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2022 media & entertainment industry outlook

Five trends driving industry growth

In the coming year, media & entertainment will continue to evolve quickly, not only reckoning with ongoing trends and disruptions within the industry, but also in its continued response to pandemic-led behavioral changes. Our 2022 M&E outlook explores five attention-grabbing trends that we think will have the broadest impact across the industry.

Riding a wave of opportunity

In 2021, the media and entertainment industry saw continued changes from technological progress, evolving generational behaviors, and ongoing impacts from the global pandemic. Amid recurring COVID-19 surges, people sought more media and entertainment at home, while often avoiding larger in-person events. Digital media engagement even remained strong over the healthier summer, evidence that the pandemic has only accelerated preexisting trends toward the digital world.

On the cusp of 2022, the broader socioeconomic dynamics animating the modern age appear to be converging with technology and amplifying change. This is driving more innovation and competition but is also putting pressure on business models to keep up with changing behaviors. The media and entertainment industry, embedded in the business of imagination, is riding a wave of tremendous opportunity amid the turbulence that attends times of significant change like the one we’re in.

In this year’s media & entertainment outlook, we examine five areas we believe will touch the most people and grab the most attention:

  • We will see the streaming video industry mature as metrics evolve beyond subscriber counts to lifetime customer value, and existing business models evolve to find greater profitability amid global competition.
  • In-person entertainment—as well as the businesses and venues that rely on it—will face greater pressure to go beyond simply bringing people out of their pandemic cocoons by evolving and differentiating itself from the living room.
  • Social media, the largest digital aggregator of humanity, will find itself at a turning point, moving to build out the next generation of retail shopping.
  • The sudden rise of NFTs and their success in bringing scarcity and exclusivity to digital goods will drive new models of customer engagement and loyalty. They’ll also lead to more digital product innovation, greater empowerment for their creators, and a fuller realization of the grand ambitions for blockchain, cryptocurrency, and the decentralized web.
  • Each of these trends is slowly marching humanity closer toward the metaverse (or metaverses), where people will spend more of their time in immersive, social, digital worlds, and the digital world will be drawn across the physical one.

Download the full report to learn more about the impacts of media and entertainment industry trends, key actions to take, and critical questions to ask.

Heading into 2022, competition among streaming video on-demand (SVOD) providers for the time, attention, and bank accounts of viewers will continue, fueled by customers juggling multiple subscriptions, showing more cost sensitivity and savviness, and displaying generational differences in entertainment preferences. With top SVOD players spending billions on content development and global expansion, the business models that got them this far may not provide the future profitability needed for the industry to grow.

In the more mature US market, subscription churn averages around 35%. Providers are under pressure to keep producing hit content, get it in front of the right audiences, figure out how to keep subscription prices low enough for a given market, and determine how much advertising is needed to subsidize operating expenses and subscription costs. They should also manage emerging competition across global markets and the required delivery infrastructure and business partnerships. But the real challenge is in finding profitability among all these costs in a business that offers nothing near the margins of cable TV.

As the pandemic recedes and theaters become more active, streaming providers—who may also be studios operating a streaming platform as a vehicle for their content—will likely struggle to balance windowed theatrical releases with direct-to-streaming releases for their subscribers.

Strategic questions to consider:

  • How can large studios determine if they are suited to being content aggregators and streaming providers, or if they should focus on content development and licensing?
  •  How can innovations in pricing tiers, paid content, and loyalty programs help streamers reach larger audiences and retain them longer?
  •  What are the best levers for lowering content production costs and de-risking larger productions?

Even when the pandemic subsides in a meaningful way, it will likely leave a mark on behaviors for some time to come. What does that mean for the future of in-person entertainment?

The challenge for entertainment venues—like concert halls, sports stadiums, and movie theaters—may be attracting those less eager to venture outside the home. How can they show people that the experience they offer onsite is enhanced beyond those available at home?

One way for entertainment venues to drive revenue and increase foot traffic is to evolve into flexible spaces. Large sports stadiums are often deployed as multipurpose spaces, hosting sports games, concerts, and trade shows all in a single weekend. Venues should also consider investing in technology updates to offer more mixed-media, live-streaming, and AR/VR experiences.
Companies and venues that can master the art of integration stand to benefit the most, as a result of their ability to cater to the broadest population of consumers. Experiences that embrace a hybrid approach, integrating in-person experiences with options like remote viewing, live streaming, and virtual co-presence, can appeal to both those who can’t wait to leave home and those who’d prefer to stay within their own four walls.

