With the recession clearing in digital media, the case is being made via PricewaterhouseCoopers that traditional media will drink more from the digital well, and be forced to take risks with their models.
This redrawing of the traditional/digital value chain will not change the conversion rate of digital dimes to analog dollars overnight, but it accelerates the conversion or transition process, and forces studios to get a “foot in the future,” as Bob Iger said recently.
Via THR: The biggest challenge in running a company as big and varied as Disney is “to maintain the balance between heritage and innovation.” Also tough is to resist those folks who want the company to invest in assets that are not “core or that don’t enhance the brand.”
[Iger] ”We looked at digital media and believed that there was a migration there by consumers whether we were there or not,” he said. “We didn’t want to be marginalized. We have to be where the fish are. [...] We’re in business with a lot of important third parties — theater owners, big-box retailers, satellite providers, TV affiliates — and this was deemed threatening. That was difficult to manage. But I felt it was important to do.”
With PwC’s new outlook, that equates to a validation of the digital subscription and download models. In addition with Blu-Ray and gaming consoles, more digital distribution gives the home entertainment market a slight upward bounce with, we suggest, strong social media marketing drivers.
Via CMU: PwC’s Global Entertainment & Media Outlook 2010-2014, published yesterday, observes that “the industry has reached a defining moment: re-evaluating and redefining its business models in ways that will ultimately redraw the value chain”, while adding “more and more, people are willing to pay for subscriptions” and “the tipping point is fast approaching at which usage, subscription and advertising revenues for content services will migrate quickly towards mobile platforms; in some markets it has already happened”.
That said, to tap into all this lovely growth, music and entertainment companies will need to quickly adapt to those new business models that start to take hold. Anyone hoping the Napster generation, who embraced the internet so early on, and drove the boom in online piracy, would conform to more traditional consumer behaviour once they grew up will be disappointed, if the PwC report is to be believed. It remarks: “Consumers [at large] are changing. We studied if, when young people grew up, they were adopting their parents’ behaviour. It absolutely was not the case”.
Internationally, media looks better overseas with an entrenched mobile presence, with especially strong UK growth.
Via Deadline: Spending on movies and home entertainment in Asia Pacific will increase by 7.2% compounded annually to reach $29.3 billion by 2014. So says PricewaterhouseCoopers’ latest global entertainment and media outlook 2010-2014, published today. Europe, Middle East and Africa will be the third fastest-growing territory. Filmed entertainment spending in EMEA countries will increase by 4.2% annually from $24.3 billion to $29.8 billion by 2014. Western Europe will account for 90% of that spending. And the UK remains Western Europe’s largest market, being worth $7.2 billion by 2014 – a 5% growth rate. North America will grow by 3.7% compounded annually to $45.3 billion in 2014 ($37.8 billion in 2009). Worldwide global filmed entertainment spending will rise by 4.8% compounded annually, reaching $107.5 billion in 2014.
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