accenture - 5° estudio global de alto rendimiento en la industria de medios y entretenimiento

8/6/2019 Accenture - 5 Estudio Global de Alto Rendimiento en la Industria de Medios y Entretenimiento

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Accentures Global Media and Entertainment High Performance Study 2011

Reshaping the business for

sustainable digital growthWhy a new operating model is needed for high performancein tomorrows digital Media and Entertainment industry


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All rights reserved Accenture 2011 1

Executive summary

Reshaping the business for sustainable digital growth Fueled by rapidly rising consumption and reboundingcapital markets, the past year has seen Media andEntertainment companies worldwide accelerate theirchange programs across several dimensions, inresponse to the pervasive impact of digital disruption.At the same time, they have gained renewedconfidence as their focus shifts from survival tocompetition and growth.


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Adapting to the new normal

As companies press ahead with their

digital transformation initiatives, there

are strong signs that a fully-fledged

new normal is now emerging. It is a

world where the formerly distinct roles

of content, services and applications in

the overall consumer experience are

increasingly indivisible. A world driven

by new devices and mass technology.

These dynamics are increasingly

apparent across all segments. But,

given the sharp variations between

different geographies and industry

sectors, it is clear that the overall

industry migration to the new world

will take some time. Classic media

will live on while the world of broad-

band media fully establishes itself.

For companies, this is not simply a

one-off transition from analog to

digital; its a new business model.

The move to delivering personalized

digital services to each consumer

does not mean M&E will stop being a

mass-driven industry. The change in

focus from the mass-market audience

to the audience of one actually

involves a shift from mass media to

mass technologywith the source of

companies economies of scale moving

to technology platforms, as a way to

manage the costs and impacts of frag-

mentation and operational complexity.

Harnessing the 3Ds

On their transformational journeys,

M&E companies need to cross the

frontier from early-stage industry

responses to more sustainable and

profitable business operations in

the new digital ecosystem. To take

this step, companies must consider

harnessing three fundamental drivers

that we have termed the 3Ds: the

Digital Consumer, Digital Monetization,

and Digital Supply Chain.

Todays consumers expect to choose

and consume the content they want,

in the way they want, wherever and

whenever they want. This means that

each individual is no longer an

aggregation of a separate reader,

viewer and listener, but a single entity

choosing and consuming content

experiences across multiple platforms.

This individuals behaviors add up to

the DNA of the digital consumer.

The second DDigital Monetiza-

tionremains a major challenge,

and an area of uncertainty for many

players. What is clear is that M&E

companies will run a diverse portfolioof revenue models, thereby capturing

multiple revenue streams, but also

obliging themselves to face further

operational complexity.

Maximizing returns

The third DDigital Supply Chain

underpins and empowers the other

two, thus enabling the M&E company

to achieve its ultimate imperative:

maximizing the return on investment

in content and operations. By support-

ing and enabling multiplatform

However, M&E companies know their industry remainsn a state of flux that will continue for the foreseeablefuture. To keep pace amid this ongoing andsweeping change, while also building sustainable andprofitable businesses for the future, companies needunprecedented operational agility. Yet many are stilless than halfway along their transformation journey.

Those that fail to reach the ultimate destination ofsustainable profitability are likely to face extinction.But for those that win this race, the prize is biggerthan ever before.



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istribution, the supply chain opens up

ew areas of growth, at a time when

onsumers are increasingly prepared to

ay for content experiences, and when

nline advertising represents a huge

lobal opportunity.

owever, the complexities are equally

nprecedented. Multiplatform opera-

on is no longer an option, but an

mperative: mobile is seen as having

he biggest growth potential by the

ndustry as a whole, TV is second,nd tablets are lagging a little way

ehindbut are already leading the

way in publishing. Companies must

nd an economically viable trade-off

etween multiplatform services and

nteroperability across devices, while

multaneously customizing content

or every platform and consumer

xperience. This is a tough call.

The collaboration imperative

A function of the increased complexity

s that as each multiplatform content

roviders supply chain can no longer

operate in isolation, high performers

are rapidly evolving their traditional

positioningand new collaborative

ecosystems will continue to emerge,

driven by the need to achieve

economies of scale, leverage skills

and compete against new players.

As companies adapt and reshape for

the new reality, implementing a series

of point solutions aimed at specific

operational issues will not be enough

to deliver sustainable high perfor-mance. What is required is an holistic

approach supported by mastery over

the effective execution of strategy.

The route to sustainablehigh performance:the 3D Operating Model

Accenture has developed a solution

that will help enable the M&E

company of the future to achieve

sustained success in the digital

new normal. The Accenture High

Performance 3D Operating Model

rethinks the traditional vertical

orientation around channels, and shifts

the polarities to a horizontal focus on

key capabilities in the digital value

chain. This means that each horizontal

layer becomes a competitive asset and

a potential focus for differentiation,

innovation and collaboration.

In our view, this model unleashes

the full commercial potential of a

companys content assets, while also

providing improved governance overits value drivers, and supporting the

innovation, operational excellence and

organizational agility needed to adapt

quickly to changes in the competitive

landscape. Andtaking account of the

continuing resilience of non-digital

contentit also provides a pragmatic

structure for maximizing digital

revenues while leveraging classic

media even more effectively.

We believe that this model will

characterize the industrys future

high performers. Please read on to

find out why.

For the fifth successive year, the

Accenture Global Media and Entertain-

ment High Performance Study has

researched the views of 130 leaders

and decision-makers in the Media and

Entertainment industry worldwide,

spanning broadcasting, publishing,

filmed entertainment, portals,

interactive gaming and music.

