase in video games, and a 22.4 percent rise in Internet access spending. Double-digit increases also were recorded in TV subscriptions and license fees, TV advertising, and newspaper publishing. E&M markets are developing rapidly in Latin America. Double-digit increases in the next five years are anticipated for Internet advertising, Internet access spending, TV subscriptions and license fees, casino and other regulated gaming, and video games. A jump in broadband penetration will drive Internet advertising as well as Internet access spending. Subscription household growth will boost TV subscriptions and license fees; new casinos will expand a small, casino and other regulated gaming market; and new video game platforms will boost the video game market. We project overall growth to average 10.6 percent compounded annually during the next five years. Spending will rise to $85 billion by 2012 from $51 billion in 2007. PricewaterhouseCoopers 90 Global Entertainment and Media Outlook: 2008 2012

Entertainment and Media Market by Segment (US$ Millions) Latin America 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Internet Access: Wired and Mobile 2,557 3,330 4,374 5,598 6,853 8,656 10,644 12,751 15,289 17,892 % Change 22.9 30.2 31.4 28.0 22.4 26.3 23.0 19.8 19.9 17.0 21.2 Internet Advertising: Wired and Mobile 99 145 213 286 430 581 748 922 1,140 1,379 % Change 4.2 46.5 46.9 34.3 50.3 35.1 28.7 23.3 23.6 21.0 26.2 TV Subscriptions and License Fees 5,100 5,437 6,073 6,837 7,966 9,212 10,661 12,264 13,994 15,956 % Change 0.1 6.6 11.7 12.6 16.5 15.6 15.7 15.0 14.1 14.0 14.9 TV Advertising 5,127 6,157 7,459 8,611 9,707 10,811 11,472 12,973 13,604 14,870 % Change 7.8 20.1 21.1 15.4 12.7 11.4 6.1 13.1 4.9 9.3 8.9 Recorded Music 1,036 1,193 1,214 1,221 1,209 1,300 1,382 1,452 1,519 1,576 % Change 12.6 15.2 1.8 0.6 1.0 7.5 6.3 5.1 4.6 3.8 5.4 Filmed Entertainment 1,759 1,991 1,963 2,170 2,303 2,449 2,616 2,798 2,983 3,182 % Change 7.5 13.2 1.4 10.5 6.1 6.3 6.8 7.0 6.6 6.7 6.7 Video Games 547 606 640 787 1,006 1,173 1,291 1,405 1,514 1,667 % Change 19.2 10.8 5.6 23.0 27.8 16.6 10.1 8.8 7.8 10.1 10.6 Consumer Magazine Publishing 2,269 2,481 2,721 2,898 3,162 3,401 3,636 3,873 4,118 4,370 % Change 4.5 9.3 9.7 6.5 9.1 7.6 6.9 6.5 6.3 6.1 6.7 Newspaper Publishing 4,260 4,471 4,863 5,321 5,882 6,296 6,671 7,050 7,438 7,829 % Change 2.2 5.0 8.8 9.4 10.5 7.0 6.0 5.7 5.5 5.3 5.9 Radio/Out-of-Home Advertising 834 945 1,118 1,270 1,344 1,433 1,524 1,625 1,735 1,846 % Change 12.2 13.3 18.3 13.6 5.8 6.6 6.4 6.6 6.8 6.4 6.6 Theme Parks and Amusement Parks 248 252 241 247 261 273 285 299 313 328 % Change 2.4 1.6 4.4 2.5 5.7 4.6 4.4 4.9 4.7 4.8 4.7 Casino and Other Regulated Gaming 199 224 248 271 297 322 358 411 460 514 % Change 1.0 12.6 10.7 9.3 9.6 8.4 11.2 14.8 11.9 11.7 11.6 Consumer and Educational Book Publishing 4,066 4,129 4,229 4,341 4,471 4,591 4,706 4,819 4,930 5,041 % Change 0.4 1.5 2.4 2.6 3.0 2.7 2.5 2.4 2.3 2.3 2.4 Business-to-Business Publishing 2,693 2,893 3,132 3,380 3,620 3,835 4,045 4,259 4,485 4,723 % Change 2.7 7.4 8.3 7.9 7.1 5.9 5.5 5.3 5.3 5.3 5.5 Sports 2,228 2,328 2,501 2,744 2,798 3,018 3,274 3,676 3,675 3,876 % Change 0.3 4.5 7.4 9.7 2.0 7.9 8.5 12.3 0.0 5.5 6.7 Total 33,022 36,582 40,989 45,982 51,278 57,280 63,199 70,416 76,971 84,744 % Change 2.8 10.8 12.0 12.2 11.5 11.7 10.3 11.4 9.3 10.1 10.6 Note: Newspaper, consumer magazine and trade magazine, Web site advertising and mobile advertising are included in their respective segments and in most countries also in the Internet advertising segment, but only once in the overall total. Executive Summary Global Entertainment and Media Market by Region 91

