UK Entertainment & Media Outlook 2024-2028

Growth in online advertising spend and data consumption will make UK entertainment and media market the largest in Europe next year

The UK is forecast to become the largest entertainment and media (E&M) market in Europe - overtaking Germany - from next year, according to PwC’s latest Global Entertainment & Media (E&M) Outlook 2024-2028. With market value expected to surpass £100bn this year alone, the UK is positioned at the forefront of E&M innovation and growth, setting new benchmarks for the industry across the continent.

£100bn

UK market is expected to exceed £100bn 2024

£121bn

And grow to £121bn 2028

Key drivers include:

Internet Advertising to Grow to £44bn by 2028

Driving revenue growth by selling E&M products directly to users is becoming increasingly difficult, with consumer spending being the smallest and slowest-growing category.

Advertising is expected to account for 77% of total E&M industry (excluding internet access) growth globally over the next five years, necessitating a shift towards more sophisticated, data-driven ad models. Despite challenges such as limited ad budgets, high inflation and an uncertain policy backdrop, internet advertising grew by 10% in 2023, and is forecasted to make up 77% of total ad spending by 2028.

In the UK, Internet advertising is poised for significant growth and expected to reach £44bn by 2028 - this will represent 85% of total UK ad spending. This surge is driven by the rapid expansion of retail media and video advertising. As the most digitally mature ad market in Western Europe, the UK will continue to lead with innovative advertising solutions, underpinned by advancements in AI and the use of data.

“The UK is one of the most online-heavy advertising markets in the world. This relative maturity means that the UK internet advertising market is more sensitive to macroeconomic factors. Even so, the market is still expected to grow over the next four years with paid search supported by rapid gains in retail media, and video supporting growth. AI is expected to increasingly influence how ad content is created, placed and measured, spanning various channels.”

_{Dan Bunyan, Partner at PwC Strategy&}

Streaming services look to new models to drive growth

The streaming world encapsulates the broader challenges faced by the E&M industry. While global usage and consumer uptake of streaming services continue to grow, the rate has slowed, as consumer finance pressures mounted and the level of subscription ‘stacking’ peaks.

Following subscription price rises across the board in recent years, the over-the-top (OTT) video market is finding new ways to drive subscriptions and better monetise subscribers, in particular with the launch of ad-based tiers, and measures to curb password sharing. While these measures will increase subscriptions to OTT video services, average revenue per subscription will barely increase, with value growth coming from the new - and highly profitable - advertising income stream, which will account for 43% of OTT video revenues in 2028 (up from 37% in 2019).

The UK market is projected to grow to £8.3bn by 2028, a CAGR of 7.5% p.a., as the sector accrues the benefits of reinventing its business model through ad-supported plans, live sports offerings, and strategic consolidation.

“Despite the OTT market being extremely competitive and mature, revenue has expanded rapidly in recent years with the market nearly doubling in size since 2020 - thanks in part to the accelerated growth experienced during the pandemic. Prices have risen for several major platforms and despite the difficult macroeconomic environment, the market has continued to flourish.

Operators are leveraging their content rights and original productions to boost take up, leaving consumers needing to subscribe to multiple services or rotate platforms to access the content they desire, such as sports streaming with English Premier League football spread across three different streaming platforms. The option to have ad-supported plans is also driving growth, in some cases offering the chance to subscribe for slightly less.”

_{Ben Bird, Entertainment and Media Sector Leader at PwC UK}

Cinema Rebound and Live Music Growth

The E&M sector is increasingly characterised by real-life experiences such as music performances, theatre, cinema, and sports, which have seen a resurgence post-COVID. Together, live music and cinema ticket sales constituted 39% of the global increase in consumer spending on E&M in 2023, with global cinema revenues expected to exceed pre-pandemic levels by 2026.

Similarly in the UK, cinema and live music sectors are on a growth trajectory, with cinema revenue expected to rebound to pre-Covid levels, growing at 6% year-on-year to 2028. Total live music revenue is projected to increase to £2.5bn by 2028. Blockbuster film releases and large-scale music events continue to drive consumer engagement and spending, highlighting the resilience and appeal of in-person entertainment experiences.

UK Gaming Market to Retain its Leading Position in Europe

The global gaming industry continues to thrive, generating increasing revenues despite some post-COVID employment reductions. In 2023, global video games revenue, encompassing esports, reached £183bn - a 4.6% rise. This positions it as one of the fastest-growing segments within the E&M sector. Historically dominated by game purchases and subscriptions, the industry is witnessing a growing significance of advertising.

The UK gaming market is set to maintain its status as the largest and most well-established in Europe, with revenues forecasted to grow from £7.0bn in 2023 to £8.4bn in 2028. Social and casual gaming will dominate, driven by the accessibility of smartphones and enhanced by 5G connectivity. This growth underscores the UK’s rich heritage and continued innovation in game development.

Ongoing investments in innovative products and new business models will continue with a focus on more engaging, collaborative, and social gameplay aimed at attracting younger demographics. These trends, along with the development of new gaming technologies, ensure that the UK will continue to be a pivotal market within the broader global gaming landscape.

Summary

This period of growth is marked by both opportunities and uncertainties, driven by digital ecosystem shifts and the rise of Generative AI.

While much of the current focus on AI in E&M centres on cost reduction and efficiencies, such as using GenAI tools for text generation, visual creation, and post-production, the real potential lies in its ability to create new revenue streams and drive greater value creation. In the highest-growth sector of advertising, GenAI can rapidly develop and refine creative approaches based on consumer response.

“The UK entertainment & media industry has always been at the forefront of technological disruption. To capitalise on the many growth opportunities, it must leverage the power of new and emerging technologies such as GenAI, re-shape its business and creative models, and better leverage technology for advertising. So far, many of the applications of GenAI in the E&M industry have focused on speed and efficiency cost savings. As we look ahead, the industry should further explore how GenAI can lead to greater value creation through experimenting, iterating, and scaling new solutions and processes, which can be monetised to drive top-line revenue growth.

Our E&M industry is one of the UK’s strongest growth sectors. To stay ahead we must continue investing in talent and embracing digital transformation which will support further revenue growth, according to our recently published Framework for Growth report.”

_{Mary Shelton Rose, Partner and UK Technology, Media and Telecoms Leader at PwC}

As businesses navigate this period of growth and uncertainty, continuous innovation becomes imperative. According to PwC's 27th Annual CEO Survey, a significant 57% of E&M CEOs believe their current business paths will be obsolete within ten years, underscoring the need for business model reinvention.

To maintain this trajectory of growth, businesses must leverage emerging technologies, invest in talent, and embrace digital transformation.

Explore how these trends can shape your business strategy and unlock new opportunities in the dynamic E&M landscape.

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