The Entertainment Revolution: When disruptors become disrupted

Sep 07, 2016

What will the entertainment and media industry look like in the future? How will our viewing become even more personalised? What are the digital opportunities?

The entertainment and media sector has always been at the leading edge of the digital revolution and here on the Isle of Man our place within the eGaming sector has given us a front row seat to that revolution.

Ten years ago, book publishing and the music industry were among the first and fastest to confront the brutal realities – and new possibilities – that digitisation brings with it. Now, there are even more significant opportunities for the sector, and the Isle of Man, though these, too, have their challenges.

The industry as a whole is thriving – PwC predicts worldwide revenues to grow from $1.72 trillion in 2015 to $2.14 trillion by 2020. That’s an annual growth rate of around 4.4%, but within that digital growth is substantially outstripping traditional media – internet advertising, for example, will grow by over 11% per annum, but both magazine and newspaper publishing are likely to decline (by 0.1% and 1.5% each year respectively). Likewise, three markets (China, the UK, and Denmark) are now generating more revenue from digital advertising than non-digital advertising – the first time this has happened. Others are set to follow.

As entertainment goes more and more digital, this in turn is driving the other growth trends in the sector. The most obvious are the dominance of younger consumers, who have grown up with digital. The world’s fastest-growing entertainment markets are those with the highest proportion of under-35s, and many of the sector’s most dynamic innovations are being developed for (or indeed, by) its young adult consumers. Some of the Island’s key entertainment businesses are focusing their own product development on this key age group: GAMESCO’s development of new real-time massive multiplayer online games (‘MMO’); Microgaming’s move into virtual and augmented reality; and Playfusion’s mixed media connected play platform.

Mobile is another trend that continues to be driven by the youth demographic. Young people run their lives on their phones and tablets, and the industry is offering more and more of its content this way. Older demographics have also embraced mobile technology. By 2017, more than half of the world’s population will be mobile Internet subscribers, and faster, more reliable connections will be demanded to make it ever easier for them to work, shop, and be entertained on the move. No surprise then, that the consumption of data on mobile devices is projected to grow at a compound annual rate of 36% across the world over the next five years. Surely if the Island is to be home to some of the key players in this market segment, should the Island not also be home to some of the leading-edge technological infrastructure? How important is it that the Isle of Man moves forward in connectivity speeds to become comparable with Akamai’s Q1 2016 top ten countries, all with average speeds of above 15Mbps?

If the youth market is the ‘who’ and mobile is the ‘how’, content is the ‘what’. There’s never been more content out there, and it’s never been easier to access it. Consumers can feel overwhelmed by the sheer volume of choice, which is opening up opportunities for aggregators, and for recommendation mechanisms, whether corporate or those generated by other users. The most successful will be those that understand two parallel but apparently opposite trends: the appetite for content is becoming both more local, and more global at the same time. Big Hollywood blockbusters still gross millions around the world, but people are also looking for high-quality personalised content that reflects their own culture, tastes, and priorities. This is where the Island can play a role far greater than its physical presence – punching above its weight on the digital content distribution stage.

Digital remains a huge opportunity for all the sectors of the entertainment and media industry, and its full potential is only now being tapped. To succeed in this dynamic and increasingly competitive world, companies need four key things: a strong and trusted brand; agility to respond to the accelerating pace of change; constant innovation, and the courage to disrupt themselves rather than wait to be disrupted by new entrants.

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Steve Billinghurst
Tel: +44 (0) 1624 689711

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Ian Clague
Senior Partner
Tel: +44 (0) 1624 689689

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