Online Entertainment Market

Market Overview

The global online entertainment market size was valued at USD 268 billion in 2021 and is estimated to reach an expected value of USD 1490 billion by 2030, registering a CAGR of 21% during the forecast period (2022 – 2030).

Online entertainment content, such as music, films, books, and games, is known as online entertainment. The number of internet users who have switched to preferring online entertainment has increased due to the increased usage of smart gadgets like smartphones, smart TVs, and laptops.

As more people create movies, music, and photographs on various social media platforms, including Instagram, Facebook, Tumblr, LinkedIn, and Whatsapp, online social media entertainment has recently grown significantly. Thus, throughout the projected period, the expansion of the online entertainment market share is anticipated to be aided by the increase in the popularity of social networking platforms.

Market Dynamics

Market Driving Factors

Technological Advancements in Smartphones

Advancements in internet-enabled devices such as smartphones, smart TVs, laptops, and desktops have attracted a large customer base in online entertainment. For instance, the launch of 4G and 5G smartphones has increased the viewership and subscription of various video OTT platforms such as Netflix, Amazon Prime, Hulu, Hotstar, Alt Balaji, and Zee5. OTT media services are majorly contributing to the online entertainment market growth. Furthermore, smartphones are mainly used for playing online video games, owing to their portability increase in display size, as wide-screen smartphones enhance the visual and gaming experience. Pubg, Fortnite Battle Royale, League of Legends (LOL), Hearthstone, and ArcheAge are some of the online games which have gained popularity and positively impacted the sales of smartphones, thereby augmenting the growth of the global online platform market.

The Surge in Disposable Income

The economy's improvement is a significant component of the market's expansion. Increased consumer buying power due to higher per capita disposable income results in increased spending on online entertainment, which is anticipated to fuel the market's growth. The ability to spend more money is expected to raise living standards and enable people to buy technologically advanced electronics like smart TVs and smartphones, which will, in turn, drive the expansion of the online entertainment business. In addition, disposable income in the developing countries of Asia, such as India and China, has witnessed significant growth in the past few years, thus increasing the expenditure on online entertainment, which drives the development of the global market.

Market Restraining Factors

Digital Illiteracy and Limited Digital Infrastructure

During the projected period, a high level of digital illiteracy is anticipated to restrain the growth of the online entertainment industry. This is explained by the fact that digital illiteracy restricts internet usage and hinders smartphone sales, which has a detrimental effect on the expansion of the online entertainment business. Because of their lack of digital literacy, 6.7 million people in France, according to government officials, are never connected to the internet.

Another major hindrance to the growth of the online entertainment business is the lack of digital infrastructure facilities for internet access. Additionally, the lack of access to computers and the internet, particularly in schools and colleges, causes a rise in digital illiteracy, which restrains the market's expansion.

For instance, just 21.3% of pupils in 596 government schools across 619 districts have access to computers, according to the Annual Status of Education Report (ASER) 2018. Because of this, all of these variables negatively impact the overall market growth.

Global Online Entertainment Market Opportunities

The Surge in Expenditure on Digital Advertisement

Investors and customers will likely be drawn to the growing online traffic as businesses market and promote their goods and services. Influence from social media is crucial in expanding the online or digital advertising business. Most social media sites, such as Instagram, LinkedIn, Telegram, and WhatsApp, have seen significant growth in millennial usage. This lucrative potential is for investors to market their brands on these sites. The benefits of digital media advertising, including higher customer conversion rates, lower marketing costs, segmented and targeted customer bases, improved search engine rankings, increased inbound traffic, and higher customer satisfaction, are also anticipated to open up new growth prospects for the market soon.

Regional Analysis

By region, the global online entertainment market is segmented into North America, Europe, Asia-Pacific, and LAMEA.

North America was the highest revenue contributor and is estimated to grow at a CAGR of 16.1%. North America dominated the market in 2019 and is expected to sustain its dominance during the forecast period. This is majorly attributed to the availability of affordable high bandwidth connections, the presence of a large user base of smartphones, and a high digital literacy rate. Furthermore, early adoption and favorable responses to technological changes in the entertainment & media industry, such as OTT platforms, contribute to market growth. These internet-based services, including over-the-top platforms, rapidly replace traditional programming distributors such as cable, satellite, and broadcasting. In addition, OTT services have gained significant popularity in the U.S., as videos, serials, games, and music are streaming on various OTT platforms such as Apple TV+, Disney+, YouTube TV, PlayStation Vue, Google Play Movies & TV, Hulu, Netflix, and Prime Video. The convenience of viewing broadcasting content, quality content, individualized subscription packages, and original content, including documentaries & TV shows, drives the adoption of OTT services, which, in turn, boosts the growth of the online entertainment market in the North American region.

Europe is the second largest region. It is estimated to reach a predicted value of USD 390 billion by 2030, registering a CAGR of 22.5%. Due to the growing popularity of OTT services and online gaming, Europe has been holding a sizable portion of the global market for online entertainment. It is predicted to keep doing so during the projection period. Additionally, the sector has benefited from the move from conventional to online gaming. Online betting has gained significant traction in the European region, further supporting the market's growth. The surge in penetration of smartphones integrated with advanced communication functions has revolutionized the OTT services market, which, in turn, is anticipated to boost the market growth during the forecast period.

