The US remains the world's largest media market by far with a total expenditure of more than $443 billion in 2010. [Source: PwC] However, Brazil and China media and entertainment expenditures are growing more rapidly.
A recent report by The Economist Intelligence Unit highlights some of the key trends in the content business -- our appetite for media has not abated, it's just taking new forms that favor interaction, convergence of modes of consumption as well as types of content, along with personalization.
· Digital is where the growth is -- most companies still searching for the right model
Digital content will be the fastest-growing part of the industry over the next decade and is expected to account for 80% of the media we consume by 2020 (up from two-thirds in 2010). Businesses don't need to shift to a purely digital model, but they need to tap into the growing digital market.
Only 12% of firms polled in our survey already have a digital distribution model that is commercially successful – perhaps because their confidence in the future hasn’t been backed up by concrete action.
Although 63% view the rise of social media as an opportunity, only 36% have undertaken social media and viral content initiatives in the past three years to increase digital revenues.
· The revolution has only just begun
Over three-fifths (63%) of the executive surveyed believe advertisers are becoming more informed and demanding, and 53% say digital models have made it more difficult to reach consumers in their preferred environment.
More than half (52%) agree that the media and entertainment industry "is not sustainable in its current form".
The majority think there is plenty of change still to come, with three-quarters saying that "we have so far only experienced a small part of the overall impact that the shift to digital will have on our economy".
· Opportunities outweigh the threats
The switch to digital is increasing competition and forcing a rethink of operating models. As with any structural shift, this is creating winners and losers.
Nevertheless, when asked whether they see different types of change, such as the growth of online consumption or increased use of social media, as opportunities or threats, the proportion of respondents seeing them more as opportunities never falls below 60%.
One point that might be boosting industry optimism is recognition of the fact that demand for media and entertainment content will continue to increase, particularly in high-growth markets like Brazil and China.
· This is still a hits business
Devices and formats may be changing, but traditional media players still have some advantages.
They are good at tapping into what the audience wants. "Media and entertainment is still primarily a hits-driven business," says David Card, Vice President Research at GigaOm Pro, a US technology consultancy.
Of course, increasing the ratio of hits to misses is difficult, but technology may help in this area too. Nearly half of firms (49%) say they involve consumers in their innovation process.
· If it’s good enough, people will pay
There has been much debate about whether enough people will be willing to pay for content now that there is so much available online for free.
Nearly seven in ten (69%) respondents to our survey think consumers will get used to paying for well-targeted content as digital models mature.
To turn this prediction into reality, the industry will need to make more headway against digital piracy as well as deliver genuinely compelling content that is enticing enough to command a premium.
I would also add that people are willing to pay for immediacy and accessibility.
· From personalization to gamification
Three years ago, personalization of content was seen as the most effective method of engaging with consumers, according to executives in the survey.
Today, however, there is a greater emphasis on interactivity and so-called gamification. Having allowed users to personalize their experience, content providers are now trying to create a more interactive or playful experience.
· Traditional media can learn valuable lessons from the masters of data
Google, Yahoo, Facebook and others have turned audience data into a science.
By contrast, only 45% of magazine publishers say they have an efficient customer data mining strategy. This is a waste.
In the digital world, there is an opportunity to continuously tweak and experiment with your product, measuring and refining the audience experience using the latest tools and techniques in data analysis.
Of course, as William Gibson famously said, the future is already here. It's just unevenly distributed. Just because we are starting to have a firm grasp on where things are headed, it doesn't mean every company trading in that space is all caught up.
The other caveat is that each new mode doesn't entirely replace older ones. In many cases, new uses open up the door for innovation in established media.
For example, new screens like tablets and smartphones are not replacing the TV, they are extending its appeal by adding a simultaneous interaction layer -- and giving us the Smart TV. Social networks are amplifying our interaction with content based on interest -- leading to the discovery of new programming and entertainment.
Valeria is an experienced listener. She is also frequent speaker at conferences and companies on a variety of topics. To book her for a speaking engagement click here.