“Innovation at the center” emerges as fundamental for media and entertainment businesses
- 70% are willing to accept short-term revenue losses for long-term digital growth
Singapore, 29 January 2014 – EY’s Sustaining digital leadership! study, released today, shows leading media and entertainment (M&E) companies are putting continuous innovation at the center of everything they do. Digital models are taking root across the range of M&E business processes – from product development and distribution to customer experience, supply chains, profit models and risk management. One measure of this transformation is that 70% of the companies identified in the study as digital leaders are willing to accept short-term revenue losses for long-term digital growth.
The digital leaders are also using real-time social engagement and big data analytics to put customer voices at the center of their innovation – to drive multi-platform product development and integrated cloud-based distribution for a seamless, anytime/ anywhere customer experience.
M&E companies face unprecedented digital opportunities and challenges
M&E companies see unprecedented opportunities to serve today’s digitally empowered audiences, whether in direct-to-consumer (D2C) or business-to-business (B2B) media. At the same time, they cite real challenges from fast-changing customer behaviors and the rapidly evolving technologies of smart mobility, social networking, cloud computing and big data analytics.
The emerging field of big data, which is pivotal to M&E companies’ new multi-platform, customer-centric mandate, provides an important example of both great strides and steep challenges still ahead – even for digital leaders.
The customer’s voice is driving technology-enabled change
The study shows that 85% of digital leaders want direct relationships with customers. Related findings show these relationships are the basis for a new “radical intimacy” based on 360 degree profiles of customer behaviors and desires when mobile, social, online, at home, in theaters or at work. For example:
- 77% of digital leaders say they can access customer data in real time.
- 64% of them cite “creating a culture of innovation” as a top strategic priority and 57% give the same weight to “listening to customers and analyzing customer interactions.” These two strategies combine to make customer engagement central to innovation.
Big data power and challenges exemplify M&E’s journey to digital transformation
M&E companies often contend with big data issues. Rich in data collected as their customers click, engage or turn away from the content and services offered. M&E wrestles with data reliability to a shortfall in the skills and tools needed to derive useful product development and marketing insight, specifically:
- Data reliability is a challenge for 49% of digital leaders.
- Only 19% of them say they are integrating customer data across all distribution channels today.
- Only 41% of digital leaders are employing second- or later-generation analytics – improving audience segmentation and other functionality based on lessons learned from early implementations.
- 39% of digital leaders say they are not yet obtaining insight from big data.
Looking beyond the digital leaders, the study shows the rest of M&E companies are facing even greater big data challenges. For example, only 11% of other M&E companies are employing second- or later-generation analytics. And, where 81% of digital leaders say they can integrate data from two or three channels to obtain a better customer profile, only 64% of other M&E companies claim that capability.
Additional findings from the report include:
- Digital leaders are more willing to cut legacy media investments in favor of digital initiatives as they rethink products and business models (65% of digital leaders versus 48% of other M&E companies).
- Depending on the activity, 64-70% of digital leaders use social media for branding, customer interaction, product development and distribution, where only 49-52% of other M&E companies use social channels for these purposes.
“While technology is enabling a lot of innovation in M&E, we’ve found that the most successful examples in both B2B and D2C, are being driven by customers, their changing behaviors and how they’re adopting both the technology and the technology-enabled innovations,” says John Nendick, EY’s Global Media & Entertainment Leader. “Customers have unprecedented control over content consumption – how, when and where.”
“The continuous nature of technology-enabled innovation makes this a kind of never-ending journey,” says Pat Hyek, EY’s Global Technology Industry Leader. “No single new product or service will ever be ‘the answer.’ Winners will be those who build organizational systems, processes and cultures that always drive innovation building on today’s successes.”
About the study
The findings in EY’s Sustaining digital leadership! report are based on a survey of senior executives from more than 550 global M&E and enabling technology companies, over two dozen executive interviews, secondary research and EY partner insight and analysis. Survey respondents came from the fields of advertising, broadcast and cable, publishing and information services, filmed entertainment, interactive gaming, music and social networking, as well as from the technology industry.
Results offer insights on digital growth strategies, business models and methods of customer engagement that companies are following to pursue and sustain M&E industry leadership in the digital era. The report includes lessons from “digital leaders” on how M&E companies (1) engage with customers, (2) balance growth and risk, (3) re-think products and business models and (4) innovate. Digital leaders are defined as M&E companies that are already driving more than half their revenue digitally and that have made the most progress in their use of the transformative digital technologies of mobile-social-cloud and big data analytics.
This is the second report in the Digital Leadership Study Series from EY’s Global Technology Center and Global Media & Entertainment Center. The first report, Digital Agility Now!, was released in June 2013. Both reports are freely available in full.
EY’s Global Technology Center
The technology industry is in a constant state of change – driven by continuous innovation, shifting markets, converging industries, consumer demand and the need for first-mover advantage. EY’s Global Technology Center connects a worldwide team of more than 15,000 technology professionals to help you navigate the challenges of this continuous change. We provide assurance and tax guidance through a network of experienced advisors to help you manage risk, transform business performance and sustain improvement. We can help you deliver cost-effective innovation, balance product portfolios, maintain effective supply chains, and identify, execute and integrate strategic growth transactions. Our global technology network leverages our leading market share position in serving technology companies to provide you with timely, reliable information. Our teams use a cross-discipline, collaborative approach to help you achieve your business objectives. We encourage our people to use their ingenuity and initiative to help you develop approaches, create options and seize opportunities. It’s how EY makes a difference.
EY’s Global Media & Entertainment Center
In an industry synonymous with creativity and innovation, the bar for business excellence is set high. You need to embrace new technology, develop new distribution models and satisfy the demands of a voracious and outspoken consumer. At the same time it’s important to manage costs, exceed stakeholder expectations and comply with new regulations. There’s always another challenge just around the corner. EY’s Global Media & Entertainment Center can help. We bring together a high-performance, worldwide team of media and entertainment professionals with deep technical experience in providing assurance, tax, transaction and advisory services to the industry’s leaders. Our network of professionals collaborate and share knowledge around the world, to provide exceptional client service and leverage our leading market share position to provide you with actionable information, quickly and reliably.
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