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 – but execution remains an issue, according to an Accenture survey.
Accenture’s 2008 Global Media Content Survey – the company’s third annual survey of more than 100 senior executives in the media and entertainment industry – examined the growth strategies of companies across the landscape of advertising, film, music, publishing, radio, the internet, videogames and television.
The vast majority of respondents (70%) reported that they derive some revenue (albeit?a small proportion)?today from new alternate forms of media – such as downloading or watching TV programs “on demand,” digital advertising or user-generated content.
Moreover, 82% agreed that content is increasingly developed for consumption across multi-platform distribution:
Four of the main sources of revenue growth cited by respondents are the same as those identified in last year’s survey, indicating a growing consensus about the potential of those four sources of revenue growth as the dominant business model five years from now:
- Multi-platform distribution. Asked to identify the largest drivers of revenue growth over the next five years…
- Two-thirds (66%) of respondents cited new platforms or new ways of delivering content – significantly more than the number who cited new content types (24%) or new geographies (10%).
- Nearly two-thirds (63%) of respondents said they will pursue a “multi-screen” distribution strategy, which includes television, online and mobile delivery.
- 84% of companies expect mobile rich media to become mass market at the latest within five years, representing the largest growth opportunity for media and entertainment firms:
- Short-form video. Asked which content type will generate the greatest growth, the greatest number of respondents – 38% – cited short-form video, with online portal/publishing second (23%) and video games third (18%).
- Social media and user-generated content. Two-thirds (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.
- Advertising. Asked to identify what they believe will be the number-one business model in five years, nearly two-thirds (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,” said Gavin Mann, digital media lead for Accenture’s 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.”
While half (50%) of the executives interviewed said they know which capabilities they need to take advantage of in this new digital market, Accenture said many have a false sense of their current capabilities. Some?66% of the respondents have less than 40% of required capabilities, a number that is unchanged since last year’s survey, indicating that companies need to implement new digital technologies or be left behind.
Among the survey’s other key findings:
- 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.
- 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.
- ?In the next year, though, most see the majority of their digital advertising budget going to mainstream media portals:
- The Web 2.0 phenomenon is here to stay. Two-thirds (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.
- 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 half (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 half (51%) of the executives surveyed. Respondents also cited other barriers, including companies’ lack of ability to provide a consistent user experience (cited by 42% of respondents), and a lack of readiness among content owners as well as mobile operators/networks (cited by 37%).
About the study: As part of its third annual Global Media Content Survey, Accenture surveyed more than 100 senior leaders and decision-makers in the media and entertainment industry – spanning television, videogames, film, music, radio, publishing, interactive entertainment and advertising – in North America and Europe. The goal of the survey – which was based on in-depth telephone and face-to-face interviews with select executives in the United States, the United Kingdom, France, Germany, Austria, Belgium, Switzerland, Italy and Brazil – was to identify where industry executives believe the greatest opportunities and challenges will come from over the next five years.