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The Accenture Global Content Study


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The Accenture Global Content Study 2008 | The Challenge of Change: Perspectives on the future for content providers

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The Accenture Global Content Study

  1. 1. Accenture Media and Entertainment The Accenture Global Content Study 2008 The Challenge of Change: Perspectives on the future for content providers
  2. 2. The Accenture Global Content Study 2008 studied more than 100 leaders and decision-makers in the media and entertainment industry, spanning television, videogames, film, music, radio, publishing, interactive entertainment and advertising. Executive Summary The study, now in its third year, • 84 percent of companies expect • Increasing complexity in the canvassed opinions from execu- mobile rich media to become business environment is causing tives across North America and mass market, representing the executives to re-evaluate their Europe, gauging their views of largest growth opportunity for capabilities. where the greatest opportunities media and entertainment firms. and challenges will come from • 52 percent of those interviewed The digital market is expected to over the next five years. The see digital advertising eclipsing continue to trend upwards over the key findings are outlined in this traditional advertising within next two to three years. But unless summary. five years. the large media organizations can transform rapidly, they will miss There is consensus over the way Execution challenges are slowing out on new opportunities for rev- the digital market is evolving, the market: enue growth. With this in mind, the where the opportunities lie and • Over 50 percent of the media critical strategic priorities must what will drive revenues over the executives we spoke to believe now be focused on: next five years: they know which capabilities • Executing digital transformation • 63% of companies are pursuing they need to transform their quickly and effectively a multi-platform distribution businesses. • Aggressively pursuing multi- strategy. • 59 percent are less than halfway platform distribution • More than one-third of compa- along their transformational • Enabling continuous product nies expect to see significant journey and are unprepared to innovation revenues from social media and meet the challenges of the user-generated content within digital marketplace. • Aligning existing cost structures three years. with future revenue streams • Understanding the consumer and delivering on their needs. The Challenge of Change 1
  3. 3. "There will be no new surprises this year, instead we will see The media and entertainment industry a significant winnowing out of new media models as the industry figures out what works." Sir Martin Sorrell, Chairman and CEO of WPP knows about change. Over the past 100 years, the industry has had to transform and reinvent itself as the result of the introduction of disruptive technologies — from radio to film, silent to sound, film to television and now, offline to online. During each transition entrenched players have been faced with a single imperative: adapt, or risk losing your audience. In 1927 Warner Bros. released the history. These innovations represent This year’s report — The Challenge of first talking film, The Jazz Singer, and brave, tradition-defying gambles that Change — reveals the findings of the ushered in the era of talking pictures. resulted in the company growing larger Accenture Global Content Study 2008, In 1929 Warner Bros. released the first than before and, ultimately, in industry which canvassed more than 100 global, Inevitably, some entrenched players are all-color talking film and created a “color revolution.” Fast forward to the 1970’s when Warner Bros. first got transformation. Now the media and entertainment senior executives across the media and entertainment industry. These influential leaders provided us with unable to make the transition, and thus involved in cable television, acquired Atari — one of the first video game industry is facing its largest and most daunting transformation. As technology enables the ubiquitous availability of insight into the trends now shaping this industry, enabling us to better perish. Others recognize the opportunity console companies — and helped to create the home video market. Later, in the 1990’s, Warner Bros. helped to media, the audience is shifting its con- sumption habits. Content creators and understand the potential winners and losers, threats and opportunities. We hope you find it an interesting and distributors have to adapt. Change is and seize it. redefine home video with the advent of DVD, ushering in one of the most never easy, but circumstances conspire to make it inevitable. And, as the thought-provoking read. prosperous times in the industry’s Warner Bros. example shows, it can bring very substantial rewards. 2 The Challenge of Change The Challenge of Change 3
