The media and entertainment industry, which encompasses a vast array of sectors from cinema and publishing to news, television, music and social networks, is now at a crossroads, facing a series of unprecedented challenges that are redefining the rules of the game.
Accelerated digitization, new consumer expectations, and the rise of streaming platforms have shaken up a once-stable ecosystem. At the same time, audience fragmentation and the need to produce diversified content while maintaining profitability are pushing industry players to reinvent their business models. Added to this are issues of regulation, data protection and fair remuneration for creators, further complicating an already rapidly changing landscape.
As the digital giants continue to strengthen their grip, traditional companies struggle to stay relevant. How can they adapt to fragmented audiences? What strategy to adopt in the face of asymmetrical competition? How can content be effectively monetized in the digital age? These questions are at the heart of the industry’s concerns. This article looks at the current strategic challenges and opportunities on the horizon.
A growing market
The global media and entertainment industry is experiencing sustained growth, driven by technological advances and changing consumer habits. According to a report by research firm Mordor Intelligence, this market, valued at just over $27.7 billion in 2024, is expected to reach $40 billion by 2029, with a compound annual growth rate of 7.8%.
North America, and the United States in particular, is the main driver of growth in this industry. This region is positioning itself as a dynamic and innovative market on an international scale. It offers consumers a diversity of choices and creates multiple business opportunities.
Digital transformation as a driver of change
According to Mordor, digital transformation is playing a central role in this industry boom. Internet penetration and the proliferation of connected devices (cell phones, tablets, etc.) have profoundly altered digital media distribution and consumption models. Streaming and bypass services (or OTT for Over-The-Top), have challenged the supremacy of traditional broadcasters, offering consumers flexibility and personalization in their content consumption. Streaming giant Netflix is a prime example of this trend, with almost 270 million subscribers worldwide.
Next-generation networks, such as 5G, promise to further accelerate this trend by offering ultra-fast speeds and reduced latency (the time between sending and receiving content). This paves the way for new forms of immersive, interactive content.
The industry is entering a platform economy. Netflix, YouTube and others don’t necessarily own the goods or services they offer, but they provide a space where supply and demand can come together through the use of digital technologies. These platforms have also introduced new business models. For example, YouTube enables content creators to monetize their videos through advertising, while platforms like Patreon allow fans to directly support their favorite artists. Projections indicate that by 2029, almost half (47.4%) of media market revenues will come from platforms, says Statista, a data and business intelligence portal.
Barriers to entry are reduced in this type of economy, which increases competition. Anyone with a good idea and technical skills can potentially disrupt the market with their creation. Industry players therefore need to stay on top of these trends to take advantage of the opportunities offered by this fast-moving market.
Canada: a digital future
The outlook for the Canadian entertainment market is equally promising. According to Statista, the estimated total revenue of the Canadian entertainment market was over $900 million in 2022. Analysts predict it will reach $1.7 billion by 2029, representing a compound annual growth rate (CAGR) of 7.5%.
For the Canadian media market, which includes books, games, music, radio, podcasts, newspapers, magazines, as well as TV and video, estimated sales in 2024 are $43 billion. Two segments, television and video, account for about half the market, or just over $22 billion.
Traditional media in crisis
Some segments of the media and entertainment industry are under more pressure than others. Such is the case of the news business, which is facing multiple challenges that are overturning traditional models of journalism.
Audience fragmentation is at the heart of these issues. More than ever, information is being accessed via social networks, with TikTok, Instagram and Facebook gaining in popularity, especially among young people. YouTube is also asserting itself as a major source of news, used every week by almost a third of consumers worldwide, reveals the Digital News Report 2024, a survey by the Reuters Institute for the Study of Journalism at Oxford University of more than 100,000 respondents from 47 countries.
Canada is no exception to this trend, albeit on a different scale. Social media are only the third most consulted source of information by the population (24%), far behind television (38%) and news sites and applications (30%).
Meta, a big player
It has to be said that Canadian media have been facing the blocking of journalistic content on Facebook and Instagram since August 2023, a decision by Meta, the owner of these platforms, in response to the introduction of the Online News Act. This requires the web giants to pay compensation to media companies for the use of their journalistic content on the platforms. While Google has agreed to pay Canadian news publishers $100 million a year, Meta has stuck to its guns.
The blockage seems to have had an impact on readership, albeit to a lesser extent than anticipated. The use of Facebook as a source of information is declining (25% compared to 29% in 2023), particularly among francophones, who are now only 38% to get their news from Facebook, compared to 46% last year. However, this decline began long before the blocking: in 2016, nearly one in two Canadians used Facebook for information, whereas today it’s just one in four.
