A dual economic and cultural revolution
The content industry is at the dawn of an unprecedented shift. Still largely dominated by American companies, the sector’s centre of gravity is shifting eastward where new global giants are emerging, and creating the world’s most lucrative market. TV’s share in the equation is shrinking as video games and OTT services are gaining ground. And online subscriptions continue to enjoy growing popularity.
Value shifting gradually towards Asia
While North America has long been the most lucrative market, the rapid development of Asian markets, starting with China, has tipped the balance of power eastward. The two continents are expected to be tied by 2023, each generating more than 260 billion EUR, or a third of the global market each, compared to the five-point lead that North America still had over Asia-Pacific in 2019.
Television remains the biggest content industry, accounting for 58% of the sector’s revenue. But its ongoing virtually zero growth will no doubt reduce that percentage to 48% by 2023, with those losses being recouped by OTT and video games whose market share is expected to rise, respectively, from 12% to 16% and from 20% to 25%. Despite a spectacular revival, the music industry remains a lightweight, forecast to increase its share to a maximum 3% in 2023 compared to 2.3% in 2019.
Asia, the new number one content market
Change in regional content industry revenue, between 2019 and 2023
Will Chinese companies by tomorrow’s media giants?
American companies top the ranks in most content industries, and do seem hard to overthrow. This is especially true when it comes to audiovisual media where US conglomerates hold the top 11 spots in terms of revenue, and where the leading non-American company is worth 15 times less than the global leader, Comcast.
The music industry is an exception here, mainly thanks to Spotify which had triple the number of paying subscribers of the top three US companies combined.
Buoyed by a fast-growing market, a handful of Chinese players are emerging and beginning to make forays outside their national borders. If they are currently the only ones big enough to rival American giants, the major cultural differences could well hamper their global expansion.
Internet giants' growing influence over content (Breakkdown of Internet giants' main revenue sources, in 2018)
An ongoing shift in business models
Content consumption is moving steadily towards online subscription services, but each industry is progressing at its own pace.
Music is by far the most advanced in this area, with more than half of its revenue coming from streaming. This percentage is expected to increase to 73% by 2023. If gaming is by now largely digital, subscription services are still only fledgling, with Google’s Stadia leading the charge. Streaming could account for 3% of revenue in 2023. In the TV and video universe, SVOD generated 6% of the sector’s total revenue in 2019, a figure that could go up to 10% by 2023. Revenue from OTT services as a whole are expected to rise from 18% to 25% of total media sector revenue by that time.
The only real holdout is the book publishing industry, with digitisation rates that are scarcely above 10%, added to which subscription services do not really align with reading habits.