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

• UK E&M market forecast to break £100bn this year

• Internet advertising is expected to grow to £44bn by 2028, driven by retail media and video 

• The Service sector (internet access) is forecast to generate £32bn by 2028 aided by significant growth in 5G subscriptions 

• Ad-based alternatives and crackdown on password sharing to help the UK Over the Top (OTT) video sector

• Cinema to rebound to pre-Covid levels with 6% growth year-on-year, with total live music increasing to £2.5bn by 2028

• UK gaming market is forecast to retain its position as the largest and most well-established in Europe

The UK is forecast to have the largest entertainment and media market in Europe - overtaking Germany - from next year, according to PwC’s latest Global Entertainment & Media (E&M) Outlook 2024-2028. UK E&M revenue is expected to break the £100bn barrier this year before growing to £121bn by 2028 at a compound annual growth rate of 4%.

Mary Shelton Rose, Partner and UK Technology, Media and Telecoms Leader at PwC, said:

“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.”

Segments driving revenue growth

Despite the anticipated slow recovery from a flat 2023, ongoing technology disruption and increased industry competition, the UK is expected to be the fastest growing E&M market in Western Europe. 

Advertising makes up an outsized share of the E&M market in the UK, representing 39% of sector revenues (in 2024) vs. 29% across Western Europe; additionally, the UK ad market is the most digitally mature in Western Europe, with internet advertising representing 80% of total advertising revenues compared to 66% across the region. Notwithstanding its advanced position, the UK digital advertising market - which represents £32bn (in 2024) of spend - is forecast to grow to £44bn in 2028, a CAGR of 8% which is amongst the highest in the region. Paid search will drive growth within internet advertising accounting for just over half its total revenue by 2028, supported by the rapidly scaling retail paid search segment.

To facilitate this rapid growth in the UK digital economy, the Service sector (internet Access) will scale from £28bn this year to £32bn by 2028, providing the necessary infrastructure for increasing digital consumption. Mobile Service revenue will continue to drive growth and by 2028 will account for more than half of total Service sector revenue. In particular, social networking, video streaming and gaming data consumption is forecast to grow over 20% CAGR 2024-28, driving significant demand for mobile data reflected in an almost tripling of 5G mobile subscriptions from 36mn to almost 100mn as infrastructure roll out completes.

Dan Bunyan, Partner at PwC Strategy&, said:

“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. 

Streaming services look to new models to drive growth

The UK’s over-the-top (OTT) market is the largest in Western Europe and the third largest globally in terms of revenue, after the US and China. Streaming service usage and consumer uptake is rising, albeit at a lower rate than in recent years, as service-providers face increased competition and challenges in getting consumers to pay for more services . While the volume of OTT video subscriptions per household grew at a 20% CAGR 2019-24, this is expected to slow to a 3% CAGR 2024-28. UK subscriptions to OTT video services will rise to £8.3bn in 2028 from £6.5bn in 2024- representing a 6% CAGR.

This plateauing effect is pushing leading streamers to reshape their business models and find new revenues beyond subscriptions, including the introduction of ad-based variants (reduced subscription fees with ad-filled content), cracking down on password sharing, introduction of live sports, and industry consolidation. By 2028, advertising will account for 30% of UK OTT streaming revenues, up from 24% in 2024.

Ben Bird, Entertainment and Media Sector Leader at PwC UK, said: 

“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.

Gaming industry to grow while cinema revenue to rebound

The UK is forecast to retain its position as the largest and most well-established gaming market in Europe with a rich heritage of successful game developers. Total video games and esports revenue is forecast to grow from £7.4bn in 2024 to £8.4bn in 2028 at a CAGR of 3%. Social and casual gaming will generate more than half of the UK’s total video games revenue by 2028 as its popularity is sustained by the accessibility of smartphones and the increasing development of 5G improving connectivity for multiplayer games.

Elsewhere, within the UK’s E&M industry, real-life experiences such as live music and cinema remain key growth industries. Total cinema revenue is forecast to continue growing over the next four years at a CAGR of 6% with cinema admission volumes due to grow at a 5% CAGR. Last year, the box office was driven by blockbuster releases such as Barbie and Oppenheimer and with the writers strike resolved, there are more big releases slated for 2025, including sequels to Mission: Impossible Dead Reckoning, Jurassic World and Avatar. The Outlook forecasts box office spend to surpass pre-Covid levels in 2027 and by the end of the forecast period be worth £1.3bn. 

Live music ticket sales are expected to grow from £1.75bn in 2024 to £1.9bn by 2028 at a CAGR of 1.9% driven by large events such as music festivals and musician world tours. The sector recovered from the pandemic in 2023, with 2024 experiencing further strong growth, boosted in part by Taylor’s Swift’s- 15 UK performances of the Eras Tour. By the end of the forecast period, live music will be worth 31% of total music, radio and podcast revenue (£6.1bn).

Dan Bunyan, added:

“Continued growth in consumer spend on online platforms such as for gaming and streaming, together with offline environments like cinema and live music, highlight that consumers continue to seek engaging content experiences - regardless of the means of consumption. Investment in high-quality content remains critical for the UK E&M economy to maintain its leading position in Western Europe.”

 Ends

Notes to editors

About the Global Entertainment & Media Outlook
PwC’s Global Entertainment & Media Outlook 2024-28, now in its 25th year, provides in-depth analysis of global entertainment & media (E&M) consumer and advertising spending. The Outlook includes five-year historical and five-year forecast data and commentary for 11 industry segments across 53 countries and territories. Segments are business-to-business; cinema; connectivity service; internet advertising; music, radio and podcasts; newspapers, consumer magazines and books; out-of-home (OOH) advertising; over-the-top (OTT) video; traditional TV; video games and esports; virtual reality (VR) and augmented reality (AR). In addition, the Outlook tracks data consumption and important developments in technologies such as AI, Metaverse and NFTs. The full Outlook can be accessed at www.pwc.com/outlook.