Global entertainment and media outlook 2009–2013 Consumer Magazine Publishing Chapter Summary Global Outlook ● Globally, overall spending on consumer magazine publishing will decline during the next two years by a cumulative 12 percent, before rebounding by 8.7 percent during the subsequent three years. ● Following this partial recovery, spending will total $76.8 billion in 2013, down 0.9 percent compounded annually from $80.3 billion in 2008. ● Global print advertising will be the component hit hardest by the economic downturn. A cumulative three-year drop of 23.4 percent in 2008-2010 will be followed by a recovery totaling 11.4 percent in 2011-2013. By 2013, print advertising spending of $30.2 billion will be 2.3 percent lower on a compound annual basis than the $33.8 billion spent in 2008. ● In contrast, digital advertising on magazine Web sites and mobile sites will rise strongly from a relatively low base, rising from $1.3 billion in 2008 to $3.1 billion in 2013, an 18.3 percent compound annual increase. ● As a result, digital advertising will account for 9.3 percent of total consumer magazine advertising in 2013, up from 3.8 percent in 2008. ● However, digital growth will not be enough to offset the print decline, and total magazine advertising will drop from $35.2 billion in 2008 to $33.3 billion in 2013, a 1.1 percent compound annual decline. ● Circulation spending will decline through to 2011 before recovering, and will stand at $43.5 billion in 2013, 0.7 percent lower on a compound annual basis from $45.1 billion in 2008. Regional Growth ● In each region except Latin America, declines during the next two years will be steeper than the subsequent rebound, leading to lower spending in 2013 than in 2008. ● EMEA will remain the largest region throughout the forecast period, despite falling by 7.5 percent in 2009 and at a 0.7 percent compound annual rate over the five years, slipping to $35 billion in 2013 from $36.2 billion in 2008. ● In North America, spending will fall by 13.5 percent in 2009 and by 1.7 percent compounded annually through 2013 to $22.6 billion, from $24.5 billion in 2008. ● The Asia Pacific market will decline by 8 percent in 2009, and by 0.6 percent compounded annually over the five years to $15.7 billion in 2013 from $16.2 billion in 2008. ● In Latin America, gains during 2011–13 will offset the near-term declines, and spending will rise by 1.3 percent compounded annually to $3.6 billion in 2013 from $3.4 billion in 2008. Key Drivers ● The economic environment will be the principal driver of consumer magazine publishing, leading to steep decreases in the near term and a subsequent rebound when economic conditions improve. ● Migration of advertising and readers from print to digital will dampen print advertising over the long run while benefiting an emerging digital market. Broadband household growth and an expanding mobile access market will also fuel digital advertising. ● Newsstand sales will be particularly vulnerable to the economic cycle in many countries during the next two years, and subscription sales will also be at risk when they are due for renewal. ● Rising discretionary income during the latter part of the forecast period will lead to a rebound in circulation spending. North America ● Total spending on consumer magazines will decline by 16.7 percent during the next two years, reflecting the impact of the recession. The market will then post a modest recovery, expanding by 10.5 percent during the subsequent three years. ● The economic downturn will lead to especially sharp near-term declines in print advertising, which will be the component most severely affected by the economic downturn, falling by 22.7 percent through 2010. ● However, print advertising will begin to pick up as the economy recovers, rising by a projected 14.2 percent from 2010 to 2013. As a result, spending in 2013 will total an estimated $11.8 billion, a 2.5 percent compound annual decline from $13.4 billion in 2008. Global Entertainment And Media Outlook 2009–2013 PricewaterhouseCoopers LLP | 2 ● The launch of mobile sites will fuel digital advertising. Advertising on magazine Web sites and mobile sites will reach $1.9 billion in 2013, a 15.5 percent compound annual increase from $909 million in 2008. ● Magazine closings and falling discretionary income will lead to decreases in circulation spending, which will decrease at a 2.8 percent compound annual rate, falling from $10.2 billion in 2008 to $8.9 billion in 2013. ● Spending in the U.S. will be more severely affected than that in Canada by the economic downturn. The US will decline at a 1.7 percent compound annual rate from $23.3 billion in 2008 to $21.4 billion in 2013, while Canada will decrease to $1.1 billion in 2013 from $1.2 billion in 2008, a 1.1 percent decline compounded