2014 Media & Entertainment Outlook
Interview with Gerald Belson
Consumer demand for ubiquitous content access and evolution of new economic models, as well as shifts in how people consume media, are among the trends to watch in the coming year, according to Gerald Belson, vice chairman and U.S. Media & Entertainment leader, Deloitte Consulting LLP. Read on for his perspective on what’s ahead for the media and entertainment industry.
What is the biggest challenge facing the media and entertainment industry in the coming year?
While the specific forces at play are constantly evolving, the biggest challenge continues to be the pressures and opportunities brought by distribution and consumption of digital content. Rarely has industry-wide business transformation occurred with the speed and impact we’re seeing today in media and entertainment, and we’re now in one of those rare moments where current and new business models are coexisting. Throughout this transformation, a significant percentage of revenue continues to move from physical to digital channels across the industry.
The ecosystem evolving around online—including mobile—substantially broadens the availability and distribution options for content. Smartphones and tablets are directly contributing to this shift and increasingly drive where and how content is delivered. The almost limitless access to content today is forcing evolution away from the long-held model that programmers decide what you will see and when. Consumers are making it clear that they will have a voice in choosing when they wish to view content.
What trends might disrupt “business as usual” in 2014?
We believe that demand for entertainment-oriented content has never been greater. But with so many different channels and ways to produce it, consumers are becoming increasingly selective in what they want to buy, and in general, their preference is moving more toward rental/streaming service options as opposed to purchasing outright. When they do purchase, consumers want to purchase content one time and then be able to view it on any platform, on any device, at any time. This desire is reflected in the growing number of multi-platform offerings, but overall, this remains an evolving model, with business issues still to be resolved. Delivering content for a variety of platforms is not only a matter of supporting several device types, but also different manufacturers and operating systems.
There are also significant intellectual property rights issues that must be addressed in these solutions. How do you track and manage the content? Where does it reside if it’s bought one time? How do you manage copy protection?
The media and entertainment ecosystem has many players, including content creators, physical and digital content distributors, storage and telecom service providers, and intellectual property managers. For incumbents in all aspects of the industry, a key question is how to optimize what you have, compete in the newer channels and shape a business model that capitalizes on increasing demand for content across different platforms—without compromising profitability.
What are some steps media and entertainment companies can take to foster innovation and/or growth?
First, companies can take advantage of the new channels and technologies without abandoning more traditional offerings. People will continue to immerse themselves in top-shelf programming on 70-inch HDTVs, and they will also enjoy watching shows on a 7-inch tablet.
Content creators today tell us they are looking at how to tailor content to the specific platform being viewed. For example, tablets, which represent one of the fastest growing video platforms, are an excellent device for viewing long or short form content (often with higher resolution screens than even high definition flat panel TVs). However, because they are inherently interactive devices, they offer the opportunity for a different, more interactive viewing experience than watching traditional TV.
A related example is revealed in Deloitte’s state of the media democracy survey, which identified that more than 80 percent of U.S. consumers multitask while watching TV.1 Most of this multitasking involves use of another digital device (e.g., smartphone, laptop or tablet), which suggests a wavering of viewer attention to the large screen. However, this also opens up the opportunity to create more integrated viewing experiences that blend the two platforms together and take advantage of the inherently interactive capabilities of the “second screen”—which could be of particular benefit to advertisers.
Another area that showcases the potential for continuing innovation is digital education. Massive open online courses, or MOOCs, are emerging as a transformative force in expanding learning opportunities worldwide, from kindergarten to the workplace. We see emerging opportunities for players both within and new to the education market to play roles in content development, distribution and infrastructure deployment.
“Rarely has industry-wide business transformation occurred with the speed and impact we’re seeing today in media and entertainment, and we’re now in one of those rare moments where current and new business models are coexisting.”