AI-driven advertising set to propel global entertainment and media revenues to $3.5tn by 2029, says PwC

PwC forecasts global entertainment and media revenue to reach $3.5 trillion by 2029, representing a 3.7% compound annual growth rate, primarily driven by the increasing adoption of AI in advertising. Despite economic headwinds, advertising is a key growth engine, with digital formats projected to account for 80% of ad revenue by 2029, up from 72% in 2024, propelled by AI-powered personalization. This outlook highlights significant opportunities in digital engagement, including connected TV ad revenue reaching $51 billion and video games sales climbing to $300 billion by 2029.

Analysis

A new PwC report projects the global entertainment and media (E&M) sector will expand to $3.5 trillion by 2029, reflecting a 3.7% compound annual growth rate. This growth is predominantly fueled by the increasing adoption of artificial intelligence in advertising, which is becoming a more critical revenue stream as consumers curtail discretionary spending on subscriptions and cinema tickets amid economic pressures. The report forecasts a significant structural shift, with digital advertising's share of total ad revenue expected to rise from 72% in 2024 to 80% by 2029, accelerated by AI-powered personalization. Specific high-growth segments identified include connected television advertising, projected to reach $51 billion, and the global video games market, which is set to climb to $300 billion by the end of the forecast period. The outlook suggests that companies that are technologically nimble and can deliver creative, tailored content will be best positioned to capitalize on these enduring trends despite macroeconomic headwinds.

Key Decisions for Investors

• Investors should assess opportunities in companies at the forefront of AI-driven advertising technology, as this is identified as the primary growth driver for the entire E&M sector.
• Consider overweighting exposure to high-growth sub-sectors such as video games and connected TV, given the specific revenue forecasts of $300 billion and $51 billion respectively.
• When evaluating media holdings, prioritize companies demonstrating a proactive strategy to integrate AI and personalized content, as firms reliant on traditional, non-ad-supported revenue models may face headwinds from shifting consumer spending.