The Hindu Business Line : Japan shadow over Asia-Pacific media, entertainment spend

ENTERTAINMENT and media (E&M) spending in the Asia-Pacific region will grow from $209 billion in 2002 to $263 billion by 2007, a growth of 5 per cent, according to Mr Marcel Fenez, Asia Pacific Leader (Entertainment & Media Practice), PricewaterhouseCoopers (PwC).

The region's E&M spend will be affected by the slower growth rate emanating from one of its biggest markets, Japan. At the same time, the global entertainment industry is expected to grow to $1.4 trillion by 2007 at a compounded annual growth rate of 4.8 per cent.

Key drivers that propel growth include the explosion of digital technology, increased broadband rollout and a boost to advertising spend in the intervening years, courtesy the Olympics, political spending and the World Cup. However, even as the entertainment sector is poised for growth there are conflicting forces at work, Mr Fenez told delegates at the FICCI-Frames 2004.

Amidst broadband network growth there is an increase in piracy. Also worrying in the short to medium term, is the prevailing situation of the world and its impact on advertising spend. The year 2003 saw technological changes but the economy continued to remain weak. This economic uncertainty resulted in advertising trailing GDP in growth, though in Asia ad spends track and may lead GDP growth. Fear of terror attacks have also resulted in reallocation of resources towards security and defence.

The global ad spend is, however, projected to touch $375 billion by 2007. Mr Fenez said that the broadband universe will expand from 42 million households in 2002 to 400 million households by 2007. In Asia-Pacific, broadband households are expected to increase to 169 million households in 2008 from the current level of 13.5 million households. Giving an overview on the entertainment industry for the Asia-Pacific region, Mr Fenez said that piracy problem will dampen film entertainment, recorded music and pay TV growth. "There will be continued growth in multi-channel penetration leading to 8 per cent CAGR in television distribution," he said.

For the Indian market, Mr Fenez's prediction points to multi-channel households growing by 13.4 per cent to 69 million households with subscription spending increasing by 14.9 per cent.

By 2008, there will be 70 million Internet users compared to the current level of 22 million. "A broad-based economic growth strengthens media prospects and attracts ad spend, which grew 9.5 per cent in 2003 and is forecast to grow at a similar rate," he said.

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