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Growing concert market bucks global slowdown

Revenues from live music are set to reach $28.9bn in five years' time, as the "insatiable appetite" for live events holds firm against a wider entertainment biz "plateau"

By Jon Chapple on 09 Jun 2017

EDM DJ, crowd, PwC Outlook 2017

image © Mani9flores/Wikimedia Commons

The global market for live music will be worth nearly US$29 billion by 2021, as the concert business defies a plateauing entertainment and media (E&M) ecosystem to deliver another five years of solid growth.

That’s according to consultancy firm PricewaterhouseCoopers (PwC), whose respected annual Global entertainment and media outlook survey reveals live music revenue – from ticket sales and sponsorship – will grow at a compound annual growth rate (CAGR) of 3% through 2021, making up a “little more than 50%” of total music revenue over the period.

That compares to growth of 20.7% for music streaming, which is forecast to be worth $17bn in 2021, amid a collapse in sales of physical music (-11.6%) and digital downloads (-19.2%), reveals the latest edition of the reportGlobal entertainment and media outlook 2017-2021, shared with IQ by PwC.

Analysing the data, PwC notes the concert business is becoming “increasingly international” in outlook. “The live music sector continues to deliver, with further growth expected around the globe,” reads the Outlook. “Fans appear to have an almost insatiable appetite for music events, with festival brands eager to export their franchises overseas – last year saw Miami’s Ultra Music Festival debut in Brazil, and the Mexico-based BPM Festival will be heading to two new markets in 2017.”

Its analysts additionally highlight the increasing maturity of, and consolidation in, the sector – “a handful of leading promoters dominate live music events on a worldwide basis”, it notes – with “sector behemoth” Live Nation continuing its run of acquisitions and rival AEG Presents “focusing on strengthening its ties with brands” such as MGM Resorts and Toshiba at AEG venues.

“The market is being defined and propelled by consumers’ increased demand for live, immersive, sharable experiences”

The increasing age of the average arena/stadium draw also draws comment from PwC, with the report noting that a “large proportion of the artists topping the worldwide touring charts last year, among them Bruce Springsteen, Guns N’ Roses, Paul McCartney and the Rolling Stones, have also been dominant for decades”.

The positive news for the live business, which is consistent with the findings of last year’s survey, comes amid a slowdown across the wider E&M landscape, with newspapers, magazines and home video all in decline and anaemic growth predicted for revenues from cinema box office (1.2% CAGR) and traditional TV advertising, especially in developed markets. “While there are increases in revenue, E&M is approaching an industry plateau,” says PwC.

Total E&M revenues – which also include books, outdoor advertising, radio, video games and more – are projected to increase 4.2%, from $1.8 trillion in 2016 to $2.2tn in 2021; down slightly on the 4.4% predicted last year.

“The broad pattern in the global E&M market is clear: as countries become more developed, E&M spending per capita relative to its GDP increases and growth slows,” the report reads. “In fact, most E&M segments will fail to keep pace with GDP growth over the next five years.

“Although only two segments, newspapers and magazines, are declining in absolute terms [as opposed to relatively], many others are slow-growing and not keeping pace with the general rate of economic growth.”

Although starting from a tiny base level, two of the fastest-growing sectors are esports and virtual reality (VR), both of which are “just beginning to accelerate” – and are also growing in importance for producers of live entertainment.

“A greater range of esports tournaments across a wider suite of games will mean many new consumers feel the pull of attending a live event”

Revenue from VR video – which has been embraced by several music-biz giants, including Live Nation and Universal Music Group – is set to grow at a CAGR of 91%, reaching a value of just over $8bn in 2021, while the esports, or competitive video-gaming, market will grow at 22%, with revenues reaching a more modest $874m over the same period.

However, PwC warns that margins for developers of VR technology remain “slim”, with hardware companies likely to seek a cut of the sales of the VR content in order to become profitable. “VR technology is complex, difficult to support and needs to retail at a cost acceptable to mainstream consumers – only a few early adopters will be willing to pay prices in excess of US$700 per headset seen in the current market,” the Outlook says. “No one will get rich from hardware alone; the endgame for these firms will be attempting to become the standard platform for VR and hence start to charge royalties or commission from content sales.”

Despite a steady rise in the number of people with VR headsets – there will, says PwC, by 2021 be “enough headsets in consumer hands to drive an advertising market” – virtual reality remains a potentially lucrative but “highly immature” market “with underdeveloped business models, flaky hardware and lots of experimental or low-quality content”.

The company is more upbeat on esports, which it says has so far seen “strong growth […] as interest rises worldwide, tournaments and leagues become more sophisticated and sponsorship and other development money pours in to the discipline.”

Several live music companies, including AEG, Australia’s TEG Live and Vivendi in France, have already partnered with esports promoters, with other positive indicators including the steady release of new games suitable for esports, such as recent hit Overwatch, and the creation of “suitable infrastructure” worldwide (including the opening of the Gfinity Arena, the UK’s first dedicated esports arena, in London).

“Companies need to harness the economic, social and emotional power of fans”

Additionally, “a greater range of tournaments across a wider suite of games will mean many new consumers will feel the pull of attending a live event”.

If there is one overarching theme from the 2017 report, it’s the importance of “user experience”: By increasing engagement with fans – and in the process collecting more data – companies can, it reads, “further refine, target and engage their core audiences in ways that delight and retain them. That ultimately creates further opportunities for value creation.”

Christopher Vollmer, PwC’s global advisory leader for entertainment and media, explains: “Amid an ever greater supply of media, businesses that are fan-centric will find themselves with audiences that are more engaged, more loyal and spend more per capita. To thrive in the experience-driven marketplace characterised by this year’s Outlook, companies need to attract and harness the economic, social and emotional power of fans.”

“The next era of differentiation in E&M is being defined and propelled by consumers’ increased demand for live, immersive, sharable experiences,” adds Deborah Bothun, PwC global entertainment and media leader. “Consumers want to get closer, more engaged and better connected with the stories they love – both in the physical and digital worlds.”

A similar, ticketing-specific, report published earlier this year by Technavio gave a 7% CAGR for concert ticketing, with a 2021 value of $24.6bn.


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