Brazil is the largest market in Latin America, at $22 billion in 2007, with Mexico second, at $13 billion. Every territory except Chile expanded at double-digit rates in 2007. We project continued double-digit growth in Argentina, Colombia, Mexico, and Venezuela and high-single-digit increases in Brazil and Chile during the next five years. Regional spending consists of categories for which we do not have country breakouts and consists largely of relatively new and rapidly growing digital sectors. Regional spending accounted for 3 percent of total E&M spending in Latin America in 2007. Entertainment and Media Market by Country (US$ Millions) Latin America 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Argentina 3,539 4,095 4,832 5,620 6,545 7,566 8,460 9,447 10,355 11,296 11.5 Brazil 13,727 15,410 17,734 19,869 21,891 23,979 26,058 28,605 31,000 33,835 9.1 Chile 2,090 2,183 2,311 2,592 2,847 3,142 3,409 3,746 4,022 4,362 8.9 Colombia 2,680 2,840 3,104 3,606 4,076 4,763 5,613 6,422 7,176 8,013 14.5 Mexico 9,163 10,012 10,817 11,793 13,027 14,550 16,033 18,076 19,865 21,933 11.0 Venezuela 721 824 907 1,017 1,149 1,289 1,424 1,633 1,835 2,080 12.6 Country Subtotal 31,920 35,364 39,705 44,497 49,535 55,289 60,997 67,929 74,253 81,519 10.5 Regional Spending 1,102 1,218 1,284 1,485 1,743 1,991 2,202 2,487 2,718 3,225 13.1 Total 33,022 36,582 40,989 45,982 51,278 57,280 63,199 70,416 76,971 84,744 10.6 With the rapid pace of economic growth cooling off, Brazil s E&M market will grow more slowly during the next five years. Nevertheless, double-digit increases in two of the three largest segments Internet access and TV subscriptions will boost overall spending at a 9.1 percent compound annual rate. Internet advertising will be the fastest-growing segment, at 24.2 percent compounded annually. Internet access spending and TV subscriptions and license fees will also grow at double-digit compound annual rates. PricewaterhouseCoopers 92 Global Entertainment and Media Outlook: 2008 2012

Entertainment and Media Spending Brazil Consumer/End-User Spending Advertising Total 2012 (US$ Millions) 2012 (US$ Millions) 2012 (US$ Millions) Internet Access: Wired and Mobile 6,815 17.7 6,815 17.7 Internet Advertising: Wired and Mobile 900 24.2 900 24.2 TV Subscriptions and License Fees 4,817 16.3 4,817 16.3 TV Advertising 5,893 8.3 5,893 8.3 Recorded Music 583 5.5 583 5.5 Filmed Entertainment 1,464 7.6 1,464 7.6 Video Games NA NA Consumer Magazine Publishing 1,231 3.4 1,063 9.8 2,294 6.1 Newspaper Publishing 1,947 3.1 1,683 6.9 3,630 4.7 Radio 315 4.6 315 4.6 Out-of-Home 151 0.0 151 0.0 Theme Parks and Amusement Parks 116 4.1 116 4.1 Casino and Other Regulated Gaming NA NA Consumer and Educational Book Publishing 3,398 2.3 3,398 2.3 Business-to-Business Publishing Total 2,004 4.6 Trade Magazines 76 1.7 134 6.9 210 4.8 Professional Books 615 4.9 615 4.9 Business Information 769 4.2 769 4.2 Directory Advertising 410 4.6 410 4.6 Sports 1,607 6.4 1,607 6.4 Total 16,623 6.9 10,397 8.4 33,835 9.1 Note: The total includes Internet access. Newspaper, consumer magazine, and trade magazine Web site advertising and mobile advertising are included in their respective segments and also in the Internet advertising segment, but only once in the overall total. Executive Summary Global Entertainment and Media Market by Region 93

Internet access Broadband penetration growth will drive Internet access spending, which we project will increase at a 21.2 percent compound annual rate to $18 billion in 2012 from $7 billion in 2007. Internet Access Market: Wired and Mobile (US$ Millions) Latin America 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Internet Access: Wired and Mobile 2,557 3,330 4,374 5,598 6,853 8,656 10,644 12,751 15,289 17,892 % Change 22.9 30.2 31.4 28.0 22.4 26.3 23.0 19.8 19.9 17.0 21.2 Brazil is the leading Internet access market in Latin America, at $3 billion in 2007, with Argentina and Mexico next, at $1.4 billion each. Each territory will expand at double-digit annual rates during the next five years. Internet Access Market: Wired and Mobile by Country (US$ Millions) Latin America 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Argentina 675 804 1,001 1,220 1,430 1,756 2,087 2,446 2,848 3,213 17.6 Brazil 893 1,292 1,844 2,464 3,017 3,653 4,263 4,927 5,841 6,815 17.7 Chile 171 186 194 241 301 362 427 493 560 633 16.0 Colombia 193 247 277 445 597 880 1,318 1,640 1,972 2,321 31.2 Mexico 583 749 983 1,127 1,365 1,828 2,330 2,970 3,719 4,466 26.8 Venezuela 42 52 75 101 143 177 219 275 349 444 25.4 Total 2,557 3,330 4,374 5,598 6,853 8,656 10,644 12,751 15,289 17,892 21.2 Advertising Advertising in Latin America rose by 12.9 percent in 2007, the fourth consecutive double-digit gain, reflecting sustained economic growth. Internet advertising was the fastest-growing category in 2007, at 50.3 percent. Newspapers rose by 15.0 percent; TV advertising increased by 12.7 percent; directories were next, at 12.2 percent; and consumer magazines expanded by 11.4 percent. Out-of-home advertising fell 0.9 percent because of the elimination of billboards in some areas in Brazil. Internet advertising will grow at a 26.2 percent compound annual rate during the next five years, buoyed by an expanding broadband household universe. Consumer magazines will increase at a 9.1 percent annual rate, boosted by international publishers launching titles in Latin America. TV advertising will grow at an 8.9 percent rate as new channels and multichannel penetration growth expand the market. Trade magazines will increase by 7.9 percent compounded annually; newspapers, by 7.8 percent; and directories, by 7.7 percent, on a compound annual basis, in each case benefiting from economic growth. Radio will face increased competition from the Internet and will increase at a 6.7 percent annual rate. Outof-home will expand at a 6.2 percent rate as further billboard cutbacks limit growth. We project advertising during the next five years to increase at an 8.8 percent compound annual rate, rising from $17 billion in 2007 to $26 billion in 2012. PricewaterhouseCoopers 94 Global Entertainment and Media Outlook: 2008 2012

