Entertainment Spending on the Rise

According to the Hollywood Reporter, global spending on home entertainment is expected to rebound over the next four years, culminating in over $1.6 trillion in profits.

According to PriceWaterhouseCoopers, an investment analysis firm in New York City, growth in entertainment will expand from its initial drop of 3.4 percent in early 2009 to an annual growth of 2.7 percent, much of it driven by digital media.

The firm also predicted that consumer spending will help drive the growth of digital media, but not without tradeoffs. While consumer demand grows, advertising is expected to decline--a bad sign for Madison Avenue, which is pulling for an upturn after a bad year and a half of slumping profits and bailing corporate clients turning away business.

It's also bad news for the U.S., which will underperform global economic trends in entertainment, as the industry at large continues to grow at a steady rate of 1.2 percent a year, topping out at $495 billion in 2013. But that will be mitigated by the 25 percent share of U.S. revenue studios and movie houses. Mobile and broadband media will account for much of the money they pull in over the next five years.

The news doesn't come as a surprise to Bill Coburn, U.S. leader of entertainment, media and communications practice at PriceWaterhouseCoopers and one of the authors of "Global Entertainment and Media Outlook 2009-2013."

"The current economic slowdown, shifting consumer behavior and new ad-supported revenue models are triggering acceleration of digital media," he said. "The current decline in revenues is not because of declining demand. In fact, demand for E and M [Entertainment and Media] appear to be increasing. The challenge is to identify ad models that are able to withstand economic pressure on ad rates in the digital environment and on subscription models that capture the consumer's preferences for content."

The "content" to which Coburn refers includes Internet and new media--hotly contested pieces of the pie in the industry. Not only do studios want to capture more of the market, labor unions do too, and in an industry where every actor and producer belongs to a union or a guild, that means more fighting to get the crumbs in this multi-billion dollar feast.

Last week, the Screen Actors Guild voted to accept a controversial deal that would guarantee them a slightly lower cut in percentages of revenues earned from residuals garnered from purchases of films and TV shows over the Internet. The vote averted a strike and ended infighting in the divided Screen Actors Guild. With billions of dollars at stake though, the possibility of more infighting is still in the air.

Office politics is just a tip of the iceberg. As consumer demand grows and advertisers scramble to find a sure method to sell their products, the Hollywood--to say the little of the global entertainment industry--is going to have it's hands full.

Regardless of what the future may hold, one thing is certain: it's going to be a busy four years.