UK becomes Europe’s leading entertainment and media market

The UK has officially overtaken Germany to become Europe’s largest entertainment and media market. The news sees it become the world’s fourth largest market, behind Japan, China, and the US.

The UK’s entertainment and media market has steadily been growing in recent years, rapidly gaining ground on its closest competitors in the process. According to a study from PwC last year, the market was set to become Europe’s largest market by 2026, with its total value forecast to be almost £100 billion by then.

Now, an update from PwC suggests that thanks to the key driver of digital consumption, the UK’s entertainment and media segment has already edged ahead of its continental rivals. In 2021, the market had already drawn level with Germany – rebounding from a Covid-19 dip more rapidly than either the German or French markets.

By the end of 2022, however, the UK market boomed to a value of £81.4 billion – moving away from Germany’s revenues of £79.7 billion, and France’s £52.1 billion. This was in spite of challenging economic conditions, which suppressed consumer confidence in the UK, and potentially prevented even more rapid growth.

Mary Shelton Rose, PwC’s leader for technology, media and telecoms in the UK, explained, “2022 was a challenging year for the UK entertainment and media industry as the economy struggled to return to normality. In the midst of continued change and disruption, the industry reassessed its strategies and refocused on core operations.”

Thanks to this pivot, the UK is forecast to maintain its position as the leading entertainment and media market in Europe over the next four years – and even widen the gap with its closes rivals. PwC’s outlook suggests that while, thanks to that challenging environment, it will now take until 2027 to break the £100 billion mark, UK entertainment and media revenue will hit £85 billion for 2023 – as the market pushes toward a compound annual growth rate of 4% over the next four years.

The UK has become the world’s fourth largest entertainment and media market in the process. While it is still some distance behind global leaders China and the US, it is gaining on Japan, too – which has a lower CAGR of just over 1%. In particular, this is being driven by the Virtual Reality market in the UK is expected to see steady growth in the next four years, driven by the rising popularity of VR gaming and immersive video experiences – and total UK VR revenue is set to increase from £1.3 billion in 2023 to over £2 billion in 2027, at a CAGR of 10%.

However, amid the overall gains the rate of growth is still muted by sluggish consumer spending, which is pushing companies to reset expectations, refocus inward and seek ways to recharge growth. In particular, this is likely to see a growing emphasis on generative AI in the UK market. Not so much because it will be creating the products which will be sold directly to consumers, but because it will deliver a quicker and cheaper means of advertising products to them.

Dan Bunyan, partner at PwC Strategy&, added, “Generative AI is likely to play a growing role in the UK internet advertising market, across a range of channels and content creation. For example, within the search segment of the market we have seen the integration of generative AI technology into search engines, starting with the inclusion of Chat GPT in Microsoft’s Bing and the launch of Google’s own Bard platform. Further adoption and calibration of Generative AI tools across the digital marketing ecosystem is likely to drive further competitive innovation.”