AI-Powered Advertising Fuels a $3.5 Trillion Boom in the Entertainment & Media Industry

Artificial intelligence is reshaping the entertainment and media industry, fueling unprecedented growth through advanced advertising strategies. According to PwC, AI-driven ads will play a pivotal role in boosting industry revenues to $3.5 trillion by 2029. With 80% of advertising expected to come from digital formats such as connected TV, streaming platforms, and personalized content, AI is set to revolutionize audience engagement, drive efficiency, and create new opportunities for brands and media companies alike.

The future of the global entertainment and media (E&M) industry is being reshaped by a powerful force: AI-driven advertising. According to PwC’s latest Global Entertainment & Media Outlook 2025–2029, released in July 2025, the industry is set to surge from just under $3 trillion in revenue in 2024 to $3.5 trillion by 2029, growing at a compound annual growth rate (CAGR) of 3.7 %.

Advertising: The Leading Engine

With rising economic uncertainty and constrained consumer spending, especially on subscriptions and non-digital media, advertising has emerged as the industry's most dynamic revenue driver. PwC projects that advertising will expand at a CAGR of 6.1 %, compared to just 2 % for consumer spending, demonstrating how ads are effectively underwriting access to entertainment content.

Digital Advertising Takes Over

The balance of ad revenue is shifting sharply toward digital formats. While digital formats accounted for 72 % of overall ad revenue in 2024, that share is expected to rise to 80 % by 2029, driven by AI-powered personalization and smarter engagement models.

Among the fastest-growing segments:

• Retail media advertising and social/mobile video ads are both forecasted to grow at a staggering 15 % CAGR.
  
• Connected TV (CTV) in-stream internet advertising is expected to grow at a solid 14 % CAGR, with total CTV ad revenue reaching an estimated $51 billion by 2029.
  
  • To put this in perspective, CTV ad revenue is projected to account for 45 % of traditional broadcast TV ad revenue by 2029, up from just 22 % in 2024 and a mere 5.9 % in 2020.
    

Other high-growth areas include:

• Retail search advertising, rising sharply in share from 32.7 % in 2020 to 45.5 % by 2029.
  
• Video game advertising, expected to grow from 32.8 % to 38.5 % of gaming revenue during the same period.
  

Gaming, Live Events, and Non-Digital Still Matter

Despite digital's upward trajectory, non-digital entertainment, such as live music, cinema, and events, continues to claim the lion’s share of consumer spending. These formats made up 61 % of consumer sector revenue in 2024, a trend expected to remain stable through 2029.

• Global cinema revenues are projected to rise from $33 billion in 2024 to around $41–42 billion by 2029, spurred in part by demand for locally produced films and shifting audience preferences.
  
• Video games represent another robust growth engine. With 2024 revenues already at $224 billion, the market is projected to reach approximately $300 billion by 2029, growing at a CAGR of 5.7 %, and exceeding combined movie and music revenues.
  

Connectivity: Still Massive, But Losing Ground

While connectivity, to mobile internet, streaming, and telecom services, remains the largest E&M category, expected to reach $1.3 trillion by 2029 (CAGR ~2.8 %), the rapid growth of advertising is narrowing the gap in terms of revenue generation.

Driving the Transformation: AI and Agility

Bart Spiegel, PwC’s Global Entertainment & Media Leader (U.S.), emphasizes that AI is revolutionizing advertising by enabling hyper-personalization, democratizing content production, and lowering market entry barriers. Advertising, he notes, is increasingly “subsidizing” entertainment access amid tightening consumer budgets.

The new landscape demands that E&M companies become more agile and proactive, capitalizing on AI-driven tools to deliver creative, tailored content that resonates with increasingly niche audiences.

Global Perspective and Regional Outlook

Although the U.S. remains the single largest E&M market, growing at a CAGR of 3.8 %, emerging markets like China (6.1 %), India, and Indonesia (both above 7.5 %) are leading regional growth, thanks in large part to rapid adoption of internet and mobile-based advertising.

Summary Table: Key Forecasts (2024 → 2029)

Category                                                                        2024                      2029 Forecast                  CAGR

Total E&M Revenue                                           ~ $3                    $3.5                                 3.7%

Advertising Spend                                             —                        —                                     6.1%

Consumer Spending                                         —                         —                                     2%

Digital Ad Share                                                 72%                     80%                                  —

Connected TV Ad Revenue                              —                        $51B                                14%

Cinema Revenue                                               $33B                   $41–42B                          —

Video Games Revenue                                     $224B                 $300B                             5.7%

Connectivity Spend                                            —                       $1.3T                               2.8%

Final Thoughts

PwC’s latest projections underscore that AI-powered advertising is driving a profound transformation across the entertainment & media industry, making ads the new lifeblood of revenue growth. As digital formats capture larger ad budgets, especially via Connected TV, retail, social/mobile, and gaming, the industry is poised to grow by half a trillion dollars over five years.

While traditional, non-digital experiences remain vital, the future belongs to companies that harness AI’s ability to create personalized, efficient, and engaging content. Agility will be key, adapting strategies and delivery models in tune with fast-evolving consumer behavior and market technologies.

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