Democratized Content is KingMedia and entertainment companies must depose traditional contentmonarchies and embrace egalitarian consumption habits driven bysocial media and mobility to fulfill desires for a unified experienceacross all devices and channels.Executive SummaryThe wedding of Prince William and Kate Middletonin April 2011 was a reminder to many about therole of the British monarchy in today’s world. Theevent was watched by millions, and for a few days,London was the party capital of the world, withmany an expert’s hours spent analyzing who worewhat and who did or did not make it to the list.The average Briton’s response to all this was, “Ohwe love the monarchy… as long as they do notinterfere with what I do.”Bill Gates coined the phrase “content is king” in1996,1and it has stuck, through thick and thin.However, the world of media and entertainmentconvergence has come a long way since themiddle ages of the Internet revolution, circa thelate 1990s. Today’s consumer does not like to betold what to watch, when to watch, how to watch.He is spoiled for choices and revolts the momentanyone tries to second-guess his preferences.In other words, we live in a democratic era wheredevices, platforms and carriers are continuouslyvying for a share of our attention — and contentis a means of getting that attention. So, like theBritish monarchy, content is still king, and it helpsattract attention, as long as content owners do notdictate terms. Today’s media and entertainmentspace can be likened to a king in a democracy.In today’s democratic landscape of digital contentconsumption, shifting paradigms are the rulerather than the exception. Principles of Web 2.0,cloud, mobile apps and rapidly evolving softwareand communication technologies have paved theway for an all-pervasive democratic revolutionknown as social media. At the same time, hardwareinnovations in the mobile and tablet space areintroducing unprecedented levels of connectiv-ity and interactivity, empowering each and everyconsumer.Media companies, from film and television tomusic and print, are feverishly trying to adapttheir approaches to this new reality. Businessmodels that worked for decades have vanished,and fresh ideas are the order of the day.However, usage and revenue patterns emergingfrom the ever-changing digital world present newchallengestomediaandentertainmentcompanies.While reach attained in the online/mobile worldwas unheard of in print, online content does nothave the same revenue potential per unit as printor broadcast content; with mobile, it is even lower.Media companies need to accept the followingrealities while planning for the future:• Customers are increasingly less likely to golooking for content; content needs to reach outto where the customer is.• Cognizant 20-20 Insightscognizant 20-20 insights | april 2013
cognizant 20-20 insights 2• Content consumption is moving from buffetstyle to à la carte.• The Internet has stripped media companiesof their control over how their products aredistributed.• The lines between different types of mediahave blurred.• Media convergence is resulting in new com-petitors and collaborators in the marketplace.• Virgin content with no social wrappers isunlikely to engage the millennial generationeffectively.• Simultaneous multi-device customerengagement is the new reality.This white paper examines the effects of thesechanges and illustrates potential options thatwill help content companies remain relevant and,more importantly, solvent.Social Media, Mobile Devices TakeOver the WorldIn the first decade of this century, content con-sumption irreversibly shifted to digital. Poweredby ever-increasing broadband speeds, 3G and 4Gnetworks and an explosion in the smartphone andtablet markets, the digital content marketplacehas overwhelmed all other forms of content dis-tribution. By 2020, the size of the digital universeis expected to be 35 zettabytes, 44 times higherthan the 0.8 zettabytes of 2009.2Moreover, theinternational digital content market is expectedto grow to $36 billion in revenue by 2014, morethan twice the $16.7 billion chalked up in 2009.3Mobile content consumption is expected toincrease at a much faster rate than wired con-sumption in the coming years. From 2012 to2016, revenue generated by mobile Internetaccess is expected to grow at 12.2% annuallycompared with 7.1% for wired access (dial-up andbroadband).4And consumers are expected to use4G networks to consume ever increasing amountsof multimedia content. By 2017, mobile video willrepresent 66% of all mobile data traffic, and 4Gconnections will account for 