Advertising by Segment (US$ Millions) Latin America 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Internet Advertising: Wired and Mobile 99 145 213 286 430 581 748 922 1,140 1,379 % Change 4.2 46.5 46.9 34.3 50.3 35.1 28.7 23.3 23.6 21.0 26.2 Television 5,127 6,157 7,459 8,611 9,707 10,811 11,472 12,973 13,604 14,870 % Change 7.8 20.1 21.1 15.4 12.7 11.4 6.1 13.1 4.9 9.3 8.9 Consumer Magazines 758 848 984 1,077 1,200 1,322 1,447 1,574 1,709 1,851 % Change 6.3 11.9 16.0 9.5 11.4 10.2 9.5 8.8 8.6 8.3 9.1 Newspapers 2,249 2,423 2,721 3,047 3,505 3,851 4,159 4,471 4,792 5,114 % Change 2.7 7.7 12.3 12.0 15.0 9.9 8.0 7.5 7.2 6.7 7.8 Radio 645 725 837 927 1,004 1,080 1,156 1,234 1,310 1,386 % Change 16.3 12.4 15.4 10.8 8.3 7.6 7.0 6.7 6.2 5.8 6.7 Out-of-Home 189 220 281 343 340 353 368 391 425 460 % Change 5.6 16.4 27.7 22.1 0.9 3.8 4.2 6.3 8.7 8.2 6.2 Directories 505 582 681 769 863 948 1,029 1,105 1,179 1,252 % Change 7.4 15.2 17.0 12.9 12.2 9.8 8.5 7.4 6.7 6.2 7.7 Trade Magazines 189 208 232 249 272 295 317 342 368 398 % Change 12.5 10.1 11.5 7.3 9.2 8.5 7.5 7.9 7.6 8.2 7.9 Total 9,761 11,308 13,408 15,309 17,290 19,170 20,582 22,851 24,301 26,405 % Change 4.5 15.8 18.6 14.2 12.9 10.9 7.4 11.0 6.3 8.7 8.8 Note: Newspaper, consumer magazine, and trade magazine Web site advertising and mobile advertising are included in their respective segments and in most countries also in the Internet advertising segment, but only once in the overall total. Brazil and Mexico are the leading territories in terms of advertising spending, at $7 billion and $5.1 billion, respectively, together constituting 70 percent of 2007 advertising in Latin America. Argentina will be the fastest-growing country during the next five years, with a projected 12.4 percent compound annual increase. Economic expansion and relatively high inflation will propel growth. Executive Summary Global Entertainment and Media Market by Region 95

Advertising by Country (US$ Millions) Latin America 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Argentina 731 875 1,092 1,395 1,742 2,126 2,365 2,682 2,871 3,123 12.4 Brazil 3,330 4,087 5,408 6,145 6,950 7,575 8,110 8,960 9,543 10,397 8.4 Chile 797 854 945 1,112 1,204 1,328 1,413 1,554 1,643 1,787 8.2 Colombia 1,277 1,340 1,480 1,669 1,825 2,015 2,179 2,411 2,577 2,803 9.0 Mexico 3,339 3,814 4,101 4,554 5,086 5,582 5,925 6,563 6,930 7,486 8.0 Venezuela 287 338 382 434 483 544 590 681 737 809 10.9 Total 9,761 11,308 13,408 15,309 17,290 19,170 20,582 22,851 24,301 26,405 8.8 Consumer/end-user spending Consumer/end-user spending increased by 8.2 percent in 2007. Double-digit growth in video games and TV subscriptions and license fees and high-single-digit growth in casino and other regulated gaming and consumer magazines paced the market. Recorded music declined by 1.0 percent. We expect TV subscriptions and license fees and video games to continue to grow at double-digit rates, with casino and other regulated gaming also expanding at double-digit rates. Growth in subscription TV households will drive TV subscription spending to a 14.9 percent compound annual increase. Casino and other regulated gaming will grow at an 11.6 percent rate during the next five years, helped by new casinos in Mexico and Chile. Video games will expand at a 10.6 percent compound annual rate, helped in the near term by new console platforms and in 2012 by the next generation of consoles as well as by growth in wireless games. Filmed entertainment and sports will each rise by 6.7 percent compounded annually. New multiplexes and digital screens will attract people to theaters, and increased DVD penetration will boost home video. Sports will be fueled by sponsorship growth and rising TV rights. Recorded music will rise at a 5.4 percent compound annual rate as large increases in digital distribution offset declines in physical distribution. Consumer magazines will expand at a 5.1 percent annual rate as increased affluence leads to rising circulation. The remaining segments will each grow by less than 5 percent annually. Overall consumer/end-user spending in Latin America will increase from $27 billion in 2007 to $40 billion in 2012, growing at an 8.3 percent compound annual rate. PricewaterhouseCoopers 96 Global Entertainment and Media Outlook: 2008 2012

