Covid sees physical media spending plummet in Middle East

15 March 2021 3 min. read
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Physical media spending in the Middle East has nosedived during the pandemic, with PwC estimating a revenue decline of 8.3 percent in its latest global media & entertainment outlook.

Professional services firm PwC has released the MENA edition of its annual five-year Global Entertainment & Media Outlook covering 2020 to 2024, and the news is not unexpected; the Covid-ravaged sector will have seen physical media spending fall regionally by an estimated 8.3 percent to below $20 billion, a trend mirrored across the world. However, in effect the global pandemic has simply accelerated already shifting patterns of consumption.

Confronted with widespread public closures and home stay-at-home orders, local media consumers last year made the shift from the physical – including cinemas, concerts and corporate events – to digital entertainment and paid content in droves, with the digital segment now expected to account for close to half of the total entertainment and media revenue take in the Middle East and North Africa in 2024. Barely a year ago, that figure stood at only 37 percent.

The show must go on

All in all, the sector at large is expected to bounce back strongly over time, but the PwC report speaks of the global pandemic forcing premature industry tipping points, and in the authors’ words, “We’ve discovered that consumer habits can take a lifetime to learn, but just one lock-down to lose.” At the global level, collective live music, cinema and trade show revenues fell by a whopping 64 percent, and aren’t expected to return to pre-pandemic levels until before at least 2024.

One bright light in the GCC amidst the gloom – especially for a region synonymous with international conferences and events – is the local cinema outlook, a market which is tipped to grow by a compound annual growth rate of 4 percent MENA-wide between 2019 and 2024, compared to a 2.4 percent decline for the rest of the world. Largely on the back of Saudi Arabia reopening its cinemas in 2018, such growth would push the market out to a worth of $1 billion in 2024.

Meanwhile, two other forms of physical media already under pressure due to dwindling advertising revenues prior to the Covid-19 outbreak – newspapers and magazines – are now expected to decline even more rapidly than before. For the Middle East, PwC forecasts that in four years time 42 percent of all advertising revenues with derive from digital adverts, while print circulation in Europe, the Middle East, and Africa is predicted to fall 6.2 percent over that time.

Average daily unit print circulation by region, annual growth, 2020-2024

“Covid-19 and its after-effects have pulled the future forward, as consumers in the region take more control of their own media consumption, faced with an ever-expanding range of channels and content,” said PwC Technology Consulting partner Fadi Komati, with his Strategy& colleague, Media & Entertainment sector leader Karim Sarkis adding that transformation for traditional media companies is not an option, but a “strategic necessity that will determine their future.”

According to PwC, which compiled the report in collaboration with Strategy&, regional media companies should be looking to develop and evolve digital business models while at the same time using the opportunity to build direct-to-consumer relationships, with optimal scalability in mind. Requiring strong competencies in consumer data and analytics, local media companies are also well-placed to leverage local insights and content production as a point of market difference.