PriceWaterhouseCoopers released its Global Entertainment and Media Outlook: 2009-2013 yesterday, and the findings will set the stage for some companies to excel while others will be forgotten. Not surprisingly, the migration to digital entertainment platforms and convergence will accelerate as companies seek advertising distribution efficiencies while consumers want more value and more control over their content streams.
The future is bright, but not for everyone.
While the report shows declines in consumer ad spending through 2011, PriceWaterhouseCoopers sees industry growth returning in 2012-2013. Specifically, global spending on entertainment and media will reach $1.6 trillion in 2013 and then grow by 2.7 percent in digital content, which will eventually offset declines in traditional media revenue models. In the United States, the entertainment and media market will ultimately grow at a 1.2 percent average annual rate to $495 billion in 2013.
The primary challenge, it says, will be that some media companies will struggle to attract revenue from fragmented and mobile audiences. On that one point, we couldn't disagree more. The emphasis on mobile audiences is leaning toward more convergence, not less, with audiences being able to import and make portable their favorite content from their desktops to their laptops and mobile phones.
If any fragmentation is occurring, it's a direct result of consumers finding a continually increasing amount of content that would otherwise be unavailable. More choices simply means not all people will pick from the most popular three, but rather any number of options from a list of 3 million.
The decision that media companies have to make is whether their product is strong enough to capture any audience at all. For example, as one large publishing company reported months ago, its greatest challenge on the Web is competition. Rather than compete with the only other daily in a major market, they have to compete with several more migrating print sources, broadcast news sites, radio news sites, and the seemingly endless supply of amateur op ed blogs and network content.
They're asking the wrong questions. They're searching for the wrong conclusions.
Digital demand is increasing, but not everyone sees it.
"The current decline in revenues is not because of declining demand," Bill Cobourn of PriceWaterhouseCoopers' media and entertainment practice said. "In fact, demand for (entertainment and media) appears to be increasing."
The struggle that some media companies are facing is where that demand is increasing and their own ability to be able to meet that demand. Rather than continuing to find ever-narrowing niches where no competition occurs, they ought to be asking what do they have to do different to demonstrate a clear product contrast.
The right content mix would ensure that the publisher would never compete with other migration print sources, broadcast news sites, radio news sites, and the greater content sources that make up social media, including former advertisers who are finding it easier to develop direct-to-public online programs.
Ergo, today's news doesn't have to be the same on every station. If anything, that is the model that died when consumer choice began to grow exponentially. Consumers no longer have to choose which newscaster or print reporter they enjoy more as much as they choose which stories interest them the most. It changes, daily.
Coupled with the media's focus on preserving old distribution models, e.g., print and broadcast, they miss the bigger picture. While there will always be room for some print (assuming it is not duplicated online), distribution stands to sort itself out.
Even PriceWaterhouseCoopers sees it. It projects mobile and digital platforms expanding at the highest average growth rate of 12.2 percent through 2013 in contrast to a non-digital growth rate of 1.2 percent. So traditional-minded media might ask itself: which growth sector makes more sense to pursue?
Tomorrow's media model will be everywhere or nowhere.
When migrating media learns how to deliver valued content over the same old coverage and shift its one-way communication model into two-way community development, then advertisers will have a real reason to invest advertising dollars in order to capture those communities. However, and in the meantime, right now it makes more sense for companies to develop their own online communities while media struggles to sort it all out.
After all, digital spending is projected to rise to 25 percent of total industry revenues in 2013, up from 17 percent in 2008. And advertisers will continue to shift toward new media, boosting Internet advertising to 19 percent of U.S. advertising by 2013, from 13 percent in 2008. In other words, the hard choice media needs to make today is whether they want to be everywhere or nowhere at all. And that choice will not be made by media alone.
Content Related To The PriceWaterhouseCoopers Report
Digital spending to fuel slower media growth-PwC by James Pethokoukis
Pricewaterhouse Coopers Notices We're Going Digital by Catharine P. Taylor
PricewaterhouseCoopers Study Finds A Positive Outlook For Digital Media Growth by Stuart Elliot
