January is always a time to look forward and think about how the new year might unfold. It’s worth noting that there is a general air of caution as the year gets underway amid fears about the global economy’s health. But are things going to be as bad as many think? And, if they are, what are the opportunities? Challenging times always seem to spur on innovation. What is certain is that there is a lot to look forward to in 2023.
With that in mind, here are eight key trends will likely dominate the media and entertainment industry in 2023.
#1 Quality Over Quantity
The spending boom on original content is likely to be moderate in 2023. Broadcasters and streamers are adapting to the tougher economic landscape ushered in during 2022. Overall spending growth on original content is expected to fall from 6% last year to 2% in 2023, according to research group Ampere Analysis. Streamers, in particular, are increasingly focused on profitability, having invested heavily to acquire subscribers. Ampere says that streamers are ordering fewer new scripted shows but are seeking higher-quality projects that can make a real impact. There is also a shift in content commissioning to incorporate a greater volume of cheaper unscripted formats.
#2 Box Office Recovery
The global box office will continue its recovery in 2023, but takings will still fall short of pre-pandemic levels. Analysts Gower Street predicts that box office will grow 12% this year, reaching $29 billion. Films such as Indiana Jones and The Dial of Destiny and Mission Impossible - Dead Reckoning (Part One) will be among those attracting audiences. If the 12% projection holds, it means the film industry will need to wait until at least 2024 to see a full return to pre-pandemic global box office levels. Global box office stood at $42.3 billion in 2019.
#3 Inflationary Pressure
With the cost of living continuing to rise, many consumers are trying to cut back on spending. Younger people are feeling especially stretched. The impact of this will be seen throughout 2023. It could result in consumers cancelling some subscription services to save money. However, it’s worth remembering that home entertainment can perform well during periods of economic uncertainty. Streaming, for example, is a relatively inexpensive entertainment option compared to going out—and some analysts think the amount of time spent watching services could rise if there is a downturn.
#4 Media Deal Making
Many analysts say that 2023 will likely bring more consolidation within the media and entertainment industries. “Strategic combinations will simplify the streaming marketplace for consumers, generate cost savings that can be utilized to fund investment in better content, marketing, and technology, and rationalize an industry landscape that is driven by global heavyweights today,” says consultancy EY. If outright mergers and acquisitions aren’t possible for some media players, then partnerships and joint ventures with industry peers can serve to accelerate market entry, share investment, and deliver synergy benefits.
#5 Advertising Growth
2022 was another strong year of growth for the ad industry, despite political and economic headwinds. Advertising industry spend is predicted to continue growing in 2023, albeit at a slower pace of 3.8% globally, according to the latest forecast from ad industry group Dentsu. They anticipate that US$740.9 billion will be spent globally this year. Major brands are likely to continue their investment in advertising, despite the global economic challenges, says brand consultant Kantar. After all, investment in marketing remains one of the most powerful forms of defense in times of economic crisis. Strong brands retain more economic value during tough times and recover more quickly when market conditions improve.
#6 Advertising Video-On-Demand Continues to Grow
Both Disney+ and Netflix launched AVOD (advertising video-on-demand) tiers last year, and it’s a timely move. AVOD enables continued, lower-cost access to consumers’ favorite content. For streaming services, it expands opportunities for new sources of revenue.
Consultancy company Deloitte predicts that by the end of 2023, nearly two-thirds of consumers in developed countries will use at least one AVOD service monthly—a 5% increase over the previous year. In addition, by the end of 2023, Deloitte thinks that all major subscription video-on-demand (SVOD) services in developed markets will have launched an ad-funded tier to complement ad-free options.
#7 Technology Investment
Innovative companies will continue investing in technology in 2023 to help them improve efficiency, drive creativity, and bear down on costs. Media companies will become increasingly comfortable with artificial intelligence / machine learning solutions and use them to speed up workflows and drive customer engagement. In addition, more filmmakers will embrace virtual production, which can shorten production times and bring real-time computer-generated imagery (CGI) and visual effects out of postproduction and onto real-life sets.
Virtual reality will also grow—Deloitte predicts the VR market will generate $7 billion in global revenue in 2023, an impressive 50% leap over 2022’s roughly $4.7 billion.
Meanwhile, the metaverse and non-fungible tokens (NFTs) will remain in focus. The hype around them cooled dramatically in the second half of 2022. Many think this is a good thing: the speculators have moved on, leaving the arena open for more experimentation. Many media leaders are studying how consumers will access content, engage with advertising, transact, and socialize within an immersive internet experience.
#8 Sustainability Focus
Environmental sustainability and cutting carbon emissions will remain firmly on the agenda in 2023, particularly in light of the 27th Conference of the Parties (COP27) and energy price pressures. For the media and entertainment industry, 2023 will be about innovation—whether that’s brands offering green products and services, media owners delivering more energy-efficient services or creatives thinking about how their content can influence audiences to be more sustainable.
A Bonus Trend
Maybe it’s worth adding a ninth trend—we’ll continue to support our clients’ video creation and localization efforts in 2023. We’ll also continue to invest heavily in cutting-edge technology tools that bring innovation and efficiencies to every step of the media workflow.
We’ll attend many of the media and entertainment industry’s biggest events in 2023, such as NAB, IBC, and MIPCOM. If you’re going to be at any of these events, please stop by and say hi! MediaNEXT offers various solutions to communicate your message around the world. Learn more about our services and solutions.