PwC Global Media Outlook 2013-2017

PwC Global Media Outlook 2013-2017

www.pwc.com/outlook Consumer/end-user & advertising spending 5 year historical & 5 year forecast data 50 countries 13 segments Business-to-business Consumer and educational book publishing Consumer magazine publishing Filmed entertainment Internet access spending Internet advertising Music Newspaper publishing Out-of-home advertising Radio TV subscriptions and license fees Television advertising Video games 2

Where is the big picture heading?

Shipments of tablets and smartphones are expected to show a double-digit yearly growth Worldwide shipments of connected devices 2,500 2,000 1,892 2,084 2,260 Tablet CAGR 2012-2017F 23% 1,683 Unit sales - millions 1,500 1,000 500 1,217 1,469 Smartphone Portable PC 16% 1% 0 2012 2013F 2014F 2015F 2016F 2017F Desktop PC -4% 4

Mobile Internet penetration is expected to catch up to, and even pass, fixed broadband in some regions Fixed broadband and mobile Internet penetration 90 80 70 60 Fixed Mobile Mobile Western Europe Percent 50 40 Fixed BRIC 30 20 10 0 2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F 2017F 5

Digital and Internet access drive growth in the Scandinavian Entertainment & Media market Scandinavian Entertainment & Media market USD in billions 45 33 32 33 34 35 36 37 38 39 40 40 35 30 25 20 15 10 5 0 Internet access Digital Nondigital CAGR 2012-2017F 8.4% 11.9% -0.4% 1.7% Digital is defined as: online and mobile Internet advertising mobile TV subscriptions digital music electronic home video online and wireless video games digital consumer magazine circulation spending digital newspaper circulation spending digital trade magazine circulation spending electronic consumer, educational, and professional books satellite radio subscriptions 6

Internet and moving pictures are expected to drive growth, while traditional media is expected to stagnate Scandinavia growth by E&M segment 2012-2017F Internet advertising 9.5% Out-of-home advertising 6.0% Television advertising Video games 3.5% 4.1% Music Radio Business-to-business Television subscriptions 2.4% 1.9% 1.8% 1.1% Filmed entertainment Consumer and educational book publishing 0.3% 1.0% USD 27.3 bn CAGR: 1.7% USD 29.7 bn Consumer magazine publishing Newspaper publishing -2.3% 0.1% 2012 2017F 7

Entertainment and Media growth rates 2012-2017F * Scandinavia 2.9% UK 4.0% Germany 2.5% Russia 10.1% US 4.8% France 2.4% Global 5.6% China 12.0% Japan 1.2% Brazil 10.8% India 13.5% *including Internet access Mature: 3.6% BRIC: 11.0% 8

Digital share of revenues in Scandinavia follows the global trend Share of digital revenue for selected media types in Scandinavia TV advertising Recorded Music Magazines Newspapers 2012 1% 50% 4% 6% 2017F 4% 74% 15% 12% 2012 2017F CAGR of total segment 4.1% 1.3% 0.1% -2.3% 9

Advertising market in Scandinavia is expected to grow by 3.0% annually, where digital advertising takes market share from printed newspapers 2012 Consumer magazines 4% Other 9% Consumer magazines 4% Other 10% 2017F B2B 5% Television 21% Digital advertising 30% CAGR 3.0% B2B 3% Television 22% Digital advertising 41% Newspaper, print 30% Newspaper, print 20% 10

Where are the tipping points and segment variations?

Digital revenues are expected to grow by 13.2% annually Digital CAGR Western Europe 2012-2017F E-book publishing 26.6 % Digital television advertising 24.1 % Digital consumer magazine publishing 23.5 % Digital filmed entertainment 21.3 % Digital newspaper publishing 14.9 % Digital business-to-business 11.9 % USD 33.9 bn CAGR 13,2% USD 63.0 bn Internet advertising 9.6 % Digital music 9.6 % 2012 2017F 12

Internet advertising continue to grow, lead by online video and mobile Scandinavia Internet advertising USD in billions 4.5 4.0 3.5 3.0 2.5 2.3 2.1 2.0 1.6 1.6 1.5 1.0 2.6 3.0 3.3 3.6 3.9 4.1 Video Mobile Search Classified Banner/display CAGR 2012-2017F 50.0% 19.4% 9.2% 6.6% 8.4% 0.5 0.0 2008 2009 2010 2011 2012 2013F2014F2015F2016F2017F 13