45% of global mobiledata traffic.5Increased digital content consumption is accom-panied by the equally game-changing and all-pervasive emergence of social media. In 2012,social networking accounted for 20% of the totaltime people spent on PCs, and 30% on mobiledevices.6The biggest social networking phenomenon inthe world, Facebook, is consuming a growingtimeshare of Internet consumption. Afterperforming the seemingly impossible taskof dislodging the Google home page as themost visited Internet Web page, Facebook nowoccupies 17% of consumers’ PC time in the U.S.6and accounts for one out of every five page viewson the Internet worldwide.7While the millennial generation is driving thesocial media revolution, older age groups are notfar behind. As of December 2012, over 50% ofInternet users in the 50-64 age group and morethan 30% in the 65-plus age group were exposedto social networking (see Figure 1).80%10%20%30%40%50%60%70%80%90%100%Feb ‘05 Aug ‘06 May ‘08 Apr ‘09 May ‘10 Aug ‘11 Feb ‘12 Aug ‘12 Dec ‘12Percent of Internet users in each age group who use social networking sites18-2930-4950-6465-plusAll Internet usersSource: Pew Research Center’s Internet and American Life Project surveys, 2005-2012Figure 1Social Networking Site Use by Age Group
cognizant 20-20 insights 3Advertisers Follow the MoneyAs content consumption moves online and ontomobile devices, so do most revenue-generationmodels. Players across the content creation,marketing and distribution sectors have acceptedthis tectonic shift and are adapting theirbusiness models to favor online and mobile. Asthe potential for subscription-based revenuegeneration models for online content remainlimited (millennials,9in particular, have grown upon the Internet, believing content should be free),companies see advertising as a means for drivingdigital revenue streams.Online researcher eMarketer estimated thatonline ad spending in the U.S. would surpass printadvertising in 2012 for the first time ever, toppingout near $40 billion.10By 2016, online spend isexpected to nearly double that of print advertis-ing. In the broadcast marketplace too, online adspending will slowly catch up with TV ad spend by2016 (see Figure 2).A study of interactive marketing spend trendsover the next four years reveals the increasingdominance of social and mobile. Social and mobilespend is expected to grow at rapid annual rates of26% and 38% respectively, while search advertis-ing will plateau with an annual growth rate of 12%(see Figure 3, next page).11Most advertisers have already shifted focus fromsearch to social media. Even the biggest searchgiant Google shifted to social, launched Google+(to mixed reviews) and even integrated searchresults. Facebook’s new social media search toolGraph Search is expected to introduce a newdimension to social media advertising.Display advertising is expected to continue itsrobust growth, the result of a more engagingmultimedia format compared with the pure textformat of search-based advertising.Contending with a Revenue DisconnectA painful realization of revenue challenges isslowly dawning on traditional media and enter-tainment companies that have plunged headlonginto the digital world (see Figure 4, next page).Online content does not have the same revenuepotential per unit as print or broadcast content,and mobile has even less. Here are some eye-opening statistics.A print newspaper reader is estimated tocontribute 18 times the value of an online reader.12This is partly due to the fact that most newspapersdo not change for online content. But the biggerreason is that an online reader is more likely togo directly to a news article through search and,hence, look at the ads on one page only, comparedwith a print reader who notices ads on each pageof the edition while browsing. Part of the drop isalso because digital ads offer improved measur-ability (in the form of impressions or click-throughrate) compared with print ads.The news is not much better in the broadcast TVspace, with a viewer estimated to bring in threetimes the value of an online viewer per episode.Although online ads can be more expensive thanbroadcast ads, given their ability to target theright audience, the number of ads shown duringprograms on the most popular online video sitesis approximately only 20% to 25% of what isshown on broadcast TV. Many industry expertsbelieve Internet audiences simply will not tolerate3239.546.552.857.56236 34.8 33.7 33.2 32.6 32.32011 2012 2013 2014 2015 2016Online Ad Spending60.764.8 65.6 67.8 68.9 72TV Ad SpendingPrint Ad SpendingSource: www.eMarketer.comFigure 2U.S. Print, TV vs. Online Advertising Spend
