Ageing models make way for next generation

The PwC report, Phoenix from the Flames: the future of media organisations, just released, claims that operating models need to catch up quickly to match the dynamics of the media industry - or face being lost in the sands of time.

David Lancefield, partner, PwC, said: "There are signs of an upturn in corporate profitability and consumer spending. However, the outlook still remains uncertain and the dynamics of consumer and technological change are complex and hard to monetise.

"During the crisis, management were understandably focussed on short-term survival and neglected the development of operating models to support growth."

Complex and often conflicting forces are reshaping media consumption habits - such as the ageing population, the rise in single person households and increasing urbanisation. Recent Government austerity measures and potential job cuts will also impact discretionary spend.

"As a result today's media executives face a complex and pressing challenge: how to deliver a new operating model that is equipped to generate revenues in a constantly changing consumer environment," David added.

Five predictions shaping the future of media

1. Anytime, anyplace, anywhere.
The consumer will come to expect content delivered across multiple devices in a seamless way - in any environment. However sources of content will continue to increase and crowd the market supplied by professional outfits as well as users.

Although the boundary between creator and consumer is becoming increasingly blurred, professional content will dominate, requiring significant investment in, for example, high end video and music.

2. Because it's worth it.
The 'pay for content/ debate rages on but consumers will surely spend when they see the benefit of quality, personalisation and flexibility of use.

Revenue not reach will also become the measurement Mecca and, as a consequence, payment by results will become the norm forcing content producers and advertisers to work together.

3. Think differently!
A mixed ecology of subscription, advertising, product placement and micro-payments is emerging. Therefore the payment model needs to shape shift between business paid-for models and consumer paid-for models.

The winners will need to demonstrate confidence and innovation when finding new ways of monetising their display advertising inventory, jumping on new technology that will enable targeting.

4. Connecting people.
Technology developments are at the heart of change. If content is crowned king then data will become queen. Infrastructure that allows real-time, accurate consumer data will become the critical core of every media organisation, complimented by wider technically-driven systems such as micro-payment solutions and higher server capacity.

Storage needs will expand significantly - at a price - to enable true, on-demand consumption, and cloud-based solutions are destined for mainstream.

5. They're lovin' it.
Mobile content will finally take off, supported by advertising models. This is a result of the consumer love affair with the smart phone and the fact that mobile provides the richest dataset possible. It allows advertisers more active engagement with the customer.

Mobile TV will finally happen on a mass scale with back channel access via Wi-Fi for home-based services remaining more important than 3G.

Lancefield explains: "The benign business environment hid the rigidity and complexity that crept into organisations which has slowed the ability of the media company to react to the trend data that is screaming at them. In this case the tortoise will not win the race.

"The new media organisation will require fresh talent, organisational structures and commercial arrangements," he concludes.

Entertainment & Media Insolvencies 2007 Q4 - 2010 Q3