Building a better future for the media and entertainment industry

Building a better future for the media and entertainment industry The media and entertainment industry is fraught with multiple challenges. Declining sales, low advertising revenues, changing consumer preferences and digital transformation are all posing questions for the industry. So, what’s the road ahead? Shashank Venkat explores

Let’s face it, the media and entertainment industry is in a pretty uncomfortable place right now. Papers are not selling; publishers are struggling with dwindling subscription rates; local content is dying; cable TV owners are unplugging fast; and Presidents of the world are choosing Twitter to communicate directly with the people. Meanwhile Netflix, Facebook and Amazon seem to be the new playmakers. So, what lies ahead?

First of all, traditional media companies have to accept the fact that the internet and smartphones have transformed the way people consume content. Viewers and readers simply don’t want content that’s pushed down their throats. Instead, they demand an experience where they are in-charge of selecting their own content. And why not? At a time when emails, app notifications and social media are all competing for every second of the consumer’s time, an engaging self-controlled content experience indeed feels very valuable.

This means that traditional broadcasters and news outlets need to massively rethink their content distribution strategies. We have already seen glimpses of that with the Economist’s digital offerings such as The Economist Espresso (a morning snippet of important news) and an audio edition to cater for on-the-go users. Even Time has started offering digital and audio format (The Brief) to its users.

But while The Economist and Time have shown that multi-device and multi-format offerings are the way forward, it is not such a straightforward path for smaller media businesses. Using multiple distribution channels demands more investment in the enabling technologies which can be a huge burden on the balance sheets at a time when revenues are already falling. Without a clear-cut pathway to profit, can smaller organisations afford to invest in multiple channels? Likely not.

In addition, these multiple formats have their own established leaders. For instance, podcasts already have a huge following and it is unlikely that the new magazine audio formats will wean away loyal podcast listeners. These audio formats also face competition from other apps such as music and audiobooks. On the digital front, these magazines face stiff competition from channels like Flipboard which are a hugely popular way to consume news. Clearly, media and publishing organisations have to build differentiated and compelling content offerings, strong brand identity and digital capabilities to win this battle for screen space.

Furthermore, the well-established revenue models have already taken a beating. Why would brands advertise with mainstream media channels when cheaper and more targeted alternatives like Google and Facebook are available? Moreover, the revenue layer is now spread thin as the content moves across multiple channels.  In an earlier blog about the future of monetisation for media and publishing businesses, I wrote about the widespread adoption of paywalls by media organisations to stem declining revenues. However, this is not an all-encompassing solution to the media industry’s challenges.
 
At a time when so much quality content is available for free (or at low cost), putting the same old content behind paywalls is not an idea which is going to bring large-scale success. Instead, it’s about creating compelling content, building a great user experience and delivering a value proposition that’s too hard for users to ignore. Think about Amazon Prime – the offerings are so compelling that it has penetrated a quarter of all households in the US and is growing fast worldwide.

So, the big question for traditional media and entertainment companies is how to overcome these challenges?

Digital Transformation – This has to be on the agenda for any media and entertainment organisation that wants to thrive in the coming years. Media businesses have to realise that they are not only competing with their own peers, but ecosystems such as Facebook, Amazon, Google and Apple. It isn’t too hard to imagine a future where Facebook Live has completely obliterated the traditional TV coverage of live events. Large media businesses have to invest in digital capabilities which will allow them to augment their existing strengths and offer that as a bundle to users. Small, independent publishers that do not have the capital to invest in building new capabilities can collaborate with social platforms such as Facebook’s Instant Articles to stay relevant. The underlying point is that digital transformation will be key to survival in the upcoming era.

Customer comes first mindset – This is the age of Netflix and Amazon who are almost obsessively focused on delivering great user experiences. Good user experience comes from creating and curating good content, distributing it where users are, and then personalising it for them. Successful media organisations will be able to do all of the above pretty effectively. Take the example of a traditional company like the BBC that has embraced social media with its #BBCShorts – these interesting, small clips of news are built for Instagram and are a great way to reach younger users. Media firms can also leverage predictive analytics to design content that’s tailor-made for individual consumers. Furthermore, these businesses need to start thinking deeply about investing in AI technology which will be key to contextual relevancy and building great customer experiences.

Newer monetisation options – The media industry is being forced to clip its advertising-dependent revenue streams thanks to changing market dynamics. Paywalls, ad blockers and sponsored content are extremely limiting ways to maintain ad revenues. At a time when customers are spoilt for choice, such moves will only alienate customers to friendly (and free) platforms such as Facebook, Twitter and Snapchat. Media and entertainment businesses will have to be smart about blending content and revenue and introduce modern monetisation methods that are less intrusive to the core user experience. If ads were the premium revenue generator in the previous era, subscriptions will be the way forward in the future.

We have seen with the success of businesses such as Netflix that customers are ready to pay if it amounts to a better experience. Of course, subscriptions themselves can take on many forms such as niche subscriptions (payment for a specific service like Tinder Gold) or other usage-based options. The idea is to give subscribers flexibility and control of their experience like Netflix. However, it is important to ensure that customers have a seamless billing and subscription management experience. Otherwise, recurring subscriptions lose out on the very motive they are designed for. 

One media company that has used subscriptions successfully to fuel its growth engine is The New York Times. By investing heavily in the quality of its content (like Netflix) and continuously adding new services and features (like Amazon Prime) such as NYT Cooking, it is quickly aiming to become an important subscription bundle for its users. The New York Times has shown that it is indeed possible to survive, and even thrive, in this dynamic digital landscape.

Accomplishing these will require media and entertainment businesses to invest in newer monetisation systems that support the growing demand on them. They need to work with partners who have deep knowledge and a track record of implementing robust monetisation solutions. Our cloud-based platform Cerillion Skyline is designed to help media and entertainment businesses harness the power of the subscription revolution by helping to monetise content offerings in a profitable and scalable fashion. By leveraging the same core billing and charging engines as our Enterprise BSS/OSS suite, Cerillion Skyline will help pave the way for digital transformation, build a customer-centric approach, and automate monetisation processes.
 

Image credit: Flickr | Methodshop.com



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