Canadians are using an expanding array of connected devices to organize, curate and discover their own unique worlds of content and media. According to PwC's Global Entertainment and Media Outlook, Canada's total revenue for the industry is projected to remain stable at a compound annual growth rate (CAGR) of 3.7% over the next five years, the same as last year. Despite the stability, the report projects staggering growth for data consumption, internet access, over the top (OTT) services, and esports while modest growth for cinema, music, and internet advertising.
Canadians to double their data consumption in the next five years
Looking at specific segments in the entertainment and media sector, data consumption secured its position as the highest-growth area. Total data consumption in Canada is set to double to 77.4trn in 2023 from 31.9trn MB in 2018, increasing at a 19.4% CAGR. In line with global trends, Canadians are avid consumers of video content, which means a thriving market exists in VOD streaming services and Canada's companies like Bell, Rogers, and Telus are well positioned to ensure that more customers can access content.
As the country prepares itself for its 5G spectrum, internet access will be quicker and more efficient. However, the report indicates that fixed and mobile Internet penetration will only increase slightly over the forecast period at a 7.36% CAGR. The introduction of the new spectrum will shift how people will consume data. Key impacts of 5G for E&M will include enabling more streaming of high-quality video, including live events like sports and music, and better use of AI. The real differentiator will be a reduction in latency and increase in speed where customers will watch events or play videogames in real-time.
"5G's impact will be felt across the entire technology, media and telecommunications value chain for the next decade not only in Canada but around the world," said John Simcoe, Media and Telecom Leader, PwC Canada. "It will make it easier, more convenient and cheaper for Canadians to access more media on phones and other mobile devices and provide a better opportunity for broadcasters to connect with audiences wherever they are."
Entertainment: OTT and esports
Canadian OTT video revenue will increase at a 10.7% CAGR from US$1.6bn in 2018 to US$2.7bn in 2023. Canada's growth trajectory will be just enough to keep it ahead of fifth-placed market the UK, with an OTT video sector value of US$2.6bn in 2023. There are currently 25 online TV services, with Netflix taking a market share of over 70%. Canadian broadcasters are quickly adjusting to ensure that they keep pace by providing compelling content for its subscribers. The number of subscription OTT viewers is expected to reach 18mn in 2019.
Canadian video games and esports revenue is continuing to grow strongly and is forecast to reach US$2.8bn by 2023, increasing at a 5.5% CAGR. Video games development is also a major industry in Canada as almost 600 studios were active in the country in 2018, in large part due to a competitive tax-incentive system encouraging major hubs in Montreal and Vancouver.
Canada's esports revenue is expected to grow at a 14.5% CAGR from US$19mn in 2018 to US$37mn in 2023. The country has become a regular stop on the international esports circuit, and in 2018 proved it had the capacity to host top-tier events. Cineplex, the biggest operator of cinema chains in Canada, bought esports platform WorldGaming and set out plans for a national esports league to be played at its venues, a natural diversification step for a media venue company whose target audience is increasingly staying at home to stream gaming competitions on Twitch (platform owned by Amazon).
The fastest-growing and most-substantial segment of Canada's esports market comes from media rights revenue, which will more than double in the forecast period to reach US$11mn at a 23.9% CAGR. Dedicated esports channel Ginx eSports TV launched in the country in May 2017, featuring tournaments and regular magazine-style programming.