  4. 4. For the third year, Accenture has interviewed senior decision- makers in the media and entertainment industry, asking them to identify the greatest opportunities and challenges they expect to encounter over the next five years. Now established as a signpost to change, the Accenture Global Content Study 2008 synthesizes the views of more than 100 leaders in the content space, including C-level executives across the television, film, music, radio, video games, publishing, interactive entertainment and advertising industries. Methodology Building on our knowledge base accu- digital advertising, as well as the The following summary presents some mulated in the three years since we uptake of mobile media. And, crucially, of the key findings from this year’s launched this major research project, we set about establishing just how far study, as well as highlights some of we asked respondents to identify the companies have progressed in their the principal implications for media most important opportunities for rev- drive towards digital transformation. and entertainment companies striving enue growth in their industry over the We then considered the findings in to capture digital revenues and sur- next five years, as well as the signifi- the context of Accenture’s High- vive/thrive in this new environment. cant challenges that they will need to Performance Business Program and For further information about overcome. We asked for an update on made recommendations to help this report please register at the social media and short-form video media and entertainment companies phenomenon. We investigated the rate achieve high performance in the new of growth in digital revenues and digital era. 4 The Challenge of Change The Challenge of Change 5
  5. 5. Extent to which agree or disagree with statements about digital transformation capabilities Progress in migration from analog, offline company to integrated file-based digital enterprise (e.g. from production to distribution) Consistent view of intellectual property rights 79% 12% 62% 19% 6% 14% 39% 20% 21% A future technology architecture and roadmap 56% 24% Analog, offline company Digital transformation Integrated file-based digital enterprise Integrated management of digital assets and metadata (Not started) (More than 70% complete) 58% 26% Deep customer insight for targeted offerings and content 43% 34% Royalty management systems capable of efficiently tracking new revenue 0% 30% 60% 90% Agree Disagree It’s all in the execution with this capability is closer to 10 to The rate of change suggests that while As a result, most organizations are “Change inevitably In 1969, Thunderclap Newman was singing: “We have got to get it togeth- is developing, where the opportunities lie and what needs to be done to take 30 percent. We believe this discrepan- media companies have a conceptual unprepared to meet the existing chal- takes longer than you er…because the revolution’s here.” The advantage of them from now on. cy can be explained by increasing vision and understanding of the all- lenges in the market. Furthermore, same sentiments apply today. Media complexity in the business environ- encompassing scale of change in front this market is evolving so fast that think to happen — and entertainment executives know Now it should all be ment (i.e. increasingly complex rights of them, the operational implementa- there are inevitably new innovations the business is profoundly changing about execution as distribution channels multiply). tion of “transformational capabilities” poised to force more disruptive but when it happens, and acknowledge the need to adapt (e.g., integrated management of meta- changes through the industry in the Over 50 percent of the media execu- it's more profound quickly, effectively and decisively to tives we interviewed now know which While executives may overestimate data and digital assets, efficient digital next 12 to18 months. the changing digital marketplace. their current capabilities, they have a royalty management systems, etc.) is than you could have capabilities they need to take advan- tage of this new market. At the same more realistic view of their progress being applied piecemeal, if at all. For Leading media and entertain- along the digital transformation con- example, a majority of content com- imagined.” ment executives “get it” time, we believe that many have a tinuum. This is highlighted by the fact panies recognize the need to distrib- false sense of their current capabili- that the majority of media companies ute content through multiple plat- UK Television executive 2008 may be recognized as the year ties. For example, nearly 80 percent believe they are less than 40 percent forms. However, almost one-third of that digital media moved from an of executives told us that their organi- of the way along this journey. This those interviewed indicated that they unstable niche market in the eyes zations have a consistent view of reinforces what we have seen in the are still taking a “siloed approach”. 79 of our respondents to a more stable intellectual property rights (i.e.; have market. As companies progress on percent of those interviewed plan to market critical to the success of their the same understanding of the rights their transformational journeys, they move to an integrated approach, but business, with companies such as associated with a specific intellectual begin to realize that it is broader and challenges abound. Disney and NBC each projecting over property across their entire business). much more complex than originally $1 billion respectively, in digital rev- This is at odds with our experience expected. As a result, they slow exe- enues. Indeed, the results of our study working in the media and entertain- cution and re-evaluate their plans. show that there is a coherent and ment space. We would suggest that a agreed upon view of how the market more realistic proportion of companies 6 The Challenge of Change The Challenge of Change 7
