You’d never know it with the black cloud hanging over the Canadian production industry, but Canada has the fastest growing entertainment and media market in the world, according to PricewaterhouseCoopers. Over the last two years, the Canadian industry has ‘outpaced’ all of the other countries surveyed in PwC’s Entertainment and Media Outlook: 2003 – 2007.

The 78-page report, which was compiled by PwC in Canada with assistance from the CRTC, Statistics Canada and other outlets, also studied entertainment and media spending trends in Europe, the U.S., Asia/Pacific, the Middle East, Latin America and Africa.

It states that spending and growth in Canada went up 9.9% in 2002 to reach US$21.7 billion (all dollar figures are in U.S. funds) through 14 entertainment and media segments, including filmed entertainment, TV network (broadcast and cable) and distribution (station, satellite and cable), Internet advertising and access spending, video games, theme and amusement parks, and sports.

Although most regions will see a modest 2003, it is expected the growth will really pick up from then on. While Canada will grow too, Gino Scapillati, PwC Canada entertainment and media practice leader, says it will work in an opposite way here, predicting a big 2003 and steady but more modest to follow.

‘Canada has had the highest growth rate for the last several years because we have been early adopters of technology, like DVD, digital television and rising broadband penetration,’ says Scapillati. ‘That growth to a large extent will be experienced in other regions a little later than we experienced it. There will be some reduction here, but it will still be a healthy growth rate.’

Outlook also says that Canada has the highest growth rate in filmed entertainment spending, up almost 34% in 2002 to $3 billion with a projected average rise of 12% each year to reach $5.2 billion in 2007. Scapillati says much of that can be attributed to the spending in the DVD ‘sell through’ market (which increased 60% in 2002), as well as strong growth in theatre box-office revenues.

Canada is also the growth leader in TV network spending, thanks mostly to advertising dollars. According to Outlook, Canadian TV nets, both broadcast and cable, generated more than $2.5 billion in 2002, up almost 10% over 2001, with a projected average growth rate of 7.2% to reach $3.55 billion in 2007.

‘The advertising market is particularly strong in television right now and it is expected to grow almost 6% over the next five years,’ says Scapillati. ‘Advertisers have been very selective in looking for the media of greatest reach. In the economic downturn, advertisers were very careful in placing their advertising dollars, so they focused more on TV. There are also a greater number of stations on which to advertise, and that greater number of stations has also increased the licence fees in that part of the business.’

Scapillati says there has been significant growth in TV distribution, and according to the report Canada is second only to Latin America in the category. End-user spending, specifically on digital and satellite TV services, helped Canadian TV distribution jump 12.6% to $3.3 billion in 2002.

‘We’re at about three million homes in Canada equipped for digital television, which was a 30% increase from last year, and we expect that to go up over the next five years to 6.8 million,’ says Scapillati.