Entertainment & Media Outlook 2011-2015 - PwC

MethodologyThis report draws on historicaldata from trade associations andpublications, government agencies andother industry sources. Recent trendsin industry performance are analysedand the factors underlying those trendsidentified. Factors considered includeeconomic, strategic, operational,technological, demographic, political,cultural, institutional, behavioural,competitive and other drivers thatmay affect particular entertainmentand media markets. The forecastshave been prepared in conjunctionwith Wilkofsky Gruen Associates andconsider the dynamics of each segmentin each region, and the factors thataffect those dynamics. We recogniseunforeseeable events, such as actsof terrorism or significant natural orenvironmental catastrophes, can occurat any time and affect the outlook. Butdue to their unpredictable nature, suchevents have not been contemplated inthis forecast.We provide annual growth rates forthe years 2006–15 and a compoundannual growth rate (CAGR) thatcovers the 2011–15 forecast period. Incalculations of the CAGR, 2010 is thebeginning year, with five years duringthe forecast period: 2011, 2012, 2013,2014 and 2015.The formula is:CAGR = 100*((value in 2015/value in 2010)^(1/5)–1).Models are then developed to quantifythe impact of each factor on industryspending. A forecast scenario foreach causal factor is created andthe contribution of each factor ona prospective basis is identified.Proprietary mathematical modelsand analytical algorithms are used toprovide an initial array of prospectivevalues. We rely on our professionalexpertise and institutional knowledgeto review and adjust these values, ifrequired. The entire process is thenexamined for internal consistencyand transparency vis-à-vis prevailingindustry wisdom.All figures are reported in nominalterms and include the effects ofinflation. Segment spending consists ofadvertising and end-user spending onentertainment and media content. Wedo not include spending on hardwareor on services that may be neededto access content. For example, inTV, radio, recorded music, filmedentertainment, and video games, we donot include spending on TV sets, radiosets, CD players or portable listeningdevices, DVD players, or video gameconsoles. Spending is at the end-userlevel and includes retail mark-ups whereapplicable. Advertising is measuredinclusive of agency commissionsas reported by the AdvertisingStandards Authority. All figures arepresented in New Zealand dollars.10 Outlook | New Zealand Entertainment and Media 2011-2015