Global spending on filmedentertainment will expand at a promising 5.7 percent compound annual growthrate over the next five years, increasing from $59bn in 2001 to $79bn in 2006,predicts PricewaterhouseCoopers as part of its latest five-year outlook reporton the worldwide media and entertainment sector.

Fueling that growth willbe strong box office receipts, the expansion of local productions and thecontinued boost that DVDs will offer the home video market, says the report.But the one black cloud looming over the filmed entertainment segment, addsPricewaterhouseCoopers, is piracy, which will adversely affect spending"unless an industry-wide solution is reached."

Looking at theworld's entertainment and media industries as a whole, the reportsuggests that weak economic conditions will continue to dampen spending overthe next two years, but faster growth will resume in 2004 spurred on by thedigital distribution of content.

In fact,PricewaterhouseCoopers anticipates spending will reach $1.4 trillion in 2006,for a 5.2 percent compound annual growth rate over the next five years. Digitaldistribution, piracy and a rebounding global advertising market will be threemain factors impacting the industry's growth during that period.

Even now, there are signsof remarkable resilience, claims the report entitled Global Entertainment &Media Outlook: 2002-2006. Despite the combined "triple whammy" ofspillover from dot-com failures, a global economic/advertising market downturn,and the impacts of the terrorist attacks last September, global entertainmentand media industry spending grew in 2001 -- rising by 1.5 percent and exceedingthe $1 trillion mark.

The near catastrophicyear the global advertising market had in 2001looks set to bottom out. Agradual rebound is forecast with the ad market beginning to re-solidify in2002, gaining strength in 2003, and turning out strong single digit growthduring 2004-2006. Global advertising spending is predicted to increase at a 4.8percent growth rate reaching a total of $405bn in 2006, compared to $321bn lastyear.

Digital distribution ofcontent, aided by rising broadband penetration, will be the greatest driver ofnew entertainment and media spending in 2005-2006. For example, broadbandconnections in the US, driven by music and video-on-demand content that requirehigh-speed connectivity, will surge from 9.4m households in 2001 to 35.3m in2006 -- nearly equaling the narrowband sector at 38.2m households.

The entertainment andmedia sector's "promising future is coming -- it's just taking alonger and more circuitous path than initially expected," said KevinCarton, global leader of PricewaterhouseCoopers' entertainment & mediapractice. "To see where the 'digital evolution' is headed, take a look atthe surge in spending for digital cable and broadband Internet access. Consumers who've demanded a morediverse entertainment experience are leading the charge by subscribing to theseupgraded distribution platforms, and new and more diverse content offeringswill follow."

Breaking the report intoregions, PricewaterhouseCoopers identifies the US as the last market last year,with total spending on entertainment and media reaching $438bn. The USprojected to expand at a 5.5 percent growth rate through 2006, with Internet advertisingand access spending enjoying significant double-digit growth, due mainly tobroadband and subscriber upgrades to higher-priced access packages. Increasedchannel capacity will in turn also spur the US television distribution market,which is expected to soar to $100bn in 2006

Europe, Middle East andAfrica (EMEA) is the second largest region with 2001 spending of $339bn. Once again,the Internet will be the fastest growing segment in this region over the nextfive years, followed by sports, which will be bolstered by the 2006 World Cupin Germany and its associated television rights. The region will continue toexperience moderate growth for the duration of the forecast period, withspending reaching $426bn by 2006.

Robert Boyle, Europeanleader for PricewaterhouseCoopers' entertainment & media practice, saidthat Europe, Middle East and Africa "will continue to grow at a pace reflectingconsumer demand for new entertainment and information options. We projectstrong growth in Internet and TV networks and distribution, fueled by consumerdesire for digital technology and multi-platform access to premium content suchas sports, movies, news and business information."

Asia/Pacific's industrywill be fueled by telecommunications deregulation, low Internet penetrationlevels that leave room for substantial growth (a 17.3 percent growth rate isexpected), as well as government initiatives to promote Internet usage. Inaddition, the 2002 World Cup in Japan and Korea will bolster the Sports market.

"Despite thesluggish Japanese economy and lost revenues due to piracy, the Asia/Pacificmarket has a promising future, with strong consumer markets for Internet and multi-channeltelevision and DVD offerings," commented PricewaterhouseCoopers'Asia/Pacific entertainment & media practice leader, Marcel Fenez.

Growth in the LatinAmerican market will continue through 2006. Low Internet and television distributionpenetration rates have left significant room for expansion and will be the mainreasons these sectors will be the fastest growing over the forecast period, withcompound annual increases of 24.3 percent and 9.0 percent, respectively.

Canada, the smallestregion with $24 billion in entertainment and media spending in 2001, isexpected to be the fastest growing, at 5.7 percent growth rate. Primary driversthere have been an advertising market that has held up relatively well despitethe global economic downturn; a healthy home video and film productionbusiness; and the establishment of new digital channels.