The media & entertainment industry is in the midst of prolific change. An industry that only a decade ago was rooted in cable, broadcast and physical-world mechanisms has quickly become internet protocol (IP)-centric, with streaming now overtaking cable TV viewership. And with cloud, 5G and edge technologies playing a greater role in evolving media business strategies, it is clear to see the path forward is IP-dominant.
The advertising industry saw a similar shift from traditional forms to digital. Digital was a sliver of overall advertising in 2010. Today, it captures nearly seven out of 10 ad dollars. According to Digiday, Google, Meta and Amazon account for 74% of global digital ad spend—highlighting the importance of mining data into insights and, in turn, refining insights into network effects that offer strategic advantages across infrastructure, operations and products.
As in digital advertising, it is likely that a handful of global content players will succeed in redefining the mission of the media company from financier and distributor, into personal experience optimizer. And like the giants that have subsumed most of the profits, these big winners are likely to become cloud-native platform businesses to achieve radicial efficiencies around this pursuit.
A data-dependent tomorrow
With change being the only constant, what works today may be radically different tomorrow in a never-ending race to experiment, learn and adapt to audiences. For example, the traditional cable bundle has largely unwound, but similar dynamics that led to its birth may give rise to super aggregators that bundle streaming subscriptions. Understanding consumers and how they share attributes is essential to understanding behaviors and fine-tuning content strategies, operations and business models.
As media companies strive to acquire customers, then maintain them, then earn profits from them, some must also navigate adjacent opportunities like entry into new business models and mediums, like ad-supported models, the metaverse, video gaming and gambling.
With deprecation of third-party cookies nearing, the ability to target and prove measurable campaign-level performance requires media companies to collect and leverage their own first-party data, while entering into partnerships with brands, agencies and technology partners to compete for scale.
Understanding and exploiting rights across geographies and distribution paths is essential to managing costs while maximizing revenue potential. Media companies need to be increasingly proficient at using data to model the tradeoffs associated with complex decisions, like whether to acquire rights at a loss to further strategic interests, and whether to challenge traditional theatrical windowing.
A digital path forward
The issue will be getting from here to there. The content experience industry is undergoing massive consolidation. Leaders are seeking to optimize distribution methods in order to maintain relevance with a fickle, demanding customer base—and are doing so while managing shifting economics. In addition to fresh content, consumers want value-based pricing, ease in content discovery, convenient administrative activities and services that learn.
To keep up, media & entertainment executives must connect technology directly to strategic functions. At the top, this requires deep alignment between the CIO and CTO to break down siloes, align technology capabilities to business outcomes and transform tech debt into tech wealth.
For example, the present day media supply chain is commonly seen as a technology function to transform and distribute media. In the evolving landscape, its purpose will be to serve the business, by converging insights about the real-time context of user engagement, a full understanding of the content itself at each stage of its lifecycle (including related rights) and a single 360-degree view of audiences. This transforms the media supply chain from being about fulfilling work orders, to becoming the beating heart for dynamic engagement.
Make no mistake, though: The sector has a great deal going for it, such as its commitment to technology adoption, its ability to extract strategic value from tech investments and its competency with data. Recent Economist Impact research supported by Cognizant illustrates key organizational challenges the industry faces as companies make the move toward future readiness.
Four big technology bets have captured the M&E industry
Respondents were asked which technologies and methodologies their business has adopted or is planning to adopt in the next two years. (Percent of respondents who have adopted or plan to adopt)