2009 TMT Predictions: Media |
Media
1. Putting print out of peril may require stopping the presses
Declining advertising revenues, increasing costs, and a dismal economy may all combine to place severe pressure on the print media industry in 2009. But pursuing a greater online presence may not be the answer: most titles that have gone online are not close to balancing declines in print revenue from Web revenues. Print media needs to take a hard look at why—including an analysis of their sales force incentive structure as well as the difference between print and online readers. Alternatively, online presence could be reduced significantly to drive people back to the physical product. And while industry consolidation and expansion in developing markets may offer hope, the economic downturn and tight credit make these unlikely solutions in 2009. It is clear that severe cost-cutting measures are in order, including union renegotiations, forced savings from suppliers—and even reductions in print frequency.
2. Television rediscovers its self-belief
Is there a silver lining to a recession? The answer might be yes if you are in television. Viewing hours tend to increase in tough times as consumers stay at home; indeed, in the latter half of 2008, average viewing hours were already rising. Digital switchover may boost viewing even more. Professionally produced content is now reasserting itself over user-generated content, both online as well as broadcast. Overall, in 2009, viewing is likely to rise by 30 minutes per week per viewer. So now may be a good time for television to put some distance between itself and other media, with the strongest players investing in content, contracts, and updated infrastructure. To help weather the down economy, television could also make the case for a general easing of product placement bans. Television should ensure its advertising impact is given credit by tracking TV ads that drive online purchases.
3. 3D becomes an obligation, not an option, at the movies
Movies will need a “must-see” factor to get audiences to open their wallets in the coming year—and that factor might well be 3D. In 2009, the 3D movie is on course to have its first billion-dollar year at the box office. A growing list of directors and producers are likely to create all future outputs in 3D—and some of the world’s leading directors are planning their first 3D movies. Yet the number of venues for 3D movies is still limited, with the expense of converting theatres potentially prohibitive in today’s economy. But the better 3D movies perform, the better the prospects for investment. This momentum may also force the industry to choose between the backing of super high definition or 3D, particularly in the short term. To be safe, 3D developers should look at other applications, such as in medicine, teaching, and peer-to-peer communications.
4. The growing cost of free online content
The public’s fifteen minutes of online fame could fast be receding, given the rising costs of storing content. For the largest sites, hosting user-generated content could cost over US$100 million per year. But the ability to realise revenue from that content remains a challenge. Advertisers are generally reluctant to place ads next to any content that could damage a client’s brand. But classification of content to the degree required for advertisers may be impossible to realise. Monitoring of comments for the occasional unacceptable post is also a thorny proposition. So to generate revenue, sites may need to start charging to upload or share content. Online content companies, however, should not be dismayed: most customers acknowledge that free lunches are unsustainable. Those that really want to post their content are likely to pay, and may even be willing to pay more for premium services.
5. Rising stars take on the megastars
After years of spending lavishly on top concert artists and sporting events, the public may no longer be able to afford to see the biggest stars in the best locations. Tightening sponsorship budgets mean there’s even less money to bankroll extravagantly staged tours or purchase hot new players. Add to that falling merchandising revenue, the main profit source for smaller venues hosting major artists—and the stage may be set for rising stars. Those not able or willing to pay premium prices may now turn to emerging artists. Managers of live stars—musical or otherwise—should be ready to meet this changing demand. Record companies should also use this opportunity to introduce new acts and develop the skill set needed to sign a deep pool of indie artists. But manager and record companies should also be willing to defy expectations: good product, allied to strong marketing, could convince some consumers to drop everything apart from premier live entertainment.
6. "Good morning, good afternoon, and good evening, listeners": the dawn of WiFi radio
Internet radio could take off in 2009. With nearly 1.5 billion Internet users worldwide, two-thirds with broadband access, online radio’s addressable market could grow by 20 percent next year. The increasing affordability of Internet radio sets and the growing use of smart phones with WiFi are two major contributing factors. Internet radio also requires little bandwidth, is mostly free, and provides a variety of content, offering both geographical reach and local access. Broadcasters need to determine if Internet radio is a strategic imperative and how online versions can stand out by offering channels with unique content that are easy to search and select. Broadcasters should also consider how user information could be useful to advertisers. Internet radios have the potential to monitor what, when, and how often consumers listen in—promising a powerful platform for advertisers.
7. Mobile advertising finds it meaning
With global advertising experiencing double-digit decreases and the coming year promising an even tougher economy, mobile advertising’s time may have come. More able than ever before to carry advertising, mobile phones are at their most ubiquitous—and there is a more mature understanding of what mobile can and cannot deliver in advertising. In 2009, a growing number of campaigns will use the minimalism of mobile to powerful effect—modelling themselves on one of mobile’s most successful campaigns to date—the U.S. presidential election’s use of text messaging. Advertisers should work harder to create campaigns that are targeted for mobile and work within its limitations. And carriers can help by becoming more uniform in terms of screen resolutions, computer processing units (CPU), OS, and so on. Mobile advertising will really take off when advertising can be sent to the entire mobile community with a single click.
8. The markets get anti-social with social networks
Social networks with their millions of users have been the toast of new media in recent years—despite their inability to fully monetize those users. But a harsher financial outlook in 2009 combined with contracting online advertising will likely bring this free ride to an end. To stay afloat as well as appease investors, social networks in the coming year will need to articulate and deliver on a clear, credible route to revenues. Management should effect a culture change that focuses on revenues, not just subscribers. And if members prove hard to monetize, the focus may need to shift to generating revenues from the aggregated value of their actions and behaviour. Further, social networks should consider how their technology could be applied in an enterprise context, using their information -sharing functionality to help corporate teams work together and build stronger knowledge management.
9. Reinventing mobile television
Mobile television is perennially predicted as “about to take off.” But while television pictures on phones may one day be commonplace, that day is unlikely to occur any time soon. With a disappointing performance in 2008, despite high-profile events like the Olympics, many mobile television initiatives are likely to be shelved in 2009. However, mobile devices and services can still play a valuable role in the wider television market—content companies just need to take a wider view. Not only can the mobile phone be used to program digital video recorders (DVR) remotely, but they can also order on-demand programming. Broadcasters could send suggested shows, trailers, or reminders of a series’ new season—with consumers recording a program with a click of their phone. And by integrating mobile capability into set-top boxes, televisions could even allow viewing information to be relayed automatically to measurement bureaus.
10. The rise of malvertising and its threats to brands
Advertising is the revenue engine for the Internet—but advertising networks online have increasingly become an easy target for criminals. Placed on trusted, well-trafficked sites, false ads—or “malvertising”—can lead to stolen data or infected computers. In 2008, one malvert reached 2 percent of all U.S. Internet users. And by exploiting weaknesses in the control mechanisms of some advertising networks, malvertising may increase in 2009. It is imperative that Website publishers develop better detection mechanisms to root out malvertising. Website administrators should also gain better control of third-party suppliers or possibly reconsider using advertising networks altogether, as some large websites are doing. Software could even be developed that rapidly identifies malvertising and automates the process of screening third-party ads. The Internet advertising community also needs to come together to address this growing assault on their very business model.
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