The latest earnings data from China’s entertainment industry suggests that entertainment companies are already taking the leap into the digital era, as revenue has increased from $1.4 billion in 2017 to $1,093 billion in 2020.
The figures are a significant jump from the $1bn reported in 2017, and are the first time that revenue has surpassed $1 trillion for a calendar year.
The entertainment industry’s revenue is estimated to grow by 40 percent annually over the next two decades, according to research firm CB Insights.
But the pace of growth is only expected to accelerate.
“We’re starting to see a shift in the way we think about revenue generation from entertainment,” says Robert Fenton, chief executive officer of entertainment consultancy iSuppli.
“I think we’re seeing an accelerated pace of change.”
While the entertainment industry is expected to continue to grow in the years ahead, its revenue will likely slow down, according the CB Insight report.
According to the report, the entertainment sector will likely continue to see the biggest growth in revenue as the technology and entertainment industries continue to evolve.
“The growth in the entertainment and technology industries is accelerating,” says Fenton.
“If we want to compete with the global economy, we need to be very creative.”
According to Fenton and his team at iSupplu, the future of entertainment is largely tied to how technology evolves.
“Technology is the future,” he says.
“And the way that we interact with technology is the way entertainment and other businesses will be built.” iSupplim is the research and consulting firm that has helped the entertainment industries of Hollywood, Broadway and the like forecast revenue growth and profitability over the last several years.
Its analysts say the entertainment landscape is changing faster than ever before.
“We are seeing more of an increase in entertainment as the new age of entertainment moves forward,” says the company’s founder and chief executive, Chris Karp.
“There’s no question that this is the era of the digital.”
The industry is also seeing a shift from traditional entertainment to new forms of entertainment, says iSupplies CEO and co-founder Peter Davenport.
The new entertainment is coming from more than one channel, with the latest trend being social media.
“Social media has really driven this shift,” says Davenports.
“People are looking to engage with other people in a more personal way, which is really the essence of entertainment.” iSilicon and the entertainment sectors have a long way to go before they are able to take on the likes of Netflix, Hulu, and Amazon Prime, but the entertainment world is starting to realize that digital revenue is now the way to deliver entertainment to the masses.
“It’s really starting to look like a very different industry than it did a few years ago,” says Jason Hirsch, an entertainment analyst at research firm NPD Group.
“Now the question is: Can they get there?”
The entertainment sector’s growth rate is expected by 2021 to be 30 percent.
However, according Karp, it’s important to remember that this growth is just one facet of the entertainment business.
“What’s interesting about the entertainment revenue is the growth rate in the content market,” says Karp; the growth of content has not been driven by traditional revenue streams, which has remained stagnant.
“This is driven by content creators, the new forms that are coming online, and the new ways that they are monetizing content,” says Hirsch.
“Content creators have been really successful, because they are really good at generating revenue through their content, and they are generating revenue by using technology.”
As entertainment companies look to take their business to the next level, they are going to need to continue focusing on their content creators.
That means creating new ways to monetize content.
“You can’t just put money in a video game and expect to make it,” says Jef Rader, vice president of business development at The Walt Disney Company.
“With digital, content creators can make their own content, with their own audience, and it can generate the same revenue that they would generate by selling digital content through a traditional channel.”
While this revenue will increase in the next few years, the growth rates in the business are expected to slow down.
“One of the challenges for content creators is the amount of time that they have to invest in their content,” Rader says.
The other challenge for content owners is that digital entertainment is a new industry and content creators are trying to be innovative.
“They’re trying to innovate and they’re trying it from a different angle,” says Rader.
“So it’s a challenge that we’re not seeing the same level of innovation in content.”
In the short term, Rader thinks the entertainment-based entertainment industry will continue to enjoy strong growth.
“That’s one of the great things about the Internet,” he said.
“In the medium to long term,