Media Industry

One of the hallmarks of the post-industrial, information-based economy has been increased consumer appetite for Media and Entertainment (M&E) products. As consumers in many countries spend an ever-growing portion of their income on M&E products, the media industry has become one of the leading industries on the planet. This report provides an overview of the major business segments of the media industry - filmed entertainment, music, television (including broadcasting), cable and networks, magazine and newspaper publishing.

Market size of the media industry

The global media industry was worth USD1.2 trillion in 2003, 4.3 percent more than in 2002. This growth was the result of increased advertising and end user spending.

The industry seems to be back on the growth trajectory after going through a rough patch in 2001. Its best ever growth was in 1999–2000, when the market grew by 8.7 percent.

According to media statistics one of the most challenging years was 2001 when the growth rate dipped to 2.4 percent. The economic downturn and the events of September 11 affected advertising and end user spending.

Media industry growth vs. nominal GDP growth

The media industry grows more quickly when the economy is expanding and slows down when it is in decline. When the economy grows, there is more disposable income to spend on entertainment. The media growth rate in 2001 was affected by the September 11 terrorist attacks. In the late 1990s, there was less spending on defense and therefore more resources available for media and entertainment. However, since the attack on the World Trade Centre defense spending has increased, squeezing the resources available for media and entertainment. Post 9/11, although M&E has grown faster than the general economy, current growth still pales in comparison to the late 1990s.

Business segments of the media industry

Filmed entertainment

The global film industry has grown from USD49.38 billion in 1999 to USD75.32 billion in 2003.

The US accounted for 45 percent of revenue followed by EMEA with 30 percent and Asia Pacific with 18 percent. In EMEA, the UK contributed a third of revenues with France and Germany lying far behind. Increased DVD penetration in the UK was the reason for its higher contribution.

Box office revenue increased from USD19.76 in 2002 to USD20.35 billion in 2003, a growth of 3 percent. However, worldwide admissions dropped from 9.08 billion in 2002 to 8.6 billion in 2003.

Recorded music

The music industry is in bad shape, declining steadily from USD37.05 billion in 1999 to USD30.52 billion in 2003. Growing piracy levels have pushed sales and profitability to low levels.

The global pirate market for recorded music totaled 1.7 billion units in 2003. The advent of compact disc burners has made it simple and cheap to create high-quality pirated CDs. According to the International Federation for the Phonographic Industry (IFPI), one out of every three music compact discs bought by consumers in 2003 was pirated. To make matters worse, the Internet and the availability of file-swapping software have made the illegal (read free) downloading of music easier. Unless piracy is curbed, the outlook for the music industry will remain bleak.

Magazine publishing

Global magazine publishing grew from USD79.9 billion in 2002 to USD80.7 billion in 2003. Magazine publishing has become increasingly international in character, with several titles now solely targeted at international markets. These include magazines aimed at general businesses such as ‘The Economist’ and those targeting specific audiences such as ‘Metal Bulletin’.

In the consumer segment, various titles are published in an increasingly homogeneous global marketplace, sometimes with a common title such as ‘Cosmopolitan’ and sometimes with a local variant such as the ‘Reader’s Digest’, which is titled ‘Das Beste’ in Germany.

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