The industry breakdown of the

respondents is shown below.

As with previous studies, we haverefined and expanded the research

program in the light of knowledge

built up in previous years, with a

view to deepening the insights gained

across all segments of the industry.

The qualitative study on which this

report is based includes interviews

with 130 C-Level executivesincreased

from 102 in the previous year in

order to improve our coverage of

all segments, particularly portals and

publishers.

The respondents are all executive

leaders in six M&E industry sectors.

They are based in 18 countries, with 42

(or 32.3%) of the interviewees located

in Asia Pacific, 50 (38.5%) in theAmericas, and 38 (29.2%) in Europe/

Middle East.

Research methodologyand sample


Key areas of focus in this years inter-

view program included companies

approach to the three key industry

drivers of the digital consumer, digital

monetization models, and digital supply

chaintogether with the impacts of

these factors on digital operating

models. This report presents some of

the key findings from our 2011

study, and goes on to draw out the

principal implications for Media and

Entertainment companies seeking to

achieve high performance in anincreasingly digital environment.

For further information about this

report, please register at

www.accenture.com/MandE_High_

Performance_Study_2011

North America 40

South America 10

Europe 38

APAC 42

Figure 2: Accenture's Global Media and Entertainment High Performance Study 2011 respondents by industry.

Figure 1: Accenture's Global Media and Entertainment High Performance Study 2011 respondents by country

Publishing Broadcasting

Entertainment

Music, Gaming, Film

Portals

Portals, Social Networking,

Internet Companies,

Advertising

18%22%30%30%



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Figure 3: Do you see more challenges or more opportunities for your business in the next 12 to 24 months?

1 Morgan Stanley: Ten Questions Internet Execs Should Ask & Answer November 16, 2010 Web 2.0 Summit, San Francisco, CA2 IDC, Worldwide and U.S. Consumer 2011 Top 10 Predictions, January 2011, IDC #2267343 http://www.digitalbuzzblog.com/facebook-statistics-stats-facts-2011/4 Cisco Visual Networking Index (VNI) Global Mobile Data Traffic Forecast Update 20115 Morgan Stanley: Ten Questions Internet Execs Should Ask & Answer November 16, 2010 Web 2.0 Summit, San Francisco, CA

Pervasive digital disruptionand growing market opportunity

No area of the industry has been

immune from the digital transforma-

tion driven by these new consumer

behaviors. This change encompasses

every aspect of the industry value

chaincontent technologies, delivery

channels, access devices, revenue

models, marketing techniques, adver-

tising paradigms, rights acquisitions

and management, cross-sector

competition, market fragmentation,

talent and skills.

n recent years, all segments of Media andEntertainment have experienced accelerating changeacross several dimensions, all rooted in the pervasivempact of digital disruption. This change has seen

consumers migrate rapidly to new modes of digitally-enabled, multichannel consumption behaviors.

The result is a world in which 35 hours of contents added to YouTube every minute,1 nearly half oftelevisions shipped with screens of 40 inches or largerhave integrated networking,2 and Facebook is usedby 1 in every 13 people on earth.3 Video is thefastest growing mobile application; by 2015 videos predicted to account for two thirds of all global

mobile data traffic.4

Insatiable consumption ofcontent

Media and Entertainment companies

have embraced this multidimensional

change, racing to redesign their

strategies for the digital ecosystem

and deliver the content experiences

that consumers want and will pay for.

These strategies are fueled by rapidly-

expanding global consumption for

media and entertainment content in its

many forms. While the growth curves

and dynamics vary by segment and

geography, this market is not going

to go away any time soon. In our

research, this insatiable consumer

consumption of content is reflected in

confidence voiced by respondents that

they foresee more opportunities than

challenges in the next 12 to 24 months

(see Figure 3).

The positive impact of rising demand

is increased still further by continuing

growth in the traditional drivers

of global spending on media and

entertainmentGDP, population and

disposable wealth. These forces are

seeing content consumption grow as

never before in an expanding array

of markets, and the momentum is

building all the time. The capital

markets appreciate this potential:

in 2004, the top 15 publicly traded

internet companies were worth acollective US$262 billion; in 2011

the figure was US$667 billion.5

Accentures Global Media and Entertainment High Performance Study 2011 All rights reserved Accenture 2011 7

Far more

challengesthan

opportunities

More challenges

26%

More opportunities

48%

Far more

opportunities

than

challenges

More challenges

than opportunities

More opportunities

than challengesAbout the same

4% 22% 40% 8%26%


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Will be relatively stable

for the next 1224

monthsContinue to change significantly for the forseeable future

85% 15%

Publishing 97%Entertainment 93%Portals 87% Broadcasting 64%

Accentures Global Media and Entertainment High Performance Study 2011 All rights reserved Accenture 2011 9

mbracing changeamidncreasing confidence

onsumers continuing voracious

ppetite for content experiences

as seen Media and Entertainment

ompanies reach a level of confidence

igher than in several yearscertainly

nce before the global economic and

nancial crisis.

howing courage and determination,

ompanies have worked hard and

ept investing even in the downturn,ressing ahead with their customer-

entric initiatives, while also improving

heir ability to operate more commer-

al models concurrently and manage

more complex and sophisticated

upply chain.

Global economic recovery and the

revival in advertising have sustained

the industrys momentum, and the

future looks significantly brighter than

it did two years ago, encouraging com-

panies to invest in digital capabilities.

