2 minute read 21 Sep 2018
Internet addicted young friends group.

How digital content distribution is transforming media and entertainment

By

John Nendick

EY Global Technology, Media & Entertainment and Telecommunications Deputy Sector Leader

Authority on trends, issues and challenges facing the technology and media and entertainment industries. Keynote speaker and thought leader quoted in industry and business publications.

2 minute read 21 Sep 2018

Digital download and streaming service providers need to plan for the licensing and production of movies and television shows. We explore how.

Digital is transforming every facet of business for media and entertainment (M&E) companies. The rise of social media, widespread broadband availability, faster internet connections, and the popularity of smartphones and tablets have changed the demands and expectations of media audiences, and created an astounding variety of new digital products and services. Research suggests that the days of traditional television are waning due to a rise in online media streaming.

“As content offerings and consumer consumption continue to evolve, companies are challenged to apply the traditional accounting standards to their new business models,” says Ian Eddleston, EY Global Media & Entertainment Services Leader.

As traditional distribution outlets continue to evolve, questions have arisen as to how digital download and streaming service providers should account for the licensing and production of movies and television shows. What these providers are doing isn’t very different from what traditional broadcasters and producers of films or television shows have always done, but rather they are distributing content in a different way.

As content offerings and consumer consumption continue to evolve, companies are challenged to apply the traditional accounting standards to their new business models.
Ian Eddleston
EY Global Media & Entertainment Assurance Services Leader

We therefore believe that entities that license or produce content to be distributed to consumers on a digital service generally should follow the M&E industry-specific accounting guidance that has historically been applied by traditional broadcasters and producers of films or television shows.

To plan for different scenarios of accounting for the distribution of digital content, content producers, broadcasters and distributors with a presence in the digital space will need to consider the following:

  1. How should different types of digital content be amortized under ASC 920?
  2. How do windows of availability affect the amortization pattern to be used under ASC 920?
  3. How are costs incurred for the production of content accounted for by entities that produce their own digital content under ASC 926?
  4. What are some of the considerations for a producer when assessing digital content for impairment under ASC 926?
  5. Are there any presentation and disclosure considerations producers of digital content should take into account?

Summary

Entities should apply the M&E industry-specific accounting guidance that has historically been applied by traditional broadcasters and producers of films or television shows to digitally distributed content.

About this article

By

John Nendick

EY Global Technology, Media & Entertainment and Telecommunications Deputy Sector Leader

Authority on trends, issues and challenges facing the technology and media and entertainment industries. Keynote speaker and thought leader quoted in industry and business publications.