Media: In the vanguard of digital transformation
The media industry has already been transformed by several waves of digitalization. To thrive, media enterprises will have to keep technology at the heart of what they do, helping them create compelling content and reach new audiences.
Almost 20 years ago an influential essay entitled “Content is King” was published. At a time when most people did not even have email accounts, it made some bold predictions, most notably that “content is where… much of the real money will be made on the internet”. For the best part of two decades, its author, Bill Gates, has been proved spectacularly right.
But today the picture is more complicated. The industry has already been transformed by several waves of digitalization – file-sharing, streaming, social and mobile – driven by the impatience of consumers to access any content from anywhere in the world at any time. Social media, video streaming services and smartphone apps compete continuously for our attention. With gigabytes of content being created every second, media companies are engaged in a tooth-and-claw battle for consumers’ attention.
How digital innovation has already transformed the media industry
Source: World Economic Forum / Accenture analysis
In this hypercompetitive market, having great content is no longer enough. Media enterprises need to integrate their content into high-quality user experiences, with customized content, better viewing recommendations, more personalized and relevant adverts, and online tools to recreate those ‘office water-cooler’ conversations about the latest hit TV series.
For media organizations to create the right content and present it in the correct context will require innovation and digitalization throughout the business, from discovering new methods of creating content (such as crowdsourcing) to experimenting with imaginative ways to distribute it (say, through connected retail apps).
Digital has become so important that the boundary between the media and technology industries has broken down. This has implications for both traditional media companies and digitally native start-ups.
To thrive, all these enterprises must keep technology at the heart of what they do, to help them reach younger audiences, create compelling content and services, and distribute and monetize their content more efficiently.
We have identified three digital themes that will define the evolution of the media industry over the next decade:
|Personalization and contextualization|
Marketers and content creators will need to produce personalized content and personalized advertising to engage consumers facing information overload. Both these developments will raise data privacy and security issues that firms will need to resolve ethically and transparently.
Content is now being distributed across an increasing number of platforms, devices and media. Broadcasters will have opportunities to exploit the growing popularity of the ‘second screen’ among TV viewers by creating integrated second screen services. Communities of content, which have sprung up on instant messaging and social platforms, have the potential to be fertile ground for advertisers.
|Partnerships and industrialization|
As the creation and distribution of content have become fragmented, partnerships in the media industry have become more important. Technology is enabling enterprises to partner with their audiences to fund or co-create innovative content. Companies will need to harness technology effectively, setting it at the heart of the digital organization, balancing creativity in content creation with industrializing digital processes such as production and distribution.
Digitalization in the media industry: unlocking $1.3 trillion of value
Our value-at-stake analysis aims to assess the potential for digital transformation initiatives in the media sector to unlock benefits for the industry, its customers and society more generally over the next decade (2016-2025).
Our analysis suggests that digitalization in the media industry could unlock approximately $1.3 trillion of value for the industry and society over the next decade, of which the value at stake for the industry is around $1.0 trillion and for society roughly $300 billion.
Media: value at stake for industry and society (2016-2025, by digital initiative)
Source: World Economic Forum / Accenture analysis
Personalization and contextualization
The total value at stake from personalization and contextualization initiatives is around $420 billion, but both these developments will raise data privacy and security issues that firms will need to resolve ethically and transparently. Consumer requirements for increased privacy amid concerns regarding data breaches are expected to erode approximately $170 billion of value, due to a combination of increased adoption of ad blockers and rising cost of data breaches.
Increased usage of over-the-top (OTT) services coupled with the growing popularity of second screen services, the emergence of content communities as newer avenues for revenue generation, and newer IP frameworks could lead to about $700 billion of value at stake for the media industry. The value to society of roughly $160 billion over the next decade is driven primarily by access to affordable content, time savings leading to increased productivity and improved educational levels.
Unlocking societal value: OTT and OTT 2.0
OTT services such as Netflix and Hulu are revolutionizing media. The proliferation of OTT is a $300 billion opportunity in terms of value to society. Its advantages include: access to cheap unbundled content leading to expenditure reduction; lower emissions due to digital viewership; wider access to education resources from open-source platforms such as YouTube and Coursera. Collaborations between different OTT players and telecom companies, and clear regulations around net neutrality, can accelerate developments around OTT.
Partnerships and industrialization
Technology is enabling enterprises to partner with their audiences to fund or co-create innovative content. Higher customer engagement in the media industry through social media usage at live events and the inclusion of customers in the process of content creation could result in approximately $300 billion of combined value at stake for the industry and society. Companies will need to harness the technology effectively, setting it at the heart of a digital organization, balancing creativity in content creation with industrializing digital processes such as production and distribution.
Becoming a truly digital organization
We have drawn up a number of recommendations for business leaders that will help position their enterprise for success in an era of intense innovation. Developing a digital business is about speed and agility, so we have considered a number of tactical, shorter-term capabilities and investments. Our recommendations span the use of data, digital strategy, learning through failing faster and more cheaply, and updating legal and intellectual property frameworks for the digital age.