More turmoil in the entertainment and media business
“These developments highlight that the entertainment and media industry is quickly transitioning to a direct-to-consumer world, where most content will remain the same — at first, at least — but the packaging and distribution will change significantly,” PwC said in the report, dubbed PwC Videoquake 3.0: The Evolution of TV’s Revolution. “Specifically, the expansion of digital technology, manifested by more ubiquitous fixed and wireless network connectivity enabling growing numbers of connected devices and new routes to the user, is altering the industry’s structure, driving new ways to produce, distribute, and monetize content across its landscape.”
“No longer is it enough to develop content for eyeballs,” the report said. “Now, you must create a fan-centric business. If you are an executive in E&M, your formula for success is already shifting radically. No longer is it enough solely to attract eyeballs, seeking the largest audiences possible for advertising and subscription revenues. Now, you must create fans: active users united by shared ideas, interests, and experiences, who will return every day to your brands and properties.”
The digital media with loyal users will have strategic advantages. Companies will have to directly target these users and monetize them. Current fans will recruit new fans. The pace of this change is only going to accelerate in 2016. More consumers will shift to over-the-top (OTT) third-party media services such as Netflix, rather than continue with subscriptions to cable TV. Video providers will have to learn from digital music providers such as Spotify that have learned to offer consumers the a la carte entertainment that they want. Live events are becoming critical to building fan bases, and fans help stoke the growth via social media.
PwC concludes that the winners and losers in this coming fan-centric, direct-to-consumer world have yet to be determined. But the requirements for victory include more customization, control, and perceived value. It also requires distinctive, habit-forming brands and experiences that turn commodity eyeballs into devoted fans. Adapting to that world won’t be easy for major media, entertainment, and brand companies.