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Media and Entertainment Industry Overview

The United States media and entertainment (M&E) industry is a $703 billion market[1], comprised of businesses that produce and distribute motion pictures, television programs and commercials, streaming content, music and audio recordings, broadcast, radio, book publishing, video games and supplementary services and products. The U.S. M&E market, which is 33% of the global M&E industry, is the largest M&E market in the world. The U.S. M&E industry is expected to reach $804 billion by 2021, according to the Entertainment & Media Outlook by PriceWaterhouseCoopers[2]. The M&E industry can be partitioned into four main verticals: film, music, book publishing and  video games.

Film

The U.S. filmed entertainment industry is principally comprised of films, movie theaters, TV subscriptions, streaming content and the distribution of the filmed entertainment. Box office sales reached just over $11 billion[3] in 2017, and home video reached $107.9 billion[4] in 2017. The United States has a mature TV market and Deloitte’s industry analysis estimates television subscriptions will remain static at $100.8 billion through 2018.[5]

Many of the prominent 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 $16.3 billion[6] in 2014 (latest available data), which was 5 percent of the total U.S. private sector services trade surplus that year.

Video Games

The U.S. gaming industry consist of a significant amount of the M&E industry: $36 billion in revenues in 2017[7]. 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”, generally professional gaming, in which players compete before a live audience. The eSports industry is growing at a 22.6 percent growth rate, signaling potential opportunity. In 2017, eSport ticket sales in the U.S. grew at a 19.7 percent rate, while eSports streaming advertising grew 35 percent. Current eSports revenue sits at $275 million in the US with Asia in the lead at $318 million[8].

The industry is constantly innovating and bringing new applications to market. VR sets, which include home, mobile and portable sets, are expected to increase sales in the up to 80 percent between 2017 and 2018. Up 150%, to 1.08 billion[9]

Music

The U.S. recorded music industry (including concerts and touring) grew to $18.3 billion in 2017, up from $17.2 billion in 2016[10]. Collectively, the industry is the largest global music market.

Digital technologies have revolutionized the music industry by creating high quality, low-cost recording technologies and digital distribution, along with the explosion of devices to download or stream music.

Book Publishing

The U.S. publishing sector, which includes both physical and digital books, is the largest in the world with $37 billion in sales[11], with the worldwide market at $116 billion[12], measured across three major segments: professional, educational, and consumer publishing. Consumer books cover the largest market share, followed by educational and then professional books. Consumer demand and reading experiences have evolved to favor digital distribution, in the form of e-books and audiobooks.

Online retailer Amazon has opened physical book stores[13] (for both physical and ebooks), while also owning the largest audiobook distributor, Audible. More than 70 percent of American adults own a smart phone, roughly 45 percent own a tablet, and one in five own an eReader. Audiobook revenue has recently surpassed e-book revenue, with 2016 figures respectively at $2.1[14] and $1.1[15] billion.

Conclusion

 The M&E industry is large and varied, constantly under pressure to innovate and explore emerging technologies for the potential impact on development. As a $703 billion market, with consumer trends indicating more growth. The M&E industry is one to watch closely in the next five years, with Deloitte and PriceWaterhouseCoopers expecting significant growth.

[1]Kevin Westcott, 2017 Media and Entertainment industry trends | Deloitte US Deloitte United States (2017), https://www2.deloitte.com/us/en/pages/technology-media-and-telecommunications/articles/media-and-entertainment-industry-outlook-trends.html (last visited Jan 22, 2018).

[2] PricewaterhouseCoopers, Global entertainment & media outlook 2017-2021: User experience takes centre stage PwC, https://www.pwc.com/gx/en/industries/entertainment-media/outlook.html (last visited Jan 23, 2018).

[3] North American box office revenue 1980-2017 | Statistic, Statista, https://www.statista.com/statistics/187069/north-american-box-office-gross-revenue-since-1980/ (last visited Jan 23, 2018).

[4] Media and Entertainment Spotlight|Select USA, https://www.selectusa.gov/media-entertainment-industry-united-states/ (last visited Jan 21, 2018).

[5]Kevin Westcott, 2017 Media and Entertainment industry trends | Deloitte US Deloitte United States (2017), https://www2.deloitte.com/us/en/pages/technology-media-and-telecommunications/articles/media-and-entertainment-industry-outlook-trends.html (last visited Jan 22, 2018).

[6] Andrea DaSIlva, 2016 Top Markets Report Media and Entertainment 2016 Top Markets Report Media and Entertainment (2016).

[7] Annual Revenue of the US Video Game Industry by Segment | Statistic, Statista, https://www-statista-com.erl.lib.byu.edu/statistics/249996/annual-revenue-of-the-us-video-game-industry-by-segment/ / (last visited Jan 23, 2018).

[8]eSports Market Worldwide Statista Dossier | Statistic, Statista, https://www-statista-com.erl.lib.byu.edu/study/34163/esports-market-worldwide-statista-dossier/ (last visited Jan 23, 2018).

[9]VR/AR Eyewear Wholesale Sales in US | Statistic, Statista https://www-statista-com.erl.lib.byu.edu/statistics/737503/vr-ar-eyeware-wholesale-sales-in-us/ (last visited Jan 23, 2018).

[10] Jesse Kirshbaum. & Jesse Kirshbaum           View all articles by this author, It’s 2018 and the Music Business is Better than Ever Ad Age (2018), http://adage.com/article/agencies/2018-music-business/311771/ (last visited Jan 22, 2018).

[11] Media and Entertainment Spotlight|Select USA, https://www.selectusa.gov/media-entertainment-industry-united-states/ (last visited Jan 21, 2018).

[12] Global book publishing revenue 2016 | Statistic Statista, https://www.statista.com/statistics/307299/global-book-publishing-revenue/ (last visited Jan 22, 2018).

[13]  Jia Tolentino, Amazon’s Brick-and-Mortar Bookstores Are Not Built for People Who Actually Read The New Yorker (2017), https://www.newyorker.com/culture/cultural-comment/amazons-brick-and-mortar-bookstores-are-not-built-for-people-who-actually-read (last visited Jan 23, 2018).

[14] Audiobook Industry Size in the US | Statistic Statista).https://www-statista-com.erl.lib.byu.edu/statistics/249854/audiobook-industry-size-in-the-us/ (last visited Jan 2, 2018).

[15] eBook Sales Revenue in the US | Statistic Statista). https://www-statista-com.erl.lib.byu.edu/statistics/278235/e-book-sales-revenue-in-the-us / (last visited Jan 2, 2018).

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Nate Nead
Nate Nead is a licensed investment banker and Principal at Deal Capital Partners, LLC which includes InvestmentBank.com and Crowdfund.co. Nate works works with middle-market corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. He is the chief evangelist of the company's growing digital investment banking platform. Reliance Worldwide Investments, LLC a member of FINRA and SIPC and registered with the SEC and MSRB. Nate resides in Seattle, Washington.
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