Australia’s media and entertainment companies have to set aside old rivalries if they are to grab the new revenues needed to combat fast-slowing market growth.

That is one of the key findings of PwC’s media and entertainment outlook report, which has halved its five-year growth forecast for the industry to 2.1 per cent from 4.1 per cent last year based on a “significant” tightening in consumer and advertising spending.

PwC, which scrutinises media categories, from film and radio to newspapers and gaming, says the slowing spending growth as money transitions from traditional to digital media means companies feeling the pinch need to make “frenemies”.

“Old-school thinking will need to change as collaborating with rivals becomes the norm,” PwC partner Megan Brownlow said. “Negotiation is cheaper and more effective than combat. Across Australia’s media and entertainment industry we continue to see a strong divergence in traditional and digital media spend.

“This trend is forcing companies to take a different approach and has led to blurring of business functions, business models and of industries.

“Competition is no longer a zero-sum game — the new competitive landscape is underpinned by ‘frenemies’.

“We’re seeing three new circumstances arising as companies seek other revenues using their natural competitive advantage — competitors are potential new clients, or new partners, and key suppliers are now competitors somewhere else in the value chain.”

PwC sees the value of Australia’s media and entertainment sectors growing to $43.7 billion by 2021, comprising $26.4 billion of consumer spending on the likes of newspapers, interactive games and streaming services, and $17.3 billion of advertising.

Online video was the fastest-growing area of internet advertising last year, with PwC tipping growth of nearly 24 per cent compound growth to 2021, second only to mobile phones.

Elsewhere, interactive gaming is seen growing at 4.8 per cent, the subscription TV market at 3.8 per cent, radio at 2.3 per cent, music — live and recorded — at 3.7 per cent and movies at 0.7 per cent.