More than a third of media and entertainment executives admit that their company will no longer exist in five years unless their business undergoes reinvention, according to a new EY survey that asks: “How are media and entertainment businesses reinventing in an age of transformation?” The survey analyzes the views of more than 350 global industry executives to reveal the catalysts, strategies and actions that are shaping business transformation.
Faced with multiple evolving and disruptive forces, 50 percent of executives say they can no longer rely on traditional business models if they are to succeed in this landscape. The survey highlights a sense of inertia among many media and entertainment businesses, with more than one in four indicating they need to reinvigorate their business, but that they don’t know what to prioritize.
“Media and entertainment companies remain upbeat about change,” says John Harrison, EY Global Media & Entertainment Sector Leader. “But with such diversity of business models and revenue streams, the starting point is often unclear. The survey reveals that there is no single path to reinvention, but businesses can succeed by prioritizing three key levers of change: operational excellence, innovation and upskilling talent. Embracing these ambitions can help them address short-term challenges and unlock long-term value creation.”
The survey also unearths the three biggest drivers of change across media and entertainment subsectors: responding to a shifting competitive landscape, which could lead to pressure on profitability; struggling to keep pace with technology as businesses evaluate digital innovations, such as artificial intelligence and 5G; and challenges associated with changing customer expectations, which is impacting the uptake of products and services.
Executives identify operating model change and operational delivery and execution as their top transformation priorities. Simplifying the enterprise emerges as a key theme in driving the next generation media and entertainment operating model, with 55 percent of all executives indicating that they want to streamline their business by consolidating internal segments.
The survey further reveals how businesses are using data to achieve operational change. Almost two-thirds of respondents see the increasing availability of data as an opportunity for transformation. Notably, 56 percent of executives indicate that they prioritize building first-party data, compared with just 13 percent who prioritize third-party sources.
“The evolving nature of revenue generation, combined with pressure to release capital to fund growth, is leading companies to reevaluate transformation goals and how they respond to shifting customer demands,” says Harrison. “Making the most of data that resides across the enterprise is one of the most crucial tactics for realizing positive change — particularly in helping businesses to compete by improving the customer experience.”
With four generations coexisting across the workforce — Boomers, Gen X, millennials and Gen Z — the survey highlights the growing imperative to foster continuous learning. A third of all executives identify the need to close the talent gap and build skills as a driver of change, rising to 43 percent and 42 percent among publishing and advertising executives respectively. Nearly a quarter see the talent gap as a threat, while 30 percent list it among the biggest barriers to innovation.
“The need for digital skill sets is now the norm among media and entertainment companies,” says Harrison, “but changing technology continues to shift expectations. To remain relevant, workers need to migrate up the value chain, reinventing themselves and continually improving their capabilities.”
The EY study, “How are media and entertainment businesses reinventing in an age of transformation?” is based on a survey of more than 350 media and entertainment executives, taking a representative view of companies by scale, geography and industry subsector. For each question and unless otherwise stated, executives were asked to select their top three responses from a predefined list of options. For example, a response of 50 percent means it was selected as one of the top three answers by half of respondents. More details about the demographics of the executives who participated are available in the appendix. You can read the full survey here.◊