Revenue generated from digital sources in Hong Kong such as over the top streaming video and internet advertising, surpassed offline sources for the first time last year, and is forecast to reach US$5.8 billion by 2022, as consumers increasingly use mobile devices to watch streaming videos and read news, according to a PwC study.

Taking into account the city’s digital revenues of US$4.5 billion last year, the segment is expected to grow at a compound annual growth rate (CAGR) of 5.1 per cent between 2018 to 2022.

In contrast, non-digital media, such as newspapers, magazines, and traditional TV, are likely to generate less advertising and consumer spending, down from US$4.3 billion in 2017 to US$4.05 billion in 2022.

“Digital is the trend, ” Cecilia Yau, PwC’s head of Hong Kong entertainment and media sector, said on Wednesday. “Hong Kong’s traditional advertising still generates more revenues than internet advertising, but consumers are turning to digital platforms [to access content], especially mobile devices, which will prompt advertisers to shift their spending.

“Because of Hong Kong’s uniquely dense population, advertisers still see print, TV, out-of-home advertising as a powerful and effective tool to capture mass views in a short duration.”

By 2022, Hong Kong’s internet advertising market will be worth US$732 million, up from US$456 million in 2017.

Mobile internet advertising revenues will account for 39 per cent by 2022, from 32 per cent in 2017.

“Mobile internet advertising will be driven by video-on-demand, live streaming and online shopping, supported by high speed networks and higher video resolution as a result of the upcoming roll-out of 5G technology that will improve user experience,” Yau said.

Meanwhile, in China, digital revenues stood at US$143 billion in 2017, accounting for nearly 60 per cent of the entire entertainment and media sector’s revenue.

By 2022, this could reach US$224 billion, or 65 per cent of the total pool, the PwC study forecast.

“Overall, China is the second largest market globally for internet advertising, behind the US,” said Wilson Chow, head of global technology, media and telecommunications at PwC.

China’s internet advertising market will be worth US$80 billion by 2022, up from US$46 billion in 2017. Key growth drivers include virtual reality, OTT video, internet advertising, and video games and e-sports.

“Consumers in China are increasingly mobile,” said Chow. “Mobile will dominate internet advertising in China, making up 72 per cent of the revenues by 2022.”

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