cognizant 20-20 insights 4$0$10,000$20,000$30,000$40,000$50,000$60,000$70,000$80,000$90,0002011 2012 2013 2014 2015 2016($M)Social mediaE-mail marketingMobile marketingDisplay advertisingSearch marketingas many commercials as on TV, although thehypothesis is still unproven.One-third of heavy Internet users admit toregularly pirating music and video content,13pointing toward a gaping hole in monetizationstrategy for online content.Social media is not untouched by this problem.Although major online giants have generatedever-increasing amounts of advertising revenueover the last few years, growth is mainly drivenby additional content consumption per user. Therate of advertising revenue generation per houron major online sites has not risen significantlyover the last few years (see Figure 5, next page).14Social media penetration of developed marketshas reached a saturation point. Most of thegrowth in social media consumption in the nearfuture will be in emerging markets, such as Africaand Asia, and on mobile devices, which offermuch lower monetization potential.Mobile users are less inclined to absorb, oreven tolerate, ads on their devices. The chiefreason is the smaller screen size, which rendersnon-essential information a nuisance. They arealso much less likely to click on hyperlinks onmobile. Revenue potential per user on mobileis expected to be limited compared with adsdelivered to personal computers. Facebook’s andTwitter’s Sponsored Stories and Promoted Tweetsstrategies, respectively, are more subtle thandisplay ads, and are believed to be more effectivewith mobile device users.While these strategies have been successful toan extent, there is a long way to go before theycan match the returns offered by ads on PCs. Forexample, in 2012, more people used Facebookon mobile devices than on PCs for the first$709$46$125Print OnlineNewspaper value per reader per yearConsumer Paid Advertising Advertising$560$170Broadcast TV OnlineBroadcast TV value per thousandviewers per episodeSource: Beyond ContentFigure 4Comparison of Value: Print, Broadcast TV, OnlineSource: Forrester Research, Inc.Figure 3U.S. Interactive Marketing Spend
5cognizant 20-20 insightstime in the company’s history, whereas revenuegenerated from mobile accounted for just 23%of total ad revenue.15Even by 2016, mobile adver-tising revenues are expected to account for only15% of the global Internet advertising market.16Impact on Media andEntertainment CompaniesMedia and entertainment companies are expe-riencing the following implications to theirbusiness:• Media companies that try to lift-and-shifttheir revenue generation models from offline(print, broadcast, etc.) to online platforms arein for a rude shock. The revenue generationpotential of traditional streams (like subscrip-tion, vanilla ads, etc.) is not the same in thedigital world.• With the rise of social platforms andapp-based content consumption on mobileand tablet devices, customers in the futurewill be increasingly less likely to proactivelyseek content (i.e., visit individual Web sites,etc.). Instead, content needs to reach where thecustomer is (on social platforms and mobile).• Content consumption is moving from buffetstyle to a la carte. Users will decide what theywant to consume; content creators cannotpush sundry material and expect to monetizeit (as with the traditional print and broadcastworld).• The Internet is stripping media and enter-tainment companies of control over howtheir products are distributed. The Internetdisrupts their ability to create media scarcityby delaying product distribution. This threatensthe fundamental profit engine of the media andentertainment business. Case in point was thefuror over “read-it-later” apps, such as Read-ability, Instapaper and Read-It-later, whichallegedly impinge on a publisher’s rights bytransforming written content, albeit for thereader’s convenience.• The lines between media types have blurred.In a world of content consumption throughapps, the user will not know or care if theyare buying a movie, game, music track ornews article. Users will not pay for each typeof media separately but will pay for a uniformexperience delivered across all formats. Thesilver lining is that apps can help push controlback into publishers’ hands.• Media convergence is resulting in new com-petitors, as well as collaborators, in the mar-ketplace. As a news publisher now needs tocompete with a broadcast house, a music labeland a Hollywood studio to gain digital userattention, it needs to work with technologycompanies such as Apple and Google to takeits products and services to them.