China's entertainment and media industry grows steadily: Industry CAGR is expected to exceed the global rate over the next five years

Shanghai, 31 October 2024 – According to PwC’s “Global Entertainment and Media (E&M) Industry Outlook 2024 to 2028” China summary, the total revenue of China’s E&M industry will reach approximately US$576.2bn by 2028. The compound annual growth rate (CAGR) of 5.5% will be higher than the average global rate of 3.9% over the next five years. Segments such as cinema, virtual reality (VR), Internet advertising, video games and esports in China continue to maintain a higher level of growth than the rest of the world.

Cecilia Yau, PwC Chinese Mainland and Hong Kong Media Leader, noted, “The E&M industry recovered its balance in 2023, and is expecting global revenues to hit US$3.4 trillion by 2028. In the future, Generative AI (GenAI) is expected to improve efficiency and productivity, while powering new ways of doing business across and within multiple industries. Reinventing business models may bring added growth opportunities for enterprises. Moreover, advertising and gaming industries, high growth regions and segments will also be major opportunity areas within the industry.”

Internet advertising

The Chinese market continued to maintain stable growth in 2024. With the clarification of domestic policies and regulations, the growth of China’s Internet advertising market will gradually stabilise in the next few years. It is estimated that by 2028, the size of China’s Internet advertising market will reach about US$215.8bn with a CAGR of 10.8%, benefiting from the enormous size and scope of the market. Thanks to the rapid development of Internet technologies and the maturity of the value chain, forms of short-video advertising have become more diverse, while data computing of short-video social platforms has led to more accurate advertising placement. These trends have helped drive the rapid growth of internet advertising. Additionally, the widespread application of AI and big data technology will further optimise advertising placement and improve user experience, as well as advertising effectiveness.

With the popularisation of a digital lifestyle, China's mobile network penetration will reach more than 90%, which will have a positive impact on China's Internet advertising growth. Video Internet advertising is the fastest-growing component of Internet advertising domestically, it is estimated that by 2028, it will account for 27% of total revenue, with a CAGR that will reach 12.9% over the next five years.

Over-the-top (OTT) video

With the evolution of technologies such as AI and 5G, China’s OTT video market is developing steadily. From 2023 to 2028, the CAGR is projected to reach 4.7%. “Membership management” across interfaces has become a key trend in the development of the OTT large-screen service industry, with IoT-OTT large-screen integration greatly expanding use cases and providing users with precise content feeds. This makes the prospect of introducing intelligent household terminals more viable in the future. In addition, the overall commercialisation of OTT video in China is growing rapidly. However, the industry is yet to be saturated, and OTT video revenue still has huge growth potential. The number of OTT subscriptions is expected to increase by around 55 million by 2028, rising from 423 million in 2023 to 478 million.

Video games and esports

China is the world’s largest video game and esports market. By the end of 2023, the total number of video game players in China reached 668 million. Total revenue is expected to grow at a CAGR of 13.3% from 2023 to reach US$122.8bn by 2028. Social media/leisure-type game revenue is on course to be the major driver of total video game revenue in China, predicted to account for 91% of proceeds in 2028. In 2024, China replaced the U.S. to become the world’s largest video game market, and due to its rapid growth, the China market is set to generate approximately 47% more revenue than the U.S. by 2028. The debut of eight esports medal events at the 19th Asian Games Hangzhou in September 2023, also brought a positive impact and impetus to the industry.

With the support of cultural industry policies and improvements in the capacity of independent research and development in the sector, the competitiveness of Chinese game products in overseas markets has been notably enhanced, with strong potential for future expansion. It is worth to be mentioned that this year, the first domestic AAA game “Black Myth: Wukong” developed by Game Science has garnered acclaim both in China and abroad upon its release.

Frank Cai, PwC Chinese Mainland Media Leader, commented, "With the continuously fierce market competition and ever-changing needs of players, fine games are tending to adapt to multiple devices. Game enterprises may need to consider growth by focusing on long-term development and operations with high quality, as the importance of original game IP is becoming more prominent. Additionally, the support and guidelines of local cultural industry policies will accelerate the adjustment of the domestic game industry layout. The combination of cities, regions and the game industry will form new highlands for industrial agglomeration and development, promoting the multidimensional development of Chinese game enterprises in terms of agglomeration, differentiation, and specialisation."

Cinema

As the domestic consumer market recovers steadily, the cinema has shown a recovery trend that serves as a notable marker of offline consumption. China’s box office revenue rebounded by 83% to US$7.81bn in 2023, accounting for 24.14% of the global box office revenue. During Q1 2024, the domestic movie market continued to recover steadily. Domestic box office revenue reached RMB14.36 billion, with Year-over-Year (YoY) growth of 3.14%, while the number of moviegoers was 364 million with YoY growth of 8.15%.

China's cinema revenue is estimated to grow at a CAGR of 7.15% from 2023 to 2028. The influence of China's box office on global box office rankings has increased, and domestic movies still dominate China's box office revenue. During 2023, 1,801 new screens were added, and this growth is expected to continue throughout the forecasted period. China’s film production capacity also continues to improve, while the supply of films grows steadily, with gradually expanding international influence. Going forward, with the market on track to return to stable growth and local films poised to gain further traction, the trend of recovery is set to continue.

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