Mobile advertising will overtake classified revenues globally by 2015. Classified advertising will continue to be strong in Scandinavia Global Internet advertising 80 Scandinavia Internet advertising 1.4 USD in billions 60 40 20 USD in billions 1.2 1.0 0.8 0.6 0.4 0.2 0 14

Growth in digital newspaper revenues will not compensate for the decline in print revenues Scandinavia newspaper market 10 9 8 8.6 7.9 7.7 7.5 USD in billions 7 6 5 4 3 55% 3% 57% 3% 56% 4% 54% 5% 7.3 7.1 7.0 6.8 6.7 6.5 53% 52% 50% 49% 48% 47% 5% 6% 6% 7% 8% 9% Print advertising Digital advertising CAGR 2012-2017F -4.6% 9.3% 2 1 0 42% 40% 40% 41% 41% 41% 42% 42% 42% 41% 1% 1% 2% 2% 2% 3% 2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F 2017F Print circulation Digital circulation -2.2% 27.9% 15

Consumer magazine revenues in Scandinavia are expected to remain flat Scandinavia consumer magazine market 2.0 1.8 CAGR 0.1% 1.6 1.6 1.6 1.6 1.5 1.5 1.5 1.5 1.5 1.5 1.5 USD in billions 1.4 32% 25% 26% 26% 26% 26% 26% 26% 26% 25% 1.2 1% 1% 1.0 2% 3% 4% 5% 5% 6% 7% 0.8 0.6 68% 74% 73% 72% 70% 68% 67% 65% 63% 60% 0.4 Print advertising Digital advertising Print circulation CAGR 2012-2017F 0.1% 17.2% -3.0% 0.2 0.0 1% 2% 2% 4% 5% 2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F 2017F 8% Digital circulation 53.4% 16

Filmed entertainment market is expected to grow by 0.9% annually driven by VOD and streaming Scandinavia filmed entertainment market 2.5 2.0 1.8 1.9 1.8 1.8 1.7 1.7 1.7 1.7 1.7 1.8 CAGR 2012-2017F USD in billions 1.5 1.0 0.5 27% 4% 69% 30% 6% 64% 29% 7% 64% 31% 8% 61% 32% 33% 34% 35% 36% 36% 10% 12% 15% 18% 21% 25% 58% 55% 51% 47% 44% 39% Cinema tickets Electronic home video 3.1% 20.7% 0 2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F 2017F Physical home video -6.6% 17

Even though Over-the-top (OTT) will earn a small portion of revenue, operators cannot ignore it 6% 6% Global OTT share of overall pay TV revenues (2017) Scandinavian OTT share of overall pay TV revenues (2017) According to 2013 PwC Consumer Intelligence Survey in the US, a full half of consumers aged 18-29 said they are likely to use the Web to satisfy their entertainment needs. "A couple of people I know have been cancelling their cable altogether and they just use (an OTT service) because it s cheaper. There are some things that you can do with the Internet that you can t get with cable. - Customer vs. 18

Pay TV industry will remain resilient, despite threats from streaming and VOD Subscription revenues in Scandinavia USD in billions 4.5 3.5 3.6 3.7 3.8 3.9 3.9 4.0 3.5 3.3 3.4 3.1 3.0 2.9 2.5 2.0 95% 94% 93% 92% 91% 89% 1.5 96% 96% 97% 97% 1.0 0.5 Over-thetop/streaming VOD (TV distributors) Television subscriptions CAGR 2012-2017F 47.3% 8.4% 0.8% 0 2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F 2017F 19

OTT / streaming revenue will drive the vast majority of the growth in electronic home video in Scandinavia Scandinavia filmed entertainment market 250 236 USD in millions 200 150 100 50 67 12 14 87 202 193 176 157 161 140 118 106 110 75 51 34 19 23 210 Over-thetop/streaming VOD CAGR 2012-2017F 47.3% 8.4% 0 2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F 2017F 20

CEO perspective: Entertainment and Media 80% of E&M CEOs are confident about their company s prospects for revenue growth over the next three years despite perceived threats like uncertain economy, fiscal debt, and new market entrants Striving for positions, competitiveness and growth: 1 2 3 4 Agility and customer insight: extract, utilize and capitalize Big Data Digital innovation: create and develop competitive advantages Distribution strategies the right content at the right time, on the right platforms, at the right prices Cost levels and efficiency minimize fixed cost base 21

Find your own Outlook story online... Oslo Eivind Nilsen Partner, revisjon eivind.nilsen@no.pwc.com Tlf: 952 60 832 Oslo Per Carlsson Senior Manager, revisjon per.a.carlsson@no.pwc.com Tlf: 952 60 153

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