M&E companies are approaching ‘the end of the beginning’ of their digital transformation, according to a new study.
The research, from Cognizant, indicates that while only 3% of respondents claim to be Digital Leaders today, a staggering 47% expect that they will be by 2022.
Spending on new technology is slated to increase by 50% in five years, while nearly 8 in 10 respondents cited mobility as the most significant technology trend over the next two years, particularly due to the rise of wearables.
The digital transformation of the Media & Entertainment (M&E) industry has advanced rapidly in recent times: The small screen of living room TVs supplanting the big screen of movie theatres, while the mini-screen of mobile then eclipsed both. Other examples include the expanding reach and market value of gaming, Facebook’s hyper-personalized ad-serving, and Netflix’s data mining to finely tailor content offerings to customer tastes. But what’s next?
According to a new study by Cognizant’s Center for the Future of Work, the Media & Entertainment (M&E) industry is gearing up to become matured in terms of digital transformation over the next five years. Still, despite being among the earliest adopters of advanced digital technologies, many M&E companies will arguably soon be facing the so-called second half of the chessboard conundrum: Digitising products and services is not the endgame, it is just the beginning.
Mobility is seen as the technology trend with the broadest impact over the next two years by nearly 80% of the respondents, with the use of wearables rising, especially in gaming (92%). Technologies such as artificial intelligence (AI), augmented reality (AR) and virtual reality (VR) are expected to play very important roles, but so too is Blockchain. At this point, however, only 29% expect to be a key technology by 2020. Blockchain may have many future M&E applications, from facilitating royalties and crowd- funding, to digital advertising and distribution. To leverage these game-changing technologies in the near term, businesses will need to adopt a fail-fast attitude and willingness to experiment broadly. Our research also shows that technology spending will skyrocket over the next five years – a 50% increase. In addition, as many as 47% of respondents aim to become digital leaders by 2022. However, true digital leaders – those with an integrated front- and back-end and strong digital growth and innovation – are rare at this stage in today’s M&E industry, accounting for just 3% of the companies studied.
In early 2018, Netflix released the latest film in the Cloverfield series to a rapturous reception from fans with no advance warning save for one commercial during the Super Bowl, just a few hours prior to release. No mega marketing prelude was needed; no critical pre-releases were shown. This should serve as an early reminder to traditional M&E companies that they cannot rest their laurels on their current digital progress: This was a media game-changer, all at the push of a (very sophisticated) digital button.
Beyond the front office, where consumers have been treated to digital products and services from M&E providers for the better part of two decades, the middle and back offices are the new digital frontier. More out-of-the-blue moves like Netflix’ will rock the operating models and organizational alignment of all players in the industry.
“Our advice to any M&E company struggling today, is to focus on how to achieve the best return on their digital investments in order to overcome the lackluster growth and profitability challenges of recent years. To compete, they need to invest now in technologies such as artificial intelligence and blockchain. Our research also uncovered that the work ahead for M&E companies wanting to expand their digital efforts, includes getting serious about data security – and accepting the fact that creative destruction is unavoidable in Keeping Up with the Netflixes,” says Robert H. Brown, AVP, Center for the Future of Work, Cognizant.