Asia-Pacific is the third largest region. The Asia-Pacific market is studied across China, India, Japan, Australia, South Korea, and the rest of the Asia-Pacific. Asia-Pacific is emerging to be one of the largest markets for online entertainment. China witnesses the highest penetration of online games and music globally, which significantly contributes to the growth of the market in Asia-Pacific. In addition, advancements in smart devices are expected to propel the development of the online entertainment market. The surge in disposable income in developing countries has boosted the adoption of electronic devices such as smartphones, smart TVs, laptops, and smart displays & speakers, further augmenting the market's growth. The Asia-Pacific online entertainment business is expanding due to rising smartphone adoption and falling data prices. Internet-capable smartphones are primarily used for online entertainment. For instance, the India Brand Equity Foundation estimates that 502 million cellphones were used in India in 2019—almost 77% of the country's population. This number reached 780 million by 2021, propelling the market growth during the forecast period.

Segmental Analysis

The global online entertainment market is segmented by form, revenue model, device, and region.

Based on form, the global market is categorized into video, audio, games, internet radio, and others. The video segment was the highest contributor to the market and is estimated to grow at a CAGR of 16.1% during the forecast period. The video segment dominates the global and is projected to sustain its dominance during the forecast period. This is primarily due to the popularity of streaming video content from various service providers such as Hulu Plus, Amazon Instant Video, Netflix, iTunes, Vudu, Roku, 2 Boxee Box, and Apple TV. Web series such as Prison Break, Black Mirror, Narcos, and Stranger Things have been gaining significant popularity among millennials in developing countries such as China and India. Video OTT platforms, such as Netflix, have focused on streaming the latest movies, likely attracting movie viewers, thus boosting the growth of the online video entertainment market. YouTube is the major contributor to the growth online video entertainment market, as most of the content is free of cost, enables easy asses to global videos, and facilitates easy video uploads.

The games segment is the second largest. Online games and e-sports are expected to increase in popularity, owing to a rise in consumer awareness toward interactive entertainment systems and the base of passionate fans across the globe. Furthermore, the surge in smartphone users at a significant rate is boosting the growth of the mobile gaming market globally. The dependency on smartphones and tablets is a considerable thrust to the global online gaming market. In addition, smartphone companies are launching smartphones by promoting compatibility with various popular games, which, in turn, boosts the growth of the online gaming market along with smartphone sales. Casual gamers have been attracted to online gaming by social or free-to-play games through new and convenient platforms such as tablets or smartphones. Furthermore, competitive gaming has been gaining considerable popularity among millennials, which is likely to propel the online entertainment market growth during the forecast period. Thus, the upsurge in penetration of smartphones and tablets in developing and developed economies is positively impacting the growth of the global online gaming market.

By revenue model, the global market is segregated into subscription, advertisement, sponsorship, and others. The advertisement segment was the highest contributor to the market and is estimated to grow at a CAGR of 16.5% during the forecast period. The surge in online social traffic is a crucial factor expected to boost the demand for online advertising. Social media advertising is gaining popularity in the advertising industry, owing to associated benefits such as increased brand awareness, improved customer conversion rate, and a decline in marketing costs. Search ads on Google, content promotion on social media platforms such as Facebook and Instagram, and video ads on YouTube and Hotstar are some examples of advertising revenue models. Furthermore, the surge in the number of smartphone and social media users is expected to propel the online entertainment market growth through online advertising.

The subscription segment is the second largest. Due to its several benefits, including its ability to offer flexibility in billing and payment, convert fixed costs into variable costs, make distribution simple, and act as a stable and constant revenue source, the adoption of subscription revenue models has increased. Some examples of subscription-based revenue models are subscriptions for OTT platforms such as Netflix and Amazon Prime and subscriptions for stock images platforms such as Shutter Stock and image bazaar. Online businesses majorly benefit by choosing subscription-based pricing, as they assure a predictable revenue stream from subscribers for the duration of an agreement. This notably reduces uncertainty and often provides payment in advance, allowing customers to become attached to the service and more likely to remain loyal.

Depending on the device, the global market is divided into smartphones; smart TVs, projectors, & monitors; laptops, desktops, & tablets; and others. The smartphone segment was the highest contributor to the market and is estimated to grow at a CAGR of 21.2% during the forecast period. The increase in the touchscreen size has been majorly driving the growth of the online entertainment market. This is attributed to the increase in touchscreen size of internet-enabled smartphones enhances the experience of watching videos and playing online video games. In addition, smartphones with larger displays allow more text to be displayed and serve as advantageous and convenient when users browse online and read e-books.

Furthermore, the rise in dependency on the internet and internet-enabled applications is expected to propel people to use smartphones, which is expected to support the online entertainment market growth. Moreover, the increase in dependency on smartphones is attributed to the surge in the utility of smartphones, such as e-book reading, bill payment, online entertainment, playing games, video calling, and reading newspapers. Breakthrough upcoming advancements in smartphones such as wireless charging, foldable phones, and artificial intelligence- & augmented reality-enabled phones are anticipated to enhance the experience of online entertainment seekers, significantly contributing to the growth of the global market.

Recent Developments

• September 2022 - Rakuten Group, Inc. and Hakuhodo DY Holdings Inc. announced the establishment of Rakuten Data Solutions, Inc. With operations underway, this new company will research and develop new data solutions.
• June 2022 - Rakuten Group, Inc. today announced that it partnered with Toon Cracker Co., Ltd. and will enter the vertically scrolling full-color digital comics for smartphones.