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China’s entertainment and media industry rebounded strongly

Rate of total revenue growth to exceed global average

Shanghai, 27 July 2021 – According to PwC’s “Global Entertainment and Media Industry Outlook 2021 to 2025” China Summary, it is estimated that the total revenue of China’s entertainment and media industry in 2021 will be approximately US$358.6bn and reach roughly US$436.8bn by 2025. In the next five years, China’s compound annual growth rate (CAGR) of 5.1% will be higher than the global rate of 4.6%. Among them, China will lead the world in average revenue growth in segments such as Virtual Reality (VR), OTT video, and Internet advertising.

Cecilia Yau, PwC Mainland China and Hong Kong Media Leader, highlighted that, “Emerging macro trends and consumption habits arising from the pandemic have led to changes in consumer behaviours. These developments have become a major influence for the entertainment and media industry. Consumers are gaining more power as they now watch more content such as new movies, live webcasts and online concerts through OTT video platforms, diversify their consumption scenarios, and attract a large number of new audiences through user-generated content.”

Internet advertising

The rapid development of 5G+ Internet of Things (IoT) has propelled the growth of internet advertising. It is estimated that by 2025, China’s internet advertising revenue will reach approximately US$117.5bn, with 10.1% CAGR. Notably, mobile spending is on course to dominate the growth of internet advertising in China, with its share of total internet advertising revenue increasing to 66% by 2025. The mobile display network advertising segment is projected to enjoy the fastest growth over the period, with a CAGR of 12.85%, higher than the global rate of 10.58%.  Chinese users are more accustomed to searching data using mini programmes on smartphones and less likely to browse and search for information on personal computers. Consequently, the efficacy of mobile paid search internet advertising is reduced in China, with the related revenue share expected to be about 16%, below the anticipated global rate of 25%. In terms of content, live video in interactive form is a highly efficient mode for Internet advertising. Live video, being one of the most prevalent market segments, and the major application for Internet users, will continue to grow in the future.

For China’s entertainment and media industry, the interconnection of everything and data-driven, personalised service systems enabled by 5G+ IoT, are popularising the application of virtual reality and smart home technologies, creating a more solid foundation for digital marketing, and an effective way to deliver media experiences to consumers. With the substantial increase in user numbers, digital marketing has become more important for internet advertising. In the future, we can expect users to be provided with a wide range of marketing pushes, and the live broadcasts of high-quality content will be the driving strategy of enterprises to gain market share.

OTT video

China’s OTT video market continues to develop. It is estimated that the CAGR from 2021 to 2025 will be 11.86% to reach US$17.3bn in revenues, which is faster than the global growth rate. Driven by multiple factors including a range of media outlets expanding their breadth and increasing the richness of their content through various means such as original content creation and ecosystem cooperation between platforms. In the future, we can expect different interfaces to be integrated to provide rich and personalised experiences.

Cinema

Due to the impact of the pandemic, the number of people going to cinemas in China plummeted in 2020, but the industry has recovered well overall. Since August 2020, the China film industry has begun to gradually recover. By December 2020, box office revenue had returned to US$2.9bn, returning 92.4% of the level in the same period of December in 2019 (US$1bn), as a result of the early control of the pandemic. The number of moviegoers has also rebounded sharply to reach about 1.4 billion in 2021, and 1.8 billion by 2025, exceeding pre-pandemic levels. In terms of revenue, China and the United States are still the world’s two largest movie markets. China’s film revenue in 2025 is expected to account for 23.5% of the world’s total revenue of US$47bn, second only to the United States’ 24.1%.

Cecilia noted: “The film industry continued to recover in 2020, with the box office revenue of Chinese New Year films hitting a record high. China’s box office continues to be added significantly to global box office revenues. However, as limited by the tightening social distancing policies under the COVID-19 pandemic, it still takes time to recover to pre-pandemic level. Looking ahead, Sino-foreign cooperation in film making will continue to flourish, becoming the major future development trend for China’s film industry. Additionally, with the rapid development of new technologies in VR/AR, artificial intelligence, and biotechnology, the sci-fi film industry will continue to advance, propelling sci-fi films to rank amongst the most popular genres.”

Video games and Esports

China is the world’s largest video game and esports market. Total video games and esports revenue reached US$31.5bn in 2020, and is forecast to increase at a 4.99% CAGR to reach US$41.7bn from 2021 to 2025. Among them, the CAGR of video games in China will be 4.9%, while the growth rate of esports will be 12.3%. Over the same period, the revenue share of app-based social/casual games to total video game in China is predicted to reach 71.8%, and the revenue share of China’s esports media rights and sponsorships to total esports is estimated to reach 75.1% by 2025.

Since 2017, the scale as well as the growth rate of Chinese mobile games’ overseas market has been increasing year by year. In 2020, the scale of China’s overseas gaming market increased by 33.25% year-on-year. In the future, the potential of overseas market is still huge, and the driving force of launching video games overseas will become a major revenue-driver for platform operators.

Wilson Chow, PwC Global TMT Industry Leader, stated, “China’s entertainment and media industry is recovering faster than the rest of the world. With the relaxation of lockdown restrictions, some market segments such as films, live music, and trade shows will see robust growth in 2021. In the next few years, with the lasting impact of the pandemic and continuous innovation of technology, and fierce competition in China’s entertainment and media industry, it will undergo tremendous change. Virtual reality and OTT video are expected to continue to grow in popularity, increasing their share of market revenue.”

 

Note to editor:

About PwC’s “Global Entertainment & Media Outlook” China summary

PwC’s 22nd annual edition of the Global Entertainment & Media Outlook is a comprehensive online source of global analysis for consumer and advertising spending. With like-for-like, five-year historical and five-year forecast data and commentary for 14 defined industry segments in 53 territories spread across North America, Western Europe, Central Europe, Middle East & Africa, Latin America and Asia Pacific, the Outlook makes it easy to compare and contrast consumer and advertising spending across segments and territories.

The China summary captures the data and insights from Mainland China from the Outlook. In this press release and the summary, "China" refers to "Mainland China".

Report in Chinese: https://www.pwccn.com/zh/industries/telecommunications-media-and-technology/publications/entertainment-and-media-outlook-2021-2025.html

Report in English: https://www.pwccn.com/en/industries/telecommunications-media-and-technology/publications/entertainment-and-media-outlook-2021-2025.html

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