• Virgin content with no social wrappers isunlikely to engage the millennial generationeffectively. Today’s youth has Facebook andTwitter in its DNA and is increasingly likelyto leverage social media in all aspects oflife – official and personal. While most Webpages possess social sharing add-ins, mediacompanies need to devise ways of leveragingsocial media to the next level. (Read our whitepaper “A Brave New World of Connected Media”for additional insights.)Note: Includes Google Web sites; Yahoo! owned and affiliated Web sitesSource: Company and comScore dataFigure 5Online’s Flat LineGlobalAdvertisingRevenuePerHour(MillionsUSD)00.20.40.60.818.104.22.168007 2008 2009 2010 2011GoogleYahoo! (total)FacebookYahoo! (display only)
cognizant 20-20 insights 6• Simultaneous multi-device customerengagement is the new reality. 41% of tabletowners and 38% of smartphone owners usetheir device daily while in front of the TVscreen.17Not only are they simultaneouslyposting about the content they consume onsocial media, but they’re also shopping andlooking up relevant program and product info.Preparing for the FutureThe following recommendations can help mediaand entertainment companies move forward.• Content:>> The quality of packaging and deliverywill draw higher premiums. Traditionally,the quality of content received the high-est premium; however, the digital user oftoday expects a feature-rich, personalized,interactive and intuitive content consump-tion experience. As a result, digital productscannot be replicas of print and broadcastproducts.>> “Relevance” is the byword of the future.Hybrid algorithms need to be devised tosuggest the most relevant content to a con-sumer based on a combination of demo-graphics, psychographics, social networksand past consumption patterns across de-vices and media.>> Established media and entertainmentcompanies need to leverage the long-tailrevenue generation potential of legacycontent they have developed over de-cades. When tied to relevancy algorithms,legacy content can reap rich dividends.• Distribution and delivery:>> As users consume more content acrossnumerous digital devices, they expect auniform experience. While providing suchan experience, companies can provide newsubscription models, such as “pay once,view anywhere.” Such subscription modelscan extend beyond digital entities into theprint and broadcast world, as well.>> Use of social media-based analytics willdrive targeted content distribution in thefuture. Content delivery needs to changefrom “one-to-many” to “one-to-one.” De-spite privacy concerns, over 50% of con-sumers worldwide are willing to provideinformation about themselves online or viaa mobile device in exchange for somethingof value — as long as it is transparent and inexchange for perceived value.18• Revenue:>> As the revenue potential of each indi-vidual medium decreases, media compa-nies must create a far greater numberof avenues of revenue generation from asingle piece of content, as well as be opento sharing the spoils with a far greaternumber of partners (device manufacturers,third-party app developers, media distribu-tors, content aggregators etc.). Monopolyover the revenue potential of content is athing of the past.>> As pricing preferences of online and mo-bile consumers are extremely heteroge-neous, monetization models also need tobe customized for individual customers.Companies need to find a balance betweenmaking payment options as non-intrusiveas possible, yet simultaneously keep themtransparent.Moving ForwardIn our view, successful media and entertainmentcompanies will do the following:• Know thy customer: From newspapers tobroadcasters to studios, a common thread isemerging: the days of commoditized contentare over. Unless media and entertainmentcompanies endeavor to know what theircustomers are thinking on a real-time basis,they will gradually lose the ability to invest andmonetize relevant content and opportunities.Tools have recently emerged that mine con-versations on popular social media platforms,as well as analyze user sentiment. Media andentertainment companies can use these toolsto listen to the pulse of their audience. Hearingthe voice of the customer is important in everyindustry, but for media companies, it is hyper-critical. Companies that know what type ofcontent their customers are seeking stand abetter chance of delivering it to them quicker.• Exploit “F-commerce:”19Almost every brandhas a Facebook page today. Media and enter-tainment companies should use these pagesfor commerce (preview, order, checkout) andnot just information exchange. Examplesinclude companies such as BabyAndMeGifts.com, Ettitude, Livescribe, etc., that are makinguse of Facebook APIs to enhance e-commerceofferings, structuring Facebook stores andinstalling plug-ins to improve user experience,as well as combining social campaigns withF-commerce to extract the maximum benefit.Various options include downloadable apps
