Media and entertainment CEOs see digital media as driver of future growth
- Ability to persuade customers to pay fair value for digital content among top CEO challenges
- Mobile devices to be the biggest driver of growth in content consumption
Thursday, 13 September 2012 - Global media and entertainment CEOs are optimistic about the digital future and expect digital revenue will be a rapidly increasing percentage of overall revenue for companies, according to Ernst & Young’s latest CEO study Opportunity and optimism: How CEOs are embracing digital growth.
The report reveals that approximately half of all CEOs surveyed believe digital will increase their overall revenues and margins by at least 10% within the next three years.
The report is the result of surveys conducted with 34 CEOs from global media and entertainment companies, including Australia, with combined annual revenues exceeding US$300 billion. The companies encompass a wide variety of media and entertainment subsectors, including filmed entertainment, television, music, electronic games, entertainment services, cable networks and channels, cable and satellite operators, internet and interactive media, advertising, publishing and conglomerates.
John Nendick, Global Media and Entertainment Leader at Ernst & Young says, “There is a heightened optimism from a few years ago when industry leaders were more tentative about the potential of digital. All of the CEOs we spoke with understand that digital is probably the single most important factor – impacting their ability to grow both revenues and margins.”
Mobile devices to be the biggest driver of growth in content consumption
“The integration of media content, devices and networks is considered the biggest driver of growth. The more users interact with content, the easier it is to learn about their habits and for content, advertising, and services within these ecosystems to evolve and grow,” said David McGregor, Asia-Pacific Media and Entertainment Leader at Ernst & Young.
When asked what will be the three biggest drivers of growth in content consumption during the next three years, CEOs were unanimous in their response. All surveyed believe mobile devices (including tablets) are the key to spurring demand for content.
Mr McGregor said CEOs are especially bullish about emerging markets, where growing mobile device availability coupled with an improving wireless broadband infrastructure are creating significant opportunities for media companies to grow.
“When queried about the greatest challenges facing the media and entertainment industry during the next three years, CEOs overwhelmingly agreed that global economic uncertainty and an inability to persuade consumers to pay fair value for digital content were the top two concerns.
“Also on the CEOs’ list was the elimination of intermediaries between their companies and the end-user, resulting in increased direct business-to-consumer relationships; structural and regulatory ambiguity; and reduction and/or reallocation of marketing budgets,” Mr McGregor said.
Other insights from the report:
- 84% of CEOs believe the role of social networking for their company is to connect with customers; building audiences and brands are secondary
- 76% of CEOs said the objective of an ‘app’ is to be part of a bundle of new or enhanced content and services
- The top priority for CEOs remains the evolution of digital and online distribution (56%), followed by creatively differentiating content (44%)
- Social and interactive media companies are best positioned among all media and entertainment companies to thrive in the future, according to 59% of CEOs
About Ernst & Young’s Global Media & Entertainment Center
Whether it’s the traditional press and broadcast media, or the multitude of digital media, audiences now have more choice than ever before. For media and entertainment companies, integration and adaptability are becoming critical success factors. Ernst & Young’s Global Media & Entertainment Center brings together worldwide teams of professionals to help our clients achieve their potential -- teams with deep technical experience in providing assurance, tax, transaction and advisory services. The Center works to anticipate market trends, identify the implications and develop points of view on relevant industry issues. Ultimately it enables us to help our clients meet their goals and compete more effectively. It’s how Ernst & Young makes a difference.
About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 152,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.
Ernst & Young refers to the global organisation of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com.
This news release has been issued by Ernst & Young Australia, a member firm of Ernst & Young Global Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
Ernst & Young Australia
03 9655 2620 or 0417 859 323