This document discusses digital disruption in media and opportunities for media companies. It notes that business models in media are under pressure from declining circulation and new technologies. While existing business still accounts for most income, companies must invest in new digital products and experiment with new business models. Data collection and analysis provides opportunities for more targeted advertising and personalized content. Organizational challenges include supporting both existing operational excellence and new experimental digital business. The IT organization will need to evolve from a support function to a core part of the business as products become digital software. Overall digitalization represents both disruption and opportunity for media companies.

1. Digitalisatie in Media.
Disruptie of Opportuniteit?
Luc Verbist
Former CIO De Persgroep
7 April 2016

2. 2014
Organische groei
Overnames
(Nederland)
De Persgroep

3. Omzet: 1.650 Mio €
70% Buiten België
EBITDA: 215 Mio €
FTE: 6.000
HQ : Brussel
IT : Gecentraliseerd in Brussel
De Persgroep

4. What is technology based disruption?

5.  Business modellen wijzigden gestaag.
 Nieuwe technologie ligt aan de basis
van erg disruptieve wijzigingen.
 Muziek
 Foto
 Media
 Taxi
 Banken
 Verzekeringen
… elke industrie zal geïmpacteerd worden.

6.  Recente voorbeeld van disruptie : 3D printing.

7. How to recognise a
disruptive technology break through?

8. E-ink in the late 90 ties
Predictions :
- Will replace paper
- Will replace newspapers
and magazines
Reality :
- No break through in newspapers
- No full colour displays
- To expensive
- No foldable large screens (yet)
 Seriously overestimated business potential

9. Characteristics of Disruptive technology
 Lower cost than existing technology
 Lower quality than existing technology (at first)
 Lower margins per unit than existing technology
If all conditions are met at the same time
Greater market opportunity
Recommended reading :
“The Innovator's Dilemma” by C.M. Christensen
“Leading Digital” by G. Westerman, D. Bonnet, A. McAfee

10. Pitfalls.
 Timing is of the essence
 Fear for canibalisation
 Risk avoidance behaviour
 Leaving comfort zone
 No understanding of new technology by senior mngt
 Too focussed on existing markets and products
 Short term thinking
 Technology can be around for some time but not
all conditions are met

11. What about Media?

12. Business model under pressure
Circulation

13. Business model under pressure

14. Business model under pressure

15. Business model under pressure
But where to?

16. Business Strategy
The innovator's dilemma: harvest existing while looking for new model
Existing : still accountable for 90% of income and profit
 Foster existing business
 Creating economy of scale
 Strive for operational excellence in existing business
New :
 Invest in new Digital products
 Experiment with new business models
 Customer centric approach based on Big Data

17. Business Strategy
 Strive for operational excellence in existing business
 Optimize processes (e.g. churn prediction models)
 Standardize processes throughout entire organization
 Reduce manpower wherever possible
 Increase quality of service towards customers without losing profitability

18. Business Strategy
 Invest in new Digital products
 News apps and websites per brand (VK redesign, AD redesign)
 New products (Paper.nl, Wekker app, …)
 Content recommendation based products

19.  Experiment with new business models
 Different pricing points
 New advertising models (targeted advertising)
 Paid for content
 Hard paywalls
 Metered paywalls
 Pay per article
Business Strategy

20. Unregistered
User
Registered
User
Single
copy
buyer
Subscriber
Member
Value or ARPU
(average revenu
Per user)
Customer journey’s
Business Strategy
 Experiment with new business models

21. Opportunities : Big Data collection & exploring
Readers Marketing:
 Readers recruitment
 Upsell and cross-Sales
 Conservation
 Reduce churn
Advertising use:
 More targetted campaigns
 Personalize ads
 Multi channel campaings
 Example : Krux
Business Strategy

22.  Personalize and adapt content during day and depending on type of device
 Example : Topics.be
Business Strategy

23. Gebruik van big data
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
2013|30
2013|33
2013|36
2013|39
2013|42
2013|45
2013|48
2013|51
2014|01
2014|04
2014|07
2014|10
2014|13
2014|16
2014|19
2014|22
2014|25
2014|28
2014|31
2014|34
2014|37
2014|40
2014|43
2014|46
2014|49
2014|52
Pageviews per week

25. Status Today

26. News and Classified websites
 HLN.be
 DeMorgen.be
 Nina.be
 Goedgevoel.be
 Volkskrant.nl
 AlgemeenDagblad.nl
 Trouw.nl
 Parool.nl
 Vacature.com
 Gouden Spelen.be
 Regiojobs.be
 Tweakers.nl
 Autotrack.nl
 Carsom.nl
 VNU Media.nl
 Intermediair.nl
 Nationale Vacaturebank.nl
Turnover
55 Mio €
Ebitda
7,2 Mio €
Reach : + 7 Mio unique visitors/day

27. Newswebsites
 Premium Content Websites
 Tijd, NYT, WSJ, FT, …
 Paywall (metered)
 Subscription model
 Advertising model
 Popular Content Websites
 HLN, Nu, NOS, Deredactie, …
 Pure Advertising model
 No paywall yet
 No subscription model yet
Business model
established &
mature

28. Tablet Subscribers
 HLN.be
 DeMorgen.be
 Volkskrant.nl
 AlgemeenDagblad.nl
 Trouw.nl
 Parool.nl
Older generation still fancies print
No good offer yet for reading paper on tablet
iPad only: 18.000 per day
iPad total: 250.000 per day
Print : 1.000.000 per day

29. Organisational Challenges

30. Challenge
 Existing business
 Operational excellence
 Preserve margin and income
 Manage decline
 Processes are being tuned
 a lot of IT work to be done
 New business
 Lot of experimenting
 Low margins and low turnover (certainly at the start)
 Hyper volatile market
 Product IS software
 a lot of IT work to be done
AA lot more
ICT resources
required

31. Hoe zal de ICT organisatie wijzigen?

32. Creative company of the future
 1/3 creatives
 1/3 commercial and marketing
 1/x ICT staff (where x is less than 10)
Shocking conclusion for a traditional print company
ICT evolves from a supporting service
to the core product of the company
Most boardmembers have no understanding of ICT

33. Digitalisatie in Media.
Disruptie of Opportuniteit?
Beide

34. Q&A
Luc Verbist
Former CIO De Persgroep
Luc.Verbist@hotmail.com