Five Factors Redefining the Media Industry in 2007
23 Oct 2006
M&E Companies Under Intense Pressure To Find and Create Value
Media & Entertainment companies are facing unprecedented challenges as long-standing business models are being fundamentally redefined. The M&E industry is experiencing large-scale disruption and transformation, as existing ways of doing business are being dismantled through the evolution of new technologies such as DVRs, VOD, iPod, wireless and IPTV. The business and technical infrastructures to support these new realities are only now emerging.
Yet, with these challenges come exciting new opportunities to deliver compelling content and experiences to the consumer. The many years of unrealized hype have finally yielded to today's media renaissance.
Five major factors are putting M&E companies and their CxOs under intense pressure to find and create value.
- Digitization – Nothing but ones and zeroes
The industry is no longer just dipping toes into the digital pond, but has dived into the digital ocean. Today, the vast majority of content is being produced in digital form, while sought-after library content has also been digitized. Spanning the entire media lifecycle – from content development, production and distribution – digitization has spawned both new opportunities and challenges that we are only now beginning to understand. - Proliferating Distribution Channels – Getting it to consumers anyway, anywhere, anytime
Traditional distribution channels (e.g., TV networks, movie theatres, retailers) are rapidly being disintermediated by new digital channels, such as broadband Internet, wireless, cable and telco. Consumers, especially younger Gen-Xers and Millenials, have very different expectations of how, where, and when they access content. What was perceived as “old media” CBS, that distributed its programming on U.S. broadcast TV in the evening hours, now reaches a global audience 24/7 via its own Innertube Web site, Yahoo!, YouTube, iTunes and wireless carriers. - Piracy and Security – Protecting both content and consumers
Digitization not only provides new ways of distributing content and making money, but it also provides new and easier ways of stealing or misusing content. Intellectual property and its associated rights is the lifeblood of the M&E industry. While piracy (the leeches) has always been around, the speed and scale of digital piracy can be extremely detrimental, as new releases hit domestic and international markets even before official premieres. Likewise, protecting the privacy and security of consumers has also proven to be a critical issue for M&E companies seeking to build strong customer relationships and trust. - Consumer Fragmentation – Reaching and retaining an elusive audience
Oh, the good ol' days of catching the family in their living rooms during prime time each night is as outdated as the old black & white television or old-time radio. Network programmers no longer control what, where, or when we consume content. Now all the power resides with the individual. We program our own individual “channels,” creating a constantly moving target for content companies. Not only do consumers have a seemingly unending amount of content to choose from, but they have a multitude of ways to receive it. Mass market approaches have already evolved to more niche or micro-segment targeting, but an M&E company's ability to truly understand how individuals “experience” their content is key to building brand and loyalty. - Disruptive Business Models – Making money in new and different ways
Advertising, subscriptions or transactions – these revenue models have always been around and they essentially represent today's “new” revenue models, but how, who and when to apply them is helping define the new market leaders in media. No one could have imagined the explosive recovery of online advertising and its ability to support the digital distribution of content. Likewise, iTunes has shown that transactional models, when integrated into a consumer-friendly and rationally-priced experience, can create brand new markets for compelling content.