In recent years the E&M industry has been at the forefront of industry disruption. Consumer behaviours and distribution channels have evolved dramatically. That may be one reason why over three-quarters of E&M CEOs (76%) believe there are more threats to their company’s growth prospects than there were three years ago. That’s up from 67% last year and higher than most other industry sectors.
E&M CEOs' top concerns are threats like geopolitical uncertainty, the availability of key skills, and the speed of technological change. They’re also cautious about global economic growth prospects this year; only 22% believe they will improve over the next 12 months, down from 34% last year. Confidence in immediate growth prospects is also subdued, with fewer CEOs very confident of business growth over the next 12 months.
It’s no wonder that CEOs are looking to play things safe, identifying the US and China as far and away the markets that offer the best prospects for growth in the coming year. Moreover, the UK leads Germany as the third most attractive market (24% vs. 16%), reversing the overall ranking order for these two countries and suggesting that E&M CEOs have greater confidence in the future of the UK marketplace.
This complicated world picture isn’t just being shaped by economic and geopolitical trends. We believe there is a more fundamental shift taking place, namely from a globalising world to a multipolar one – with many dimensions of power, growth, and threats. The majority of E&M CEOs, like their peers in others industries, are already anticipating this shift: for example, 72% expect increasing regionalisation in trade, while 83% predict that differing fundamental belief systems will underpin societies around the world.
These factors amplify the growing need for industry leaders to respond to consumer expectations and demands at the local market level – giving local content providers an advantage and fuelling co-production activity in key growth markets.
In other research (2015-2019 Global Entertainment & Media Outlook) we’ve reviewed some of the factors needed to succeed in this environment. Innovating around the product and the user experience, developing seamless consumer relationships across distribution channels, and putting mobile (and increasingly video) at the centre of their consumer offerings will be key strategies for E&M players going forward.
Looking further ahead, the picture for the industry gets much brighter. 61% of E&M CEOs say their companies have more opportunities for growth today compared to three years ago. And most E&M CEOs (89%) are confident about their company’s growth prospects over the next three years, in line with the global CEO population.
Customers and clients stand out as the most important stakeholders for E&M CEOs; 95% say they have a high or very high impact on their company’s strategy. But they are far from the only stakeholders impacting business strategy. Nearly three-quarters of E&M CEOs (72%) say that industry competitors and peers are impacting their business strategy. We think that reflects two trends: increased partnership and the importance of new entrants.
E&M CEOs plan to use key partnerships to help drive growth. More than two-thirds of E&M CEOs (68%) say their company will enter into a new strategic alliance or joint venture over the next year, dramatically more than across our sample as a whole (49%). This focus on alliances reflects the need to be nimble and responsive to changing consumer behaviours. As users demand more personalised and engaging experiences, it becomes increasingly important for companies to explore alliances that support new combinations of advertising, subscriptions and transactions.
Nicole Sheffield, CEO of Australia’s NewsLifeMedia describes the situation like this: “What I’m seeing is the role that you potentially had as a publisher, as a media owner, as a content creator is completely changed because your relationship with what was once your client is now actually your partner. And often their digital strategies, technologies, and plans actually work in synch with you, and often enemies in the past are actually now no longer even frenemies. They’re actually partners because whilst half your business might be competing, there’s another part of your business where working together improves the end result.”
E&M companies are also collaborating with external parties to streamline their own operations; about one-third of CEOs say that they plan to outsource a business process in the next year. That’s more than in other related industries like Technology (23%) or Communications (24%).
Last year, our survey results showed that E&M CEOs were one of the sectors facing the greatest amount of disruption, driven especially by technological advances. This year’s survey shows that technology continues to drive major changes in the industry. 89% of E&M CEOs say that technological advances are the trend most likely to influence stakeholder expectations. And nearly three-quarters of E&M CEOs (74%) are concerned that new market entrants could threaten growth prospects. That’s more than any other industry and reflects the pressure that ubiquitous mobile devices and other new competitive threats are placing on the industry. As we’ve shown in our 2015-2019 Global Entertainment & Media Outlook, monetising mobile will be a critical success factor for some segments like newspaper publishing.
Technology also stands out as an area where CEOs are actively promoting change – 59% say their companies will make significant changes to how they use technology to assess and deliver on wider stakeholder expectations. In doing so, it will be vital to keep the customer in mind and not use technology for technology’s sake.
E&M CEOs are also more concerned about cybersecurity this year; 66% think it could threaten growth, up from 60% last year and 43% in 2014. That’s no surprise, given the increasing scale, complexity and frequency of cyber breaches reported over recent years, both within and outside the E&M industry. Technology can have benefits too. Many E&M CEOs say their organisations are using it to engage stakeholders. More of them see data and analytics along with social media communications and engagement as good ways to understand and reach stakeholders – especially customers – as compared to CEOs across the sample as a whole.
E&M companies have strong skills in measuring and monitoring consumers’ preferences and behaviours. But how are they doing when it comes to measuring their own organisations? The top area where CEOs say they want to do better at measuring value and impact is in innovation and R&D (mentioned by 71% of E&M CEOs vs. 55% of CEOs overall). New business models continue to break new ground in areas like OTT ("over-the-top" content), content creation, and audience measurement. Tracking innovation is critical to meeting clients’ needs and staying ahead of the competition.
Non-financial indicators like brand strength (mentioned by 54% of E&M CEOs vs. 44% of CEOs overall) is the second most important category where E&M CEOs want to improve their ability to measure impact. Nearly every E&M CEOs says their company will make changes to how they manage brand, marketing and communications and it will be important to track their success moving forward.
When it comes to communicating better, organisational purpose tops the list, followed by innovation. E&M CEOs who see the need to communicate more around their organisational purpose and values most often want to reach their employees, while CEOs looking to share more about innovation efforts are focused most on customers and clients.
CEOs tell us that customers will increasingly judge companies based on how they help greater society and how they live up to their own values. More than a quarter of E&M CEOs said that their company has changed its purpose in the last three years to take into account the broader impact it has on society. Many E&M CEOs believe that their sense of purpose will pay off when it comes time to recruiting – 54% say that top talent choose their organisation because its social values align to their own.
E&M CEOs are already on their way; 79% of E&M CEOs say that business success in the 21st century will be defined by more than just financial profit.
Nicole Sheffield, CEO, NewsLifeMedia, Australia
Global entertainment and media outlook provides a single comparable source of five-year forecast and five-year historic consumer and advertiser spending data and commentary.
The Australian Entertainment & Media Outlook 2016-2020 highlights growth through diversity with a focus on talent, geography and business models.
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