2018 Media and Entertainment Outlook

Where do you see opportunities for growth in 2018?

Advances in mobile, video, and wireless technologies have ignited an explosion in the growth of streaming services. Nearly half of US households subscribed to one as of 2016, and 60 percent of US consumers (and 82 percent of millennials) stream TV shows at least monthly.¹

The growth of streaming services is driving a number of media and entertainment industry trends, including:

• The emergence of vMVPDs—Virtual multichannel video programming distributors (vMVPDs) like DirectTV Now, Sling TV, and YouTube TV now hold about 20 percent of the US subscriber market.² 
• The rise of cord-shaving—A million US viewers recently replaced their multichannel subscription services³ with more streamlined solutions.⁴ Nimble media companies will seize the chance to leverage this emerging demand.
• The growth of targeted advertising—We’re seeing pockets of innovation regarding data analytics and personalization. Look for media and entertainment companies to start augmenting customer information with social media.
• Increased attention to virtual and augmented reality—These technologies will gain traction for their ability to enhance storytelling as media companies seek to differentiate their content.

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What should businesses be mindful of as they plan for growth?

Media companies will be challenged to maintain or increase content quality while finding ways to extract maximum value. In the past, value was driven by content scarcity. Today’s always-on, multi-window world demands new ways to deliver value.

Three value-creation approaches for media and entertainment companies to consider are:

• True demand-based pricing—Companies can harness data analytics to price content based on even more viewing windows that are available today. They’ll also begin to match variable pricing with consumer demographics and shopping behaviors to drive additional value for both themselves and their customers.
• Strategic M&A—Media and entertainment companies will look for mergers and acquisitions that can help them gain negotiating leverage or strengthen distribution channels. 
• Rethink programming formats—By 2021, mobile video will drive 24 percent of all internet video traffic.⁶ Media companies should explore formats geared to smaller screens and shorter attention spans.

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Which markets do you see emerging in the sector?

A big challenge for the media and entertainment industry in 2018 will be to figure out how to create tailored customer experiences when there is mass customization of experience across all content, advertising, and brands. Fortunately, customers will likely continue to generate more and more data about their preferences, relationships, habits, locations, etc. There’s a big market opportunity for companies to use this data to hyper-target their content and advertising and optimize the customer experience.

Content discovery is another market opportunity for media and entertainment companies. Success may lie in developing an intimate understanding of the consumers' media companies are trying to reach—including by tapping social media, which has become the number one way people learn about new TV shows.

From a technology perspective, key areas to watch this year include:

• 4K video—As more and more 4K TVs enter the home, consumers may demand that every viewing experience match what they can get in their living rooms.
• Autonomous vehicles—AVs will soon emerge as powerful media-delivery devices. Passengers with time on their hands may be interested in a wide range of new viewing windows.
• 5G wireless—Media companies must take advantage of this pivotal technology to maximize the power of 5G.

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References

¹ Deloitte Digital Democracy Survey. 11th Edition: eMarketer; Cisco VNI, 2017

² “The VMVPD: Cable’s Answer to Cord Cutting”, AdExchanger, March 27, 2017, https://adexchanger.com/tv-and-video/vmvpd-cables-answer-cord-cutting/

³ Kari Bode, “Another Million Subscribers Cut the Pay TV Cord Last Quarter”, DSL Reports, October 31, 2017.

⁴ Note: Since Nielsen includes vMVPDs in its cable household universe estimates, vMVPD subscribers are not considered cord-cutters.

⁵ “Discovery to Buy Scripps, Owner of the Food Network, in $11.9 billion deal.” The New York Times, July 31, 2017, https://www.nytimes.com/2017/07/31/business/dealbook/discovery-scripps-acquire-viacom.html?mcubz=0

⁶ Source: Cisco VNI, 2017