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Report: Media Spending to Reach $1.8 Trillion in 2010

By Gina Keating

Global entertainment spending will reach $1.8 trillion in 2010, fueled by the spread of broadband and wireless technology, according to a PricewaterhouseCoopers report released on Tuesday.

Consumer spending on entertainment through online and wireless channels will more than triple to $67 billion by 2010 from $19 billion in 2005 , the report, "Global Entertainment and Media Outlook: 2006-2010," said.

PWC analysts said entertainment spending in the Asia Pacific region would grow fastest, with double-digit increases on Internet, television distribution, video games, and casino and other regulated gaming.

By 2009, China is expected to surpass Japan as the largest market for media and entertainment in Asia, the report said.

The United States will remain the largest though slowest-growing global media consumer. U.S. media spending will increase by 5.6 percent a year, on average, to reach $726 billion in 2010. That growth will be led by video games and the Internet, the report said.

The spread of digital distribution combined with stepped-up government enforcement and improving economic conditions in developing markets will mute the effects of piracy on the overall industry, the report said.

Current growth rates in advertising will stay constant through 2008, but will slow in 2009 and 2010 as the ongoing economic recovery in some countries falters, the report said.

Internet advertising will continue to grow the fastest of all advertising modes, racking up $521 billion in sales from $385 billion in 2005 and capturing nearly 10 percent of global advertising dollars, compared with 3 percent in 2002.

Michael Kelley, a partner in PricewaterhouseCoopers' entertainment & media practice, said PWC analysts expect a rebound in box office and home video spending driven by digital upgrades in both industries, as well as the modernization of theaters in developing nations.

The U.S. movie theater industry this year began converting its 37,000 screens from 35-millimeter projectors and prints to digital equipment, a change that will improve the movie-going experience and bring down distribution costs, Kelley said.

Digital systems also allow studios to easily distribute several versions of films to capture a larger swath of an increasingly fragmented market.

"You're looking at about 10,000 screens converted by end of the decade in the U.S., then we will start to see an uptick in that impact," Kelley said.

The home entertainment market will benefit from the introduction this year of high-definition DVD formats, the rising popularity of the DVD format in Latin America, and the growth of broadband penetration that allows consumers to buy movies online, Kelley said.

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