Consumer/End-User Spending by Segment (US$ Millions) Latin America 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 TV Subscriptions and License Fees 5,100 5,437 6,073 6,837 7,966 9,212 10,661 12,264 13,994 15,956 % Change 0.1 6.6 11.7 12.6 16.5 15.6 15.7 15.0 14.1 14.0 14.9 Recorded Music 1,036 1,193 1,214 1,221 1,209 1,300 1,382 1,452 1,519 1,576 % Change 12.6 15.2 1.8 0.6 1.0 7.5 6.3 5.1 4.6 3.8 5.4 Filmed Entertainment 1,759 1,991 1,963 2,170 2,303 2,449 2,616 2,798 2,983 3,182 % Change 7.5 13.2 1.4 10.5 6.1 6.3 6.8 7.0 6.6 6.7 6.7 Video Games 547 606 640 787 1,006 1,173 1,291 1,405 1,514 1,667 % Change 19.2 10.8 5.6 23.0 27.8 16.6 10.1 8.8 7.8 10.1 10.6 Consumer Magazines 1,511 1,633 1,737 1,821 1,962 2,079 2,189 2,299 2,409 2,519 % Change 3.6 8.1 6.4 4.8 7.7 6.0 5.3 5.0 4.8 4.6 5.1 Newspapers 2,011 2,048 2,142 2,274 2,377 2,445 2,512 2,579 2,646 2,715 % Change 7.2 1.8 4.6 6.2 4.5 2.9 2.7 2.7 2.6 2.6 2.7 Theme Parks and Amusement Parks 248 252 241 247 261 273 285 299 313 328 % Change 2.4 1.6 4.4 2.5 5.7 4.6 4.4 4.9 4.7 4.8 4.7 Casino and Other Regulated Gaming 199 224 248 271 297 322 358 411 460 514 % Change 1.0 12.6 10.7 9.3 9.6 8.4 11.2 14.8 11.9 11.7 11.6 Consumer and Educational Books 4,066 4,129 4,229 4,341 4,471 4,591 4,706 4,819 4,930 5,041 % Change 0.4 1.5 2.4 2.6 3.0 2.7 2.5 2.4 2.3 2.3 2.4 Business-to-Business Publishing 1,999 2,103 2,219 2,362 2,485 2,592 2,699 2,812 2,938 3,073 % Change 0.7 5.2 5.5 6.4 5.2 4.3 4.1 4.2 4.5 4.6 4.3 Sports 2,228 2,328 2,501 2,744 2,798 3,018 3,274 3,676 3,675 3,876 % Change 0.3 4.5 7.4 9.7 2.0 7.9 8.5 12.3 0.0 5.5 6.7 Total 20,704 21,944 23,207 25,075 27,135 29,454 31,973 34,814 37,381 40,447 % Change 0.0 6.0 5.8 8.0 8.2 8.5 8.6 8.9 7.4 8.2 8.3 Executive Summary Global Entertainment and Media Market by Region 97

Brazil is the leading consumer/end-user territory in Latin America, at $11.9 billion in 2007, with Mexico next, at $6.6 billion, followed by Argentina at $3.4 billion. Colombia will be the fastest-growing country, with an 11.8 percent compound annual increase. Consumer/End-User Spending (Excluding Internet Access) by Country (US$ Millions) Latin America 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Argentina 2,133 2,416 2,739 3,005 3,373 3,684 4,008 4,319 4,636 4,960 8.0 Brazil 9,504 10,031 10,482 11,260 11,924 12,751 13,685 14,718 15,616 16,623 6.9 Chile 1,122 1,143 1,172 1,239 1,342 1,452 1,569 1,699 1,819 1,942 7.7 Colombia 1,210 1,253 1,347 1,492 1,654 1,868 2,116 2,371 2,627 2,889 11.8 Mexico 5,241 5,449 5,733 6,112 6,576 7,140 7,778 8,543 9,216 9,981 8.7 Venezuela 392 434 450 482 523 568 615 677 749 827 9.6 Country Subtotal 19,602 20,726 21,923 23,590 25,392 27,463 29,771 32,327 34,663 37,222 7.9 Regional Spending 1,102 1,218 1,284 1,485 1,743 1,991 2,202 2,487 2,718 3,225 13.1 Total 20,704 21,944 23,207 25,075 27,135 29,454 31,973 34,814 37,381 40,447 8.3 PricewaterhouseCoopers 98 Global Entertainment and Media Outlook: 2008 2012

Canada Canada s entertainment and media market rose by 5.2 percent in 2007, down from the 8.6 percent rise in 2006, when the return of the National Hockey League boosted spending. Internet advertising jumped 33.2 percent in 2007, video games rose by 26.5 percent, and radio/out-of-home grew by 11.0 percent. Internet access growth slowed to 7.7 percent, the only region that did not record a double-digit gain in this segment. With broadband penetration already very high in Canada, broadband spending growth moderated. Casino and other regulated gaming rose by 8.8 percent, helped by double-digit growth in online gaming and sports betting. Buoyed by strong sales of Harry Potter books, consumer and educational publishing increased by 5.1 percent. The remaining segments grew by less than 5 percent, and recorded music declined by 11.3 percent. Canada will be adversely affected in the near term by weakness in the US economy. The Vancouver Olympics in 2010 will provide a significant boost for several segments. Otherwise, most segments are mature, and growth will be moderate. We expect continued double-digit growth in Internet advertising, a return to double-digit growth in Internet access spending as increases in mobile access boost spending and continued double-digit increases in radio and out-of-home, helped by an expanding satellite radio market. The overall market will expand at a 5.8 percent compound annual rate to $54 billion in 2012 from $41 billion in 2007. Executive Summary Global Entertainment and Media Market by Region 99

