A newly released PricewaterhouseCoopers' report, 'Phoenix from the Flames: The future media organisation', examines why it is difficult for media companies to tap into new revenue streams and achieve further gains from restructuring initiatives. According to the report, while the crisis continued, insufficient attention was paid to operating models that would support the growth agenda.
2009 proved to be a very difficult year for the media industry. Some businesses failed as restructuring and refinancing efforts failed to keep pace with the drastic fall in revenues. However, the industry seems to be experiencing early signs of growth after surviving one of the worst economic downturns in history.
While the outlook remains uncertain, the dynamics of consumer and technological change have never been more complex to understand or harder to monetise. So how should media companies take advantage of the new opportunities arising from the recovery?
Vicki Myburgh, PricewaterhouseCoopers' South African entertainment and media leader says, "Media companies should be formulating a clear vision for the organisation which forms the foundation of their operating models. Opportunities are constantly evolving and social consumer dynamics drive this change. A new operating model, which understands consumer behaviour, is required to gain maximum exposure to these new opportunities.
"The reality is, management was understandably preoccupied with short-term measures to alleviate the existing financial pressure and as a result, media companies are now faced with the challenge of delivering a new operating model that is fit for the future and equipped to generate rising revenues from a dynamic consumer environment." The design of new operating models will be driven by five strategic themes:
Themes
- Anytime, anyplace, anywhere becomes a reality. Delivering content across multiple devices and environments seamlessly will facilitate greater integration of entertainment and transactions. The boundary between creator and consumer becomes increasingly blurred but professional content will dominate formats which require significant investment, such as high-end video and music.
- Engagement and trust underpin successful business models. Trust becomes an important source of competitive advantage as media companies recognise the power of collecting and using consumer's details with security and integrity. In addition, Consumers measurement becomes increasingly centred on outcomes, rather than outputs - reach becomes challenged as the cornerstone of audience measurement.
- Diversification and agility - the cornerstones of strategy. A mixed, more balanced ecology of subscription, advertising, product placement and micro payments will emerge. Media owners will need to find new ways to monetise their advertising inventory, with new found confidence and innovation.
- Technological developments at the heart of change to commercial and operating models. If content is king, data becomes queen. Powerful infrastructures will develop that are capable of capturing and leveraging the full picture of consumer activity. Customer relationship management will become a critical core competency of every media company.
- Mobile content takes off, supported by advertising models. By its nature - given data on geography and other features in the home or office - mobile enables the richest dataset possible and a true anywhere experience, with advertising models benefiting the ability to have more active engagement with customers.
Myburgh concludes, "The media industry is at a crossroads, experiencing unprecedented change and escalating complexity. Media companies that are able to diversify, increase scale and reshape their operating model to support tier strategy will be the ones who succeed."
