Digital revenues will overtake traditional by 2015

The average revenue of media and entertainment (M&E) companies will shortly cross the 50 per cent mark from majority traditional to majority digital, according to a new report by Ernst & Young that surveyed more than 550 senior executives from global M&E companies. Today, revenue from digital is 47 per cent and survey respondents say that by 2015 it will account for 57 per cent of revenue – thus making digital the new norm and the primary source of revenue for M&E companies.

The study goes on to identify characteristics of M&E “digital leaders” – companies that are using new technology not only to deliver digital products and services, but to build more agile organisations capable of sensing and responding far faster to shifting customer expectations and marketplace opportunities and risks. The digital leaders are pioneering the path to a higher level of organisational agility as the M&E industry transitions to digital as its new norm.

“Mobile-social-cloud and big data analytics technologies are game-changers for M&E firms,” says
 Pat Hyek, Global Technology Industry Leader, Ernst & Young. “These technologies can help M&E digital leaders who broke ahead of the pack in the early stages of digital to extend their advantages, as well as offer opportunities for those who fell behind to adapt quickly and catch up.”

According to the report, a major differentiator between these digital leaders and other survey respondents is a greater emphasis on mobile-social-cloud and big data analytics technologies for internal collaboration. For example, digital leaders are 60 per cent more likely than all other respondents to emphasise the importance of social media for internal communication among employees: 67 per cent said it was “very” or “extremely” important, versus 42 per cent of all others. The study points to the kind of rapid collaboration that is enabled by social networks and characteristic of an agile organisation, where silos are broken down by the ready flow of information.

The study shows that digital leaders’ advanced social listening programmes, leading-edge analytics and cloud-based infrastructure enable rapid deployment of new products and resources, and give companies the ability to quickly learn from and fix mistakes. This organisational agility is necessary
to meet the demands of rapidly evolving digital consumer behaviour.

“Media & Entertainment companies no longer live in a world where everything lives in ‘their’ world. It’s a connected eco-system with consumer technology leading the way,” says John Nendick, Global Media & Entertainment Leader, Ernst & Young.
Other results from the survey include:

•    Technology alliances: Digital leaders emphasise alliances that let them act faster than “going it alone”; 51 per cent rank alliances with technology and other M&E partners among their top three strategic priorities for digital transformation, vs. 30 per cent for others.

•    Second-generation deployments: Digital leaders were generally more than twice as likely to incorporate lessons learned from initial technology deployments to achieve more advanced functionality. For example, 49 per cent of digital leaders use second-generation mobile technologies to develop products/services vs. 16 per cent of all others.

•    Smart mobility: Similarly, 32 per cent of digital leaders use second-generation or later techniques in mobility to enhance employee engagement and communication, vs. 13 per cent of all others.

•    Cloud: Digital leaders emphasize the importance of cloud computing to enhance internal and customer-facing flexibility. For example, 74 per cent of digital leaders say it’s important to host business tools in the cloud, vs. 49 per cent of all others; and 43 per cent of digital leaders use second-generation cloud solutions to speed product/service development vs. 12 per cent of all others.

•    Big data analytics: Digital leaders are three times more likely than other respondents to use second-generation big data analytics techniques to improve customer engagement (26 per cent vs. 9 per cent). Among all respondents, 66 per cent rely on in-house resources to get insight into customers yet 41 per cent say they gain no insight from their data, suggesting they don’t have the right big data analytics tools or skills in place and may be better off partnering to access external resources.

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