 | Issue: | EMEA 2012 |
| Article no.: | 4 | |
| Topic: | Beyond Digital: Connecting Media and Entertainment to Future Trends | |
| Author: | Saul J. Berman | |
| Title: | Partner & VP, Global Strategy Consulting Leader & Innovation and Growth Services Leader, IBM Global Business Services (GBS) | |
| Organisation: | IBM | |
| PDF size: | 346KB |
About author
Saul J. Berman, Ph.D. is Partner & Vice President, Global Strategy Consulting Leader & Innovation and Growth Services Leader within IBM Global Business Services (GBS). In this role he works closely with major corporations around the globe on strategic business issues. He leads a worldwide team of IBM consultants focused on delivering business value through business, technology and operations strategy engagements as well as organizational change initiatives.
Prior to this role, Dr Berman was the Lead Strategy Partner for the Media and Entertainment Practice as well as a Global Strategy & Change Services Leader at IBM GBS. Before joining IBM, Dr Berman was the Global Strategic Change Leader at PwC Consulting. He was also previously with The Boston Consulting Group, a divisional Vice President with Broadway Department Stores and an Assistant Professor of Management at the University of Southern California.
A frequent speaker to industry and strategic planning organizations, Dr Berman was named as one of the Top 25 Consultants of 2005 by Consulting Magazine. He is also an editorial advisory board member for Strategy & Leadership Magazine. Additionally, Dr Berman served as a board member of the USC Film School Entertainment Technology Center and of the Southern California chapter of the Strategic Leadership Forum. He has authored numerous books and publications.
Dr Berman holds a Ph.D. in Management and Information Systems and a MBA in Production Systems and Operations Research from the Graduate School of Business at Columbia University in New York. He obtained a Bachelor of Science in Economics at The Wharton School, University of Pennsylvania, Philadelphia.
Article abstract
Moving from analogue to digitized content is not just about digitizing it. Media and Entertainment (M&E) providers must find new ways of approaching their audiences. Consumers’ behaviours are changing and new audience segmentation is now needed. For example, rather than classify consumers by age and region, behaviour is determined more by the mode of access – on demand, non-linear, on mobiles or via social media. M&E providers must collaborate to provide suitably tailored packages according to the new behaviour. They still need to find monetization models that overcome the lower revenues that digitized connected content is currently bringing.
Full Article
Today’s ‘connected’ consumers are empowered. They demand instant access to personalized content on their own terms. To satisfy connected consumers, as well as ecosystem partners, Media and Entertainment (M&E) providers must move “beyond digital” to deliver individualized experiences on demand, at any time or place and across devices as well.
By understanding each customer individually – on a massive scale – M&E providers can anticipate what people want and transform marketing into a welcomed service, instead of an intrusion. For those in the M&E industry, digitizing content and digitally distributing it is no longer enough. Success in the connected landscape will require:
– a business-to-consumer (B2C) mind-set;
– insight into consumers’ digital personalities;
– the delivery of relevant, enhanced experiences; and
– the ability to find new ways to monetize content successfully.
According to YouTube’s statistics: “more video uploaded to YouTube in one month than the three major U.S. networks created in 60 years”.
About the IBV Survey
The Institute of Business Value (IBV) has just released results of its fourth annual digital consumer survey: Beyond Digital: Connecting Media and Entertainment to the Future, which questioned more than 3,800 consumers in six countries: China, France, Germany, Japan, the United Kingdom and the United States. The goal was to evaluate current and future digital content consumption behaviours.In addition to the consumer survey, one-on-one sessions were conducted with global participants across the media and entertainment industry. These participants represented the following types of organizations:
– Content owners, including broadcasters, cable networks, publishers and online media companies.
– Media distributors, including cable/satellite operators, telecommunications providers and new media entrants.
– Agencies, including creative services, media services and direct marketing.
– Research organizations/analysts, including industry research analysts and representatives from industry associations.
Greater digital connectedness is here to stay
With this ongoing consumer desire to stay connected in new ways, providers have begun to understand that digitizing content is no longer enough. The industry must evolve beyond the digital era and engage in the connected consumer era.
To better understand the connected consumer phenomenon, the IBM Institute of Business Value (IBV) asked more than 3,800 consumers in six countries: “which of the following terms best matches your own approach to digital device adoption”?
Their responses:
• Early adopters, or12 per cent of the global sample, say: “I adopt the latest and greatest devices as soon as they are available”.
• Mainstream consumers, or 35 per cent of the global sample, say: “I purchase at about the same time when many others seem to be purchasing”.
• Late adopters, or 32 per cent of the global sample, say: “I am typically one of the last to purchase”.
• Stragglers, or21 per cent of the global sample, say: “I don’t typically purchase new devices, I am happy with the technology I have”.
The IBV (Institute of Business Value) survey found that a ‘critical mass’ of mainstream consumers is now consuming digital content. So, while in the past providers could concentrate attention on what younger consumers expect and thus reach the majority of connected consumers, this generalization no longer holds true. While age remains an important factor, it is not sufficient to determine what consumers want.
How connected consumers want to consume content
The rampant adoption of digital devices has fuelled the growth of digital content consumption globally. The study found that digital device adopters commonly exhibit four types of content consumption behaviours. They are:
• Viewing on demand, or “I’ll catch you later”: Also known as time-shifting digital viewing on demand is now the norm. The survey found that already in China, the UK and the U.S., over half of early adopters and mainstream consumers consume online video such as Hulu and Netflix on their PCs and video on demand on their home TVs.
