Dramatic shifts are underway on how entertainment and media (E&M) companies compete and generate value, as the quality of the experience they deliver to consumers becomes their primary basis for strategic differentiation and revenue growth.
To thrive in a marketplace that’s increasingly competitive and crowded, companies are developing strategies and building capabilities to engage and monetize their most loyal and passionate users — their fans.
According to PwC’s Global entertainment and media outlook 2017-2021, this means they must combine compelling content with breadth and depth of distribution, then connect it all to a great user experience, where content is easily discoverable on an array of screens and at an attractive price.
Rapid advances in technology drive D2C strategies
As companies compete to create the most desired user experiences, advances in technology are at the heart of their strategies. Combined with great user experience, companies can harness technology and data to create a virtuous circle – one in which increasing consumer engagement and attention lead to the capture of more data and more insights into what users want. This understanding allows companies to further target and engage their core audiences, opening up new opportunities to generate revenue. Increasingly, the models used to achieve this monetization are founded on direct-to-consumer (D2C) strategies, which are enabled by technology and characterized by greater choice and user control.
E&M growth will lag GDP as advertising comes under pressure
The focus on realizing new revenues by turning consumers into fans is being intensified by a slowdown in overall E&M industry growth and pressures on advertising models. This slowdown reflects pressures on ad-supported business models – consumers now prefer ad-free experiences and advertisers are dissatisfied with the current measurement capabilities available with digital media. While advertisers are still willing to spend, growth in ad spend is now overwhelmingly driven by internet advertising.
Mobile advertising is growing apace – but still needs better measurement practices
Growth of internet advertising is being powered by mobile advertising, which grew 58.7 percent in the past year, and will continue to expand at an 18.5 percent compound annual growth rate (CAGR) through 2021. However, without accepted measurement practices that can provide transparency on the efficacy and efficiency of the major platforms, premium brands are reluctant to take on the perceived risks inherent in concentrating more of their advertising in digital mediums.
Major digital tipping-points are occurring, or in prospect across all segments globally…
Amid shifting consumer preferences, rapid advances in technology and ongoing disruption to business models, the new strategic imperative for E&M companies is to turn customers into fans – by innovating to create the most compelling, engaging, and intuitive user experiences – as Deborah Bothun, PwC Global Entertainment and Media Leader, comments:
“A raft of changes in technology, user behavior and business models have opened up a gap between how consumers want to experience and pay for E&M offerings, and how companies produce and distribute them.
The right user experience bridges this gap. To deliver it, companies must pursue two related strategies. First, build businesses and brands anchored by active, high-value communities of fans, united by shared passions, values and interests. And second, capitalize on emerging technologies to delight users in new ways and provide superior user experiences.”
Nelson Charsegun L. Aquino is an Assurance Partner in the Technology, Information, Communication and Entertainment (TICE) and Methodology Leader. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.