Entertainment and Media Market by Segment (US$ Millions) Canada 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Internet Access: Wired and Mobile 2,121 2,350 2,599 3,141 3,383 3,800 4,214 4,777 5,126 5,603 % Change 23.5 10.8 10.6 20.9 7.7 12.3 10.9 13.4 7.3 9.3 10.6 Internet Advertising: Wired and Mobile 227 350 547 993 1,323 1,692 2,114 2,543 2,992 3,447 % Change 38.4 54.2 56.3 81.5 33.2 27.9 24.9 20.3 17.7 15.2 21.1 TV Subscriptions and License Fees 3,384 3,570 3,850 4,249 4,552 4,843 5,178 5,437 5,754 6,000 % Change 8.0 5.5 7.8 10.4 7.1 6.4 6.9 5.0 5.8 4.3 5.7 TV Advertising 2,632 2,759 2,805 2,916 2,872 2,964 3,104 3,215 3,319 3,420 % Change 9.0 4.8 1.7 4.0 1.5 3.2 4.7 3.6 3.2 3.0 3.6 Recorded Music 882 856 837 782 694 627 623 631 641 660 % Change 2.8 2.9 2.2 6.6 11.3 9.7 0.6 1.3 1.6 3.0 1.0 Filmed Entertainment 5,094 5,780 5,769 5,867 5,908 6,071 6,324 6,673 7,074 7,499 % Change 22.5 13.5 0.2 1.7 0.7 2.8 4.2 5.5 6.0 6.0 4.9 Video Games 675 767 833 1,061 1,342 1,532 1,705 1,824 1,928 2,083 % Change 16.6 13.6 8.6 27.4 26.5 14.2 11.3 7.0 5.7 8.0 9.2 Consumer Magazine Publishing 1,103 1,130 1,151 1,170 1,208 1,237 1,264 1,297 1,336 1,378 % Change 4.6 2.4 1.9 1.7 3.2 2.4 2.2 2.6 3.0 3.1 2.7 Newspaper Publishing 3,045 3,165 3,262 3,356 3,440 3,473 3,528 3,600 3,674 3,755 % Change 1.5 3.9 3.1 2.9 2.5 1.0 1.6 2.0 2.1 2.2 1.8 Radio/Out-of-Home Advertising 1,352 1,407 1,458 1,568 1,741 1,942 2,141 2,392 2,664 2,879 % Change 7.4 4.1 3.6 7.5 11.0 11.5 10.2 11.7 11.4 8.1 10.6 Theme Parks and Amusement Parks 404 454 463 482 487 511 527 549 566 588 % Change 0.7 12.4 2.0 4.1 1.0 4.9 3.1 4.2 3.1 3.9 3.8 Casino and Other Regulated Gaming 3,332 3,597 3,995 4,235 4,608 4,771 5,055 5,441 5,831 6,176 % Change 11.0 8.0 11.1 6.0 8.8 3.5 6.0 7.6 7.2 5.9 6.0 Consumer and Educational Book Publishing 1,445 1,457 1,516 1,537 1,615 1,641 1,704 1,769 1,835 1,904 % Change 0.2 0.8 4.0 1.4 5.1 1.6 3.8 3.8 3.7 3.8 3.3 Business-to-Business Publishing 5,822 5,982 6,193 6,462 6,699 6,820 6,978 7,257 7,567 7,883 % Change 0.4 2.7 3.5 4.3 3.7 1.8 2.3 4.0 4.3 4.2 3.3 Sports 890 927 429 1,000 999 1,106 1,137 2,210 1,206 1,320 % Change 1.9 4.2 53.7 133.1 0.1 10.7 2.8 94.4 45.4 9.5 5.7 Total 32,408 34,551 35,657 38,719 40,719 42,821 45,325 49,274 51,095 54,089 % Change 8.4 6.6 3.2 8.6 5.2 5.2 5.8 8.7 3.7 5.9 5.8 Note: Newspaper, consumer magazine, and trade magazine Web site advertising and mobile advertising are included in their respective segments and in the Internet advertising segment, but only once in the overall total. PricewaterhouseCoopers 100 Global Entertainment and Media Outlook: 2008 2012

Internet access The Internet market is mature, and access spending slowed to single-digit increases in 2007. The emergence of mobile access will lead to a return to double-digit growth during 2008 10. By 2012, access spending will total an estimated $5.6 billion, growing at a 10.6 percent compound annual rate from $3.4 billion in 2007. Internet Access Market: Wired and Mobile (US$ Millions) Canada 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Internet Access: Wired and Mobile 2,121 2,350 2,599 3,141 3,383 3,800 4,214 4,777 5,126 5,603 % Change 23.5 10.8 10.6 20.9 7.7 12.3 10.9 13.4 7.3 9.3 10.6 Advertising Advertising rose by 5.0 percent in 2007, down from a 9.0 percent increase in 2006, hampered by a decline in terrestrial TV advertising caused in part by competition from specialty channels and time shifting. Excluding TV, advertising increased 7.8 percent. Internet advertising rose by 33.2 percent; a small, video game segment rose by 30 percent; out-of-home increased by 7.0 percent; and the remaining segments posted increases in the 3 to 6 percent range. We expect the Internet to continue to be the fastest-growing category, at 21.1 percent compounded annually, driven by increases in paid search and mobile advertising. Dynamic in-game ads will boost video games at a 17.9 percent compound annual rate. Out-of-home will expand at a 6.6 percent compound annual rate, while trade and consumer magazines will each grow by 4.9 percent compounded annually, boosted by advertising on companion Web sites. The remaining segments will increase by less than 4 percent annually. For the advertising market as a whole, spending will climb at a 6.1 percent compound annual rate, rising to $14 billion in 2012 from $10 billion in 2007. Executive Summary Global Entertainment and Media Market by Region 101

