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In a world where the media industry’s growth is lagging behind the global economy, profitable growth will increasingly come from capturing market share rather than from expansion in the overall market. In response, media companies worldwide have embarked on a quest to create the most compelling, engaging, and intuitive user experiences.
And as companies adapt, invest, experiment, and innovate to secure higher revenues and market share, they’re driving and capitalising on profound shifts in six key areas: business models, value chains, technology, content strategy, deals, and regulation.
Many segments are at a tipping point where companies must be flexible and innovative to capture new growth streams through emerging business models. For example, in recorded music, labels are reaping big gains in performance rights as streaming becomes the dominant revenue source.
Technological advances, and new consumer behaviors they enable, are redistributing revenues and competitive advantage along the E&M value chain. In response, E&M businesses are building direct, sustainable relationships with consumers through a relentless focus on user experience.
Technological change is enabling E&M companies to innovate in product offerings, brands, and business models around the user experience. We see this in fast-growth segments like virtual reality and e-sports, and in many other segments where data is evolving into a form of currency.
Although there’s a near-perfect correlation between rapid E&M growth and younger populations, content strategies must take account of a multitude of local factors. However, a bigger issue remains content discovery, since companies must penetrate consumers’ personal filtering mechanisms.
The strong flow of E&M deals in 2016 is set to continue – notably capabilities-driven deals to create new revenue streams and enhance the user experience. In particular, we expect an increase in strategic deals focused on data, analytics, technology innovation and live events and experiences.
While companies increasingly operate on a global scale, it remains vital to understand the changes afoot at a local level. And while the impacts of regulation are hard to predict, its effects in E&M are often clear – witness giant streaming and e-commerce company deciding not to compete directly in China.