annually. EMEA ● The consumer magazine publishing market in EMEA will decline by 9.8 percent during the next two years under the impact of the economic downturn, before expanding by 7 percent from 2010 to 2013, not quite making up for the lost ground. ● The near-term decline will center on print advertising, which will fall by 18.9 percent during 2009–10. However, as the economy recovers, print advertising will turn around and expand by 9.5 percent to $12.1 billion from 2010 to 2013, representing a 2.3 percent compound annual decrease from $13.6 billion in 2008. ● Growing consumer magazine Web site traffic will propel an emerging digital advertising market from a low base once economic conditions improve. After declining by 5.9 percent in 2009, digital advertising will rebound in 2010, with spending rising to $853 million by 2013, a 24.1 percent compound annual increase. ● The gain in digital will not fully offset the decline in print, and total consumer magazine advertising will fall at a 1.4 percent compound annual rate from $13.9 billion in 2008 to $13 billion in 2013. ● Lower discretionary income during the next few years will induce consumers to reduce their consumer magazine purchases. Circulation spending will decline at low-single-digit rates during the next three years and then increase by 3.5 percent cumulatively during 2012–13. As a result, spending in 2013 will total $22 billion from $22.3 billion in 2008, a 0.3 percent decrease compounded annually. Asia Pacific ● The consumer magazine industry in Asia Pacific will decline by a cumulative 11 percent during 2009–10 and then rebound by 8.8 percent during the subsequent three years, not quite making up for the lost ground. ● Declining economies in many countries and unit circulation declines will lead to decreases in print advertising during the next three years. Increases during 2012–13 will not offset that decline, and print advertising will fall from $5.5 billion in 2008 to $4.9 billion in 2013, a 2.4 percent compound annual decrease. ● Broadband growth and an expanding mobile access market will propel digital consumer magazine advertising. Digital advertising on magazine Web sites and mobile magazine sites distributed to mobile phones will total $314 million in 2013 from $120 million in 2008, a 21.2 percent increase compounded annually. ● Even with the increase in digital, total advertising will remain lower in 2013 than in 2008, falling from $5.6 billion to $5.2 billion, a 1.6 percent compound annual decline. ● Decreases in discretionary income will reduce consumer magazine circulation spending, which will fall by 7.6 percent during the next two years and then grow by 7.4 percent cumulatively during the subsequent three years. This will take it to $10.5 billion in 2013, still 0.2 percent lower on a compound annual basis from $10.6 billion in 2008. ● Japan is by far the largest market in the region, but spending there will fall at a 3.5 percent compound annual rate to $7 billion in 2013. In the second-largest market, the People’s Republic of China (PRC), spending will grow by 5.5 percent compounded annually to $3.6 billion in 2013. Latin America ● Consumer magazine publishing in Latin America will decrease by 6.8 percent during the next two years under the impact of the economic downturn, before rebounding by 14.3 percent during the subsequent three years. This will make it the only region to register compound annual growth over the five years. ● The declining economy will lead to near-term decreases in print advertising, which will fall by 8.7 percent during the next two years, followed by a 15.1 percent rebound to $1.4 billion in 2013, giving a 1 percent compound annual increase from $1.3 billion in 2008. ● Broadband household growth will stimulate a small digital advertising market, which will rise from $13 million in 2008 to $58 million in 2013, a 34.9 percent compound annual increase from a low base. Global Entertainment And Media Outlook 2009–2013 PricewaterhouseCoopers LLP | 3 ● Falling discretionary income will depress circulation spending during the next two years, butlike print advertisingit will then rebound during the subsequent three years. Magazine circulation spending will total $2.1 billion in 2013 from $2 billion in 2008, a 1 percent compound annual increase. ● Argentinathe region’s second-biggest market after Brazilwill record the best performance in nominal terms during the next five years, with a 3.2 percent compound annual increase. Over the forecast period, we also expect gains in Brazil, Mexico, and Venezuela in later years to offset the near-term declines. Global Entertainment And Media Outlook 2009–2013 PricewaterhouseCoopers LLP | 4 www.pwc.com/outlook This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. 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