Digital Drivers In Media Industry Push Change

Ralf Brechter

Digitization is accelerating in the entertainment and media (E&M) industry, creating a new kind of value chain with the consumer at the center. Three major trends are driving the digitization of media today: connected devices, data growth, and the cloud as the distribution enabler. With consumer expectations higher than ever, the industry is responding with data-driven flexibility. From 2013 through 2017, digital content has been projected to account for 87% of all growth in E&M consumer spending.

The Price Waterhouse Coopers (PwC) network has published a report titled Global Entertainment and Media Outlook 2015-2019 (Outlook). According to PwC’s Outlook, the industry faces serious challenges. To succeed in meeting and serving the expected growth, companies will need to focus on three priorities:

  1. Innovating around the consumer experience and the product
  2. Creating seamless consumer relationships across all channels
  3. Making mobile, and especially video, centerpieces in all of their offerings

Connected devices

Devices used in earlier generations were largely asynchronous, with data transmitted intermittently rather than in a steady stream. Today the trend is toward an interconnected network of communications: Today’s “smart” IP devices permit two-way communication. Consumers now can conduct digital commerce for media content as well as for physical products and services, which allow a more customer-centric experience: Customers express their preferences and receive what they want in a single real-time experience.

The user experience has also become a two-way street. Consumers can create their own media content using smart devices, enabling a two-way personalization process that allows users to create and share content such as videos on platforms such as YouTube as well as in personal blogs.

Data growth

Our smart devices generate large amounts of data, and our “digital breadcrumbs” include everything from informational content to personal sentiment. Content has developed a life of its own, and it comes from all directions. For the media and entertainment industry, the value chain surrounding content has changed. In the traditional TV value chain, content was merely pushed out to the audience. In today’s more customer-centered experience, the consumer selects the content from digital sources. Big Data has extended the entertainment experience to new levels.

Cloud distribution

The third major trend driving today’s digitization is cloud distribution. With the cloud, content is managed digitally and distributed more widely than ever before. As a distribution enabler, the cloud is unsurpassed: Information and entertainment are available anywhere, anytime, on any number of and type of device. Digital video is now the main driver of increased Internet traffic.

The mass-media value chain has undergone a transition. It now exists as a digital media network and is increasingly becoming a “glass-to-glass” Internet ecosystem (GGIE), which means from the very beginning to the very end of the chain in the video life cycle. And it is all made possible in the data-driven cloud. We have entered into a digital trend that continues to shape the media and entertainment industry. Those who fail to recognize and acknowledge this trend are being left behind.

Four forces are shaping the digital landscape in the media industry today, and all four will continue to grow in importance:

  1. Increasing reliance on mobile technology: In 2014, the number of mobile users surpassed the number of desktop users.
  2. Rising demand for video content: Video is the primary marketing tool in today’s digitally enabled advertising universe.
  3. The use of native advertising: Native advertising places the ad in the context of the surrounding content. The product and the content are merged.
  4. Programmatic advertising: This is the use of software to purchase advertising. We are now using machine technology to buy ads.

Consumers today want more mobile and video content. PwC’s Joe Atkinson says, “Amidst the proliferation of content and access options, it’s clear that consumers are demanding more flexibility, freedom, and convenience regarding when and how they consume content.”

The media industry will give its audience what it wants. Media business models are being re-imagined as digitization reaches out to today’s empowered consumers and places them at the center of the value chain.

To learn more about the impact of digitization on the media industry, visit here.

Ralf Brechter

About Ralf Brechter

Ralf Brechter is a director of industry cloud solutions for the Media Industry Business Unit at SAP. He is responsible for working with media companies worldwide to help ensure alignment between their strategic requirements and the SAP solution road map. for the Media Industry Business Unit at SAP. He is responsible for working with Media customers globally to ensure alignment between their strategic requirements and SAP’s solution roadmap.