Foot in the Future: PwC Global Media & Entertainment Outlook
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. Read more >>
Should Traditional Media “Burn the Boats”?
It’s an interesting chapter for traditional media these days, where the advent of iPads (assume, if you will, that they will be “broken” or hacked to allow unlicensed or un-proprietary content), Boxees, Hulus and Netflix Streaming continually tests the ability of mainstream media to expand its price and library footprint.
Whether it be buying a big library like MGM (post-Sony/Comcast) or Miramax (post-Disney), the real value studios or private equity see in these sizable libraries is the money they will throw off in terms of license deals. Basically, 7-year “ultimates” – i.e., revenues from the many license windows of distribution.
That this money is now pointing more to more at the lower revshares of the iTunes/iPads/Apple TVs, YouTubes and Hulus reduces the overall payloads and valuations considerably.
It’s almost like adjusting for “technological” inflation. Will the studios adjust?
Questions have to be asked: Can the studios keep their accretive acquisitions and productions at the rates they are by adding staff to their digital distribution divisions? Will digital growth eventually narrow media losses, vis-a-vis by distributing content more intelligently in the primary traditional windows, followed by smarter delivery to digital windows? Read more >>