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Net, tech to juice up global entertainment market

PwC says online ads, broadband, mobile communications and other tech areas will help speed up growth.

The Internet and new technologies should help the global media and entertainment market see annual revenue of $1.7 trillion by 2008, putting years of sluggish growth behind it, according to research from PricewaterhouseCoopers.

The industry will achieve a compound annual growth rate, or CAGR, of 6.3 percent, compared with 4.2 percent in 2003, the researcher said. Spearheading the growth will be video games, Internet advertising, access and distribution technologies such as broadband and mobile communications, and digital products like DVDs, according to a statement from Wayne Jackson, PwC's global leader for entertainment & media practice.

PwC estimates that during the next five years, the number of broadband households will grow at a 31.3 percent CAGR, crossing the 300 million mark for the first time in 2008. This shift should boost a number of industry segments, such as recorded music.

The major music labels claim to have suffered hugely as the result of unauthorized downloading from the Internet, but PwC sees things looking up by 2005, with a projected 2 percent CAGR for the period from 2004 through 2008. PwC said the Internet has already evolved into a vital distribution channel. In 2003, licensed online music services began acquiring paying customers, showing that consumers will pay for high-quality entertainment that is easily accessible online.

Similarly, Internet advertising should boom. The Internet is the smallest of the six advertising media PwC tracked--and also the fastest-growing, with a projected 2008 revenue of $18.9 billion on a 12.7 percent CAGR.

Internet advertising spending rebounded strongly in 2003, with a 22.9 percent increase after a weak 2001 and 2002. "Paid search and rich media propelled spending in 2003, and the growing number of broadband households, along with expanding e-commerce, makes the Internet more attractive to advertisers," Jackson said.