By contrast, Instagram, despite the blockage, is gaining ground (13%, +3 percentage points), especially among 18-34 year-olds (26%, +6).
Changing habits
The situation has forced Canadians to change their habits when it comes to following the news. According to a study conducted on behalf of Observatoire des technologies médias, nearly 30% of Internet users are consulting media applications and websites more often, while nearly 20% prefer television and radio.
Another source of concern is that trust in the media remains fragile, with only 40% of respondents worldwide saying they trust news, according to the Digital News Report 2024. Over a third of respondents (39%) say they actively avoid news. Over-information and the difficulty of distinguishing truth from falsehood on the Internet fuel this phenomenon.
Jobs are affected
This transformation of the media landscape has had a negative impact on employment, with thousands of jobs eliminated in recent years. Between 2018 and 2023, the number of employees for the entire cultural and communications industry in Quebec fell by around 16%, according to the Institut de la statistique du Québec. The decline is particularly marked in the newspaper and book publishing sector, which employed 4,700 people in May 2024, down 36% on the same period in 2018. At radio and TV stations, headcount was reduced by 15%. The loss of advertising revenue has led to successive rounds of cuts in this sector.
In search of a new business model
This migration to social networks and video platforms is posing serious problems for traditional media, capturing most of the public’s attention, but also that of advertisers. Between 2012 and 2022, advertising revenues for the Quebec media industry rose by $2.2 billion, or 89%. However, the redistribution of advertising budgets is far from equitable: revenues from traditional media and supports have fallen by 41%, while those from digital platforms have exploded by 629%, according to a report by the Centre d’études sur les médias (CEM).
Financing cultural and creative industries
This reallocation of advertising investment to global players like Google, Meta and other digital networks leaves the media in an increasingly precarious position, where competition for advertisers is fierce.
The economy and advertising strategies impacted
To remedy the situation, many are seeking to strengthen or introduce revenue models based on payment by readers, such as subscriptions, memberships and donations. However, the implementation of these strategies does not always yield the expected results.
According to the Reuters Institute study, subscriptions are struggling to take off, with only 17% of people paying for online information in wealthy countries. In the United States, barely a fifth of consumers have opted for digital subscriptions.
In Canada, 15% of respondents subscribe to major media apps or websites, up from 11% in 2023. This trend is more pronounced among English speakers, at 16% (+5), while the figure is stable among French speakers (11%).
After a significant increase in paid subscriptions during the COVID-19 pandemic, this growth has run out of steam, note the authors of the study. The majority of people willing to pay have already taken out a subscription, and publishers are now struggling to convince a wider audience, especially as rising inflation has reduced consumers’ purchasing power.
In most countries, the digital subscription market is dominated by a few major national titles. In the USA, for example, The New York Times has over 10 million subscribers, 9.9 million of whom are digital-only. Despite this, some markets are seeing an increase in the number of people paying for more than one publication, notably in the USA, Switzerland, Poland and France, thanks to bundled offers from certain publishers. On the other hand, many subscribers pay very little, taking advantage of discounted trial periods. In the United States, 46% of subscribers pay the full price, compared with just 21% in France.
Paying for information, really?
Further challenges lie ahead: on a global scale, a large proportion of the public (55%) do not see information as a product worth paying for, continuing to access free options. While discounts and trial offers play a crucial role in attracting new customers, retention seems difficult.
The Reuters Institute survey also shows that more people are experiencing information fatigue in the face of multiple media sources. Around four in ten people (39%) sometimes or often avoid the news, up 10 percentage points since 2017. The reasons for this avoidance are varied, but repetitiveness, the negative nature of the news and the anxiety it generates come up frequently.
To address these concerns, media companies are looking to make news more accessible and engaging, while expanding the media agenda without sacrificing quality. Many are adopting a user-driven model that seeks to balance news coverage with stories that educate, inspire, offer insight, connect or entertain.
To each his own
Another promising approach for news organizations, according to the experts, is to focus on the right topics for the right audiences. While local and international news are considered important by all age groups, political news is not in the top five for the under-35s. By contrast, for the over-45s, politics remains a top priority. Younger generations are showing a growing interest in topics such as the environment, climate change and well-being, which are less of a priority for older age groups.
In a world saturated with content, the success of media will depend on their ability to stand out, to become a destination for information that neither algorithm nor intelligence (AI) can provide, while remaining visible on many platforms, conclude the experts at Reuters Institute.