As our research shows, 84% of respon-

dent companies increased their levels

of investment in the digital supply

chain in 2010with almost a third

(31%) increasing it by more than 25%.

As a result of this committed invest-

ment, companies across the industry

have taken some significant steps on

their digital transformation journey,

and believe they are now well-posi-

tioned to competealthough they

accept there is much more change

to come. As Figure 4 shows, 73% of

respondents in our research study think

their operating models are primed for

success to a large or very large

extent. The minority who are less

confident are dominated by publishers

and broadcasters.

These findings suggest that the indus-

try as a whole is no longer afraid of

the digital future, and that the game

is moving from survival to competition

and growth. Last year, cross-sector

competition was regarded as the top

challenge facing companies in the

coming 12 to 24 months; this year, it is

identifying the monetization models

needed to harness new revenues.

Again, this suggests the mood is shift-

ing from caution to optimism, as the

industrys growth potential becomes

visible again, and appears higher than

ever before.

[The key will be] strong content backed by a verystrong customer insight.Head of Digital Marketing, music company, India

gure 4: To what extent do you believe your operating model is primed to enable your business to compete successfully? Figure 6: Given your view of future industry change, do you believe that your business will continue to change significantly?

Much more change to come

At the same time, Media and

Entertainment companies fully

recognize that their industry is a

long way from reaching a stabilized

situation. As Figure 5 shows, four out

of five believe that the industry is

still in a state of flux, with significant

further redistribution of revenues yet

to take place across the value chain

over the next two years.

Companies also know from experiencethat the pace of change creates major

pitfalls, which have impacted successful

global leaders and newer digital

entrants alike. As reported in the global

news media, UK broadcaster ITV sold

Friends Reunited in 2009 for 25m,

having agreed to pay a total of 175m

for it four years earlier.6 And in

February 2011, News Corp revealed a

US$275 million write-down on its

MySpace acquisition and the related

Web businesses.

Given the continuing pace of change,

companies know they must balance

their growing confidence in their digital

capabilities with rigorous management

of ongoing change and the resulting

risks. The vast majorityincluding over

90% in publishing and entertainment

expect that significant change willcontinue for the foreseeable future,

meaning they will have to continue

changing and adapting (see Figure 6).

Reshaping for the newenvironment

So Media and Entertainment companies

are on an ongoing journey as the digital

ecosystem expands. To reach their des-

tination, they will need unprecedented

operational agility that enables rapid

ongoing reshaping of their business in

response to continuing change, the

sheer pace of which means an approach

of wait and see is not an option.

Instead, with much of the current

digital industry built on wooden

foundations rather than rock, companies

move now to identify and build a new

basis for sustainable success in the

future.

6 http://news.bbc.co.uk/1/hi/8186840.stm

o not

ow

To a very large extent

To a very

limited

extent

To a limited

extent To a large extent

3%

ortals 17% Entertainment 21% Broadcasting 26% Publishing 33%

22% 55% 18%

It will be stable

in 1224 months

with some revenue

redistribution

across value chain

It is already

fairly stable

It will be stable

in 1224 months

with current

business models

It is still changing rapidly with significant revenue redistribution across value chain

80% 14% 4% 2

Figure 5: Do you believe the Media and Entertainment Industry is becoming more stable or is continuing to change?


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Execution of digital strategiesdemands a new operating modelTo adapt to the new environment, companies acrossall Media and Entertainment segments have identifiedand launched new strategic programs and ramped uptheir investment in digital initiatives and digitally-enabled services and capabilities.

Some incumbents have implemented

highly successful strategies in the

digital space. High-profile examples

include Disney, whose CEO Bob Iger

was quoted in October 2010 as saying:

I have tried to keep two obvious

philosophiesFirst, that our current

business not get in the way of adopt-

ing new technologies. And, second,

that our business belongs on these

new platforms.7 At the same time,

other players have come in as new

digital entrants with successful strate-gieswitness Netflixs drive to make its

movie streaming service available on

as wide an array of set-top boxes and

handheld devices as possible.

Only halfway along the journey

However, as we have already highlight-

ed, our research shows that companies

know the industry is still a long way

from reaching a stable state. Digitally-

driven changeand the need for

companies to adapt to itwill continue

for the foreseeable future. In this

context, most companies know they are

still less than halfway along their jour-

ney to a digitally integrated file-based

enterprise. As Figure 7 shows, only 43%

believe they are already over 50% of the

way to full digitization, while 32% are

less than a quarter of the way there.

That said, some companies have already

built end-to-end digital supply chains,

as illustrated in the accompanying

information panel about Warner Bros.

Such pioneers aside, most companies

face a need to execute the rest of this

journey while continuing to respond

to ongoing profound change in the

Figure 7: How far along are you in terms of the migration from an analog, offline company, to an integrated file-based digital enterprise(e.g. from production to distribution to access management)?

Figure 8: What is the top challenge(s) that your company faces, or expects to face, in the next 12 to 24 months?

7 http://kara.allthingsd.com/20101009/when-you-wish-upon-two-web-stars-ceo-bob-iger-talks-about-the-next-digital-direction-for-disney-2/

0 Accentures Global Media and Entertainment High Performance Study 2011

Not

started

Analog, offline company Digitization Process Integrated, file-based digital enterprise

70%

4% 12% 16% 25% 22% 21%

Identifying new

monetization models

39%

Speed and ability to

transform your digital

operating model

23%

Providing a better

digital consumer

experience

22%

Competition from

new players

20%

Cross-sector

competition

15%

Declining

demand

7%

Other

8%

Warner Bros.:digital end-to-end

A good example of digitalsupply chains in action isAccentures collaborationwith Warner Bros. to helptransform its core mediaproduction and distributioncapabilities into a single,

totally integrated digitaloperation. This project madeWarner Bros. one of thefirst studios in the world tomove its entire film andtelevision production, post-production and distributionto an entirely digital end-to-end-process.


