Entertainment Sector to See Strong Growth

Despite economic uncertainties, the global entertainment and media business will continue to grow at a healthy 7.2% annual pace through 2005 in part because of an explosion in the Latin American market and the development of entertainment viewed over broadband Internet systems, according to a report to be released this week.

Published by PricewaterhouseCoopers, the five-year global entertainment outlook predicts that the industry worldwide will grow past $1 trillion annually for the first time ever, eventually rising to $1.2 trillion by 2005.

One major highlight of the report is its repeated underscoring of Latin America as one of Hollywood’s most fertile areas for growth.

Cable television, satellite and wireless systems there are growing rapidly, in part because of deregulation. And the number of movie theaters is expanding, literacy is improving and major theme parks that are largely absent from the area now are expected to be developed.

“It’s very virgin territory,” said Mike Kelley, a New York-based partner in the accounting and consulting firm’s entertainment and media group.

Despite the latest technology shakeout, the report is bullish on the use of the Internet for entertainment in downloading music, reading books, newspapers and magazines and, eventually, viewing feature films.

The report is optimistic that online copyright and piracy issues soon can be resolved, and that the entertainment industry will develop Internet subscription-based services to generate revenue.

In the U.S., the report concludes that entertainment will grow about 7.1% annually to nearly $500 million.

Among the other predictions contained in the report:

* Filmed entertainment worldwide will continue to grow despite the retrenching by the U.S. exhibition business amid financial problems plaguing movie theater chains.

Growth of 6.6% annually is predicted, to $93 billion in 2005 from $68 billion in 2000, with Latin America leading at a 10% clip. The U.S. market in filmed entertainment is expected to reach $55 billion by 2005, sparked by a growing market for DVDs as well as TV program spending.

* Television programming and distribution systems also will grow rapidly.

The report predicts TV programming over broadcast and cable systems will grow 9.4% annually to $168 billion in 2005, with growth in digital and satellite TV playing a major role. Television distribution via stations, cable channels and satellite systems will grow 7.8% annually to $221 billion.

* Spending on music will be flat in the U.S. and Europe. But overall growth worldwide will be about 5.1%, to $49.3 billion, because of increased sales in Latin America, Eastern Europe and Asia and because of growth in online distribution.

* In theme parks, the U.S. will experience the slowest growth because the business is so highly developed here. Higher growth rates will occur in Latin America and Asia. The report predicts 6.3% annual growth to $24.2 billion.

* Higher ticket prices and the growth of digital TV will boost sports worldwide, raising it 7.4% annually to $50.4 billion in 2005.

* Improved literacy rates in Latin America will boost the magazine, newspaper and book publishing businesses. Globally, newspaper growth is predicted to be 5% annually, to $197 billion, with magazines rising 5.8% to $111 billion and books growing 4.2% to $105 billion.