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Power shifts in China’s entertainment and media industry

Understand China’s power shifts taking place in entertainment and media, as the industry rebounds from 2020 and consumer habits propelled by the pandemic continue to transform sectors and business models.

Mainland China entertainment and media rebounded strongly and its revenue in 2021 will be approximately US$358.6bn and reach roughly US$436.8bn by 2025. In the next five years, Mainland China’s compound annual growth rate (CAGR) of 5.1% will be higher than the global rate of 4.6%. Among them, Mainland China will lead the world in average revenue growth in segments such as Virtual Reality, OTT video, and Internet advertising.

Mainland China outlook highlights

Emerging macro trends and consumption habits arising from the pandemic have led to changes in consumer behaviours. These developments have become a major influence for the entertainment and media industry. Consumers are gaining more power as they now watch more content such as new movies, live webcasts and online concerts through OTT video platforms, diversify their consumption scenarios, and attract a large number of new audiences through user-generated content.

Internet advertising

Mainland China’s Internet advertising market is the second largest in the world: it was worth US$74.8bn in 2020, more than any other market bar the US. The Mainland Chinese market is also worth more than the whole of Europe or the rest of the Asia Pacific markets combined. Total Mainland Chinese Internet advertising revenue is forecast to rise to US$117.5bn by 2025, increasing at a 9.4% CAGR.

With 481mn households with a fixed broadband connection in Mainland China, and 990mn mobile Internet subscribers (more than any other market in both cases), the potential audience of online consumers is huge. And according to the Chinese Government, the number of Internet users in the country increased by 85.4mn between March 2020 and the end of the year, with the COVID-19 pandemic forcing more people indoors and online. The pandemic has also changed consumers’ shopping habits, accelerating a shift towards digital and creating more online consumers.

The Mainland Chinese market has been shifting towards mobile for some years, by 2025 mobile Internet advertising revenue is expected to account for 65.6% of all Internet advertising revenue in the country. Display advertising makes up most of the mobile Internet advertising revenue at 73.7% in 2020, with paid search accounting for the other 26.3%. This is not expected to change significantly during the forecast period, but the proportion of mobile display advertising revenue made up by video will increase from 33.3% in 2020 to 49.7% in 2025.

Like a lot of countries around the world, Mainland China has tightened up its regulations for Internet advertising in recent years: in 2019 a ruling that requires online ads to be clearly marked as such is particularly relevant for the mobile market. This ruling is especially important for “influencers” on social media platforms like WeChat and Weibo.

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