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nvironment, and in the face of a

umber of severe challenges that have

et to be addressed. As Figure 8 shows,

he most pressing of these challenges

n the next 12 to 24 months are

dentifying new monetization models

nd generating the speed and ability

o transform their operating models to

apitalize on future opportunities.

here is as yet no clear or agreed view

f precisely what these opportunities

will look like or how they will best be

everaged. What is clear is that the

ndustrys world changed dramatically

s a result of digitization, accelerating

he rate of change during the down-

urn, with several factors underpinning

sing demand into the future.

The new normal is comingbut will not arrive overnight

Signs of this new world emerging

are all around us. Broadband and

interconnected devices are spreading

exponentially, with global media tablet

shipments alone expected to exceed

44.6 million in 2011, a leap of over

160% from 2010's 16.9 million.8 And

an Accenture survey9 published in

January 2011 projected that consumer

purchase rates for personal computers

and mobile phones (excluding smart-

phones) will decline by 39 percent and

56 percent respectively in 2011 com-

pared with 2010, as consumers switch

their spending to newer alternatives

offering a better content experience.

These alternative devices include not

just tablets but also 3D TVs (sales of

which are expected to rise by 500% in

2011), eBook readers (up 133%) and

2 Accentures Global Media and Entertainment High Performance Study 2011 All rights reserved Accenture 2011 13

smartphones (increasingly saturated,

but still up 26%). At the same time,

the advent of the multipolar world

where spending power and talent are

distributed more evenly around the

worldis seeing a billion new and

more mobile consumers hungrily

accessing content via ever more devices.

These advances are early signs that a

fully-established new normal is now

emerging: a world driven by new

devices and mass technology, where

the agility to adapt to constant change

while delivering personalized content

experiences will be a prerequisite for

sustained high performance in any

segment of Media and Entertainment.

Personalization of the consumer

experience for millions of individuals

requires companies to become more

agile and efficient in serving the new,

mobile, digital consumer and his or

Figure 9: What is your companys share of digital revenue today, and what proportion of your revenue do you expect to achieve from digitalincome two years from now?

The] most important competitive edge for us mustbe the creativity of our products. Gathering customerntelligence as much as possible is another key tohelp define a better strategy.

eneral Manager, Product Operations Centre, gaming company, China

her social network. This intensifies the

need for a new digital operating model

based on an end-to-end digital value

chain, to enable completely new busi-

ness and monetization models with the

required level of integration between

content, applications, services, devices,

and connecting channels.

However, while the dynamics of this

new world are increasingly apparent,

and while there is no doubt the

momentum behind digitization is

both unstoppable and growing, the

industrys complete migration to this

new world will take time. As Figure 9

shows, only 22% of companies say

that they currently get more than a

quarter of their revenues from digital

sources. Even in two years time, less

than half expect to be in this position.

Not a transitionbut a newbusiness model

The implications are clear. As digital

revenues gain momentum over a

period of several years, they will

account for a progressively rising

proportion of companies revenues. But

in the meantime, classic media will

live on, while the new normalthe

reality of ubiquitous, always-connected

broadband mediaestablishes itself.

This means that what companies arefacing is not simply a transition from

analog to digital, but an imperative

for a new business model.

Until recently, the industrys concerns

over the difficulty of monetizing digital

content were often summed up as

switching analog dollars for digital

pennies, a phrase originally coined

and later updatedby NBC CEO Jeff

Zucker. Given the fact that classic

and broadband media will co-exist

70%

47% 31% 11% 8%3%

22%

70%

17% 36% 28% 6% 13%

47%

IDC, Worldwide and U.S. Consumer 2011 Top 10 Predictions, January 2011, IDC #226734

Accentures Consumer Electronics Products and Services Usage Report 2011, available at https://microsite.accenture.

com/landing_pages/EHT/Documents/Accenture_GlobalConsumerTech_2011.pdf

for the foreseeable future, it is now

increasingly clear that this concern

is a distraction. So companies need

to press ahead with an operating

model equipped to serve both classic

media consumption and personalized

broadband consumption at high levels

of efficiency.

This model will require new ways to

achieve economies of scale, as media

increasingly equates to technology,

and mass media comes to equal

mass technology. The move to

personalized services does not mean

Media and Entertainment will stop

being a mass-driven industry. Instead,

the reorientation around the audience

of one actually involves a shift from

mass media to mass technology,

with the source of economies of scale

moving to technology platforms

rapidly adopting new themes such as

mobility, cloud or analytics to manage

the costs and impacts of fragmentation

and increased operational complexity.


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4 Accentures Global Media and Entertainment High Performance Study 2011

owards a high performanceigital operating model

o do this, the high performance Media

nd Entertainment business of the

uture will remove embedded barriers,

nabling it to do more with less, and

o redefine itself as a leaner, more

gile and more innovative organiza-

on, ready and equipped to exploit

gital opportunities in an integrated

ay across channels. To build such an

perating model, companies need to

hallenge the basis for the existing

hannel-focused silos within their

usiness. Legacy structures based

round separate content delivery

hannels can hinder key capabilities

or the digital world such as digital

ustomer centricity, cross-channel

ontent monetization, and integrated

ghts acquisition and management.