Young people driving change
To move forward, players in the media and entertainment industry will need to take into account the interests and preferences of millennials and Generation Z. Their members – born between 1982 and 2005 and between 1997 and 2012 respectively – have been immersed in digital technology from an early age. In Quebec, the vast majority of 18- to 24-year-olds (96%) and 25- to 34-year-olds (97%) will own a smartphone by 2023, according to NETendances. More than three out of four young people subscribe to entertainment services (Netflix, Disney, etc.) and online music platforms (Spotify, Apple Music, etc.). And around 40% of them plan to discontinue their TV service within the next year.
Generational differences that don’t lie
These young people show a clear preference for more engaging, interactive and personalized entertainment experiences. They are more inclined to watch user-generated video content, follow online creators and use social networks. Their attraction to virtual worlds, augmented reality and shopping on social networks reflects their quest for immersive interactions. This appetite for engaging, personalized entertainment experiences goes hand in hand with a strong interest in social and environmental causes.
Media and entertainment companies will need to pay particular attention to Generation Z, whose demographic weight is growing steadily in many countries. Its members already represent 20% of the population in the United States. In Canada, according to Statistics Canada, the Z group is set to outnumber millennials, currently the largest generation, within the next fifteen years. Brands need to win the loyalty of these young consumers today to ensure their long-term loyalty.
Book publishing: a dynamic market
According to the latest report from the Institut de la statistique du Québec’s Observatoire de la culture et des communications, the province’s book industry continues to prosper, surpassing pre-pandemic sales levels for the third year running.
Overall, the Quebec book market generated $677.3 million in 2023, almost identical to the figure for 2022 ($678.4 million), demonstrating the sector’s stability. It represents almost a third of the Canadian market’s sales, which totaled $1.7 billion in 2022.
Print books continue to be popular with readers. Across Canada, they accounted for 73% of consumer purchases. Digital books accounted for 17% of sales, and audio books for 6%.
In Quebec, the digital book market is showing signs of slowing, with sales down 6.2% in 2023, marking the third consecutive year of decline in this segment.
Video games: between challenges and promises for the future
The global video game industry continues to grow, with revenues estimated at US$187.7 billion in 2024, up 2.1% on the previous year. However, this growth remains below analysts’ forecasts of 2.8%. Companies continue to face a number of challenges, including lower console sales and an overall slowdown in consumer spending.
According to a report by market research firm Newzoo, almost half of consumer spending on games in 2024 is expected to come from the USA and China. Together, these two markets are expected to generate more than US$90 billion.
However, the outlook for 2025 looks promising. Two major launches should reinvigorate the industry: Nintendo plans to launch a new generation of its Switch console in spring 2025. There should also be the release of Grand Theft Auto VI, developed by Rockstar Games. In addition, strategic partnerships, such as the one between Disney and Epic Games, creator of the popular game Fortnite, promise to create novel gaming experiences blending popular universes such as Marvel, Star Wars and Fortnite. Disney is investing US$1.5 billion in this venture.
According to Newzoo, one of the main challenges for game studios in the coming years will be to control costs in an increasingly competitive and consolidated market. Studios will also have to deal with complex issues linked to the competition between free-to-play games (available on dematerialized stores) and premium games (with additional paid content), as well as the growing use of generative artificial intelligence in development, marketing and operations.
In the shadow of these major players, Quebec manages to hold its own, ranking among the world’s top three production hubs, alongside California and Tokyo. In 2023, the sector will be worth $1.4 billion, up on 2019, when it crossed the symbolic $1 billion threshold. With nearly 13,000 jobs, Quebec accounts for almost half of all jobs in the Canadian video game industry, well ahead of British Columbia and Ontario. Ubisoft, Eidos, Electronics Arts… Many of the world’s video game giants have studios in the province. In addition, there are almost 200 independent Quebec studios contributing to the industry’s effervescence.
While the industry’s future looks promising, challenges remain. Independent studios will need to develop marketing and distribution expertise to complete the value chain, according to the Quebec Video Game Guild.
More questions? We have the answer.
What are the creative industries?
The creative industries cover a range of activities based on creation, innovation and cultural know-how. From cinema and music to publishing, design and video games, these sectors shape our culture while adapting to today’s digital challenges.
How can the culture industry be an instrument of power?
The cultural industry influences ideas, behavior and even politics, shaping collective perception. In a digital world where control of information is crucial, culture becomes a real lever of power for those who know how to master it.
