According to a report titled “Cities of Opportunities,” by PricewaterhouseCoopers (PwC), an auditing firm with headquarters in the US, back in the year 2015, New York City is the world’s media capital. The report compares the size of the entertainment and media (E & M) amongst 30 urban areas around the globe. Most the cities in the report are leading cities regarding finance, business, and culture around the world. They include New York, London, Tokyo, Seoul, Hong Kong, Los Angeles, Sydney, Chicago, Singapore, and Berlin among others.
The Media Powerhouses of the World
Before beginning the analysis of the report, it is imperative to understand its rationale. The rationale is simple, E & M and urbanization have an undeniable natural connection. Cities all across the world are responsible for driving the technological, cultural, and the communications core of the modern world. In a world where more than 50% of the population live in a city, with more than two-thirds of the population projected to live in cities by 2050, the notion that cities drive the world makes more sense.
In the year 2009, Tokyo was the leading spending city in the world in E & M. Tokyo was spending $17.6 billion, while New York was a close second at $15.8 billion and London closed the top three with $13.9 billion. The top three cities were also the only three cities to have spent more than $10 billion in the E & M sector. However, another study by PwC saw that the tables had turned when New York City dethroned Tokyo at the top of the list with spending of $19.7 billion compared to Tokyo’s $19.5 billion, a difference of only $0.2 billion. London’s expenditure also increased to $16.3 billion while Seoul broke the $10 billion barrier with a massive improvement to $11.9 billion. All the other cities in the study had growths in their spending.
Projections into the future of the cities place New York even further beyond Tokyo. Based on the projected rate of growth, New York will have an approximate spending of $23.6 billion in the year 2018, while Tokyo will be well dethroned at second with amounts of $20.1 billion with London still at third with $18.5 billion. Seoul and Hong Kong will be fourth and fifth respectively with amounts totaling $13.5 billion and $11.2 billion respectively. Los Angeles should also be close to the $10 billion mark with estimated projections of $9.9 billion.
Compound Annual Growth Rate
The projections in the previous paragraph bring about the concept of compound annual growth rate (CAGR). The 2013-2018 forecast shows that Tokyo will have the minimum CAGR of a paltry 0.7%, compared to the other cities. In comparison, New York has a CAGR of 4.5% with London having 3.3%. Of the top five cities projected to spend beyond the $10 billion mark, Hong Kong has the highest CAGR of 5.6% while Seoul has 3.5%.
The reason for such an immense disparity in CAGR can be attributed to the kinds of economy available in the two cities. Compared to Tokyo, New York is an emerging or a fast-growing economy. New York then becomes a developed or mature economy. For someone to understand the concept of a developed economy and that of a fast-growing economy, then consider two cities; Hong Kong and Nairobi. Hong Kong’s rates of growth stands at 5.6% while Nairobi’s stands at a whopping 12.5%. Of the $37 billion gain of the projection, the majority of the money will be dominated by developed cities which also happen to the biggest spenders in the market. All this is despite the fact that the developing cities will grow the most.
Predictably, the biggest gains in the E & M sector will be seen in the internet segment. Everything is digital these days, and the world is wiring up for the future, which will undoubtedly be dominated by technology. Ranging from advertising to entertainment and news, the internet will see the highest gains. However, this is not to mean that TV advertising, news, and entertainment will no longer be present. TV shall remain at the top in advertising but with half the growth rate of the internet which is projected at 10.4%. At this rate, the internet is set to catch up to TV advertising by the year 2020. In all this, however, New York City remains at the top of the top spenders' list of the 30 cities.
Breaking down the other parts of the E & M sector, internet access is expected to grow at high rates of 7.3%. Video games, another segment in the sector, has an estimated CAGR of 12.5%, although it’s still relatively small compared to the other top spending segments.
Across all the thirty cities in the report, 2013 E & M spending was estimated to be at $147 billion across all the thirty cities. The figure is expected to hit even higher marks in the year 2018 at $184 billion, a CAGR of 4.5%. Of the total $147, $109 billion was from the mature economies compared to $38 billion, a figure almost three times, from emerging economies. Equally, the projected growth rate for developed cities is expected to be less than half that of developing cities; 3.4% compared to 7.4% respectively.
Future of the E & M Sector
From the above, it is obvious that the tale is divided into two parts; that of developing cities and emerging ones. Both of them have a very important role in the growth and development of the E & M sector.
Developing cities are playing a significant role in the growth of the sector. However, for all their impressive growth rate, their spending power is minimal. As of 2013, developed cities accounted for approximately 78% of the total expenditure. This value is expected to drop to 70% by the year 2018, which is still a small share. Developed cities, with New York at the helm, will continue to dominate the spending in the sector for many more years to come, an industry that is critical to the economy of the world.