Media and entertainment companies are in broad agreement on the way the digital market is evolving, where the opportunities lie, and what will drive revenues over the next five years, according to the findings of a survey released by Accenture.
Accentures 2008 Global Media Content Survey has revealed that there appears to be strong consensus as to what will drive future growth. 70% of respondents to the survey, the companys third of more than 100 senior executives in the media and entertainment industry indicated that they derive some revenue today (albeit less than 10%) from new, alternative forms of media, such as downloading or watching TV programs on demand, digital advertising or user-generated content, or cant determine how much of their revenue comes from these new sources. Based on the participating companies, that small percentage of revenue actually represents tremendous growth , says Accenture, adding that substantial revenue streams are being derived today from these new forms of media.
Four of the main sources of revenue growth cited by respondents in this years survey are the same as those identified in last years survey, which indicates growing consensus about the potential of new platforms. These four sources of revenue growth are multi-platform distribution, short-form video, social media/user-generated content, and advertising.
When asked to identify the largest drivers of revenue growth over the next five years, two-thirds of respondents cited new platforms or new ways of delivering content. This is significantly more than the number who cited new content types (24%) or new geographies (10%). 63% of respondents said they will pursue a multi-screen distribution strategy, which includes television, online and mobile delivery.
When asked which content type will generate the greatest growth, the greatest number of respondents (38%) cited short-form video, with online portal/publishing (23%) second, and video games (18%) third.
Social media and user-generated content
68% of respondents identified social media and user-generated content as a high-growth opportunity, and more than half (56%) said they are already involved in social media in some capacity.
When asked to identify what they believe will be the number one business model in five years, (62%) of respondents selected advertising-supported business models, compared with 25% who cited subscription-based services and 11% who cited pay-per-play services.
It is great news that media organizations are developing a consistent strategic view of the key growth areas, but execution is slow, says Gavin Mann, Digital Media Lead for Accentures Media & Entertainment practice. There clearly remains a huge effort to put in place the necessary capabilities, and it is apparent that the size of the task is still not fully understood. I am not claiming it is easy to turn around some of the worlds greatest media organisations, but I do believe it is essential if they are to remain great.
While 50% of the executives interviewed said they know which capabilities they need to take advantage of in this new digital market, Accenture believes that many have a false sense of their current capabilities. 66% of the respondents have less than 40% of required capabilities, a number that is unchanged since last years survey, indicating that companies need to implement new digital technologies or be left behind.
For example, almost 80% of executives said that their organisations have a consistent view of intellectual property rights (i.e., have the same understanding of the rights associated with a specific intellectual property across their entire business). In Accentures experience, considerably fewer organisations actually have the flexibility necessary to capitalize on fast-developing opportunities.
We interviewed executives at the very top of their organizations, and at this level it might appear that they share a consistent and flexible view of intellectual property, says Mann. However, in many cases, we believe this will actually require inordinate manual efforts, or work-arounds, throughout the organization, each time a new distribution channel is launched. Such a cost structure is not sustainable over the long run.
Other key findings include:
Uncertainty as to when the mobile market will take off - When asked when they believe the nascent mobile market will become a mass market, respondents were split, with slightly more than half (55%) saying within three years, while slightly less than 45% said they believe it will take longer.
There are several barriers to the mobile market - Consumer readiness continues to be singled out as a barrier to the mass uptake of the mobile market, cited by 51% of the executives surveyed. Respondents also cited other barriers, including companies ability, or lack thereof, to provide a consistent user experience (cited by 42% of respondents), as well as a lack of readiness among both content owners and mobile operators/networks (cited by 37%).
Digital advertising will drive a large portion of future revenues - Almost every media company is trying to adapt to the reality of digital advertising as a major source of revenue. 52% of respondents said they see digital advertising eclipsing traditional advertising within five years, and 62% said they believe that content will be supported by a variety of digital advertising methods, including branded content, search, sponsorships, performance and a mix of all of these within the next five years.
The Web 2.0 phenomenon is here to stay - 66% of respondents said there is no likelihood of the Web 2.0 bubble bursting during the next 24 months, and 71% said they do not see any risk in allowing their brands to be associated with social media.
Theres more information on the Global Media Content Survey here.