Media
Drivers
All industries are being shaped by the global Megatends of Globalisation, changing Demographics, Climate change and Technology innovation. Shaped by the these trends and now the pandemic, the industry is being defined by five major drivers:
Customer Experience
BigTech has radically changed the shape of the media industry and customer expectations over the past twenty years. This has not only delivered new technological experiences such as social media but has changed consumer buying patterns hitting the status quo for traditional media companies.
The Covid-19 pandemic has accelerated many of the trends of the past 5 to 10 years, including the outsized growth in digital media consumption and consumers’ ability to access content from just about anywhere. It is expected that traditional TV broadcaster's share of viewing hours will fall to be below 50% by 2023 in the UK, 30% for 16-34 year olds. Increases in consumer participation and the exponential development of technologies like 5G will accelerate the disruption.
While growth in streaming services has given consumers an explosion in choice, it’s also created considerable
complexity. Consumers will follow the experiences and content that is personal to them, meaning differentiation and relevance are key.
Regulation
The traditional media industry was governed by national laws and regulations, but the global Internet and BigTech social and streaming media companies have outpaced this. Governments are now racing to regulate in a global media age. For instance the EU Digital Services Act (DSA) will be one of the first laws restricting the ability of social platforms, search engines, and online marketplaces to target certain European users with ads and to publish harmful content. The UK is proposing that Ofcom regulates streaming services (as it does traditional TV companies) and a new Digital Markets Unit (DMU) will regulate tech companies for areas like social media. Other jurisdictions will follow but keeping up with market innovation will be very hard.
The industry itself is responding to a renewed focus on privacy. This shift is exemplified by Apple’s decision to
allow consumers to choose if applications can track user movements across other apps, and by Google’s intention to retire the use of third-party cookies by 2023.
New Technology
The industry has been continually shaped by new technology like wireless, mobile, devices, digitisation, internet, cloud storage, consumer analytics and social media. The industry has successfully adapted around these developments in every generation. Since 1990s, digitization of content has changed creation and delivery of music. Another disruption in 2000s, the rise of the internet was a game changer for all the sub-verticals of the industry. Now streaming services are now used by nearly 80% of US households to the detriment of linear TV and music purchases/downloads. Indeed global streaming subscriptions have passed 1 billion users.
Over the next few years technologies such as 5G mobile, artificial intelligence and the metaverse will once again shape the industry and create disruption.
Sustainability
There is a growing realisation that a digital lifestyle creates a significant carbon footprint. The internet accounts for more than 2% of global greenhouse gas emissions, on par with the aviation industry. Indirect or scope 3 emissions like the Internet and digital technology are the largest within the media industry, with one media holding company actually stating that they account for 98% of total emissions. When a global brand displays 40 billion 200kB ad impressions, this can generate up to 8,000 tons of CO2. Embedded in this calculation is a methodology that considers that one GB of data sent across the internet uses 1kg of CO2.
Outside of the internet/digital technology the sustainability impact of media falls into three principal areas: transport, energy, and waste. In terms of emissions, transport accounts for approximately 50% of the total: primarily moving people (cast/crew) and freight (filming equipment, sets) for the production of assorted programmes. Energy, comprised of electricity and gas consumption, comes next, driven by corporate operations, studio power, production offices, and the use of diesel generators on location.
Finally, there is waste. Production can be a notoriously “disposable” process: sets and materials are often designed and created for specific projects, before being taken down and thrown away once filming ends. For print media, there is the additional factor of newspapers and magazines, whose production requires millions of trees to be felled while mass distribution consumes significant energy. Inevitably, waste is ubiquitous. Although sales of physical titles may be in long term decline, online media outlets also create their own carbon footprint.
Business Models
Digitisation and the Internet have severely disrupted the business model of traditional media; licence fees, purchases, subscriptions and advertising. Social Media and the Internet have been driven consumers to expect that content is free to access, but these are often funded indirectly by ad-supported platforms, individual sponsorships, product collaborations, in-app purchases and funding platforms such as Patreon.
More than 40% of consumers now subscribe to three or more video streaming services. The monthly payments for more media services are a growing problem. In fact, many consumers are approaching their upper limit on the amount of money they’ll spend. Fragmentation of the industry and platforms is also leading to high degrees of consumer churn. As the growth in subscriber numbers slows, the competition will shift to share of engagement and retaining viewers on the platform. The intensity of the competition among the big players—Amazon, Discovery, Disney, Netflix—is at an all-time high.
Navigating the myriad of business models is a huge challenge for today's media companies and the record-breaking increases in the cost of living may negatively impact revenues. Profitability pressures are likely to be a
continuing problem for all but the biggest or most diversified player