INDUSTRY OVERVIEW:
The U.S. media and entertainment (M&E) industry is the largest in the world. At $717 billion, it represents a third of the global M&E industry, and it includes motion pictures, television programs and commercials, streaming content, music and audio recordings, broadcast, radio, book publishing, video games, and ancillary services and products. The U.S. industry is expected to reach more than $825 billion by 2023, according to the 2018-2023 Entertainment & Media Outlook by PriceWaterhouseCoopers (PwC).
Filmed Entertainment (Motion Pictures, Television, and Video)
The U.S. filmed entertainment industry encompasses films, movie theaters, TV subscriptions and electronic home video production, and distribution and consumption. Box office receipts are expected to surpass $11 billion in 2019 (this figure includes projected cinema advertising earnings of $991 million). TV and home video earnings are expected to reach $96 billion in 2019. Due to the rapid expansion of streaming video on demand (SVOD), television subscriptions are expected to experience a slight decline (to $91 billion) through 2019.
Box office numbers are expected to grow as theaters adopt digital screens, increase ticket prices, diversify concession options, offer consumer products such as movie or brand related merchandise, and offer membership discounts to attract viewership. Traditionally the film industry consisted of multinational umbrella corporations, major studios, and independent studios or “indies.” Today, multi-channel networks engage in the filmed entertainment sector and SVOD platforms are major drivers in the filmed entertainment sector.
Drawing on formidable strengths, the U.S. film industry has a proven ability to produce films that generate hundreds of millions of dollars, including revenues from distribution across strong domestic and international networks. Success in the industry is based on creativity and financing, and the industry is largely self-regulated. The U.S. market has a large talent pool of writers, actors, producers, directors and technical experts, and is home to a variety of film crews, post-production firms, backdrops, and infrastructure to support production. U.S. filmmakers also receive critical protections for their intellectual property.
Many of the leading motion picture studios are part of larger media conglomerates that often include television, video and streaming services, music services, newspaper, cable and magazine segments. The U.S. filmed entertainment sector enjoyed a trade surplus of $10.3 billion in 2016 (latest available data), which was roughly 4 percent of the total U.S. private sector services trade surplus that year.
The industry offers attractive possibilities for international companies, both large and small, and provides film production tax incentives. With the shift toward digital production and distribution, foreign firms are continually seeking out U.S. digital and animation expertise and new formats.
Music
The U.S. recorded music industry (including concerts and touring) grew to $22 billion in 2019. Collectively, it is the largest global music market. Aside from contracting physical music sales, all segments of recorded music are up, including digital, streaming, and sync licensing. Since overtaking physical music sales in 2014, digital sales have helped the music industry adapt to a fast-changing entertainment landscape (royalties are expected to reach $1.1 billion in 2019). Live and recorded music sales are rising, and digitally recorded music is expected to grow just under $1 billion in 2019. Many companies in the industry have diversified, signing sync deals with vertical businesses for TV ads, in-flight entertainment, satellite radio, restaurants, touring, live entertainment, and merchandise. The United States also has the world’s largest performance rights market and earns half of global sync revenues.
Digital technologies have revolutionized the music industry by creating high quality, low-cost recording technologies and digital distribution, along with the proliferation of devices to download and listen to music. Future industry growth is likely to come from diversified services as they capitalize on vertical business opportunities to license brand name products and services, packaging consumer experiences around touring and live music, bundling music services with other online content services and more. Streaming services will continue to grow and offer more personalized services for consumers. The consumer has more power to influence digital entertainment industries than ever before.
Video Games
The U.S. gaming industry accounts for a significant amount of the M&E industry, and revenues are expected to reach nearly $26 billion in 2019. Today’s consumers have access to multiple devices for gaming, including PCs, mobile phones, digital or physical consoles, and tablets. The sector is comprised of: physical, digital, and online games; mobile apps; and virtual and augmented reality (VR/AR). Electronic sports, also known as “eSports” or “e-sports”, includes professional gaming, in which players compete before a live audience, and the industry is growing quickly: $281 billion in 2019, more than double its size in 2016. In 2019, eSport media rights earnings will have quadrupled to $69 million in that same period. (NOTE: eSports earnings data are currently available for about ten key markets worldwide).
The industry is constantly innovating and bringing new applications to market. VR is the use of digital technology to replace reality with a complete and realistic, immersive simulation, while AR is interaction with computer-generated content overlaid with the “real world”. Using VR/AR, U.S. developers and scientists are producing cutting-edge solutions in healthcare, education, online shopping, and entertainment. VR gaming has grown more than 14 percent since 2018.
SPORTS
Over the past 20 or 30 years, the major trend in sports has been the tremendous growth in revenues, primed by televised broadcasting of games. This innovation led first to increased advertising sales, then to sponsorships, and then to stadium naming rights. Player endorsements provide a human (or superhuman) face to these sports-marketing efforts. Over time, teams and leagues have become much more business-minded, and revenues have increased many times over. This transformation has fueled the need for business people to wheel and deal, and squeeze as much money out of every sporting event or deal as possible.
However, sports consumers (whoops, make that “fans”) are becoming increasingly disillusioned with the transformation of sports into a money-making machine, one that has encouraged player hubris, corporate intrusion, and a general disregard for the fans. Older fans have voted with their, um, backsides, by keeping them at home rather than seating them in stadiums. And younger people have moved toward “action” sports more to their liking, such as snowboarding and BMX, as these are exactly the kinds of things they like to do themselves.
As consumers retreat, corporate sponsors are forced to be more selective in their campaigns, usually by targeting as closely as possible the demographic they are after. They are also demanding more from sponsorship deals. Valuation services is a growing segment of sponsorship, since it attempts to quantify and evaluate the return on investment of any such deal.
Companies in this industry sector produce or promote live entertainment and other events, operate amusement and leisure activity facilities, or preserve and exhibit objects and sites of historical or cultural significance. Major companies and organizations include Creative Artists Agency (CAA), Las Vegas Sands, Live Nation Entertainment, the New York Yankees, the Smithsonian Institution, and Walt Disney Parks and Resorts (all US-based); as well as Cirque du Soleil (Canada); Galaxy Entertainment (Hong Kong); IGT, Merlin Entertainments, and William Hill (all based in the UK); the Louvre (France); and Real Madrid (Spain).
The global recreation market is forecast to grow to more than $2 trillion in 2027 at a compound annual growth rate (CAGR) of 3.7%, according to The Business Research Company.
The US arts, entertainment, and recreation sector includes about 140,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $265 billion.
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Sources: https://www.wetfeet.com , www.pwc.com , www.wetfeet.com , www.selectusa.gov , www.dnb.com
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