Companies are already under pressure

to define clearly how they will trans-

form themselves to harness digital

opportunities. The capital markets are

reducing the future growth premium

allocated to those Media and

Entertainment companies that are

failing to set out a compelling vision

for their own digital transformation.

Successful execution of digital strate-

gies in Media and Entertainment

and winning over skeptical investors

to believe in those strategiesrequirescompanies to adopt a new and

different performance anatomy.

Not piecemealbut holistic

Some Media and Entertainment com-

panies are trying to implement their

digital strategies though a series of

point solutions aimed at specific

operational issuessuch as repurposing

selected pieces of print content for

Internet and mobile formats. It is

increasingly clear that this type of

piecemeal approach will not deliver

sustainable high performance in the

long term. Confidence in the viability

of the current operating model does

nothing to ensure its sustainability.

Instead, what is required is a combina-

tion of an holistic approach to set the

context for all actions, with mastery

over effective execution of overallstrategy to sustain momentum and

competitive advantage over time.

So, what factors will shape the design

of the new, sustainable high perfor-

mance operating model? We will now

examine the drivers behind the model

and go on to show what it will

look like.


Constant innovation and digital distribution will bemost essential.xecutive Director News, broadcasting company, Malaysia


10/17

The drivers behind a newhigh performance Media andEntertainment operating model

To cross the frontier from early-stage industry responsesto more sustainable and profitable business operationsn the digital ecosystem, M&E companies need to

consider creating an operating model specificallydesigned and oriented to achieve two things. First, itmust maximize the key broadband media revenuedrivers in the digital era efficiently and effectively.Simultaneously, it must also support traditionalclassic media for as long as necessary.

All rights reserved Accenture 2011 176 Accentures Global Media and Entertainment High Performance Study 2011

As Figure 10 illustrates, we believe that

these imperatives can only be achieved

by an agile enterprise that successfully

harnesses three drivers, which we

have termed the 3Ds: the Digital

Consumer; Digital Monetization;

andunderpinning them both

the Digital Supply Chain.

Figure 10: The agile enterprise and 3D drivers

1The Digital Consumer

Transformational change in consumers

behavior and expectations around con-

tent consumption have been gathering

pace for several years. Consumers expect

to choose and consume the content they

want in the way they want, wherever

and whenever they want. As a result,

each individual is no longer an aggrega-

tion of a separate reader, viewer and

listener, but a single entity choosing and

consuming content experiences across

multiple platforms.

In expressing this individuality through

their behavior, digital consumers exhibit

a number of shared characteristics

which together add up to the DNA

of the digital customer. These include

amplified social engagement and inter-

activity, multichannel and multiplatform

usage (including rising mobility), and

demand for real-time interaction and

information.

Consumers are also super-global

and hyper-local in their content

consumption habitsboth hungry for

world news and global applications,

and also strongly focused on their local

environment. Yet, despite these shared

characteristics, every digital consumer

remains a unique individual with unique

DNA, creating a far more diverse and

varied consumer landscape than in

the past.

An early stage of thecustomer-centric journey

The companies interviewed in our study

are fully aware of the need to deliver

the new personalized digital experienc-

es that consumers wantbut most are

some way from building the integrated

view of the digital customer needed to

execute this objective. Over half of our

respondents (52%) say the transition

from mass audiences to individual

Digital Consumer

Agile Enterprise

Digital Supply Chain

Digital Monetization


11/17

8 Accentures Global Media and Entertainment High Performance Study 2011 All rights reserved Accenture 2011 19

ustomers remains a challenge for

heir businesses. And, as Figure 11

hows, only 9% of executives feel their

ompany has a fully integrated view of

heir digital customerwith the vast

majority believing there is room for

mprovement in the integration and

onsistency of the view of digital

ustomers across the business.

Asked to name the most complex

ssues their business faces in managing

o shift from mass audiences to

ndividual consumers, executives cite

wide range of concerns. Culture and

kills are seen as the most difficult

ssue (cited by 22%), closely followed

y operational (21%), technical (21%),

ommercial (18%) and organizational

16%) barriers. The fact that so many

ssues are perceived as presenting

elatively equal challenges underlines

he need for a new operating model

o tackle all of them holistically.

Seeking immersive experiences

These findings indicate a pressing

need to improve customer centricity

and understanding to keep up with

changing consumption behaviors. In

particular, the combination of social

networking and mobilityenabled by

better broadband connectivity and

lower cost/higher performance

devicesis fundamentally transforming

the landscape of the consumer experi-

ence. Crucially, consumers no longer

see communications technology as a

tool for one-to-one transactional

conversations with a specific purpose.

Instead they want to immerse them-

selves in an ecosystem of content,

applications and services with a myriad

of usesincluding networking, making

friends, gaming, buying goods, and

accessing information and home

entertainment such as video and

music.

For the first time, the digitally-enabled

Media and Entertainment industry

has the capabilities and technologies

required to fulfill these needs, support-

ed by consumers own readiness to

buy the devices that make it possible.

Global smartphone shipments are

expected to overtake desktop and

notebook PCs combined in 2012.10 And

between 2000 and 2008, the average

consumer increased his or her spending

on electronics devices by 7 percent a

yearwhile companies reduced theirIT hardware spending per employee

by 3 percent.11This increase reflects

consumers ongoing appetite for new

consumption experiences, as illustrated

by surging take-up of tablets, eBook

readers and smartphones worldwide.

