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UK to become Europe’s leading entertainment and media market

The UK is on course to become the largest entertainment and media (E&M) market in Europe next year, surpassing Germany, according to PwC.

With UK E&M market revenue expected to reach £83 billion this year, and the market on course to grow by 4% per annum over the next four years, the UK will become Europe’s leading market by 2023, and be worth £97 billion by 2026.

“The UK entertainment and media market is forecast to emerge from the past few years of uncertainty to greater clarity about the underlying forces driving sustainable growth,” said Mary Shelton Rose, Partner and UK Technology, Media and Telecoms Leader at PwC.

“A vision of what the dynamic E&M landscape will look like in 2026 is coming into focus – an industry that is more digital, more mobile, and more dependent on advertising in all its forms”

By 2026, internet advertising revenue is forecast to be worth more than a third of overall E&M revenue, thanks to growth of 6% per annum from the £26 billion expected to be spent this year. Much of this will be led by mobile, which will account for two-thirds of total internet advertising revenue by 2026.

“The Outlook tells a story of evolving consumer behaviours and the advertising money that follows them. While consumers aren’t faced with Covid restrictions anymore, many of their consumption habits have remained – with online channels and digital spaces sustaining high attention and engagement. As such, new content and advertising money continues to follow,” said Dan Bunyan, Partner at PwC Strategy&.

“Digital platforms will be underpinned by improving infrastructure. Mobile operators continue to develop their 5G propositions and the majority of broadband connections are expected to be high speed by next year. With more consumers than ever online, growth will be driven by brands engaging with people where they are, to build awareness and influence purchasing decisions.”

Over the forecast period, the UK will continue to be the leading market for over-the-top (OTT) video in Europe, and the third largest after the US and China. Overall OTT revenue is set to reach £3.6 billion this year, before growing at 6% per annum.

Meanwhile, virtual reality (VR) and mobile augmented reality (AR) revenue is predicted to double during the forecast period, with the UK remaining the largest VR market in Europe, Middle East and Asia, and the mobile AR market being driven by branded filters.

“OTT video has been one of the biggest beneficiaries of the shift to spending more time at home and the UK market is proving to be one of the largest markets globally for the biggest players. While we expect growth to fall back to a more modest rate, we expect some price increases in services to drive revenue in the forecast period since the pool of potential new subscribers gradually reduces. More OTT video providers venturing into live sport will also present new opportunities and options for consumers,” said Bunyan.

“Compared with other consumer devices in the UK, virtual reality remains a small segment, but it is making steady progress in terms of adoption levels.  Virtual reality content is inherently tied to the VR headsets sold, and the market has faced the ‘chicken-and-egg’ problem in recent years. But the recent improvements to VR headset technology, lower-priced headsets and the release of games from high-profile developers will encourage more consumers to invest in VR over the forecast period and could see the metaverse experience expand.”

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