MUMBAI: Global entertainment and media spending is expected to rise from $1.6 trillion in 2011 to $2.1 trillion by 2016, growing at a compound annual growth rate (CAGR) of 5.7 per cent, according to PwC?s annual Global Entertainment and Media Outlook 2012-2016.

The U.S. E&M market experienced the largest increase since 2007 with faster growth expected, growing at 5.2 per cent CAGR reaching $597 billion in 2016, from $464 billion in 2011.

Record global sales of tablets and smart devices are underlining the rising revenue opportunities from digital delivery of entertainment and media (E&M) content and advertising to increasingly connected and mobile consumers, the report noted.

The M&E industry, the report states, is approaching the ?end of the digital beginning? with digital now embedded in business-as-usual and moving to the heart of many E&M companies.

The report finds that growth in digital E&M spending will continue to significantly outpace growth in non-digital spending during the next five years. Digital spending is expected to account for 67 per cent of all growth in spending during the next five years, globally. Digital spending in the U.S. is expected to account for 31.5 pe rcent of all E&M spending in 2016, up from 21.7 per cent in 2011.

?Change in consumer behavior is pervasive and accelerating and the E&M industry is in the front line of this change. The past uncertainty triggered by the digital migration has given way to a sharper focus of E&M companies on executing their digital strategies. While experimentation will continue, the way forward is becoming clearer as companies focus on identifying, choosing and executing the right business models, organizational structures and developing the skill sets to understand consumer behaviors and motivations in their connected, multi-screen environments,? said PwC US practice leader entertainment, media & communications Ken Sharkey.

?By embracing digital as the engine of their business and using it to integrate and automate processes from content production to rights management, E&M companies are well positioned to meet the fast changing consumer demands through any channel and format more effectively and drive greater revenue growth than before,? added Sharkey.

According to the Outlook, the rise of unpaid or earned media reflects an innovative new mix of advertising, content and analytics, bringing sweeping change to the roles and business models in advertising. The rise of socialisation is feeding into the widely-accepted concept of bought, owned and earned advertising among agencies and advertisers.

A fourth category is emerging ? ?managed? advertising, which involves the orchestrated use of social media, such as engagement with bloggers. Everything that agencies do for their clients now has an embedded digital component with the attention on measurement shifted towards earned, unpaid media reach and purchasing intentions.

Overall, U.S. advertising is expected to increase at a 5.9 per cent CAGR from $172 billion in 2011 to $229 billion in 2016, enhanced by Olympic and political advertising in 2016. Internet advertising is expected to average 16 per cent CAGR followed by video games, one of the smallest segments, at 11.4 per cent CAGR.

Television advertising, the largest segment, is expected to grow at 6.7 per cent CAGR. Out-of-home advertising and cinema advertising are expected to grow by 4.9 per cent and 4.5 per cent CAGR, respectively. Newspaper advertising (-0.2 per cent) is expected to be the only category to decline.

Recorded music rebounds in the U.S.

In the US, Internet advertising is expected to continue to outperform all other E&M segments, with double-digit gains of 16 per cent CAGR. Recorded music will rebound with steady expansion projected rising at a 5.5 percent CAGR to $19.8 billion in 2016 from $15.2 billion in 2011. Digital distribution of recorded music is expected to overtake physical distribution in 2012 and will rise at an 11.7 per cent CAGR to $5.5 billion in 2016 from $3.1 billion in 2011.

Internet access (9.3% CAGR), TV advertising (6.7% CAGR) and TV subscriptions (5.4% CAGR) are set to grow more than 5 per cent compounded annually. Out-of-home advertising (4.9% CAGR), video games (4.1% CAGR), radio (4.1% CAGR), business-to-business publishing (4% CAGR), consumer magazine publishing (1.6% CAGR), consumer and educational book publishing (1.1% CAGR) and filmed entertainment (0.6% CAGR) are expected to generate modest growth. Spending on newspaper publishing (-1.4% CAGR) is expected to decline moderately before it begins to expand in 2016. Overall, U.S. consumer/end-user spending is expected to grow by 3.7 per cent CAGR.