Despite the economic headwinds facing the global landscape, Italy's Entertainment and Media (E&M) industry has emerged as a shining beacon, recording a remarkable 3.7% expansion in 2023 to reach a valuation of €50.1 billion. This impressive growth has been fueled by a staggering 9.3% surge in advertising revenues, which now stand at €12 billion.

Powering Italy's E&M Sector: A Transformative Digital Shift

The Digital Dominance: Driving Exponential Growth

The digital segment has emerged as the driving force behind Italy's E&M industry, accounting for a staggering 84% of total revenues in 2023. This digital-led growth is projected to continue, with a forecasted CAGR of 4.6% through 2028, ultimately reaching a valuation of €58.4 billion. At the heart of this digital transformation lies the meteoric rise of online advertising, which reached €6.5 billion in 2023, and the sustained growth of AVoD (Advertising-based Video on Demand) services.

Streaming Supremacy: The Ascent of OTT

The Italian E&M landscape has witnessed a seismic shift, as OTT (Over-the-Top) revenues have quadrupled since 2019, surpassing traditional pay-TV for the first time in 2023. This surge is a direct result of a profound change in consumer behavior, with viewers increasingly opting for more affordable and flexible OTT subscriptions, abandoning the rigid confines of traditional pay-TV.

Advertising Resurgence: Fueling the E&M Boom

Advertising revenues have emerged as a key driver of Italy's E&M industry, with total advertising revenues projected to rise at a CAGR of 4.7%, reaching €15.1 billion by 2028. This growth is underpinned by the continued expansion of the digital advertising landscape, as well as the industry's ability to adapt to evolving consumer preferences and technological advancements.

Navigating the Non-Digital Landscape: Challenges and Opportunities

While the digital segment has been the primary engine of growth, Italy's non-digital E&M sector is projected to contract until 2028. This decline is primarily driven by a sharp decrease in video revenues, particularly from the public license fee. The government's decision to reduce the annual license fee from €90 to €70 will have a significant impact on the revenue streams of the public broadcaster, Rai.

Streaming Services: Adapting to Maintain Profitability

As the cost of content continues to rise and subscriber growth stagnates, streaming services in Italy must innovate to maintain profitability in the coming decade. Major players like Netflix, Prime Video, and Disney+ have already taken proactive steps, launching ad-supported tiers to broaden their audience and increase revenue. This trend is expected to continue in the years ahead, as streaming services adapt to the evolving market dynamics.

The Road Ahead: Navigating Challenges and Seizing Opportunities

Italy's E&M industry stands at a pivotal juncture, poised to capitalize on the digital transformation and the resurgence of advertising revenues. However, the sector must also navigate the challenges posed by the contraction of the non-digital segment and the need for streaming services to innovate and maintain profitability. By embracing the digital revolution, optimizing advertising strategies, and adapting to changing consumer preferences, Italy's E&M industry is well-positioned to continue its impressive growth trajectory in the years to come.