  6. 6. To what extent do you agree that… Extent to which agree or disagree with statements around social media/user generated content Content is increasingly developed 12% for consumption across multi-platform 82% distribution “Social media and user generated content is a high growth opportunity for content companies. Social networking is, too.” 68% 15% 2008 Content companies are shifting toward 24% an “open model” of distribution 61% 66% 22% 2007 Disagree Agree Commercial distribution of content 26% without DRM will cause dramatic 42% growth in digital revenues 40% The cost of distributing HD content 36% via the internet is cost prohibitive Peer-to-peer is the only viable long- 78% term tech to distribute online content 7% Disagree Agree The future is getting clearer “The big issue will be This year’s study shows that media and distribution strategy across multiple create and distribute platform specific In fact, 53 percent believe social media “We need to ensure entertainment companies have, for the screens (e.g.,TV, online and mobile, etc.) content, such as The Jeannie Tate distribution channels represent the trying to convert the most part, embraced digital media, and Show. Another example, ABC’s Lost, highest growth opportunity for them. that our content have acknowledged the need to adapt Channels Pursued provides an integrated experience, This may be due to the fact that social technology to reliable their business strategies and technical creating unique content for each media represent much more than a is available on revenue…trying to operations to evolve and grow their TV 78% platform that furthers the overarching simple distribution channel and direct whichever platform businesses. The study also reveals a plot and storyline. This integrated revenue stream. Influencers congregate monetise the social consensus as to where future value Online 95% approach creates new opportunities and decisions are made through social consumers wish to and revenue will come from — multi- Mobile 77% for customers to interact with their media. Therefore social media also rep- networks, experiment- platform distribution, social media, content as well as new revenue resent a large indirect revenue stream. view it on.” mobile and digital advertising are opportunities involved with production Through our experiences in the market, ing with new business amongst the front-runners. It is not surprising then, that as and distribution of the show. we have found that this opportunity is Television executive, USA companies pursue their multi-screen models, trying to strategies they are developing content so complex, and requires such a broad Multi-platform distribution Social media is here to stay set of capabilities to harness its power, increase revenues for consumption across these different channels. While 83 percent of our “People power” and new ways of that companies are finding it difficult Content companies know that they to realize its revenue potential. in existing models. have to make digital content available respondents agree that content is consuming content continue to drive to consumers whenever and wherever increasingly developed for consump- change throughout the industry. That said, 57 percent of respondents This is what we are they want it, and there is broad con- tion across multiple platforms, content Indeed, social networks, the poster expect to see significant revenues children of Web 2.0 concepts, have from social media and user-generated all trying to do.” sensus that finding new ways to reach companies are taking a multi-faceted approach to multi-platform distribu- proven their ability to aggregate large content within one to three years. consumers, or responding to how and Music executive, USA where media is being accessed is seen tion. CBS, ABC and NBC, for example, audiences and influence consumer However, 40 percent expect to see as the largest growth driver for con- repurpose content originally intended behavior and popular culture. Our significant revenues from this sector tent companies over the next five for television on the Internet. Other respondents recognize this, and 68 in greater than three years, and 18 years. For 63 percent of our respon- companies, such as Warner Bros. and percent agree that social media and precent believe it will take more than dents this means pursuing a content Disney, have announced plans to user-generated content is a high- five years (more than double the growth opportunity for them. results indicated in our 2007 study). 8 The Challenge of Change The Challenge of Change 9
