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Digital media on track for double-digit growth

Digital media on track for double-digit growth

New Zealanders are continuing to turn away from print in favour of digital alternatives. In fact, across all channels, digital will see a growth rate of 10% a year between now and 2020, compared to 0.3% for non-digital publications. That’s just one of the findings from PwC’s Global Entertainment and Media Outlook 2016-2020.

It’s these unprecedented changes in consumption that are now fundamentally reshaping the media industry. The current application before the Commerce Commission to merge NZME and Fairfax NZ clearly demonstrates how changes in media consumption are affecting New Zealand operators.

At the same time, digital is growing rapidly. Internet advertising will see the single largest gain of any sector in the report, recording a CAGR of 13.8%.

“The phenomenal growth that digital will see over the coming years gives us a clear picture of the sectors that are thriving,” explained PwC Partner Keren Blakey.

“The figures for internet advertising are particularly promising when you consider the headwinds this sector is facing, such as the rise in ad-blocking software.”

According to the report, New Zealand newspaper revenue will see a compound annual growth rate (CAGR) of -4.42% through to 2020. This is lower than global newspaper growth (-1.49%) and the figures from Australia (-1.7%). In New Zealand, these figures amount to a market size of $565 million in 2020, compared to $709 million in 2016.

While newspaper figures are down, there are still bright spots for printed publications. Book publishing is recording strong growth, reaching a CAGR of 4.7% through to 2020. Professional books are driving these increases, with a CAGR of 6.9%.

Purchasing models shift with the times

While digital channels are certainly recording strong growth, there are other big trends that are shaping the sector. The rise of subscription-based services that charge users a monthly fee is offering an alternative revenue model for content producers that have traditionally relied on advertising.

At the same time, subscription services are shifting from satellite-based services to digital. Satellite-based subscriptions will still be dominant in 2020, but won’t have the same growth trajectory as digital services.

“Subscription content services delivered through digital channels is one area which is certainly appealing to New Zealand consumers,” said Ms Blakey.

The introduction of Netflix is an example of the growing popularity of digital subscriptions. However, the new “Netflix Tax” may also affect the way local consumers approach subscription-based content providers.

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