Advertising by Segment (US$ Millions) Canada 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 Internet Advertising: Wired and Mobile 227 350 547 993 1,323 1,692 2,114 2,543 2,992 3,447 % Change 38.4 54.2 56.3 81.5 33.2 27.9 24.9 20.3 17.7 15.2 21.1 Television 2,632 2,759 2,805 2,916 2,872 2,964 3,104 3,215 3,319 3,420 % Change 9.0 4.8 1.7 4.0 1.5 3.2 4.7 3.6 3.2 3.0 3.6 Video Games NA NA 16 80 104 132 160 187 213 237 % Change 400.0 30.0 26.9 21.2 16.9 13.9 11.3 17.9 Consumer Magazines 568 602 619 641 678 710 740 775 816 860 % Change 9.4 6.0 2.8 3.6 5.8 4.7 4.2 4.7 5.3 5.4 4.9 Newspapers 2,353 2,430 2,525 2,608 2,685 2,711 2,761 2,830 2,904 2,986 % Change 0.7 3.3 3.9 3.3 3.0 1.0 1.8 2.5 2.6 2.8 2.1 Radio 1,088 1,125 1,138 1,200 1,256 1,271 1,298 1,349 1,415 1,479 % Change 8.3 3.4 1.2 5.4 4.7 1.2 2.1 3.9 4.9 4.5 3.3 Out-of-Home 264 282 320 344 368 386 410 437 470 507 % Change 3.9 6.8 13.5 7.5 7.0 4.9 6.2 6.6 7.6 7.9 6.6 Directories 791 814 838 870 898 940 977 1,015 1,052 1,089 % Change 2.6 2.9 2.9 3.8 3.2 4.7 3.9 3.9 3.6 3.5 3.9 Trade Magazines 205 207 209 218 228 236 246 259 273 290 % Change 6.4 1.0 1.0 4.3 4.6 3.5 4.2 5.3 5.4 6.2 4.9 Total 8,128 8,569 8,967 9,770 10,260 10,833 11,539 12,269 13,036 13,809 % Change 5.8 5.4 4.6 9.0 5.0 5.6 6.5 6.3 6.3 5.9 6.1 Note: Newspaper, consumer magazine, and trade magazine Web site advertising and mobile advertising are included in their respective segments and in the Internet advertising segment, but only once in the overall total. Consumer/end-user spending Consumer/end-user spending rose by 4.9 percent in 2007. Video games surged by 26.2 percent, satellite radio jumped from a small base, casino and other regulated gaming rose by 8.8 percent, and TV subscriptions and license fees increased by 7.1 percent. Recorded music fell by 11.3 percent, and sports dipped 0.1 percent following a strong rebound in 2006. Satellite radio subscriptions a new market in Canada that will reach $893 million in 2012 will be the only category to grow at double-digit rates. We expect increases of greater than 5 percent annually in video games, casino and other regulated gaming, sports, and TV subscriptions and license fees. Video games associated with next-generation consoles and large increases in online and wireless games will fuel video game growth by 8.3 percent compounded annually. Casino and other regulated gaming will benefit from new and upgraded casinos, a new sports-betting parlor, and broadband growth that will stimulate online gaming. Sports will nearly double in 2010 because of the Vancouver Olympics and will rise at a 5.7 percent compound annual rate through 2012. TV subscriptions and license fees will also expand by 5.7 percent compounded annually, helped by the shift to digital, the entrance of telephone companies into the market, PricewaterhouseCoopers 102 Global Entertainment and Media Outlook: 2008 2012

and growth in video-on-demand. No other segment will exceed 5 percent growth. Overall consumer/ end-user spending will increase from $27 billion in 2007 to $35 billion in 2012, growing at a 5.1 percent compound annual rate. Consumer/End-User Spending by Segment (US$ Millions) Canada 2003 2004 2005 2006 2007p 2008 2009 2010 2011 2012 TV Subscriptions and License Fees 3,384 3,570 3,850 4,249 4,552 4,843 5,178 5,437 5,754 6,000 % Change 8.0 5.5 7.8 10.4 7.1 6.4 6.9 5.0 5.8 4.3 5.7 Recorded Music 882 856 837 782 694 627 623 631 641 660 % Change 2.8 2.9 2.2 6.6 11.3 9.7 0.6 1.3 1.6 3.0 1.0 Filmed Entertainment 5,094 5,780 5,769 5,867 5,908 6,071 6,324 6,673 7,074 7,499 % Change 22.5 13.5 0.2 1.7 0.7 2.8 4.2 5.5 6.0 6.0 4.9 Video Games 675 767 817 981 1,238 1,400 1,545 1,637 1,715 1,846 % Change 16.6 13.6 6.5 20.1 26.2 13.1 10.4 6.0 4.8 7.6 8.3 Consumer Magazines 535 528 532 529 530 527 524 522 520 518 % Change 0.0 1.3 0.8 0.6 0.2 0.6 0.6 0.4 0.4 0.4 0.5 Newspapers 692 735 737 748 755 762 767 770 770 769 % Change 4.4 6.2 0.3 1.5 0.9 0.9 0.7 0.4 0.0 0.1 0.4 Radio 24 117 285 433 606 779 893 % Change 387.5 143.6 51.9 40.0 28.5 14.6 50.2 Theme Parks and Amusement Parks 404 454 463 482 487 511 527 549 566 588 % Change 0.7 12.4 2.0 4.1 1.0 4.9 3.1 4.2 3.1 3.9 3.8 Casino and Other Regulated Gaming 3,332 3,597 3,995 4,235 4,608 4,771 5,055 5,441 5,831 6,176 % Change 11.0 8.0 11.1 6.0 8.8 3.5 6.0 7.6 7.2 5.9 6.0 Consumer and Educational Books 1,445 1,457 1,516 1,537 1,615 1,641 1,704 1,769 1,835 1,904 % Change 0.2 0.8 4.0 1.4 5.1 1.6 3.8 3.8 3.7 3.8 3.3 Business-to-Business Publishing 4,826 4,961 5,146 5,374 5,573 5,644 5,755 5,983 6,242 6,504 % Change 0.3 2.8 3.7 4.4 3.7 1.3 2.0 4.0 4.3 4.2 3.1 Sports 890 927 429 1,000 999 1,106 1,137 2,210 1,206 1,320 % Change 1.9 4.2 53.7 133.1 0.1 10.7 2.8 94.4 45.4 9.5 5.7 Total 22,159 23,632 24,091 25,808 27,076 28,188 29,572 32,228 32,933 34,677 % Change 8.0 6.6 1.9 7.1 4.9 4.1 4.9 9.0 2.2 5.3 5.1 Executive Summary Global Entertainment and Media Market by Region 103

