Digital Entertainment Offers Opportunities For Companies And Consumers

Ralf Brechter

Digital technology has transformed the way consumers select, buy, store, and use entertainment. This shift has made media companies rethink their business models to better provide exceptional outcomes for consumers.

Business processes are changing in response to the shifts in business models. Media companies adapting to the new entertainment marketplace are well positioned for the future. These new processes create opportunity for media companies of all types. Digital native companies and traditional media companies alike are considering new approaches. New competitors are emerging from other industries moving into the digital media space.

There are many possible business processes that can be reimagined. They include more interactive offerings and bundled products. Deeper consumer analytics inform other processes that allow companies to respond fast. Companies can address changes in consumer preferences or markets more quickly.

How did we get here?

It’s important to reflect on how we got here. History helps us understand why these new business processes are so important.

The introduction of portable MP3 players more than 15 years ago is a key point in the digital revolution. The launch of iTunes in 2001 ushered in a new era of remarkable technological growth. It also forever shifted the way content is consumed.

Today smart products are everywhere. Devices connect to each other, allowing for the tracking, recording, and transmission of data. New technology has followed in rapid succession. Smartphones and tablets connect us at anytime, anywhere. Wearable devices let us track data and communicate.

Technology that was once a novelty is now the norm. Content is no longer primarily a physical product. Instead, digital distribution and storage of media is the predominant mode.

The growth of cloud computing in recent years led to new digital entertainment platforms. From Pandora to Netflix, media companies have redefined how entertainment is delivered and consumed.

Model disruption

These technological advances have disrupted traditional mass media business models. Product-centric mass media push models are in decline or obsolete. In their place are new models driven by consumer-defined bundling and pull models. Media companies no longer derive value based largely on unit sales.

Today, value comes from direct interactions with consumers. Consumers are at the center.

In these ecosystems, consumers expect personalized content choice. Content options must abound, allowing for customization and choice never seen before.

Companies are changing how these experiences are monetized beyond content licensing and advertising. Aggregated data offers “digitally monetized” beyond content licensing and advertising and additionally offers “digital bread crumbs” about consumer behavior.

That data source allows media companies to identify new revenue streams that they can create programmatic advertising and single campaigns across platforms. In addition, they can also upsell or cross-sell in a personal relationship with consumers.

Process changes

With so many dynamic shifts in business models, media companies have an incredible opportunity. By reimagining their business processes, companies can become agile and nimble. When shifts occur, agile companies can respond rapidly. Media companies can overlay these new or rethought processes on top of company-wide technology platforms. If processes continue to be siloed, media companies face more challenges and costs due to complexity.

What are some of the ways processes are changing?

Subscriptions and bundles

Many digital business models rely on subscriptions and usage-based services. A company needs the capability to launch customer-centric subscription offers quickly. Doing so lets these companies stand out in crowded market spaces.

Metering and entitlement

Mass media is more than reach. In digital channels, monetizing content reach means offering choice. Consumers expect individual configurations with flexible subscription choices.

Dynamic pricing lets companies leverage differences to stay ahead of competitors. Metered paywalls give choice and provide for tiered content.

Usage- and frequency-based entitlements reward consumers who engage more often. Packaging digital content with physical purchases allows cross-platform engagement.

Embedded commerce

With the growth of interactive media, advertising has evolved. Seamless click-through shopping options abound.

For example, in late 2015, YouTube announced expanded shopping-enabled videos. Companies have long been able to insert clickable ads into videos. The new service takes the tech a step further.

Companies now can embed relevant products into videos. Viewers can buy with a click. In effect, videos can become a digital storefront with the new service.

Sponsored content

Partnerships with retailers can create new bundled products for consumers. Cross industry bundling is not new. But as digital delivery costs drop, new partnership possibilities emerge. Think about getting tunes with your coffee. For years Starbucks has offered free downloads to paying consumers.

Consumer analytics

With each consumer interaction, new data is produced. These datasets are invaluable.

Understanding this data allows media companies to hone marketing, rethink products, and increase engagement. Now imagine layering these data with OTT video usage, psychographic, and demographic information. A clearer understanding of consumers emerges.

Understand the consumer

For the consumer, it’s personal. Personalized content is the new normal. Relevance matters. Understanding consumers and markets in real time lets companies respond as needed when moments appear. With 360-degree views of consumers and markets, nimble companies remain relevant.

Conclusion

Media companies face increased competition from all corners. Consumers expect personalization. Business models are changing.

This dynamic new entertainment space demands new processes. Companies that adapt to the new entertainment space have an advantage.

They will be able to deliver experiences that resonate with consumers. They will use data in new ways. They will partner and pair products differently. Entertainment will continue to evolve and delight.

Learn more about digitization of the media industry and the impact on business models.


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.