Strong growth picked for NZ media sector

The media and entertainment industry will experience strong growth in the next five years, despite uncertainty about tackling challenges besetting the sector such as monetising online content and the weaker pull of television advertising.

A report released by PricewaterhouseCoopers today forecasts the sector as a whole will grow by an average annual rate of 5.9 per cent until 2015, to value $6.7 billion.

Included in those numbers are newspaper and magazine sales, pay television and internet subscriptions, sales of movies, music and books, and advertising across all mediums.

The consultancy said the wider availability of broadband, the Government's investment in ultrafast broadband, 4G mobile networks and the growing popularity of smartphones and tablet computers would accelerate changes to the media landscape.

But it said many attempts by print publishers to charge for online content had ended unsuccessfully and it forecast traditional media would see most advertising revenue growth come from traditional sources.

It forecast that newspaper and magazine print advertising sales would grow from $766 million this year to $844m in 2015, while their income from online advertising would rise from $30m to a still modest $60m. Television advertising revenues are forecast to rise from $604m to $785m over the period.

Newspaper Publishers Association chief executive Tim Pankhurst said there were no co-ordinated discussions at an industry level about how to address the shift toward digital media consumption and he did not believe there was a silver bullet for the sector.

TelstraClear consumer markets head Steve Jackson said television advertising was losing effectiveness because of the take-up of personal video recorders that let consumers "time shift" viewing and fast-forward through advertisements.

Fairfax group digital editor Sinead Boucher said it was watching models that were developing around the world to monetise digital content. These included charging for content and others that rewarded readers for providing personal data useful to advertisers.

"The main trend is that there is no one trend. There is not one model that suits all digital business. I think we will be looking at a mixture of approaches, depending on the product and the audience."

Micro-payment systems that would let internet users pay small amounts to access online content on a casual basis, without having to register or provide any personal information, have been touted as a possible solution by media researchers and technologists, but Boucher was not aware of any such systems being successfully deployed.

Digital head Nigel Tutt said such systems were probably still some way off. "You have got to get into consumers' heads that paying for news online is valid, and I think we are a way away from that."

PwC's estimate that newspapers and magazines would earn $30m from online advertising this year seemed low to him, he said. Fairfax was likely to launch more "apps" for devices such as tablet computers that would provide access to certain types of content. An example might be an interactive wine guide from Cuisine.

APN News and Media chief executive Brett Chenoweth said it also had "more interactive services, new business models, brands and apps" under development.

PwC said newspaper and magazine revenues had held up "reasonably well" during the economic downturn and it was not predicting their imminent demise, but change was happening. The combined daily circulation of newspapers was expected to drop slightly from 620,000 copies per day today, to 605,000 in 2015.

It forecast double-digit annual growth in online search and classifieds advertising – dominated by Google and Trade Me, respectively – and in spending on internet access. Pay television subscriptions would rise in value from $718m to $974m in 2015.

- © Fairfax NZ News