PricewaterhouseCoopers 104 Global Entertainment and Media Outlook: 2008 2012

Methodology Historical information is obtained principally from confidential and proprietary sources. In instances when third-party sources are consulted, their information is used either indirectly, as part of our calculus for the historical data, or directly, from government agencies, trade associations, or related entities that seek to have their data disseminated in the public domain. The sources of such information are explicitly cited. Recent trends in industry performance are analyzed, and the factors underlying those trends are identified. The factors considered are economic, demographic, technological, institutional, behavioral, competitive, and other drivers that may affect each of the entertainment and media markets. Models are then developed to quantify the impact of each factor on industry spending. A forecast scenario for each causative factor is created, and the contribution of each factor on a prospective basis is identified. Proprietary mathematical models and analytic algorithms are used in the process to provide an initial array of prospective values. Our professional expertise and institutional knowledge are then applied to review and adjust those values if required. The entire process is then examined for internal consistency and transparency vis-à-vis prevailing industry wisdom. Forecasts for 2008 2012 are based on an analysis of the dynamics of each segment in each region and on the factors that affect those dynamics. We provide compound annual growth rates (s) that cover the 2008 2012 forecast period. In the calculation of s, 2007 is the beginning year, with five growth years during the forecast period: 2008, 2009, 2010, 2011, and 2012. The end year is 2012. The formula is: = 100*((Value in 2012/Value in 2007)^(1/5) 1) All figures are reported in nominal terms reflecting actual spending transactions and therefore include the effects of inflation. Segment spending consists of advertising and end-user spending directly related to entertainment and media content. We do not include spending on hardware or on services that may be needed to access content. Spending is counted at the consumer or end-user level, not at the wholesale level, and includes retail markups when applicable. Advertising is measured net of agency commissions in all territories except the United States and Russia, where gross advertising is measured to be consistent with the way advertising is generally reported. Each chapter introduction begins with a definition of which spending streams are included in the segment. Figures for EMEA, Asia Pacific, Latin America, and Canada are presented in US dollars by using the average 2007 exchange rate held constant for each historical year and forecast year. This means the figures reflect industry trends and are not distorted by fluctuations in international exchange rates. Executive Summary Methodology 105

The following exchange rates were used for the individual countries in EMEA. Exchange Rates per US$ (2007 Average) EMEA Currency Exchange Rate Western Europe Austria Euro 0.73082 Belgium Euro 0.73082 Denmark Krone 5.44490 Finland Euro 0.73082 France Euro 0.73082 Germany Euro 0.73082 Greece Euro 0.73082 Ireland Euro 0.73082 Italy Euro 0.73082 Netherlands Euro 0.73082 Norway Krone 5.86422 Portugal Euro 0.73082 Spain Euro 0.73082 Sweden Krona 6.75991 Switzerland Franc 1.20042 United Kingdom Pound sterling 0.49987 Central and Eastern Europe Czech Republic Koruna 20.32852 Hungary Forint 184.01874 Poland Zloty 2.76865 Romania New leu 2.44717 Russia Ruble 25.57944 Turkey New lira 1.31148 Middle East/Africa Israel New shekel 4.11440 Saudi Arabia/Pan Arab US dollar 1.00000 South Africa Rand 7.06926 Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Syria, and the United Arab Emirates. Figures are estimated in US$. The following exchange rates were used for the individual countries in Asia Pacific. Exchange Rates per US$ (2007 Average) Asia Pacific Currency Exchange Rate Australia Dollar 1.19540 China Yuan (renminbi) 7.61720 Hong Kong Dollar 7.80255 India Rupee 41.35699 Indonesia Rupiah 9,138.50192 Japan Yen 117.81453 Malaysia Ringgit 3.44714 New Zealand Dollar 1.36154 Pakistan Rupee 60.81631 Philippines Peso 46.21397 Singapore Dollar 1.50720 South Korea Won 935.26976 Taiwan Dollar 32.88259 Thailand Baht 32.53008 Vietnam Dong 16,421.39288 The following exchange rates were used for the individual countries in Latin America. Exchange Rates per US$ (2007 Average) Latin America Currency Exchange Rate Argentina Peso 3.12180 Brazil Real 1.95159 Chile Peso 522.36740 Colombia Peso 2,119.61879 Mexico Peso 10.93657 Venezuela Bolivar 2,148.88625 The following exchange rate was used for Canada. Exchange Rates per US$ (2007 Average) Canada Currency Exchange Rate Canada Dollar 1.0744 PricewaterhouseCoopers 106 Global Entertainment and Media Outlook: 2008 2012

Full discussions of the trends and drivers discussed here in the Executive Summary are provided in the full edition of the PricewaterhouseCoopers Global Entertainment and Media Outlook: 2008-2012 covering the United States, EMEA, Asia Pacific, Latin America, and Canada. Containing numerous tables and charts with summary data broken out into subcomponents, the full Outlook provides a more detailed and more granular depiction of the industry. The tables and charts accompany in-depth forecasts and analyses for each of the 15 industry segments organized into 15 separate chapters. The full Outlook is available in a single volume, and individual chapters can also be acquired separately. The papers, paper mills, and printer utilized in the production of this publication are all certified to Forest Stewardship Council (FSC) standards, which promote environmentally appropriate, socially beneficial, and economically viable management of the world s forests. The publication was printed on paper containing 10% post-consumer waste material. The materials used in the production of this book were created using 100% renewable energy. Although the Outlook is available in print format, we have limited the print run and encourage you to select the electronic format if you are considering purchasing the full book. This will help us realize our commitment to the environment. To find out more about the publication and to place an order, please visit www.pwc.com/outlook. Executive Summary Global Entertainment and Media Outlook: 2008 2012 107