2Digital Monetization

Asked to identify their most important

sources of revenue growth in the next

12 to 24 months, our respondents

point to new platforms or distribution

channels, followed by new products

and services (see Figure 12). These

sources will form the core focus of

the new sustainable operating models

digital monetization strategy.

However, while this focus may be com-

mon across companies, it is important

to stress that there is no single right

answer to business and monetization

models. As Figure 13 shows, M&E

companies in the future will operate a

combination of several monetization

models and revenue streamsa port-

folio of revenue models. These will

often include the classic ones, but

the new models will need to be more

than just a re-platforming of existing

models. This diverse blend of concur-rent revenue streams will add further

complexity to their operations, by

cutting across the traditional focus on

channels.

igure 11: To what extent do you believe your company has an integrated view of your digital customer?

[Its about] innovative customer relationshipmanagement. We need to invent something new forour customers, in order to be ahead of the competition.Chairman, film company, Germany

Figure 12: In terms of opportunities, what is the most important source of revenue growth for your company in the next 12 to 24 months?

Figure 13: Which of the following are the most prevalent business models for your business today, and which will be the emerging ones inthe next two years? (Ranked and top 3 selected)

Maximizing returns oncontent investment

The ultimate imperative is to maximize

the return on investment in content

and operationsa need made all the

more urgent by the high and often

rising costs of content creation and

acquisition. Key attributes for achieving

this include a strong, focused and

integrated capability in content rights

management, and the ability to target

and repurpose this content in differing

ways and contexts to deliver a compel-

ling experience across platforms. The

complexity is further increased by the

evolution of the concept of content

itself to encompass a combination of

applications, services and content.

Increasing Integrated View

sufficient

r our

eeds Fragmented

Consistent but

by business

unit only

Somewhat

integrated

Fully

integrated

8% 31% 14% 38% 9%

New Platforms or

Distribution Channels

65%

1st Choice 2nd Choice

New Products

and Services

42%

New Monetization

Models

34%

New

Content

27%

New

Geographies

21%

New

Consumer

Segments

8%

Other

5%

49% 17%16% 25% 25%9% 10% 17% 7% 14% 4 4 5%

46%42%

Ad Supported Subscription On Demand Merchandising/Physical Sales

Licensing Freemium Affili ate Other Brokerage

16%

21%

15% 14%

7% 6% 6%5% 5%4% 4%3% 2% 2% 1% 1%Today

Next2

Years

0 Morgan Stanley: Ten Questions Internet Execs Should Ask & Answer November 16, 2010 Web 2.0 Summit,

San Francisco, CA1 Accenture Institute for High Performance: Can Enterprise IT Survive the Meteor of Consumer Technology? By Robin

Murdoch, Jeanne G. Harris and Glenn Devore, September 2010. Drawn from: Employment Status of the Civilian Non-

Institutional Population, 1940 to date, 2009 edition, Bureau of Labor Statistics, US Department of Labor; Historical

Sales Data Details, Consumer Electronics Association, 2010; and Worldwide IT Spending Historical Databook, IDC, 2010.


12/17

Approachraditional Digital Multimedia

on e a nd not pl an ni ng to la un ch in next 12 mon th s 2 05 0% di gi ta l/ mu lt imedi awith no plans to increasein next 12 months

None but planning to launch in next 12 months


13/17


by managing additionalmultiplatform complexity

As the dynamics of the multiplatform

environment continue to evolve, the

ability to deliver content experience to

consumers across multiple platforms

remains key. This brings additional

complexities for the content supply

chain, which is critical for creating the

end-to-end visibility on revenue and

costs needed to gauge profitability.

This visibility is needed across all

platforms, and throughout all stages

of the supply chain, including creating

content, buying rights, and reformat-

ting it for different platforms.

When we asked our respondents to

name the most important supply chain

capability for success in a multiplat-

form environment, interoperability

across platforms and devices came top,

narrowly ahead of customized content

for each platform in second place.

Achieving these two conflicting

objectives in a profitable and sustain-

able way demands a trade-off that

further increases the complexity of

multiplatform delivery models. It

also demands multiple new skill sets,boosting the need for collaboration

and lending greater urgency to the

search for economies of scale.

As the momentum behind collaboration

rows, new alliances are now emerging

lmost every week: recent initiatives

nclude the "broad strategic partner-

hip" announced between Nokia and

Microsoft; Warner Bros. decision to

tream The Dark Knighton Facebook;

nd retailer JC Penneys use of

acebook as an online sales platform.

Seizing the mobile revenueopportunity

As new collaborative digital supply

chains emerge, they share a number

of critical success factors. Access to

content is clearly vital, together with

linkage on one side with customer

interactivity, and on the other side

with the understanding, control and

ownership of the customer as a unique

individual consuming content across

different channels and devices.

This requirement is growing with the

escalating penetration of new devices.

As Figure 17 shows, the rapid rise of

smartphones means executives believe

that mobile devices will be their

customers preferred platform for

digital content consumption in the

next two years. TV is also expected to

maintain strong relevance thanks to

the spread of Connected TV. Tablets

still in their early stages of adoption

will have less relevance in the short

term across M&E as a whole. But

drilling down into the segmental

responses, we find that publishing

companies believe tablets will be their

consumers favorite consumption

device within the next 12 to 24

months, cited by 36% of publishing

respondents.

Furthermore, as Figure 18 shows,

mobile is regarded as the digital supply

chain distribution channel with the

greatest potential to drive growth,

again followed by TV. As these findings

show, while mobile is undoubtedly the

main driving force, TV/connected TV

are resilient and will remain relevant,

and tablets are a promise not yet at

scale (except in publishing). The

technology platform suffering the

most is the PC.

gure 17: Please rank the content consumption device you believe your customer will prefer in the next 12 to 24 months. Figure 19: Which of the above do you believe are the most important supply chain capabilities required to succeed in a multiplatform context?

