Entertainment and media industry shifts to ad spending

The market is expected to grow 2.26% annually to $117b by 2029.
 

Hong Kong’s entertainment and media (E&M) industry is tilting toward advertising as a growth driver as businesses cut back on consumer revenue strategies amidst a global push for digitalisation, according to PricewaterhouseCoopers International Ltd. (PwC).

This is in line with a global trend, in which advertising is expected to surpass consumer revenue by about $2.34t (US$300b) by 2029. Internet ads, over-the-top (OTT) video, and cinema will drive the increase, it said.

“The ongoing shift from traditional to digital media by consumers and advertisers is occurring concurrently with the rising impact of AI (artificial intelligence)-enhanced monetisation strategies by major tech platforms,” Cecilia Yau, PwC Chinese Mainland and Hong Kong media leader, told Hong Kong Business.

“Consequently, internet advertising will play an increasingly crucial role in driving growth. Given the trajectory of AI and digitalisation, businesses are likely to allocate larger portions of their budgets to internet advertising,” she said in an emailed reply to questions.

Hong Kong’s E&M market is projected to grow 2.26% annually to $117b (US$15b) by 2029, with advertising leading, Yau said, citing a PwC report in August.

“In Hong Kong, advertising revenue is projected to grow at a 4% compound annual growth rate (CAGR), compared with a 1% increase in consumer revenue,” she said. “While consumers may be more reserved in their spending, businesses are prioritising marketing efforts to capture attention and drive sales.”

Globally, advertising will grow more than three times faster than consumer spending at 6.1% from 2024 to 2029.

“The recent economic environment has led to a slowdown in consumer spending growth,” Yau said. “During this period, companies have been increasingly investing in advertising to attract consumers, seeking to boost demand for their products.”

She added that digitalisation is widening opportunities. “Ongoing advancements of smartphones and broadband have rapidly expanded the digital landscape, providing new opportunities within advertising.”

AI is central to the shift. Behaviour analysis and predictive tools enable personalised, relevant content, strengthening consumer connections and improving returns on ad budgets.

Video advertising is expected to gain the most from generative AI. “This technology is revolutionising video production by reducing costs and production times, enabling advertisers to create high-quality and dynamic content swiftly,” Yau said.

She noted that frequent campaign refreshes and personalised targeting could  boost engagement and conversion rates.
Augmented reality (AR) and virtual reality (VR) are also reshaping marketing. “This convergence of AI, AR, and VR positions the video advertising segment to be a potential leader of ingenuity, advancing the evolution of compelling and personalised marketing strategies.”

Cross-platform strategies are also changing the industry. Partnerships between cinema chains and OTT platforms can support hybrid releases, broadening reach.

“While nuanced, a balanced form of this strategy offers a route to enhance reach and engagement by catering to varied consumer preferences,” Yau said.

Collaborations between streaming services and social media platforms are adding interactive content that fosters engagement and loyalty.

“By investing in the digital segment and exploring synergies between different media platforms, businesses can effectively capture and expand their market, boosting both marketing impact and consumer spending,” she added.