PricewaterhouseCoopers 108 Global Entertainment and Media Outlook: 2008 2012

Global Entertainment and Media Outlook: 2008 2012 Summary of Tables and Charts Executive Summary Regions/Countries Covered... 8 Global Entertainment and Media Market by Segment... 10 E&M Market in BRIC... 11 2008 2012 E&M... 12 2007 E&M Spending as a Percentage of Total Consumer Spending... 13 Net Generation... 14 Population Demographics... 15 Broadband Households... 16 Wireless Telephone Subscribers... 17 Global Digital/Mobile Revenues... 21 Global Digital/Mobile Revenue Growth... 21 Global Revenues Subject to Digital Competition... 22 Growth of Global Revenues Subject to Digital Competition... 23 Nominal GDP Growth by Region... 25 Nominal GDP Growth by Country in EMEA... 26 Nominal GDP Growth by Country in Asia Pacific... 27 Nominal GDP Growth by Country in Latin America... 28 Global Entertainment and Media Market by Region... 30 Global Internet Access Market: Wired and Mobile... 31 Global Advertising... 32 Global Consumer/End-User Spending... 33 Global Internet Access Market: Wired and Mobile by Region... 35 Global Internet Access: Wired and Mobile by Component... 36 Global Internet Advertising Market: Wired and Mobile by Region... 37 Global Internet Advertising Market: Wired and Mobile by Component... 37 Global TV Subscription and License Fee Market by Region... 38 Global TV Subscription and License Fee Market by Component... 38 Global Television Advertising Market by Region... 39 Global Television Advertising Market by Component... 39 Global Recorded Music Market by Region... 40 Global Recorded Music Market by Component... 41 Global Filmed Entertainment Market by Region... 42 Global Filmed Entertainment Market by Component... 42 Global Video Game Market by Region... 44 Global Video Game Market by Component... 44 Global Consumer Magazine Publishing Market by Region... 45 Global Consumer Magazine Publishing Market by Component... 45 Global Newspaper Publishing Market by Region... 47 Global Newspaper Publishing Market by Component... 47 Global Radio/Out-of-Home Advertising Market by Region... 48 Global Radio/Out-of-Home Advertising Market by Component... 49 Global Theme Parks and Amusement Parks Market... 49 Global Casino and Other Regulated Gaming Market by Region... 50 Global Casino and Other Regulated Gaming Market by Component... 51 Global Consumer and Educational Book Publishing Market by Region... 51 Global Consumer and Educational Book Publishing Market by Component... 52 Index Summary of Tables and Charts 109

Global Business-to-Business Publishing Market by Region... 53 Global Business-to-Business Publishing Market by Component... 54 Global Sports Market by Region... 55 Global Sports Market by Component... 55 United States Entertainment and Media Market by Segment... 58 Internet Access Market: Wired and Mobile... 59 Advertising by Segment... 60 Consumer/End-User Spending by Segment... 62 EMEA Entertainment and Media Market by Segment... 64 Entertainment and Media Market by Country... 66 Entertainment and Media Spending... 67 Entertainment and Media Spending... 68 Entertainment and Media Spending... 69 Entertainment and Media Spending... 70 Internet Access Market: Wired and Mobile... 71 Internet Access Market: Wired and Mobile by Country... 72 Advertising by Segment... 74 Advertising by Country... 75 Consumer/End-User Spending by Segment... 77 Consumer/End-User Spending by Country... 78 Asia Pacific Entertainment and Media Market by Segment... 80 Entertainment and Media Market by Country... 81 Entertainment and Media Spending... 82 Entertainment and Media Spending... 83 Entertainment and Media Spending... 84 Internet Access Market: Wired and Mobile... 85 Internet Access Market: Wired and Mobile by Country... 85 Advertising by Segment... 86 Advertising by Country... 87 Consumer/End-User Spending by Segment... 88 Consumer/End-User Spending (Excluding Internet Access) by Country... 89 Latin America Entertainment and Media Market by Segment... 91 Entertainment and Media Market by Country... 92 Entertainment and Media Spending... 93 Internet Access Market: Wired and Mobile... 94 Internet Access Market: Wired and Mobile by Country... 94 Advertising by Segment... 95 Advertising by Country... 96 Consumer/End-User Spending by Segment... 97 Consumer/End-User Spending (Excluding Internet Access) by Country... 98 Canada Entertainment and Media Market by Segment... 100 Internet Access Market: Wired and Mobile... 101 Advertising by Segment... 102 Consumer/End-User Spending by Segment... 103 Exchange Rates per US$ (2007 Average)... 106 Key to symbols used in the tables and charts p = preliminary NA = not available = no spending that year Totals in tables and charts may not total arithmetically due to rounding. The papers, paper mills, and printer utilized in the production of this publication are all certified to Forest Stewardship Council (FSC) standards, which promote environmentally appropriate, socially beneficial, and economically viable management of the world s forests. The publication was printed on paper containing 10% post-consumer waste material. The materials used in the production of this book were created using 100% renewable energy. Although the Outlook is available in print format, we have limited the print run and encourage you to select the electronic format if you are considering purchasing the full book. This will help us realize our commitment to the environment. PricewaterhouseCoopers 110 Global Entertainment and Media Outlook: 2008 2012

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