After three years of sluggish momentum because of economic and terrorism woes, the global media and entertainment industry is picking up speed, according to a new study. The industry is set to grow at

After three years of sluggish momentum because of economic and terrorism woes, the global media and entertainment industry is picking up speed, according to a new study. The industry is set to grow at a compound annual rate of 6.3% over the 2004-08 time frame and hit $1.67 trillion in 2008, according to the fifth annual edition of PricewaterhouseCoopers' "Global Entertainment and Media Outlook."

The latest version of the big industry study, which will be formally released in the United States today (June 29), projects U.S. sales of digitally distributed music to climb from $71 million in 2003 to $2.2 billion by 2008, "becoming the principal driver of growth in the recorded music industry as a whole."

The report projects the strongest revenue gains over the five-year period to come in the Asia-Pacific region with 9.8%, with the U.S. market set to expand at a 5.4% compound annual rate. Asia-Pacific's recorded-music market is expected to continue to decline over the next two years, according to the report, but will stabilize in 2006 and expand over 2007 and 2008, making for a 0.4% compound annual increase from 2003.

The report identifies video games and the Internet as key growth opportunities for media and entertainment companies. Film growth is set to slow as the DVD market moves toward a maturation point in the United States, while advertising trends will be uneven over the five-year period, PwC predicts.

"While terrorism remains a grave threat, economic conditions in most countries have improved, and the entertainment and media industry is expanding," the report says. "However, while the global outlook is certainly brighter in 2004 than in the previous few years, there are also significant budgetary pressures, including rising energy costs and increased spending on security."

PwC's annual outlook covers 14 industry sectors -- from print, film and television to radio, recorded music and video games -- in the United States, Canada, Latin America, Asia-Pacific and the Europe/Middle East/Africa region. It calculates media and entertainment revenue from two sources -- consumer spending and advertising.

Last year, the industry expanded its revenue 4.2% to $1.23 trillion globally, with the U.S. market increasing 4.3% to $523.2 billion. For 2004, PwC projects a 5.7% improvement in both figures to $1.3 trillion and $552.9 billion, respectively.

However, over the full five-year period, the worldwide industry's growth will outpace U.S. gains.

The Asia-Pacific region showed media and entertainment revenue of $229.1 billion last year, up 5.6% year-over-year. For the 2004-08 period, PwC projects 9.8% annual compound gains to $365.9 billion at the end of the period, with China and India serving as the two main growth engines.

Driven by changes in digital and broadband technology, the video-game and Internet sectors will be the fastest-growing sectors of the entertainment industry, the report indicates.

PwC predicts 20.1% compound annual gains for the video-games market globally, with the U.S. games sector expanding 15.1% by 2008. This would leave the sector with revenue of $55.6 billion worldwide and $15.3 billion in the United States. Internet growth for the 2004-08 period will be fueled by compound growth of 17.3% in consumer spending on Web access and 12.7% growth in online advertising, PwC forecasts.

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