Anyone with a smartphone — or just a pulse — is aware that broadband access and second screen devices are changing how we consume content and entertainment. But sometimes details are helpful. Consulting firm PwC (PricewaterhouseCoopers) today offered up some details about where the digital media market is going and how companies should respond.
The report comes in 13 segments, ranging from video games to internet advertising (my colleague Laura Owen has the ebook predictions here). We’re digging into some of those but, in the meantime, here’s some highlights from the big picture entitled “Entertainment and Media Outlook: 2013-2017 .. Summary of Key Themes”
Consumers are cord-cutting, in control — and confused
PwC says a plethora of choices has trained consumers to expect to receive media and entertainment when and where they want it. This means traditional forms of content packaging — like cable TV subscriptions — are becoming less tenable: “it is the connected consumer who is now really in control … cord-cutters are now being joined the ‘cordnevers’, a younger generation who would never think of paying for TV.”
But the report (citing people in Singapore who pay for pirated content even though a legal version was available for free) also suggests that the volume of content is leaving consumers “confused.” This presents an opportunity for companies that can help people discover and navigate all this media.
Advertising will be enormous — if the industry can figure out the data thing
Traditional advertisers have been alarmed at how the consumer audience has scattered to consume an infinite variety of content across multiple screens. But PwC sees huge opportunities if the industry can become “platform-agnostic” and tap into a growing wealth of consumer data. Interestingly, the report plays down “big data” hype in favor of (emphasis mine):
granular, small data— derived through analytics—that gives insights into customers’ actual and likely behavior in response to a particular message or experience. One of the most exciting areas is the emerging opportunity around the second screen, which has huge potential for building not just consumer engagement, but also especially in combination with mobile wallets eCommerce transactions.
Likewise, the advertising and media industry must solve the problem of credible, cross-platform metrics. Right now, plenty of people are proposing standards to measure online audiences but there is no single, widely-accepted number like there is for TV.
Content is king (again) — but companies must still figure out how to package and sell it
Here’s some good news for those creative types who equate the internet with cheap and lousy content (emphasis mine):
The rising value of content has fired the starting-gun on an industry-wide race to acquire it. Recent months and years have seen several major acquisitions of content assets, as consumers’ rising expectation of ubiquitous access to premium and library content drives companies to focus on licensing and/or acquiring content
But, says PwC, just getting content is not enough. Content holders must also figure out how to: distribute it to second screens; reinvent “windowing” models to shorten release times; discover new “bundling” and discount models since “People still love a bargain”
Global markets — and piracy — are evolving quickly
Media and entertainment opportunities in developing markets are growing fast, but the real bucks will still remain in the mature markets of the US and Europe. But as the global population becomes more migratory, there are also new opportunities to target diasporas. Check out this interesting nugget (emphasis mine):
there were more than 215 million migrants worldwide in 2010, which would make that ‘migrant nation’ the fourth largest in the world. As expatriate communities grow, distributors are increasingly crossing geographical borders to address them. Examples include iRoko, which targets the African diaspora in wealthier markets and has more customers in London than Lagos.
Piracy will of course remain an issue in emerging markets but PwC proposes a more sophisticated prescription than the usual howls for enforcement. The report appears to share the perspective of copyright scholar Bill Patry, who regards piracy in large part as a pricing issue. In other words, content owners should not just focus on enforcement but on pricing and distribution too: “Tackling piracy … means using an understanding of consumers to deliver the right content to the right people, at the right time, place and price via the right experience.”
- Globally, digital media will account for 37 percent of advertising revenues by 2017, up from 26 percent in 2012.”
- Internet advertising will be the fastest-growing segment, at a 13.1 percent CAGR
- Video gaming at a 6.5% CAGR and TV advertising at a 5.3 percent CAGR will also show strong growth.
- Segments traditionally related to print—newspapers, magazines and books—which will grow by an average of less than one percentage point
- By 2017, physical purchases will represent just 53 percent of consumer spending.