Media & Entertainment

Media and Entertainment Incumbents Strike Back

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The digital world has turned the media and entertainment (M&E) industry upside down. Digital disruptors such as Netflix and Amazon are now competing directly with traditional M&E companies for the time, advocacy and money of consumers. Two years ago, CxOs told us they were deeply worried about digital companies invading their industry. Now, they seem to be somewhat more relaxed. While 66 percent expected these new competitors would flood the landscape in our 2015 study, just 27 percent report the same in our most recent survey of 578 M&E CxOs. They are still wary of digital giants, who continue to make inroads into their traditional territory. But a full 65 percent say that the real disruption is increasingly coming from innovative industry peers – in particular those M&E companies that are reinventing themselves to thrive in the digital era.

Inventive M&E companies outthink digital disruption by reinventing their businesses and creating innovative offerings. As an example, the BBC has reinvented iPlayer to compete with Netflix. It had its “best week ever” after it turned to Netflix-style box sets for Christmas. Wimbledon developed “My Wimbledon Story”, an AI-powered feature that extends fan experience to how the public likes to consume match content. And media giant Walt Disney plans to start its own online streaming services in the US for movies, shows and sports in a shift aimed at bringing productions directly to consumers.

In the course of our research, we identified three distinct organizational “archetypes,” each at a different stage on the road to Digital Reinvention: Reinventors, Practitioners and Aspirationals. M&E Reinventors outperform their peers on revenue growth and profitability while leading in innovation. They have distinct characteristics that lead to differing vantage points. In particular, they stand out on three topics:

  • The path to personalization
  • The pull of platforms
  • The focus on organizational agility

The path to personalization

Designing compelling personalized experiences is extremely difficult; it takes a profound understanding of what makes different people tick. M&E Reinventors excel at creating personalized customer experiences (see Figure). They approach personalization like design thinkers – by engaging directly with customers, consulting their partners to get a better picture of the customer experience and incorporating feedback into planning. They’re also more tuned into the potential of artificial intelligence (AI) as a means of improving their product and service delivery models.

The pull of platforms

One of the most exciting recent trends is the emergence of the platform business model, which connects producers directly with consumers. But what makes a platform work? We identified three “rules” for success: creating value from reciprocity, capitalizing on data and committing to innovation. M&E Reinventors fit this profile. And they’re much more willing to invest in technology to achieve their goals: 66 percent of M&E Reinventors expect to increase cloud computing investments (versus 47 percent of Practitioners and 39 percent of Aspirationals). And almost a third (30 percent) of M&E Reinventors expect blockchain to reduce transaction costs – for example, in micropayments for buying content – by eliminating intermediaries.

The focus on organizational agility

With the landscape shifting around them daily, M&E CxOs are particularly focused on organizational agility and new ways of working. Almost half (46 percent) of M&E CxOs see the potential of AI as a means of optimizing and automating business processes in the next few years, although most are still in the early stages of identifying processes that could benefit from automation. But the Reinventors have gone much further. They place more emphasis on accelerating innovation and look to their teams to jumpstart it: 72 percent actively solicit employee input to stimulate innovation. In other words, they combine a dynamic vision with an open culture and agile operations – and these, as our research shows, are the three stepping stones to organizational dexterity.

M&E companies that want to stay in the game may need to embark upon a holistic, orchestrated and integrated program of Digital Reinvention to focus their resources, investments and capabilities on the things that truly matter. Emerging technologies like cognitive solutions and blockchain will play a key role in that future. Industry leaders will be those who can institutionalize such capabilities as part of their Digital Reinvention efforts and focus their companies on investing in great content and delivering superior customer experience.

To read the full report, please go to

Global Telecommunications Industry Leader at the IBM Institute for Business Value

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