cognizant 20-20 insights 7that allow viewers to transact within acompany’s existing Facebook presence (e.g.,Ecwid Payvment), catalog applications thatorganize products but link back to an existingonline store (e.g., Storefront Social), integratede-commerce platforms that include extensionsfor Facebook commerce (e.g., BigCommerce)and tailored development environments forFacebook commerce (e.g., 8th Bridge). Obviousbenefits are two-fold — reaching customerswhere they are usually present and leveragingsocial recommendations without the extraeffort of visiting multiple URLs and logins.• Use the power of apps to provide innovativesolutions: Apps should be used to provide theentire bouquet of offerings around a piece ofcontent to the consumer. Examples includetrailers, games, merchandise, etc. for a motionpicture. Targeted apps should be releasedaround a major product debut. Apps can alsoprovide customized offerings, building onsocial data captured across platforms.• Leverage emerging technology: Rapid tech-nological advances are making the creationof apps and cross-platform offerings easierthan ever before. Technological solutions builtaround HTML5 can easily convert Web apps tonative apps on the fly. These have the sametransformational potential as blogs that revo-lutionized e-publishing half a decade ago.• Format data correctly: With the rise of contentaggregators and custom publishing apps suchas Flipboard, Pulse, etc., content creatorsmust ensure that their data format is flexibleenough to be picked up by all common aggre-gating engines and publishing apps. Keeping aclose eye on companies such as Apple, Googleand Facebook that are driving the course ofsoftware and hardware innovation is a must.• Utilize a second screen: The level of socialinteractivity on online articles (live Twitterfeeds, friend recommendations, etc.) can beextended to the broadcast world throughsecond-screen apps. While consuming videocontent on TV or the Internet, users canreceive a more interactive experience byengaging in conversations with friends andfans on the content. They can see what theirfriends are watching, consume additionalcontent that is not available in broadcast modeand even purchase content on the fly, based onrecommendations and downloads from theirnetwork. Relevant algorithms, for example, canbe deployed to cross-sell related TV shows.• Social care: Brands need more focus oncustomer service via social media. Customerfeedback on social media is fundamentallydifferent from other modes, in that it has thepotential to change the perceptions (positiveor negative)of a large customer base in a veryshort period of time. Customer care operations,therefore, need to be tuned to listen and reactmore closely with voices in social media.Footnotes1 Candice Schwager, “Bill Gates’ 1996 ’Content is King’ Has Reigned 16 Years,” Examiner.com, Oct. 30, 2011,http://www.examiner.com/article/bill-gates-1996-content-is-king-has-reigned-16-years.2 “The Digital Universe Decade: Are You Ready” IDC, May 2010,http://gigaom.files.wordpress.com/2010/05/2010-digital-universe-iview_5-4-10.pdf.3 Jemima Kiss, ”Digital Content Set for Growth. Oh, Except News,” The Guardian, March 31, 2010,http://www.guardian.co.uk/media/pda/2010/mar/31/digitalcontent-research.4 “Global Entertainment and Media Outlook on Internet Access: 2012–2016,” PricewaterhouseCoopers,http://www.pwc.com/gx/en/global-entertainment-media-outlook/index.jhtml.5 “Visual Networking Index,” Cisco Systems, Inc.,http://www.cisco.com/en/US/netsol/ns827/networking_solutions_sub_solution.html#~forecast.6 “State of the Media: The Social Media Report 2012,” Nielsen, 2012, http://www.nielsen.com/content/dam/corporate/us/en/reports-downloads/2012-Reports/The-Social-Media-Report-2012.pdf.7 “Facebook User Statistics 2012,” AnsonAlex, Feb. 20, 2012, http://ansonalex.com/infographics/facebook-user-statistics-2012-infographic/.8 Joanne Brenner, “Pew Internet: Social Networking,” Pew Internet, Feb. 14, 2013,http://pewinternet.org/Commentary/2012/March/Pew-Internet-Social-Networking-full-detail.aspx.9 ”Millennials and the Future of Work,” Cognizant Technology Solutions,http://www.cognizant.com/futureofwork/explore#!/video-videos/Millennials-and-the-Future-of-Work.