Strategic questions to consider:

  •  How can entertainment companies cater to everyone and create experiences that blend the in-person with the virtual?
  •  Can entertainment venues broaden their scope and offerings to become in-demand, multipurpose places?
  •  What exclusive, insulated VIP experiences can venues offer to high-paying customers interested in live events?

Imagine scrolling through a social media feed and encountering a post for a new clothing brand that enables purchasing after just a few clicks. Or seeing an ad pop-up while playing a video game on your smartphone. That’s shoppable media: an interactive buying experience sitting at the intersection of content and commerce.

Across platforms, these experiences look to boost revenues and opportunities for both advertisers and creatives, but perhaps more importantly, these integrated experiences may also increase consumer engagement and brand loyalty.

Opportunities abound, but companies—especially video streamers—who enter this realm might be forced to make significant investments in infrastructure and technology that enables a seamless and integrated shoppable media ecosystem on their existing platforms. It may require rethinking integration across content, buying supply chains, and payment systems.

More broadly, shoppable media may shift the commerce ecosystem to favor smaller, more nimble creators, rather than more established brands. Media and entertainment companies that are willing to adapt and reinvent may be first in line.

Strategic questions to consider:

  • Where can streaming video, streaming music, gaming, and social media companies integrate shoppable media experiences into their existing customer journey?
  • What strategic partnerships can content producers and streaming companies forge to enable seamless, integrated shoppable media environments and to promote the adoption of mobile and digital payments?
  •  How can companies leverage the virality and power of the creator economy to boost awareness and revenues?

In 2022, nonfungible tokens (NFTs) will likely generate more innovations and revenues beyond collectibles, while the emerging ecosystem makes it easier for more people to participate. This growth will likely expose some challenges, but it could also open the door for much greater innovation in NFTs, cryptocurrencies, and blockchains.

In 2022, NFTs could evolve from a novelty into a utility. More content creators will likely experiment with NFTs to sell directly to fans while innovating on the kinds of additional value they can attach to the asset. Music labels and rights holders could advance efforts to understand how NFTs, and the blockchains that support them, may impact their business models. Gaming companies will likely continue experimenting with NFT virtual goods while eyeing a future of blockchain-based “play-to-earn” games.

With so much money being invested, the popularity of NFTs is likely accelerating the use and adoption of decentralized ledgers, like blockchains, and cryptocurrencies that contain the potential to radically recompose many aspects of the economy.

Strategic questions to consider:

  •  How can media and entertainment companies help make it easier for people to buy and sell NFTs?
  • What existing assets are good fits for NFTs? How can NFTs be used to add additional value, exclusivity, and transparency to those assets?
  • How does the design of an NFT (legal interpretation and technological architecture) affect the classification of that NFT for tax, accounting, and broader regulatory purposes?

Combining platforms, experiences, audiences, and marketplaces, a metaverse is a 3D digital “place” where people interact through digital representations of themselves. By most definitions, a metaverse is an alternative world to the physical one, with activities, events, and virtual goods that are compelling enough to gather users and businesses. It can include augmented (AR), virtual (VR), and mixed (MR) reality experiences and may operate across physical and digital spaces.

Trends like shoppable media, virtual meetings, social camera filters, motion capture, AR for clothing and furniture shopping, spatial computing, immersive learning, and an array of brand and enterprise experiments in AR and VR could all converge toward a metaverse. However, to become reality, they would require significant adoption, standardization, and interoperability, while establishing greater trust and safety.

Despite the many challenges, a future of multiple metaverses threading in and out of virtual and physical spaces does seem to be the likely evolution of technology. But its full realization and broad adoption could take many years. In 2022, companies should focus on the building blocks, near-term use cases, and early metaverses that can achieve success now while laying the foundation for the future.

Strategic questions to consider:

  • How can brands and services think about their role and presence in a young metaverse?
  •  What are the implications for existing media and entertainment companies that may need to differentiate from—or participate in—the expectations shaped by a metaverse experience?
  •  What is the role of NFTs and blockchains for supporting virtual economies and asset ownership? Can these tools also enable, for example, a user to easily move their avatar (the digital image they wear in a metaverse)—and its identity—across different metaverses?

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