  7. 7. When will mobile rich media become a mass market? "There will be no new surprises this year, instead we will see a significant winnowing out of new media models as the 2% Already 53% 28% 13% 3% industry figures out what works." Sir Martin Sorrell, Chairman and CEO of WPP 1% >1 yr 1-3 yrs 3-5 yrs <5 yrs Never “People will be a much greater part of content creation or What do you view as the greatest barriers to mass market uptake of mobile rich media? content consumption. I think the audience will be so much Consumer readiness 51% 51% closer to the content authors.” Television Executive, UK Consistent user experience (no data) 42% Content owner readiness 32% 37% Mobile operator/network readiness 33% 37% Handset readiness 33% 34% Interoperability/DRM readiness 35% 27% Cost of service 7% 9% People power 2007 2008 Our research shows there is executives see social media/ For the year ahead, 46 percent Mobile One possible explanation for the split Digital Advertising an enormous and growing networking as a high growth expect to focus on organic is that media and entertainment exec- This year’s study reflects an agreement utives see a number of significant bar- Our research indicates that ad- opportunity for media and enter- opportunity. involvement, with 19 precent on growth drivers in the media and riers to the uptake of mobile rich supported business models will drive tainment companies to engage planning joint ventures in this entertainment industry. 57 percent of media. Consumer readiness continues a large portion of future revenues for with the audience in a relatively The music industry, in particular, space and 10 percent contem- our respondents agree that mobile to be singled out by the greatest pro- media and entertainment companies. represents the largest growth oppor- portion of executives (51 percent), but In fact, 62 percent of respondents inexpensive but extremely effec- is looking to social networking plating acquisitions. The slight tunity over the next five years and companies’ ability (or lack thereof) to believe that content will be supported tive manner, provided they can sites as a source of new talent downturn in user numbers on industry observers agree that the by a variety of advertising methods, provide a consistent user experience is develop the right capabilities (television and film have yet to FaceBook and some other social mobile market will have profound also expected to impede mass market including branded content, search, and execute well. capitalize on this opportunity). networking sites is clearly not impact on when, where and how con- uptake (42 percent). Lack of readiness sponsorships, performance and a mix tent is produced, packaged, distributed of all within the next five years. The home-grown success of stars identified as a long-term con- amongst both content owners and and consumed. The question is: When mobile operators/networks also plays a Respondents to our survey are such as Lily Allen, Arctic cern by media businesses target- will this nascent market become a As a result, expectations for surging part (37 percent). confident that the Web 2.0 Monkeys, Rihanna and Kate ing this space. Indeed, compared mass market? To this, our respondents revenues from online advertising are phenomenon is here to stay. Nash — all of whom built their to last year (when 25% of exec- were split. 55 percent believe that high. According to a recent Financial 66 percent agree that that there followings on social networking mobile will be a mass market within Times article (11 Feb 2008), online utives saw this as a revolutionary three years, 45 percent believe it will advertising is expected to generate is no likelihood of the ‘bubble’ sites — underlines the potential phenomenon) the vast majority be after three years. revenue of US$41.6 billion this year. bursting during the next 24 of this medium. of executives are convinced that ZenithOptimedia forecasts that, by months, while 71 percent do not social media is evolutionary (74 2010, online will represent one tenth see any risk in allowing their 56 percent of respondents to our percent) and not a fad ( just of all advertising spend worldwide. brands to be associated with survey are already involved in seven percent of executives) social media. 68 percent of social media in some capacity. 10 The Challenge of Change The Challenge of Change 11
