Ricardo Queiroz also said that digital advertising should gain prominence in the coming years
Among the conclusions of the 2022-2026 Global Entertainment and Media Survey, released at the end of the year by PwC Brasil, it is worth mentioning that the sector is doing well, with growth projections above the national GDP forecasts, and continues to be strongly driven by technological innovation .
In the following interview, PwC Brasil partner Ricardo Queiroz talks about the main trends in advertising, the solid growth of the segment and assesses the digital market.
Digital advertising, even if still supporting in Brazil, should be highlighted in the coming years, with possibilities for growth in the gaming market and advertising on video-on-demand platforms and music streaming, says Queiroz.
For the executive, the challenges are huge, but so are the rewards for those who manage to serve consumers where they are.
trends
We realize that ways of earning revenue through advertising and consumption of media and entertainment products are changing. Companies have sought to diversify the services they offer so that the consumer has access to a lower price conditioned to the display of advertising content, for example. Another trend is in the universe of games via applications. It has already been practice and should continue to be accentuated to condition an in-game improvement or bonus upon consumption of advertisements. These are just a few examples, but we have also seen that there is a growing trend in advertising for podcasts. In Brazil, the forecast for this year is that this type of space will have revenues of US$ 19 million. In 2026, the value increases to US$ 26 million.
Growth
Our research indicates that the media and entertainment market will continue to grow in the coming years. The global growth trajectory is clear and solid. In 2021, the industry resumed its growth trajectory with revenues increasing at a rate of 10.4%. By 2022, the global industry revenue forecast to be $2.5 trillion is a 7.3% increase (compared to the 2.9% forecast for global GDP). And achieve a Compound Annual Growth Rate (CAGR) of 4.6% through 2026, reaching $3 trillion in revenue.
resumption
The resumption began in 2020 and we can see this growth in several areas. We highlight two examples: the music market, with festivals and concerts, and cinema. Music saw a pronounced increase in digital revenues in 2020 due to the cancellation of live events during the pandemic and the increase in digital subscriptions from consumers looking for entertainment options. In the two years following the onset of the pandemic, live music has slowly begun to pick up again, and pent-up demand is being met. As of 2022, digital music revenue will gradually decrease its share until reaching a forecast of 3.3% in 2026.
Cinema
Spending on cinema will also grow in the survey analysis period and the losses caused by the pandemic in 2020 will be recovered. The market should register new records in 2023 in the world and only in 2026 in Brazil. Even so, Brazil will grow faster than the global average in the forecast period. Revenues in the country should reach US$ 404 million this year. And, in 2026, the country’s cinema market should return to revenue similar to the pre-pandemic period, US$ 681 million (in 2019 this revenue was US$ 676 million).
Brazilian market
In Brazil, the sector should close the year with almost US$ 33 billion in revenues, with an advance of 8.6%, well above the 1.7% growth rate forecast for GDP in 2022 by the Central Bank. By 2026, the segment will reach US$39.9 billion in revenues, with a Compound Annual Growth Rate (CAGR) of 5.7%, the highest in the world. This result is greater than that projected for the country in the previous study: CAGR of 4.7% until 2025. The projections for Brazil accompany the growth of the global market. Worldwide, the forecast for 2022 is that the global revenue of the E&M industry will be US$ 2.5 trillion, an increase of 7.3% (compared to the forecast of 2.9% for the global GDP) and reach CAGR of 4.6% by 2026, reaching $3 trillion in revenue. In the previous edition, the growth projection until 2025 was 5%.
electronic games
One of the highlights of our study is the growth of the electronic games market, with a spotlight on casual mobile games. Brazil is a country that likes technology, innovation and is a strong supporter of the culture of games and eSports. Total video game and eSports revenue in Brazil was US$1.4 billion in 2021 and is forecast to exceed US$2.8 billion in 2026, increasing at a CAGR of 15.2%. The figure for 2021 represented an impressive year-on-year growth of 27.4%, although the growth rate is expected to slow to 17.3% by 2022 and continue to slow in the years to come. In 2021, Brazil overtook Mexico as the largest video game market in Latin America and will be responsible for 47.4% of the region’s total revenue by 2026.
e-Sports
Another highlight is the Brazilian eSports market, which is expected to nearly triple from a base of US$5.4 million in 2021 to over US$15 million in 2026, equivalent to a 22.7% CAGR increase. This is mainly driven by significant increases in media rights, from US$1.7 million to US$3.9 million; and sponsorship, from $1.6 million to $3.8 million over the forecast period. The fastest growing segments are ticket sales and consumer contribution, with increases of 48.2% CAGR and 47.3% CAGR respectively, although this is due to the impact that Covid-19 has had on these segments, causing huge losses in 2020 and 2021.
Advertising
The pace of expansion is within expectations and follows the recovery mapped for the global market until 2026. In the world, after falling by almost 7% in 2020, advertising increased by 22.6% in 2021 and should grow at an annual rate of 6 .6% by 2026, when it should reach US$ 1 trillion in revenue. In Brazil, with a predominance of non-digital advertising, the drop in the pandemic was 10.5% in 2020. The following year, the recovery was 13.8%. The forecast is that advertising will grow at a rate of 5% per year around here until 2026. Due to the pandemic, consumer and leisure activities have become more digital, which has opened up opportunities for retailers and digital marketing professionals. Producing and buying content on platforms just got easier.
Consumer
Brazil is experiencing a digital abyss. According to data collected from Instituto Locomotiva, 67% of the population accesses the internet exclusively via cell phone, while 63% of households have broadband. This reality shows that not all Brazilians have access to entertainment and media industry products. Although this is the reality, another of our surveys, released in June of this year, brings forecasts that indicate that 70% of Brazilians increased their online purchases during the pandemic. The same study indicates that 55% of Brazilians will increase their online purchases even more in the next six months. Therefore, we can conclude that the economically active population has a digital profile, as there is interest in consuming products in this environment.
digital consumption
The consumption of digital content will continue to be a reality. Advertising in games, on connected TVs, is also a fact that should gain more proportion over the next few years. As such, companies should continue to evaluate investments in new media channels. The present and the future are digital, interactive and immersive. Business strategies must continue to be reshaped so that companies can serve the consumers of 2026 in the places where they live, travel and shop. Given the expected increase in time spent on 3D experiences, we are likely to see increased investment in e-commerce in gaming environments and the metaverse, with companies such as Nike and Gucci offering for sale not only branded virtual items, but also the opportunity to pre-order. physical goods.
Concluses
We can say that the Brazilian entertainment and media industry is doing well, with growth projections above the national GDP forecasts, and recovering from the declines suffered during the pandemic. The sector continues to be strongly driven by technological innovation. Digital advertising, even if still supporting in Brazil, should be highlighted in the coming years with possibilities for growth in the gaming market and advertising on video-on-demand platforms and music streaming. There is no easy solution to maintaining a durable model of profitable growth for years to come. The industry’s barriers to entry are very low, and the pace of innovation and change very high. This prevents any participant from sustaining a competitive differentiation with the same way of operating as in the last five years. Participants who want to succeed in 2026 will need a strategy that goes beyond the essentials. It should include great content, multiple revenue streams, and ties to broader business initiatives and compelling immersive experiences. The challenges are formidable, but so are the rewards for those who can meet consumers where they are.
