Entertainment Execs: Digital Is the Future - but How to Get There?

Media and entertainment companies are in broad agreement on the way the digital market is evolving, where the opportunities lie and what will drive revenues over the next five years - but execution remains an issue, according to an Accenture survey, MarketingCharts writes.

Accenture’s 2008 Global Media Content Survey - the company’s third annual survey of more than 100 senior executives in the media and entertainment industry - examined the growth strategies of companies across the landscape of advertising, film, music, publishing, radio, the internet, videogames and television.

The vast majority of respondents (70 percent) reported that they derive some revenue (albeit a small proportion) today from new alternate forms of media - such as downloading or watching TV programs “on demand,” digital advertising or user-generated content.

Moreover, 82 percent agreed that content is increasingly developed for consumption across multi-platform distribution (view chart of perceived content trends).

Four of the main sources of revenue growth cited by respondents are the same as those identified in last year’s survey, indicating a growing consensus about the potential of those four sources of revenue growth as the dominant business model five years from now:

• Multi-platform distribution. Asked to identify the largest drivers of revenue growth over the next five years…
  • Two-thirds (66 percent) of respondents cited new platforms or new ways of delivering content - significantly more than the number who cited new content types (24 percent) or new geographies (10 percent).
  • Nearly two-thirds (63 percent) of respondents said they will pursue a “multi-screen” distribution strategy, which includes television, online and mobile delivery.
  • 84 percent of companies expect mobile rich media to become mass market at the latest within five years, representing the largest growth opportunity for media and entertainment firms (see chart).
• Short-form video. Asked which content type will generate the greatest growth, the greatest number of respondents - 38 percent - cited short-form video, with online portal/publishing second (23 percent) and video games third (18 percent).
• Social media and user-generated content. Two-thirds (68 percent) of respondents identified social media and user-generated content as a high-growth opportunity, and more than half (56 percent) said they are already involved in social media in some capacity.
• Advertising. Asked to identify what they believe will be the number-one business model in five years, nearly two-thirds (62) percent of respondents selected advertising-supported business models, compared with 25 percent who cited subscription-based services and 11 percent who cited pay-per-play services.

“It is great news that media organizations are developing a consistent strategic view of the key growth areas, but execution is slow,” said Gavin Mann, digital media lead for Accenture’s Media & Entertainment practice. “There clearly remains a huge effort to put in place the necessary capabilities, and it is apparent that the size of the task is still not fully understood.”

While half (50 percent) of the executives interviewed said they know which capabilities they need to take advantage of in this new digital market, Accenture said many have a false sense of their current capabilities. Some 66 percent of the respondents have less than 40 percent of required capabilities, a number that is unchanged since last year’s survey, indicating that companies need to implement new digital technologies or be left behind.

Among the survey’s other key findings:

• Digital advertising will drive a large portion of future revenues. Almost every media company is trying to adapt to the reality of digital advertising as a major source of revenue:
  • 52 percent of respondents said they see digital advertising eclipsing traditional advertising within five years.
  • 62 percent said they believe that content will be supported by a variety of digital advertising methods, including branded content, search, sponsorships, performance and a mix of all of these within the next five years.
  • In the next year, though, most see the majority of their digital advertising budget going to mainstream media portals (see chart).
• The Web 2.0 phenomenon is here to stay. Two-thirds (66 percent) of respondents said there is no likelihood of the Web 2.0 “bubble” bursting during the next 24 months, and 71 percent said they do not see any risk in allowing their brands to be associated with social media.
  • Uncertainty as to when the mobile market will take off. When asked when they believe the nascent mobile market will become a mass market, respondents were split, with slightly more than half (55 percent) saying within three years, while slightly less than half (45 percent) said they believe it will take longer.
  • There are several barriers to the mobile market. Consumer readiness continues to be singled out as a barrier to the mass uptake of the mobile market, cited by half (51 percent) of the executives surveyed (see chart). Respondents also cited other barriers, including companies’ lack of ability to provide a consistent user experience (cited by 42 percent of respondents), and a lack of readiness among content owners as well as mobile operators/networks (cited by 37 percent).

About the study: As part of its third annual Global Media Content Survey, Accenture surveyed more than 100 senior leaders and decision-makers in the media and entertainment industry - spanning television, videogames, film, music, radio, publishing, interactive entertainment and advertising - in North America and Europe. The goal of the survey - which was based on in-depth telephone and face-to-face interviews with select executives in the United States, the United Kingdom, France, Germany, Austria, Belgium, Switzerland, Italy and Brazil - was to identify where industry executives believe the greatest opportunities and challenges will come from over the next five years.