  8. 8. Where do you expect to spend the majority of your digital advertising budget in the next year? The scope of digital transformation is broad, complex and Mainstream media portals 59% affects each value chain participant differently. This year’s Social networking portals 15% study has found that regardless of where a company sits in User generated content 5% the value chain, the following challenges are common: VoD advertising 5% Mobile advertising 4% In-game advertising 3% Other 8% Common challenges across the value chain On both the buy- and sell-side, almost As far as targeted spend on digital As such, small and large companies Multi-Channel companies across the value nies must then work closely every media company is trying to adapt advertising is concerned, the majority alike are pouring resources into aggre- Distribution chain first need to discern their with mobile content distributors to the reality of digital advertising as a (59 percent) will be directed at main- gating ever-larger audiences across Providing a fully integrated, abilities to understand their to create simple and integrated major source of revenue. As reported stream media portals. However, this platforms and developing deeper customers’ behavior, preference user experiences that “fit” the customer-centric, multi-channel on, Antony Young, marks a significant decrease on last abilities to target them. Google’s acqui- experience requires media and and consumption patterns. Then, content. president of Optimedia US, recently put year, when 77 percent of budgets were sition of DoubleClick, Yahoo!’s purchase it like this: “A lot more decisions are allocated to this sector of the market. of RightMedia, Microsoft’s acquisition entertainment companies to companies must determine the starting with the media strategy, as In a growing digital market, this does of aQuantive and most recently break out of their siloed offer- capabilities and implement the Digital Advertising opposed to starting with the messag- not necessarily represent a dilution in Microsoft’s bid for Yahoo! illustrates ings and to abstract the content technologies required to create Achieving the promise of digital ing. Digital has put a big fat wedge in financial terms, but there is no doubt this point. However, acquiring technolo- from the device so that it can content/offerings tailored to advertising requires firms to the way we have to approach commu- that social networking portals are gies, aggregating audiences and achiev- specific customer segments. understand who their customers be leveraged cross-channel. This nication in campaigns.” assuming far greater significance. For ing consensus is simply not enough. are as well as to recognize the 2008, 15 percent of budgets will be requires having strong content allocated to this area. and rights management capabil- Mobile power of multi-screen distribu- ities, as well as the ability to Overcoming the significant bar- tion and the effectiveness of properly schedule and control riers to mass market adoption of rich media. This means media content distribution. rich media requires organiza- and entertainment companies tions to clearly define mobile need to build out multi-channel Social Media content offerings and work with advertising capabilities, includ- Enabling media and entertain- partners more closely than ever ing multi-channel inventory ment companies can leverage before. As such, content compa- and management solutions as social media to interact with nies should reconsider the defi- well as multi-channel yield their customers in a new and nition, purpose and business |optimization tools – all capable more meaningful way. In order models associated with mobile of delivering rich as well as to capitalize on and monetize content. As offerings become static media. the wide array of social media, better defined, content compa- 12 The Challenge of Change The Challenge of Change 13
  9. 9. The Accenture Global Content Study 2008 shows that media Multi-platform distribution, social media, mobile and digi- and entertainment companies are struggling to operationally tal advertising are only a few examples of the rapid tech- transform their businesses to meet the demands of an ever nological and behavioral changes that are now a fact of changing digital marketplace. life for media and entertainment companies. To keep pace, organizations must overcome significant cultural, technical Transformation is a daunting prospect, but the momentum and other business challenges. To effectively compete, behind the digital revolution continues to build and billions corporate DNAs must change and, in making the change, of dollars are now at stake. A well-planned, well-executed companies in this space face important strategic and integrated transformation strategy is now a necessity. execution priorities, including: Implications Execution – getting it right “You must break the The need to innovate and optimize content, to investigate new opportuni- Execute your digital trans- Focus on continuous product Develop an understanding formation as quickly and innovation. with the consumer and deliver innovators dilemma ties and to exploit new technologies effectively as possible. Are you able to keep up with what they want. and platforms – is a strategic priority and walk away from if companies are to survive and grow - How prepared is your organiza- the rate of change? In which How well do you know your old paradigms…you and media and entertainment busi- tion to execute the cultural and areas might you fall behind? audience? Content aside, do you nesses have to be equipped to exploit technological changes required have the ability to create, must have a keen new channels in an