Will Some "Entertainment" Spending Shift to "Communications" Spending?

PwC expects entertainment and media spending to keep growing. Video subscription service providers might not agree that can hold up over the long term. While it might be true that advertising spending is growing, especially in the online and mobile areas, it might not be so true to forecast continuing end user spending on video services.

PwC thinks consumers will keep spending five percent a year more, for the next several years. But no market grows to "infinity," and there are abundant signs that younger consumers do not watch television so much, do not own televisions, and do not want to pay for television, even when the cost of doing so is not an issue. 

All the while, new experiments with Internet-delivered video continue to grow. Intel plans a new streaming service. Netflix, iTunes, Google, Dish Network, Amazon Prime, Hulu and others are going to keep expanding their menus. Aereo appears ready to disrupt the broadcast TV revenue stream. 

And even though video service providers allow some streaming to keep their traditional video subscription service customers, all it takes is a change of heart by the content owners, and a willingness to go "direct to the end user," for significant change to happen. 

On the other hand, consumer budgets are not infinite, either. So a reasonable supposition is that most people will substitute one form of spending for another. In other words, if able to buy discrete programs or channels, and stream them, they will spend less money on traditional video subscription services, increase spending for online alternatives, and then likely increase the amount of money they spend on broadband access, as well.

But it wouldn't be unreasonable to predict that the net change in recurring spending will not be much different from what people spend now. Perhaps oddly, many consumers might find they do not actually wind up saving much money. The lower video service payments will be matched by new online subscription fees and higher broadband access spending. 

So one might predict that average spending on broadband access could grow, at some point, as traditional video service spending falls. But recurring payments would probably be equal to, or less than current payments. In fact, spending should be less, overall. 

The reason is that people are rational. They will decide whether they can save money overall by switching. If they can't save money, there is little incentive to switch.