• Non-linear viewing, or “THIS I have to check out right now”: In a profound shift from the linear nature of traditional content consumption, global consumers are distracted, decreasingly giving TV their undivided attention. Across our global sample, three-fourths of adults reported surfing the web while watching TV. In the U.S., the figure rises to 90 per cent of mainstream consumers who split their attention in this way.
• Mobile access, or “Do you want that to go?”: The place-shifting capability made possible by mobile devices is closely related to the content consumption behaviours of time-shifting and distracted viewing. More than 50 per cent of early adopter and mainstream consumer respondents in Japan, the UK and the U.S. regularly access content on their smart phones or other portable devices. This trend will only accelerate. Internet-enabled mobile devices – including tablets, video-game systems, TVs and Blu-ray players – are expected to outpace PC shipments worldwide in 2013.
• Social consumption, or “How are YOU doing?”: This aspect of connected consumer behaviour is not just about connecting with content everywhere – it’s about connecting with people everywhere, too. Across the global sample, 46 per cent of all surveyed consumers reported connecting with friends on social networking sites. In the U.S., 58 per cent of early adopters and 59 per cent of mainstream users are already doing so.
Television stations are beginning to tap into how audiences are using so called ‘second screens’ whilst watching TV, and are encouraging the audience to provide feedback and create an online buzz by providing Twitter hash-tags at the start of a show. Some stations are then taking this a step further by using the online feedback to make better informed decisions in order to optimize future offerings. For example RTL Nederland, a Dutch entertainment company, used IBM analytics technology to explore the social media sentiment around certain TV shows. This helped to better understand audience needs and preferences, and hence increase viewer involvement.
The changing media landscape presents challenges
The availability of connected content has empowered consumers to expect instant access to desired content. It is changing how traditional media is paid for and consumed. Meeting demand for ‘connected content’ is the key to growth – and even profitability – for every party in the Marketing & Entertainment (M&E) segment. To do this, it is critical to understand three key challenges in the changing media landscape:
a. Content cannibalization is real
Traditional media and devices are in decline, including newspapers, DVDs and portable game players. Clearly, printed newspapers feel the impact: breaking news is widely available on their own sites, on social networking sites and other media channels. In China, France and the U.S., our survey found that more than twice as many respondents use online sources for breaking news than printed newspapers.
b. Mass audiences segments are splitting: From 2000 to 2009, the primetime TV audience has declined steadily for TV networks, independent TV, public and pay cable TV. Declining viewership of broadcast networks exemplifies that mass audiences are splitting into behavioural micro-segments. Age-based micro-segments may well hold true in some cases, but they cannot be relied upon.
The survey reveals that contrary to popular belief, not all early digital adopters are college age. Distracted viewing and social networking are practiced widely across all age groups. Sixty-five per cent of all respondents aged 55 to 64 reported surfing the Web and texting with friends while watching TV. Of those over age 65 watching TV, 49 per cent surf the Web and 30 per cent text their friends. Clearly, age is not the only distinguishing characteristic for today’s connected consumers’ digital behaviours. M&E providers need to go beyond traditional age segmentation to master understanding their customers’ digital behaviour in order to successfully attract them in segmentation and retain them long-term.
c. Digital models generate less revenue: For M&E providers, the shift to digital is problematic because digital revenue streams have yet to deliver value that is comparable to traditional models. Before now, the primary means for generating online revenues has been ad-supported models that have yielded a substantially lower return than broadcast TV, for example. The survey showed that more than two-thirds of early adopters are willing to pay for content. As a result, M&E providers need innovative pricing and payment models to maximize revenues.
Looking ahead
Going beyond providing analogue content to digital channels offers an opportunity to develop more strategic and tailored relationships with consumers. Consumers want their content to provide experiences that are tailored to their particular contexts – both geographic and social – as well as their own preferences. Now is the time to focus on the overall consumer experience, embracing new distribution platforms and expanding revenue models.
What can the M&E Industry learn from these behaviours? Digitizing content is not enough. Media and Entertainment providers must practice new rules of engagement. We believe four major steps can help them as they evolve beyond digital:
1. Act like a B2C company – regardless of where they sit in the M&E Value chain, M&E companies need to deliver tailored experiences that match consumers’ digital personalities and must find ways to interact directly with consumers, soliciting input and incorporating it at every turn.
2. Target consumers based on the four ‘digital personalities’(on-demand, non-linear viewing, mobile access and social consumption) – These personalities are not age-based, but instead are based on the combination of degree of access to content and intensity of content interaction.
3. Deliver relevant, enhanced experiences – While in the past it may have been sufficient merely to deliver content using digital channels, targeting consumers based on their digital personalities requires a whole new approach. For example, a critical mass of global consumers say they look forward to interacting more personally with digital content — many would like to control sports replays or the angle of a movie scene as viewers. To deliver the desired experiences, content cannot stand alone. Appealing content has to reach the right consumers (by using analytics), when and where they desire it (using a smart, integrated infrastructure), with the right features (such as social media).
4. Monetize content successfully – This is the tricky part. Even with tailored, captivating content for their customers, content providers will still wrestle with how to expand their revenue models to fit the consumers’ expectations and benefit from digital offerings. These new revenue models will need to evolve beyond a ’one size fits all‘ mould and offer the relevancy, choice, integration and packaging options that consumers demand.
Getting the required multiple business models right will be the ultimate challenge for the industry, but the expanded ability to create relevant, enhanced consumer experiences will move M&E providers beyond digital and create new value — something we can all look forward to, regardless of our digital personality type.
