PricewaterhouseCoopers: Newspapers to Lose 32 Percent of Ad Revenue by 2013

Over the next five years, newspapers will lose $13 billion on the weight of dropping about 32 percent of its advertising revenue as digital technologies become increasingly widespread, according to the PricewaterhouseCoopers Global Entertainment and Media Outlook 2009-2013 recently released report.

The report expects print advertising to fall the most from $36.7 billion in 2008 to $24.3 billion in 2013. Online advertising revenue is anticipated to decline over the next two years. PWC expects online ad revenue to grow to $3.7 billion in 2013 -- a 2.5% increase when compounded annually from 2008.

The global entertainment and media market as a whole, including both consumer and advertising spending will grow by 2.7 percent compounded annually for the entire forecast period to $1.6 trillion in 2013. Initially, the report said, the industry should expect to see a 3.9 percent drop in 2009 and a mere 0.4 percent advance in 2010, with a period of much faster growth during the remaining period to 7.1 percent in 2013.

The report said PreicewaterhouseCoopers is expecting that this recession will last longer than previous ones because of a steeper downturn, and that the impact on consumer spending will be much steeper than in the past. However the economic downturn does not change the underlying drivers for digital migration and will more likely influence their pace and power and hence the timing of industry change. In short, making it more difficult to hide from the digital migration, the report said.

During the period under review, the switch to digital will drive divergences in revenue performance between different segments and geographies. Change will impact the managing of brands, characters, titles and talent across distribution platforms supported by new commercial models.

Marcel Fenez, global leader entertainment and media practice officer for PricewaterhouseCoopers, said, “In some ways this could be called 'the perfect storm.' Inside every cloud is a silver lining and in this case, a digital one. Companies who grasp the opportunities which are appearing in this fast changing marketplace and are agile enough to adapt their business models will be able to take full advantage of the potential and new revenue models as they emerge.

“In previous years we have talked about the Net Generation and how their demands are driving the industry towards new business models," Fenez said. "Interestingly, in this “income elastic” climate where spending power has to stretch even further than before, this younger generation is now exerting influence over older generations who are, in turn, taking a growing interest in new and emerging platforms. End-user spending through digital/ mobile platforms accounted for 23.4 percent of the overall consumer/end-user/ access market in 2008 and we expect this to account for 78 percent of total growth during the next five years.”