Entertainment: The Smartphone Is Eating Hollywood | The Decade Ahead

**Bryce** (0:00)
Netflix just tried to buy Warner Bros. for $83 billion. Saudi Arabia took EA private, and Foxtel got snapped up by British sports streamer. There's a massive land grab going on in digital entertainment right now. And in this episode, we're going to be breaking down where the growth is and how you can invest in it.
Welcome to The Decade Ahead, a 10-part series where we are unpacking 10 themes that we think are set up for the next decade.

**Ren** (0:28)
My name is Bryce and I'm Ren and today we are talking all things digital entertainment, streaming video games or streaming both video and music. Yeah, it has become a massive part of our lives. But for a lot of investors, it hasn't become a massive part of their portfolios. So we're going to talk about the industry that is changing the growth rates, the particular growth pockets of the industry and how we think about investing in it.

**Bryce** (0:53)
The Decade Ahead is brought to you by ANZ Business Start Right. Starting a business comes with a lot of what-ifs, and ANZ is here to help you with what's next.

**Ren** (1:02)
All right, well, let's get into it and let's start with what's happened over the last six months because digital entertainment is in vogue. It's so hot right now. The mergers and acquisitions activity has picked up.

**Bryce** (1:14)
Particularly over the last six months, we've seen some huge acquisitions take place. So Netflix and Paramount, they were in a tug of war over Warner Bros.
Saudi Arabia's private investment fund. Public investment fund. They took EA private for $55 billion. And then a sports streamer called Dazen, they bought Foxtel for $3.4 billion. So some pretty massive M&A happening with some very well known media giants.

**Ren** (1:51)
And what they're saying and really what the rest of the world is saying is that the overall digital entertainment industry is growing massively.
It's gone through its period of disrupting legacy media. Legacy media is well and truly disrupted. But the growth rates that people are assuming are pretty massive. So to put some numbers to it, if we start in the US today, the US digital entertainment market is a $971 billion market. You think that's big. Wait until 2035 when it's expected to be $1.43 trillion.
That's just the US. Globally, the market today is a $3.2 trillion market. It's expected to reach $6.2 trillion by 2035 For those eagle-eared listeners, they would notice that the global growth rate is faster than the US growth rate. That's a little tease of one of the big themes we're going to be unpacking today.

**Bryce** (2:49)
Well, Ren, let's just get straight into that point because...

**Ren** (2:52)
You don't like the tease.

**Bryce** (2:53)
No, I don't like the tease, but we're now in it.
The reason this is an interesting industry to look at is because it's booming, and one of the biggest drivers is coming from emerging markets. So that's why we're seeing global growth outstrip the US growth. It is the fastest growing, or one of the fastest growing segments in digital entertainment, being defined by the booming middle class. So you've got India, you've got China, you've got Indonesia and Brazil, with an emerging middle class that are now starting to engage with digital entertainment.

**Ren** (3:27)
Yeah, one of the first things you see when consumers have discretionary spending, when they hit that middle class level, I guess you'd call it, is leisure spending. That discretionary spending bucket starts to really increase. So that's one thing. It's just like more disposable income, more spending on leisure and digital entertainment is a big part of that. The other big thing that is happening is the rise of cheap smartphones and internet penetration. So all of a sudden, you've got literally billions of people who have more money in their pocket, access to a digital platform that they didn't have before, and connection to the internet.
And so we're just seeing an explosion of global spending on entertainment. It's no longer just really a US focused story.

**Bryce** (4:16)
So that leads on to the second reason, Ren, why now is a great time to be looking at this industry because, you know, off the back of the rising middle class internet penetration, there is a quiet rise in mobile gaming.

**Ren** (4:28)
Yeah, I think this would surprise a lot of people. So if we just ask, where is the money in video games in particular? You would assume consoles, PlayStation, Xbox. Other people would assume PCs, like computers. But mobile gaming is the biggest segment of the gaming market. In 2025, the global gaming market was $188.8 billion.