The Strategist

PwC: Media market should focus on interaction with users

06/13/2017 - 14:49

The international consulting company PricewaterhouseCoopers (PwC) has released another "Global entertainment and media outlook 2017-2021". The researchers believe that the industry’s participants, many of which have focused on issues of content, distribution and digitization until now, now should get used to the new reality and focus on interaction with their users and content consumers.

PwC’s forecast for the entertainment and media industry outlined the most important directions for development of 17 segments of this market in 54 countries of the world - Internet advertising, outdoor and TV advertising, cinema, television, radio, media, books, Internet video, Internet access, cyber-sport, video games, virtual reality, b2b-media, etc. The report’s authors give a disappointing outlook on revenue relative to GDP dynamics for virtually all market players - they expect that only online video, video games, Internet advertising and Internet access will show sustainable growth in 2016-2021.

Traditionally, the forecast for the print media market participants and books is the most pessimistic. Other old residents of the media market - radio and television – also look unpromising. "Traditional, mature segments of the market are shrinking, the Internet and digital media are growing, but not like before. Further wave of new content may come from stimulate e-sports and virtual reality, which are just beginning to accelerate", the report says.

Weak growth in the media industry’s revenue, according to PwC, will result in the fact that this market will give increasingly less contribution to the global economy.

The researchers believe that the share of the media and entertainment industry in world GDP will be slowly but surely declining in the next four years. It was 2.54% in 2016, and is expected to decline to 2.39% in 2021. PwC quotes the Nielsen study, which says: last year, the adult population of the United States spent on media consumption and entertainment content on average 10 hours 39 minutes a day, including 4 hours and 31 minutes of watching TV. "Since the United States is the largest source of revenue for the media and entertainment market, it is difficult to understand how consumers in this country can increase their consumption and media spending to levels that exceed the country's GDP growth unless there is a significant change in technologies and brands, without which consumers cannot do. One of such changes may be development of unmanned vehicles, thanks to which users will have more time to view media and entertainment content during the trip", the report’s authors believe.

PwC notes that 2016 became very important for the global advertising market - the revenue from Internet advertising exceeded revenue from television advertising for the first time. In the next five years, this trend will only grow thanks to the mobile Internet market. However, the TV advertising market will also be rising, but not as fast as the Internet advertising market. "Both platforms remain important for the consumers, so brands need to find an approach to the audience of the future to effectively coordinate their advertising campaigns on different platforms", the researchers note.

PwC is more pessimistic about the print media market as its global circulation has been steadily declining since 2015. However, cuts from advertising in print media are even more noticeable as advertisers are increasingly turning to digital sites. This trend will lead to the fact that share of proceeds from sales of printed production will grow in the total revenue of print media, reaching 54% in 2021. PwC expects that from 2012 to 2021 revenues from advertising in print media will decrease by $ 23.8 billion worldwide.

Based on the current situation, PwC concludes that market players who have recently focused on content, its digitization and distribution, need to devote more time to establishing contact with the consumer, search for appropriate technologies and strategies for this. "Historically, the discussion in the media and entertainment industry has revolved around content and its distribution - which is more important and what is more important. This led to vertical integration, market consolidation and digital convergence in development strategies. More always meant better, and volumes became an important competitive advantage. However, as technology evolves and consumer behavior changes, there is a gap between how consumers want to consume and pay for content, and how companies produce and distribute their content. To reduce this gap, companies need to develop two interrelated strategies: to concentrate on building businesses and brands, based on active, profitable communities of their audience, which are united by common interests, values and interests; use new technologies that can satisfy the audience based on its changing needs", the researchers believe.

To do this, market participants primarily need to understand their own audience, isolate their loyal fans from among ordinary users, understand what drives their commitment to this brand, and analyze behavior of various segments of the audience. Realizing this, companies can improve their efficiency by optimizing operations for customers' requests and desires, developing new business models. This, in turn, should boost monetization and inspire search for new types of content that the audience wants to see and consume. Personalization of the interface, closer work with the audience, a more responsive response to its requests - all this, according to PwC analysts, should help players in the media market minimize negative consequences from the changing conjuncture.