Media and entertainment executives from around the world feel that digital is about to become their primary source of revenue, details Ernst & Young in a new report. Digital’s share of top-line revenue is expected to grow from 47% on average this year to 57% by 2015, a more bullish forecast than given recently by PricewaterhouseCoopers, which also noted a shift to digital spending and revenues. In order to digitally transform their organizations, most respondents cite the creation of a culture of innovation as one of their top strategic priorities. Many also believe that listening to customers and analyzing customer interactions will be a strategic necessity in digitally transforming their organizations. Perhaps those top 2 priorities will go hand-in-hand, as research has shown that many companies are planning to use social tools for innovation by engaging with customers.
The Ernst & Young study identifies a sub-group of respondents named “digital leaders,” among whom:
- digital revenue already accounts for a majority of company revenue;
- customer profile data is integrated across at least 2 channels; and
- second-generation or better solutions are in place in at least 2 of 4 key technologies (smart mobility, social media, big data analytics, and cloud computing) in order to increase revenue or develop new products or services.
Like other respondents, digital leaders say their top strategic priorities are innovation cultures and customer interactions, but they differ from their peers in some other ways. They are relatively more interested in building alliances with media, entertainment and technology partners (51% vs. 30%), but less concerned with the acquisition of digital skills through hiring, training or acquisitions (33% vs. 44%).
Separately, digital leaders are also more likely to believe that technology will first and foremost drive growth through the development of new products and service offerings (30% vs. 25%), but less likely to feel that growth will be driven primarily by the evolution of existing products and service offerings (19% vs. 30%).
- The top challenge digital leaders see in their digital transformation is the shortening life cycle of their products and services (42%), while for all other respondents its coping with new digital business models (40%).
- 14% of respondents overall said they are at second generation deployment or later of mobile technology to help them achieve their distribution business goals. More respondents were at that stage of deployment of big data to achieve revenue (19%), while just 15% were at that stage in deployment of social networking to achieve their customer engagement goals.
About the Data: Ernst & Young, with the help of Oxford Economics, conducted a global survey of more than 550 M&E executives during the first quarter of 2013. Respondents came from a wide swath of M&E industry segments, including advertising, broadcast and cable, publishing and information services, filmed entertainment, interactive gaming, music and social media, as
well as from the technology industry.
20% come from companies headquartered in the US, with China (12%) and India (12%) the next most heavily represented countries.