integrated way. to support the demands of the Align your cost structures to enable, and deliver a product or focus on determining In this environment, as our study market? future revenue streams. service they want? shows, companies face a number of Has your cost structure been what consumers really challenges. As ever, the keys to high “From the consumer’s point of view, technology has caused this revolution Aggressively pursue multi- fully optimized to enable the performance are speed, flexibility and need and what makes innovation – but the ways in which that we’re talking about…it’s caused a platform distribution. flexibility required to pursue dramatic disruption in the way people their lives better.” these need to be applied are changing all the time. Effective digital transfor- used to consume information and Is your organisation equipped to new business opportunities? entertainment, so technology has execute an integrated multi- Media Executive, USA mation is vital and requires focused disrupted the model. This has obliged platform distribution strategy? execution programs. Media businesses us to move on and try to keep up with know they have to do this to succeed: the change in their habits.” the time has come to act on these Publishing Executive, Italy intentions. Against this backdrop, the ability to execute effectively will be key to capitalizing on market opportunities. 14 The Challenge of Change The Challenge of Change 15
  10. 10. The media and entertainment industry knows about change. Over the last hundred years, the industry has had to transform and reinvent itself. Today, transformation beckons again. As in the past, Warner Bros. is leading the way and has begun its digital transformation journey. Once completed, digital content of all types will be created, stored, shared and accessed quickly, efficiently and securely across its operations and by each member of the content value chain. In short, Warner Bros. is building flexible, responsive and agile businesses that will also allow for fine-tuning and course changes as the digital market- place emerges. Conclusion Across the entire media and entertain- For the time being, however, “old” and ment industry, traditional ways of “new” media will ride side-by-side. doing business are being challenged by Each will fuel interest in the other. new digital technologies and consumer Digital will continue to enhance the demands for 24/7 access to high quali- consumer experience, enabling wider ty content. This does not mean that and more immediate distribution. All of traditional content (and traditional this is well recognized by now. media) is dead. Far from it. Cinemas will continue to find audiences for All industries eventually arrive at an years to come. Children will still lose inflexion point. The financial services themselves in storybooks. Newspapers industry had no choice but to embrace will be spread out on café tables. And electronic trading. The travel industry bands will treasure the first cut of their was forced to accept its consumers new record. shopping online for the best deals. The telecommunications industry had to But there’s no denying the pace of come to terms with VoIP. change. A generation from now, people will rely on media and information Now the media and entertainment much more than they do today. Cross- industry has reached this point. platform access to content – anytime, Companies in this sector know what anyplace, anywhere – will be the norm. they must do. And, as ever, there will New technologies will emerge and be be no prizes for second place. adopted. Disruptive players will force their way into the media and enter- tainment industry. 16 The Challenge of Change
  11. 11. About The Accenture Global About the Media & About Accenture Content Study 2008 Entertainment Group Accenture is a global management The study was fielded for Accenture in For more information on this study consulting, technology services and North America and Europe by The and what Accenture can do to help outsourcing company. Combining BPRI Group at the beginning of 2008. you reach high performance in your unparalleled experience, comprehen- The results are based on face-to-face convergence business, please contact: sive capabilities across all industries and telephone interviews. and business functions, and extensive Greg Douglass research on the world’s most success- All efforts were made in good faith to Global Managing Director ful companies, Accenture collaborates secure a balanced and representative Accenture Media & Entertainment with clients to help them become sample of respondents. high-performance businesses and gov- David Wolf ernments. With 178,000 people in 49 Authors: Gavin Mann and Ross Global Lead, Digital Transformation countries, the company generated net Sonnabend Accenture Media & Entertainment revenues of US$19.70 billion for the Contributions: Greg Douglass and fiscal year ended Aug. 31, 2007. Its Gavin Mann David Wolf home page is Digital Media Lead Accenture Media & Entertainment Website www. entertainment Copyright © 2008 Accenture. All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.