Media and entertainment cross the digital chasm: risk and disruption await

Ernst & Young survey of 550 media and entertainment executives finds 57 percent of revenue will come through digital channels by 2015... but it's complicated.
Written by Joe McKendrick, Contributing Writer

Sometime within the next two years, the average revenue of media and entertainment (M&E) companies will  cross the 50-percent mark from majority traditional to majority digital. Not only are they selling digital, but they're also running more of their businesses on digital platforms as well.

Not that long ago, analog was the cutting edge. Photo credit: US National Archives.

These are the findings of a new survey report by Ernst & Young, covering more than 550 senior executives from global media and entertainment (M&E) companies. Today, revenue from digital is 47 percent and survey respondents say that by 2015 it will account for 57 percent of revenue – "thus making digital the new norm and the primary source of revenue for M&E companies."

As leaders in the newspaper industry understand only too clearly, the path to digitization is full of risk and disruption, especially with audiences expecting content at low or no cost. "A more complicated web of revenue-generating efforts has emerged, including micropayments and freemium content," the E&Y report states. "All respondents indicate that 'personalization' (64 percent), 'anytime anywhere access' (63 percent), and 'creating unique content' (61 percent) will be the keys that ensure customers pay for digital products and services in the future."

The study identified the social network and gaming sectors as the most agile segments of the media and entertainment space. Advertising and publishing were found to be the least agile.

E&Y's authors also says the M&E “digital leaders” identified in the study are not only delivering more content through digital challenges, but have also absorbed a more innovative mindset into their corporate cultures. In other words, they eat, sleep and breath digital. For example, the companies in the forefront of the digital revolution are 60 percent more likely than all other respondents to emphasize the importance of social media for internal communication among employees: 67 percent said it was “very” or “extremely” important, versus 42 percent of all others.

The study points to the kind of rapid collaboration that is enabled by social networks and characteristic of an agile organization, "where silos are broken down by the ready flow of information." In addition, digital leaders’ advanced social listening programs, leading-edge analytics and cloud-based infrastructure "enable rapid deployment of new products and resources, and give companies the ability to quickly learn from and fix mistakes."

They're also more likely to be tapping into new technology paradigms such as cloud computing and big data. At least 74 percent  of digital leaders say "it’s important to host business tools in the cloud," vs. 49 percent of all others. Digital leaders are also three times more likely than other respondents to use the latest big data analytics techniques to improve customer engagement (26 percent vs. nine percent).

This post was originally published on Smartplanet.com

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