Figure 18: Which of the above distribution channels offer the highest growth opportunities for your company over the next three years?

The [key will be the] ability to reach our audienceunimpeded by other people's gateways. We want toensure that there are no barriers to a unified contentapproach.Managing Editor, TV Platforms, broadcasting company, UK

obile/smartphone

35%

TV/connected TV

32%

PC

19%

Tablet/netbook

13%

Mobile/Wireless54%

1stChoice

2ndChoice

3rdChoice 1%

2%

Traditional TV41%

Online:Social Media37%

Online:Streaming35%

Video over IP,IPTV, OTTV33%

Online:eCommerce29%

Online:Portals22%

Online:Search16%

Print16%

Bricks &MortarRetail10%

Radio8%

2%

2%

25% 23% 6 8% 8% 9% 9% 9%3 3 4410%11% 11% 12% 11%510% 16% 16%14% 13%17% 12% 6 66 5

Interoperability across platforms and devices

36% 32% 17% 13%

Customized content for each platform

Control of

end-user access

Industry standards

and regulations

Other

1%


14/17


The three drivers we have described

the digital consumer, digital monetiza-

tion and digital supply chainrequire

Media and Entertainment companies to

adopt an entirely new operating model

to enable and sustain high performance

in the industry. The new model will

need to re-think the traditional vertical

orientation around channels, and shift

the polarities to a horizontal focus on

key capabilities in the digital value

chain serving multiple channels.

We have applied our insights into

industry dynamics, operating models

and technology to design a model that

meets these requirements. We have

called it the 3D Operating Model, and

its key elements are illustrated above.

In our view, adopting such a model will

become a prerequisite for industry high

performance in the coming years.

Media and Entertainment companies

traditional vertical focus on delivery

channels and platforms hinders the free

flow of digital content through and

across the organization, and hampers

the optimization of revenues and profits

though multichannel exploitation. In

our view, the shift from vertical silos

to horizontal layers represents the best

option for enabling and empowering

new revenue models without complete

organizational re-platforming, while

still leveraging the best of the tradi-

tional channels.

In the horizontally integrated 3D

Operating Model, each layer plays a

specific role in the digital value chain,

and represents a critical capability and

key value driver in achieving multi-

channel digital consumer-centricity.

While the exact make-up and

requirements for each capability will

vary depending on company-specific

factorssuch as the target consumers,

legacy product range, and the nature

and latency of the content moving

through the digital value chainthere

are principles that will help shape

each layer.

Pervasive benefitssupportingstrategic execution

The 3D Operating Model will enable

improved governance over the organi-

zations key capabilities and value

driversby exposing them more clearly

in the operational layersand support

a greater focus on innovation in each

layer. It will also provide added flexibili-

ty in seeking out potential economies

of scale and alliances for each distinct

layer, and not necessarily across all of

them at the same time, thus reducing

execution time and complexity.

In fact, if implemented and integrated

effectively, this model has the potential

to increase overall effectiveness and

agility, supported by greater simplifica-

tion and standardization throughout

the business. This in turn will enhance

scale synergies, boost operational

efficiency, and enable smarter and

more joined-up resource allocation

and sharing of assets and knowledge.

Also, by becoming a distinct center of

expertise in its specific capability, each

of the layers will be able to highlight

The new high performance Mediaand Entertainment operatingmodel: shifting the polarities fromvertical to horizontal

Innovation really is key, all across the business sectors:services, marketing, strategies, distribution, channels,action models. Innovation is essential for success.Head of Strategic Marketing, broadcasting company, Italy

Figure 20: The High Performance "3D Operating Model" for the Media & Entertainment company of the future

Consumer

Delivery

Channel 1

Consumer

Delivery

Channel 2

Digital

Consumer

Digital

Monetization

AgileEnterprise

3Ds

Digital

Supply Chain

Consumer

Delivery

Channel 3

Consumer

Delivery

Channel 4

Business Model and Brand Management

Marketing and Customer Interaction

Advertising and Sales

Devices

Platforms

Channels

Content Planning, Production and Control

Content Distribution

Rights Management

Enterprise Management

Internationa

lization

Innovat

ion

Consumer


15/17


hallenges and opportunities in skills

evelopment and exploitation, both

within its own focus area and shared

cross the organization.

to achieve agility

n turn, this combination of improved

trategic governance and flexibility with

perational efficiency and effectiveness

mproves the companys ability to adapt

uickly and accurately to changes

n the value chain, the competitive

nvironment, consumer demands or

he companys positioning. Given the

ndustrys expectation of continued and

ccelerated change, this agility will be

ital in executing digital strategies

uickly and effectively within a shifting

nd evolving digital ecosystem.

and High Performance

As the 3D Operating Model illustrates,

wo overarching capabilities are

lso needed to achieve superior

xecution and high performance:

rstly continuous innovation, and

econdly internationalization.

1| Continuous innovation

As the transformation to digital gathers

pace, nobody can afford to stand still or

rest on their laurels. So innovation must

become a managed business process

in the same way as order processing or

accounts payable. The 3D Operating

Model helps to support and drive inno-

vation because it is designed from first

principles to be agile and continually

results-oriented. Each layer supports

and focuses on innovation that can beleveraged across the entire company

and throughout the ecosystem.

