Growth in the Irish entertainment and media sector should reflect, and in some areas surpass, European growth averages over the next five years, according to Mr Feargal O'Rourke, technology, media and entertainment partner at PricewaterhouseCoopers (PwC).

Despite what PwC calls the "triple whammy" of the bursting dotcom bubble, a general decline in technology sector and the events of September 11th, steady growth is predicted for most entertainment and media sectors, according to a report it has just released.

The market in the Europe, Middle East and Africa (EMEA) region grew from $270 billion (€274 billion) five years ago to more than $340 billion last year and is expected to reach $428 billion by 2006, showing a compound annual growth rate of 4.7 per cent over the next five years. Global spending last year was $1.1 trillion and this should rise to $1.4 trillion by 2006.

Growth in the Irish entertainment and media markets will reflect these trends, with variations, says Mr O'Rourke. TV advertising growth in the region has a predicted growth rate of 6.2 per cent compared to 4.1 per cent in the Republic. The difference is accounted for by a slowdown in the growth of the Irish market and the fact that media outlets such as Sky and Channel 4 have significant Irish market penetration and offer local advertising, thus attracting advertisers away from RTÉ.

"Clearly there are threats to RTÉ's advertising revenues in the next five years," says Mr O'Rourke.

PwC predicts that the fastest-growing segment in the European region over next five years will be internet advertising and access spending. He says "strong growth in internet and TV networks and distribution" is forecast, "fuelled by consumer desire for digital technology and multi-platform access".

Accelerating the deployment of new digital delivery systems "will be the greatest driver" of new entertainment and media spending, he adds.

The report identifies broadband and wireless systems as essential to the efficient delivery of new digital products. The implications for the Republic are clear. The rollout of broadband and wireless facilities in this State lags behind other developed countries.

The overall predicted growth rate for the EMEA region in the internet sector is 9.1 per cent. But a lack of broadband and wireless infrastructure means growth in the Republic over the next five years is likely to be just 6.8 per cent. This figure, although lower than the regional average, is still in line with the rest of western Europe.

Mr O'Rourke believes increases in broadband availability will "reinvigorate internet advertisers" as they will be able to make use of new styles of advertising, including streamed advertisements with moving images.

"Advertisers have been turned off in the past by banner advertisements on websites," he says.

A renewal of confidence in the print media sector, says Mr O'Rourke, means predicted growth in the newspaper sector in the Republic will exceed the EMEA average of 2.8 per cent. In Europe, only Greece and Portugal have higher compound annual growth rates than the Republic, where growth is 4.1 per cent.

Over the next decade, PwC expects digitisation will produce new revenue streams and entice players into the entertainment and media markets from technology-related sectors. Under this scenario, traditional broadcast models will be threatened unless they exploit emerging business models.

One drawback to increasingly digitised content is that copies can be created without any degradation in quality and can be distributed online. Piracy is a major concern.

The increased dissemination of free content is the greatest risk to content providers, says PwC.

Increases in piracy dampened home-video and recorded-music spending, and file sharing and CD-burning are becoming mainstream activities. Unless there is an industry-wide solution found to the problem, "piracy issues will begin seriously affecting other major entertainment and media sectors", according to PwC.

Systems such as Napster, which provided free music downloads over the internet, have brought about a shift in attitudes regarding how content should be delivered and particularly about how much people are willing to pay for that content. Global sales of music singles fell by 40 per cent last year, forcing the music industry to tackle issues of intellectual property regulation and online business model design.

The Republic has recognised the need for protecting intellectual property rights in its Copyright and Related Rights Act 2000, which was heralded as the "most robust of its kind in Europe" by the Business Software Alliance, an organisation combating piracy in the Irish and global software industry.

Politically, there has been a shift away from protectionist policy regarding the entertainment and media markets towards protecting rights. PwC predicts industry consolidation will continue apace, especially with ownership rules relaxing globally. A select group of major players will dominate but will need new business models to be successful beyond 2006. Digital cable and digital terrestrial systems continue to grow in reach, and cable and satellite providers continue to consolidate. This year, the US is poised to relax or eliminate TV station ownership limitations. Similar changes are expected in other markets by 2006.

Overall, PwC predicts weak economic conditions will dampen spending in the next year but these will improve in 2004-2006. "The entertainment and media sector's promising future is coming," says Mr O'Rourke.