The Irish entertainment and media sector will lag global growth rates over the next five years, according to a new report by PricewaterhouseCoopers (PwC). The accountancy firm predicts the Irish sector will secure average annual growth rates of 2.3 per cent in the years to 2018.

This is a much less optimistic outlook than the 4.2 per cent growth rate it predicted last year for the 2013-2017 period. It is also lower than the forecasted global average annual growth rate of 5 per cent.

PwC said the highest rate of decline in entertainment and media spending by consumers would occur in newspaper publishing, which is expected to contract 7.1 per cent over the period to 2018.

"Publishers in the Irish market are investing increasingly in the digital elements of their business models, and are currently experiencing growth in their digital advertising revenues," PwC notes in its Global Entertainment and Media Outlook report.

“However, the trends show the continued challenge to monetise digital advertising despite increased digital circulation.”

Computer games contraction

PwC forecasts that spending on physical computer games will contract 18 per cent over the next five years. The so-called “casual gaming sector”, mostly free games played on mobile, “remains difficult to monetise”.

Consumer spending on digital recorded music will account for three-quarters of all recorded music spending by 2018, with spending on CDs and vinyl due to contract at a rate of 18 per cent over the period.

In television, pay-TV platforms will continue to be dominant, with online streaming services such as Netflix accounting for only 10 per cent of spending in the home video entertainment market by 2018.

But while pay-TV subscription revenues are expected to climb 6 per cent in Ireland over the period, spending on streaming services is set to surge by 47 per cent. For companies that invest in producing content it will be “a potential concern”, PwC notes, that consumer spending on internet access may be taking revenue share away from content providers.

The problem of how to make money from digital media is a worldwide issue, the report suggests. “More must be done to encourage not just consumers’ digital behaviours, but their digital spending,” it says.

Globally, internet advertising revenues will overtake television by 2018, PwC says: “We are approaching a major tipping point in the advertising universe.”