Digital migration is increasingly playing out differently across the various segments and geographies of the entertainment and media industry says PwC’s Global Entertainment and Media Outlook 2012-2016
Singapore, 12 June 2012 - Despite ongoing economic uncertainty, the past year has seen global sales of tablets and smart devices reach record levels once again. The trend underlines the growing revenue opportunities from digital delivery of entertainment and media (E&M) content and advertising to increasingly connected, and particularly mobile, consumers.
According to PwC’s annual Global Entertainment and Media Outlook 2012-2016, released today, digital opportunities are now well understood by media companies, advertising agencies and advertisers themselves: the industry is approaching the ‘end of the digital beginning’ as rising comfort levels with digital mean that it is becoming business-as-usual. Although the ‘fog’ experienced in the past few years around strategic options is lifting, there is more to be done: today’s challenge is in the implementation of those digital strategies.
A world of difference
PwC believes that though the focus may still be on digital migration, challenges for E&M companies differ according to diverging market pictures across segments and geographies.
Charlotte Hsu, Partner and Singapore Entertainment and Media Leader, PwC LLP, says:
“The Singapore entertainment and media market at 5.8 percent compound annual growth rate is uniquely positioned, straddling between the maturity of certain markets and the growth of this sector within the Asia Pacific region. Mobile and internet penetration and digital infrastructure in Singapore, fuelled by the rapid uptake of tablets and smart devices, is closer to the more mature markets in the United States, Europe and Japan. But at the same time, the strength of certain segments such as internet advertising is clearly energised by the rapid and dynamic growth in Asia. Digital prospects will be dictated by how well companies embrace digital strategies as its core strategy, and how it uses digital social media and other data collaborative tools to drive that growth.”
Tipping points and contrasting market development rates globally and in Singapore as highlighted by this year’s Outlook data and analysis show:
Growth of E&M spending on digital closing in on non-digital share of market
Strong showing in Singapore’s internet advertising spending growth
Consumer spending in video games and music expected to be fastest growing segments in Singapore
TV subscription and advertising trend in Singapore energised by growth in the region
Adrian Seto, Associate Director, Entertainment and Media, PwC LLP Singapore, says:
“Singapore is at a different stage of digital development across the different segments within the E&M sector. Internet advertising spending clearly takes the lion’s share of growth in spending compared to other digital segments. The industry is still dominated by the key players in TV and newspapers but as they have made the commitment to a digital future and it becomes core to the enterprise we see them strive to make the necessary changes to their products, distribution and organisations."
Entertainment and media companies reshape and retool for life in the digital new normal
According to the Outlook, the challenge now for E&M companies in a world where digital is established as ‘business as usual’ – and in those markets where the infrastructure is suitably developed to support digital distribution and consumption – is to focus on planning out and executing their digital strategies. Uncertainty in past years triggered by digital migration is giving way to a sharper focus on identifying, choosing and executing the business models, organisational structures and skill sets to harness new consumer behaviours and deliver rising future value.
Companies will find that giving consumers more control over how their personal data is used may deliver higher benefits back to consumers, encouraging them to volunteer even more information, as well as providing better value for advertisers and higher rewards for media owners. Businesses need to aim for a win-win model in which the medium, the advertiser and the consumer all collaborate and benefit. Ultimately, the only person who ‘owns’ the customer – and the customer’s data – is the customer him or herself.
According to the Outlook, these roles could include:
For creative and media agencies, the rise of unpaid or earned media reflects an innovative new fusion of advertising, content and analytics, and presents an opportunity for sweeping change in their roles and business models. Advancing socialization is feeding into the widely-accepted concept among agencies and advertisers of “bought, owned and earned” advertising. A fourth category is emerging -- “managed” advertising, (the orchestrated use of social media, such as engagement via bloggers). Everything that agencies do for their clients now has an embedded digital component and agencies are directing clients’ attention toward output measures such as earned/unpaid media reach, and purchasing intentions.
There are therefore opportunities for agencies to act as digital marketing and brand consultants, guiding their clients with insights into opportunities around the aggregation of data, socialization and content – particularly as the historical distinction between traditional and digital disappears.
To realise these benefits, companies will have to tackle challenges around rights, royalties and piracy – areas where many E&M companies are often burdened by rigid, complex, bespoke legacy systems There are additional issues in leading and marshalling the talent and culture of innovation, needed to make digital implementation a reality, particularly in meeting the distinctive employment needs and expectations of the Millennial generation.
Greg Unsworth, Asia Pacific Technology Industry Practice Leader, PwC LLP Singapore, says:
“The growth in the entertainment and media sector is fuelled not only by the growth in use of tablets and smart phones. The rise of cloud computing and innovation within the financial services and payment industry will lend a hand in advancing consumer experiences in this sector. Within organisations, we will see how the new digital strategies and cloud technology drive down the barriers around individuals and silo business units. The right talent and the development of new performance indicators, business process and operating behaviours will change the game for businesses, or otherwise, they face the risk of being left behind as the digital generation moves past them.”
The end of the ‘digital beginning’ arrives
In the face of sweeping change and uncertainty, the E&M industry has spent the past few years seeking effective business and operating models for the new world, through a cycle of constant experimentation, ongoing innovation and targeted analysis of the results. This will continue. But with digital now at the core of business-as- usual, PwC believes that experimentation and execution are no longer sequential but will proceed in parallel, enabling E&M companies to press ahead into the ‘new normal’ with confidence.
Greg Unsworth adds:
“We have arrived at the tipping point where digital has become the new standard to meet consumer needs. Businesses have to embed digital in its core strategies, to operate within such an environment and find ways to capitalise on it.”
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About the Outlook
PwC’s Global Entertainment and Media Outlook 2012-2016, the 13th annual edition, contains in-depth analysis and historical and forecast data for advertising and consumer/end-user spending in 13 major industry segments across 48 countries. Find out more at http://www.pwc.com/outlook.
Segments covered by the Outlook
Business-to-business, Consumer and educational books, Consumer magazine publishing, Filmed entertainment, Internet access spending: wired and mobile, Internet advertising: wired and mobile, Newspaper publishing, Out-of-home advertising, Radio, Music, Television advertising, TV Subscriptions and license fees, Video games.
Digital spending consists of broadband and mobile Internet access; online and mobile Internet advertising; mobile TV subscriptions; digital music; electronic home video; online and wireless video games; digital consumer magazine circulation spending; digital newspaper circulation spending; digital trade magazine circulation spending; electronic consumer, educational, and professional books; and satellite radio subscriptions.