Every year, professional consultants PwC compile an outlook of the Australian media and entertainment landscape, looking at the past 12 months and the likely changes over the next five years. It began as a survey into general trends of advertising and media, but with the rise of video games and experiences around gaming, the report has increasingly focused on the world of video games.
Late Thursday afternoon, the report's authors took Australian game publishers, government bodies and other industry members through the latest projections, offering some context and thoughts throughout. Here's some of the most interesting bits from that report.
Why the Foxtel/Netflix deal was so important
One of the biggest deals in the Aussie landscape earlier this year was Foxtel's partnership with Netflix, a move that the internet and most commentators immediately viewed as an instant capitulation.
But as explained by lead author and PwC partner Justin Papps, the deal's actually a lot more interesting than that. From Foxtel's perspective, the problem isn't so much that users stop watching Foxtel to watch something on Netflix. It's the fact that they have no data or information about what a Foxtel owner does when they stop watching Foxtel. Potentially knowing in advance that a user is switching over from Foxtel to Netflix, and vice versa, may help Foxtel understand where the audience is moving to when not watching their content. How this data may be captured and then used for more specific ad targeting is something that will be watched closely.
Regulators will continue looking at loot boxes
This was something I wasn't expecting, because the report didn't really delve into microtransactions that deeply. There's no detail about the competition regulator in the report, but Papps told the crowd that there is likely to be increased focus on things like loot boxes and the role they play in games, versus microtransactions where the value exchange is clear for the end user, as opposed to a randomised outcome of some loot boxes where the value exchange is less clear for the consumer. While that may be good news for those frustrated at the more egregious MTX models, it is probably not great news for publishers and developers.
Big things are expected for esports, while physical PC and console sales are expected to drop, but the industry isn't so sure
The report's longest and most obvious correlation with the video game industry is the amount Aussie spend on hardware, software, and the various means in which we buy that. But it's also the area where the consultants run into the most trouble, because they're talking to an audience that knows the sector intimately well as the entire room is either reporting on it, or directly involved in the creation, promotion and distribution of games.
The main takeaways from the panel was an expected increase in the esports audience, which PwC anticipates will be worth $8 million in Australia by 2023 (around 18.3 percent growth over the next five years). But as members of the crowd asked during a Q&A afterwards, the industry is facing one of its strongest headwinds yet: the creation of third-party audited data.
If you're an advertiser or a brand, the biggest problem in local esports is data. Tournament organisations always provide their figures direct from Twitch, Facebook or whatever analytics they have, but none of it is independently verified. (A couple of people joked on the day that some tournaments and organisations had deliberately double counted their viewership figures.)
Some of the crowd openly questioned whether the growth in Australian esports would continue once that independent verification kicked in, suggesting that sponsors and brands would be less than impressed with the "real" figures. I also questioned whether PwC's report took into account the high international viewership of local events and the nature of the Australian media landscape — local agencies and brands generally exclude all non-Australian audiences from their reporting.
As for esports, the crowd was told that the greater understanding of esports and the general growth of streaming and gaming as a medium would solidify the projections. It was noted that Twitch and YouTube weren't individually tracked in the report, but PwC stressed that gaming and live music would be tracked more closely for next year's report. The full release does note that "esports will still be a fringe event" for advertisers that want a broad reach, but anyone looking to invest in that intersection of play and gaming, a "bespoke sponsorship package would be attractive", with food, beverage and films getting some traction.
As for games hardware, the crowd was sceptical that physical consoles would decline with the release of a PS5 and new Xbox in 2020, the associated sales of new peripherals for those platforms, and even the prospect of rumours around an upgraded Nintendo Switch or a Nintendo Switch 2 in 2021 (which remains wholly unverified, but has been discussed in circles over the last 48 hours).
The most exciting live entertainment is live experiential gaming
Most growth expected in this experiental live action, like the Marshmallow Fortnite concert and The Void, Disney's VR haptic vest experience at Disney Springs Orlando #PwCOutlook pic.twitter.com/yuqDJfWmW5
— Alex Walker (@dippizuka) October 3, 2019
A key focus of the growing entertainment landscape locally is what Australia is doing with live events. Live gaming events are proving especially popular, whether it's esports (Australian esports attendees go to events with the intention of spending $600) or events like the Assassin's Creed symphonic orchestra. "This whole idea of watching the concert and then going home and playing the game is blurring those lines," Papps told the crowd.
The most exciting element of that was The Void, a VR walkthrough adventure at Disney Springs and Downtown Disney District where people put on a haptic suit and physically walk through corridors as a disguised Stormtrooper while you infiltrate a basic to steal Imperial intelligence. The suit provides feedback as the player gets shot, and the whole thing provides an experience that runs for about 20 minutes.
The Void is the perfect example of that intersection between live entertainment and gaming that works so well in today's climate, but the challenge with high-tech, large scale experiences will be how many people they can accommodate and how quickly they can get them through the experience.
Discretionary income across Australian households is down, thanks to a crippling combination of stagnant wages/salary growth and rising household debt. The effect of that is that people tend to stay at home, and prefer cheaper experiences or subscriptions that have a low barrier for entry.
Huge live experiences, particularly experiential ones that can't be replicated at home, are the kinds of entertainment that are likely to have the most growth and success over the next five years. Gamers still like spending money on premium events — they just want to be sure it'll be worth it.
Lego Masters was hugely popular
The PwC report touches on traditional media and the trends that are affecting free-to-air particularly. Naturally, free-to-air is having a tough time, but there was a real nice bright spot for Nine (which owns Kotaku Australia through Pedestrian Group) in Lego Masters.
Over three million Australians watched the Lego Masters finale, both live and through broadcast on-demand services and catch up like 9now. Papps added that the show brought back what's known as "appointment viewing", where families would make a time in their weekly schedule to sit down to watch LEGO Masters, playing along as the challenges panned out in each episode. It's a nice touch not only for LEGO fans, but also for viewers who have gotten sick of the over dramatised nature of Australian TV.
Except a solid uptick in online ads
Online advertising has eaten into traditional ads across Australian media, and the most obvious effect of that has been the enormous chunk of revenue it's taken out of the large newspaper publishers. Google and Facebook have been the largest beneficiaries, but the Big Two is now the Big Three thanks to Amazon's advertising business opening in Australia this year.
"The most likely brands to be early adopters of Amazon Advertising are those whose product is stocked on the Amazon eCommerce site, in particular consumer electronic retailers," the PwC report says. Another oddity of the Australian market, however, is interest in online classifieds - particularly property listings. As Papps explained, Australians really like looking at properties they can't afford.
Disney+ will hit the Australian market like a sledgehammer
Australians like streaming content, but we're starting to hit our limit with the amount of subscriptions we have. That's partially because of the income/household debt problem, although a PwC survey of 3000 Aussies found that most had 1.5 subscription services (typically Netflix and 'something else').
That 'something else' is liable to be Disney+ for a lot of families though, as Disney's content for kids looks set to absolutely clobber its rivals when it launches this November. Papps was adamant that Disney+ is expected to have a significant impact in the Australian market, given its family heritage and content mix from Marvel, Star Wars, National Geographic and more.
To view the report in full, head to the PwC's Entertainment and Media Trends landing page.