Accelerating digital media adoption

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Riding the new wave of digital growth


Key findings from our Digital Media Attractiveness Index

Media and entertainment companies have the opportunity to catch a new wave of growth as emerging markets embrace digital media.

Understanding the potential of digital growth in emerging markets

Emerging markets are ripe for digital media investment. By 2016, China will have more than 500 million wireless broadband connections; India will have more than 300 million.1 Cheap smartphones and the rollout of 3G and 4G broadband infrastructure are rapidly coming together to democratize online access.

EY - Accelerated digital media adoption

Together, these factors are the foundations for accelerated digital media adoption – condensed rates of technology adoption and digital media consumption. It took Twitter three years to reach 50 million users globally; Weibo, a Chinese microblogging website, did it in 14 months.6 Facebook's first four years in India netted it 50 million users, the same amount of time it took to hit that milestone in the rest of the world.7

The foundations for accelerated digital media adoption

EY - The foundations for accelerated digital media adoption


“Emerging markets are ripe for digital media investment. However, understanding what markets to focus on, as well as how and when to enter them is crucial to succeed.” - John Nendick, EY Global Media & Entertainment Leader


1 “Mobile broadband connections and revenues forecast: 2012–17,” Ovum, August 2012.
2 “Emerging Opportunities — To win in developing markets: Be agile and be smart,” The Nielsen Company, May 2013.
3 “Smartphone growth continues, buoyed by big emerging markets,” Total Telecom Plus, 29 May 2014, via Factiva, © 2014 Terrapinn Holdings Limited.
4 “Mobile broadband connections and revenues forecast: 2012–17,” Ovum, August 2012; “Fixed broadband forecast: 2011–16,” Ovum, March 2012.
5 “The growing role of emerging markets in shaping global demand,” ICEF Monitor website, http://monitor.icef.com/2014/03/the-role-of-emergingmarkets-in-shaping-global-demand, accessed 4 December 2014.
6 “Google Plus vs Facebook Infographics,” Visual.ly website, http://visual.ly/google-plus-vs-facebook-infographics, accessed 20 May 2014; “A Twitter to Invest In,” Forbes, 14 March 2011, via Factiva, © 2011 Forbes Inc.
7 “Reaching 50 Million Users,” Visual.ly website, http://visual.ly/reaching-50-million-users, accessed 20 May 2014; “Facebook user base soars to 50 mn in India,” Press Trust of India, 25 July 2014, via Factiva, © 2012 The Press Trust.

Identifying markets that offer the greatest digital earnings potential

The opportunity for M&E companies from this new wave of digital growth is enormous, as is the cost of missing out. To help M&E companies understand what markets to focus on, when to enter and how to enter, we have developed the Digital Media Attractiveness Index (DiMAx) — a proprietary tool that ranks countries on their potential to generate earnings from digital media.

Results from DiMAx, EY's proprietary Digital Media Attractiveness Index


EY - Results from DiMAx

  • Mature markets still lead: The US ranks No. 1 overall in terms of digital earnings potential — no surprise, given its scale and maturity in all areas. Japan’s strength in both benefits and cost attractiveness places it at No. 2. Germany, though scoring lower on benefits, is the most cost attractive market and ranks No. 3 overall. The UK comes in at No. 4.
  • China ranks No. 5 and is the highest-ranked emerging market: China’s story is one of contrast. China places 2nd in the index in terms of benefits and 13th in cost attractiveness — while the size and scale of this market offers undeniable benefits, restrictive caps on foreign participation may limit growth opportunities.
  • India is the second-highest ranked emerging market: India’s huge millennial population is tempered by low monetization and nascent digital consumption. A challenging business environment places it further down the index at No. 9.
  • Despite high consumption, Brazil and Russia face uncertainty: While they offer scale, strong media consumption and high rates of technology adoption, economic uncertainty prevails. Recent restrictions on foreign ownership have reduced Russia’s cost attractiveness. Russia ranks No. 10 and Brazil ranks No. 13.

Viewing digital market potential through the lens of benefits vs. costs

Our research found that markets group into one of four distinct benefit vs. cost profiles. By viewing digital market potential through the lens, M&E companies can fine-tune their growth strategy, identifying markets that fit their risk vs. reward appetite and optimizing their investment capital across markets.

Digital market potential through the lens of benefits vs. costs

EY - Digital market potential

 


“New and meaningful investments in all markets will be critical to the long-term growth potential, independence and success of global media and entertainment companies.” - Tom Connolly, EY Global Media & Entertainment Transaction Advisory Services Leader


Prioritize markets most relevant to your business with DiMAx Interactive

DiMAx Interactive takes our published index one step further. This customizable tool is designed to help M&E companies identify markets that offer the best opportunities for digital growth based on criteria most relevant to their business. DiMAx Interactive incorporates the same data sets used in our published index, with the added flexibility of allowing companies to prioritize criteria and rank markets in real time.

DiMAx Interactive

EY - DiMAx Interactive

Resources

To find out more about DiMAx Interactive and to organize a facilitated session with one of our professionals, please contact:

Raghav Mani
Global M&E Knowledge Leader
raghav.mani@ey.com

Martyn Whistler
Global M&E Lead Analyst
mwhistler@uk.ey.com


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