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Streaming Movie Revenue Forecast to Surpass Box Office Totals

NEW YORK (TheStreet) -- In a wide ranging report on the future of the entertainment industry, PricewaterhouseCoopers expects on-demand, digital delivery of videos, movies, music, games and eBooks to explode in the next few years.

In this year's Global Entertainment and Media Outlook, PwC is forecasting that the digital delivery revolution will permanently change the way we use our connected devices - so much so that, for instance, video streaming services such as Amazon (AMZN - Get Report), Apple's iTunes (AAPL), Hulu, Netflix (NFLX - Get Report) and Google's YouTube (GOOG) should outpace U.S. movie theater receipts by 2017.

The survey believes:

  • Electronic home video streaming is one of the fastest-growing consumer sub-segments and is projected to reach $10.1 billion in 2018, up from $3.3 billion in 2013.
  • Box office resilience underscores the continuing popularity of the cinematic experience. U.S. box office revenue will exceed revenue from physical home video (discs) in 2015.
  • Electronic home video revenue will exceed physical home video revenue in 2016. Total electronic home video revenue, driven primarily by video-on-demand rather than through-TV subscriptions, will surge from $7.34 billion in 2013 to $17.03 billion in 2018. By 2018, the electronic home video segment will be the main contributor to total filmed entertainment revenue at 43 percent, overtaking the box office in 2017.
  • Advertising-supported and paid-subscription streaming music services rose 48.5 percent in 2013 as streamed offerings gained significant traction for U.S. consumers. There were a total 118 billion music streams in the U.S. in 2013, representing significant year-on-year growth of close to one-third. Digital music streaming revenue is forecast to increase from $848 million in 2013 to $1.7 billion in 2018, when it will account for 37 percent of total digital recorded music revenue.
  • Mobile video gaming continues to drive uninterrupted growth in the U.S. and is forecast to reach $1.84 billion in 2018, up from $1.32 billion in 2013.
  • Online video gaming to reach $3.60 billion in 2018, up from $2.51 billion in 2013.
  • Consumer books electronic revenue will reach $8.7 billion in 2018, up from $4.5 billion in 2013. Digital revenue will overtake consumer books print/audio revenue in 2018 with growth in tablets encouraging digital consumption of books.

These new paradigms will also have a big effect on the advertising industry. PwC forecasts global entertainment and media spending is expected to rise from $1.8 trillion last year, to $2.3 trillion by 2018 and should outpace consumer spending. That explosive advertising growth estimates include digital magazines, as well as video games.

The survey warns that attracting, retaining, and monetizing the digital consumer remains challenging. "The consumer is now at the center of their own entertainment and media world, pivoting from finding to being found by content experiences via every channel and device," according to PricewaterhouseCoopers' U.S. Entertainment and Media boss Ken Sharkey. "E&M businesses may need to look beyond technology, and adopt more flexible business models that allow them to get closer to the consumer. What's important to the consumer is the specific experience - whether it's live or on-demand and on any screen."

-- Written by Gary Krakow in New York.

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Gary Krakow is TheStreet's Senior Technology Correspondent.

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