The horizontal structure means the

model also supports double-sided

innovationfocused on product and

services on one side, and on cost and

efficiency of operations on the other

one. The two are closely linked: ongoing

innovation to reduce operational costs is

vital to support organizational agility

and free up funds for investment in

content and services. Cost innovation

is likely to include outsourcing of

non-core activities to enable a sharper

focus on branding, content services and

consumer experiences.

2 | Internationalization

Digital content distribution enables

global reach and revenues at marginal

incremental costsso internationaliza-

tion is a route to increased cashflow

and margins. This may involve local

revenue-sharing partnerships, leveraging

the strength of established local brands

and distribution.

As such partnerships underline,

internationalization does not imply

losing local connections. People

consumersare local, and emotions

are localized. While exploiting mass

technology enables and requires scale,

the benefits can be leveraged at the

local level. Again, the 3D Operating

Model provides added agility and

competitive advantage by enabling

each layer to be internationalized

independently from the others, thus

enhancing and speeding the execution

of alliances and in-fill acquisitions.

|


16/17


Figure 21: In the next 12 months, which of the above capabilities do you consider a priority to enable your company to compete successfullyin the digital world?

In this way, the 3D Operating Model

enables concurrent operation of

classic and broadband media,

thereby reaping the optimal benefits

in terms of future revenues, sustain-

able business models, and increased

innovation and execution agility.

When asked, our respondents confirm

that while there is a clear vision of

which capabilities they need to evolve

to compete successfully in the new

digital worldan innovative business

model, multiplatform distribution, and

efficient content planning, production

and control, to name but a few (see

Figure 21)there is also awareness

that all of these are required to com-

pete effectively in the new ecosystem.

In Accentures view, the 3D Operating

Model that we have outlined will

characterize Media and Entertainment

high performers in the years to come.

But the journey toward this model

raises many strategic and operational

uncertainties and challenges. Here

are some key questions for M&E

executives to consider:

Which capabilities will be most

critical for acquiring a rising share of

revenues in the multiplatform world?

To what extent is your organization

evolving to reflect the huge transfor-

mations that are taking place in the

marketing, advertising and rights

management areas, just to mention

a few?

How is your company preparing

itself operationally and financially

to manage continuous innovationin products and services?

How will your company reduce

operating costs while improving

decision-making and boosting speed

of response to achieve increased

agility?

Do you believe we are moving

towards a future dominated by

global M&E conglomerates, or will

niche/local players still have a role?

Where will your business fit in?

Call to Action

Our research and industry experience

both indicate clearly that high

performing Media and Entertainment

companies will shift from legacy

vertical, channel-oriented structures

toward the type of horizontally-

layered operating model we have

described in this study.

However, it is equally clear that the

precise implications and challengesof executing such a model will

vary between different segments

of the industry; between different

geographies, due to variations

in local behaviors, legislation and

infrastructures; and even between

different businesses in the same

market segment.

Some key strategic andoperational questionsn Accentures view, the 3D Operating Modelplanned, designed and implemented from an holisticperspectiverepresents the appropriate approach forpragmatic and successful execution of strategy in M&E.

t is inspired by the concept of harnessing the maximumdriving force from the key industry drivers (the 3Ds),and aligning and integrating the fundamentalperformance capabilities.

Effective Payment Models

Not a priority 19%Low priority 30%An important priority 27%Top priority 23%

Optimizing Enterprise Management (shared services, cloud)

13%25%42%20%

Dynamic Brand Management

10%25%42%24%

Maximizing Rights Exploitation

17%17%33%33%

Multimedia Advertising

28% 43% 23% 6%

Ownership of the Consumer and Superior Interaction

38% 41% 12% 8%

Digital Performance Marketing

25% 54% 15% 6%

Efficient Content Planning, Production and Control

45% 39% 10% 5%

Mastering Multiplatform Digital Distribution

52% 35% 8% 5%

Innovative Business Model

48% 42% 9% 2


17/17

32 | 2010 Mobile World Congress Next Page

Copyright 2011 Accenture

All rights reserved.

Accenture, its logo, and

High Performance Delivered

are trademarks of Accenture.

This document is an informed point

of view based on research, opinion

and experience, and should not be

considered as professional advicewith respect to your business.

About Accenture

Accenture is a global management

consulting, technology services and

outsourcing company, with more

than 215,000 people serving clients in

more than 120 countries. Combining

unparalleled experience, comprehen-

sive capabilities across all industries

and business functions, and extensive

research on the worlds most success-

ful companies, Accenture collaborates

with clients to help them become

high-performance businesses and

governments. The company generated

net revenues of US$21.6 billion for

the fiscal year ended Aug. 31, 2010.

Its home page is www.accenture.com.

About the Media &

Entertainment Group

Achieving excellence in engaging and

interacting with consumers is the

content industry's new battleground.

While Media and Entertainment

companies have made significant stepsto reinvent themselves from a technical

perspective, they are facing new

challenges around their operating

models. Our M&E practice helps clients

determine the right digital business

model and optimize future revenue

growth through a multiplatform

approach. Its home page is

www.accenture.com/mediaandenter-

tainment.

For more information on this study

and what Accenture can do to help

you reach high performance in your

business, please contact the authors

and contributors:

Marco VernocchiGlobal Managing Director

Accenture Media & Entertainment

Robert E. SellManaging Director

Accenture Communications & High Tech

North America

Alwin MagimayManaging Director

Accenture Media & EntertainmentAPAC

Carlo IacoboniSenior Manager

Accenture Media & Entertainment