2013 Outlook on Media & Entertainment
Interview with Gerald Belson
Digital transformation and continued disruption will be the overriding concern and greatest opportunity facing the media and entertainment industry in the coming year, according to Gerald Belson, vice chairman and U.S. Media & Entertainment leader, Deloitte Consulting LLP. Read on for his perspective on trends to watch and steps to take in 2013.
What is the key issue facing your sector in 2013?
The ongoing shift toward online and mobile distribution of content is one of the biggest evolutions across the sector. Mobility, in particular, changes everything. The opportunities to engage the consumer — to have almost instantaneous distribution and to provide an integrated experience — are immense and market shifting. Continuing to enhance the user experience and create new business models addressing changing consumption patterns will be significant challenges.
The proliferation of new devices and customer segments that increasingly span multiple platforms opens up new ways for engaging with and understanding consumers. Consider the rapid ascent of tablets. A recent Deloitte study showed that nearly 48 percent of U.S. consumers who own tablets report taking their tablet rather than laptop on overnight trips. With tablets, we now have a mobile platform that has high-resolution capabilities in larger form factors that can deliver a high-quality customer experience — something that didn’t even exist a few years ago.
Between the multitude of platforms, increased personalization and understanding of consumer preferences, it is possible to deliver media to customers in a variety of ways, which creates opportunities for new targeting and content pricing models. These new models will have to account for the user experience, the expectations (for a given platform), how consumers prefer to view the content and the value of the overall experience. As franchises are extended across platforms, media and entertainment companies have to ask themselves: What pricing structure will meet each market’s expectations without devaluing the brand?
Finally, and increasingly on consumers’ minds, privacy will continue to be a challenge across the sector, especially as technology and evolving delivery models enable deeper levels of personalization.
What are some steps companies in this sector can take to manage through the current climate of economic uncertainty?
Despite all of the challenges, digital transformation represents, foremost, an opportunity for the sector. Digitized content, improved and increased connectivity and high-resolution, high-capacity mobile devices open the door for new content delivery models that shake off historical constraints — and many of the costs — of the old physical systems. Still, most companies are managing some combination of new and legacy business models. Those that want to maximize opportunity need to keep abreast of the latest trends among younger segments without alienating their more traditional consumers. It’s important to monitor the relative profitability of the businesses versus the customer segments they serve, manage costs and continue to move people into more value-added aspects of the business. Those companies that are best managing the costs for the business, even if the revenues for the legacy business are not growing, are the ones that will be in the strongest positions.
What are high-performing companies doing to foster innovation and growth?
Above all, high-performing companies are embracing digital transformation and the opportunities the ecosystem presents rather than fighting to maintain the traditional distribution systems. They are looking for ways to expand their business model, broadening their ecosystems and figuring out how to leverage their partners to create, deliver and monetize content across platforms in a mobile, digital world. They are committing to cross-platform integration and investing in research and development (R&D) to build these platforms. Another significant development is the adoption of the consumers’ perspective, that is, separating content from platform. There’s still no substitute for creating really great content that people want, but leading companies will focus on meeting the consumer where they are in terms of how they want to receive and interact with content — in short getting closer to the customer.
Media and entertainment companies, old and new, will also find opportunities for growth and innovation by exploiting the capabilities for rapid response, personalization and interaction enabled by social media and mobile. The opportunity mobile provides for geographically sensitive targeting and greater levels of personalization through location-based services is another area that has yet to be unlocked, largely because of privacy issues. But it has tremendous potential.
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