Top 4 Digital Transformation Trends In Media And Entertainment For 2020
Over the summer, streaming giant and industry up-ender Netflix reported its first domestic subscriber loss since 2011 and its lowest quarterly subscriber growth in three years. Within hours, its stock value tanked $17 billion in a single day. You read that right: $17 BILLION. Clearly, no one is immune from disruption and this is especially true in the media and entertainment business – even those who helped create and spur them forward.
Last year, we looked at digital transformation trends for media and entertainment focusing on things like the increase in video ads, a clamor for digital experience, and a rise in mobile data usage due to such high demand. All of these predictions have become a reality and heading into 2020, all of those things will likely to continue. After all, we as consumers haven’t changed that much. We still want lots of content, everywhere, right now.
The greater trends we’ll be seeing from the media and entertainment companies themselves, however, will focus more on getting a handle on the wild masses of content being created and shared across an endless number of channels. In other words: we need to cap the crazy and realize what types of technology advancements and content creation will really drive business in 2020 – and which will merely drive companies into the ground.
With tech proliferation showing no signs of slowing down, I see 2020 as an inflection point where companies are going to need to better operationalize current technology and prepare their organizations to handle the next wave of technology such as 5G, Mobile AR/VR and conversational AI, all the while also being more profitable and more connected with their consumers.
Applied AI for Operations: Step Away from the Money Pit
A recent – and incredibly illuminating – report from Accenture noted that Opex for today’s media and entertainment companies is rising faster than revenue. I’m guessing Netflix could give a personal testimony to that one. In layman terms, spending is increasing faster than profit, and in business that’s always a bad thing. Accenture notes that media companies are caught in a “spending trap beyond their control.” I tend to be more optimistic about the problem. Yes, as we head into 2020, media and entertainment groups need to get a handle on content and spending, but I don’t feel that it’s beyond their control. Every company today, aided by AI and machine learning, has the power to be smarter about where and how they’re spending. They have the ability to see what’s working and what isn’t. It is no longer necessary to create content merely for the effort of making content. It’s high time they get honest about what content is worth creating and act accordingly.
Privacy: (Re)Build Trust and Transparency
There is a massive gap in trust right now, and the media and entertainment industry is at the center of this dilemma. In a recent study conducted by Futurum Research in partnership with SAS Software, which polled more than 4000 global consumers and brands to better understand the future of customer experience, one of the areas we focused on was Privacy and Digital Trust. Among our respondents, 61% felt that they had completely lost control of their data and privacy and felt hopeless in terms of their ability to protect themselves or their loved ones from future data breaches. This sentiment is causing a significant dissonance in trust between consumers and brands. This is especially true with the media as the same study revealed that Traditional Media was consistently among the three most distrusted industries (out of more than 20) along with Social Media and Government.
In the future, there will be a significant opportunity for brands to work on offering greater levels of data usage transparency to deliver best of breed experiences while also providing consumers a better understanding of how data is being used. This won’t be a matter of not using or collecting, it will be about greater visibility and providing levels of controls back to consumers that may including knowing what brands know about them and having the right to be forgotten. This has already started with GDPR in Europe, and I expect it to continue globally over the next decade.
Back Office Refinement: Focus on the Enterprise
It’s easy to get stuck on the tech side of digital transformation when it comes to media and development because today’s streaming, mobile, real-time beacons and AI seem to have been developed specifically for this industry. What we’re learning from the spending issue above however is that media and entertainment companies need to start focusing on building intelligent enterprises – not just cool and exciting media arms. For the laggards, it’s time that they start to implement Enterprise Resource Planning to ensure higher efficiencies, lower spending, and more efficient work processes overall. For those that are underway in their transformation and have made investments in tools and technology, it is important that continued refinement is part of the strategy in order to be sure that ROI on tech investments are measurable and ideally increasing. Digital Transformation in media and entertainment has brought tremendous innovation to the consumer, but it is important that companies apply the same effort to the back office to make sure operations can support growth and scale profitably.
Reports show that 40% of Millennials and Gen-Z’ers are willing to pay for personalization done well. They want the deeper engagement that digital transformation done well can provide. As we head into 2020, I think we’ll see companies turn inward to figure out what content they’re actually good at creating and which audiences they’re connecting with on a deeper level. From there, I think we’ll see more niche communication and content development geared toward those audiences, rather than the content free-for-all we’re seeing now. Of course, this means a greater increase in AI and machine learning to draw out those connection points so that we can understand our audiences even better.
I want to be clear: when I say, “smarter personalization,” I’m again not just talking about content recommendations. I’ve personally received numerous email and mail campaigns from certain cable companies asking me to subscribe … when I’m already a subscriber. It’s time for the industries to clean up their databases and make smarter outreach. As a technologist by trade, I’m likely to cut off service from someone who doesn’t even know I’m a customer than sign on to more services (or even worse, the same services I already have)! 2020 will leave no room for messy communication and customer relationship management. It’s time to use technology for what it’s meant to do: bring us closer to our customers.
If there’s one thing Netflix’s shocking subscriber loss taught all of us is that no one can coast their way through digital transformation. Even those who helped disrupt their industry need to be vigilant when it comes to personalization, content development, and spending. There is no relaxing for media and entertainment this coming year. If nothing else, it’s a time to regroup and get serious about using technology not just to excite our fan bases, to make smarter and deeper connections with them while driving greater profitability into the business.
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