The media and entertainment industry today is witnessing a “second screen” phenomenon with more and more content being accessed and consumed through online channels, rather than the traditional mediums of TV, magazines and newspapers. This has been fuelled by the increased availability of affordable smartphones and tablets, the advent of 4G services, healthy growth in the number of 3G subscribers and the continued adoption of 2G services in rural areas.
Almost all the major companies in the media and entertainment industry today have dedicated mobile platforms that complement their traditional channels. A case in point is the music segment, which, as per KPMG estimates, now generates over 50 per cent of its revenues through digital channels like YouTube, Wynk Music and Saavn, and is witnessing a significant decline in year-on-year physical sales of 30-35 per cent.
The media and entertainment industry is also witnessing a convergence of ecosystem players. Content providers like Warner Brothers, consumer electronics companies like Apple and Google, communication service providers like Airtel, and over-the-top service providers like Netflix and Hotstar are converging to provide community-driven, contextualised, commercialised and multichannel content for connected digital age users. Technology is changing not only the way content is created and procured but also the way it is consumed and delivered to end-users.
To stay ahead in the digital age, companies need innovative IT strategies to track consumer behaviour, deliver timely content across multiple channels and explore new sources of revenue. IT solutions can help address a range of media-specific needs, from optimising content on digital devices and broadcasting live from the field to scaling up distribution capabilities. Besides, IT solutions can aid in monetising content to generate more revenue, streamlining and automating the media planning process and reducing the lead time to production.
Key IT applications
With the explosion of digital media, the industry needs to balance the need to support complex workflows and new data formats with uncertain revenue and monetisation avenues. Cloud solutions offer a viable solution to address this challenge as they can help companies manage their processes and workflows more effectively. The cloud platform is scalable, flexible and reliable, and is also more cost-effective and convenient since it does not require any upfront investment and can be paid for according to usage or through a monthly/yearly subscription. The various categories of cloud solutions that can be used in the industry include transcoding, animation tools, media asset management as well as niche solutions such as metadata, closed captioning, and subtitling services.
Cloud-based enterprise content management (ECM) systems have also gained immense popularity amongst entertainment companies. While the creation of movies and TV shows earlier required a team to be physically assembled at one location, with the new ECM systems, far-flung teams can collaborate using a variety of devices. In addition, a robust ECM system can help media and entertainment companies monitor and capture feedback from social media and blogs to assess the popularity of their content and thereby customise their offerings. For instance, the US-based online video streaming platform Netflix leverages data to help decide what programming to host and what content to develop.
The constant pressure to decrease IT budgets and instead invest resources in generating high quality, creative content is driving media companies globally to adopt cloud solutions. According to Frost & Sullivan, the global cloud computing market in the media and entertainment industry was around $100 million in 2013 and will grow nearly ninefold by 2020.
Another key trend among media and entertainment companies is the increasing use of big data analytics. The industry has moved to digital recording, production and delivery in the past few years. Consequently, an enormous amount of data is generated through almost every online user activity. Moreover, as all other industries connect their products and services to the networks of media and entertainment companies, it further complicates data management. Big data analytics enables a deep understanding of the end-user, which makes the automation of a range of valuable business activities simpler, and simultaneously improves the customer experience.
While the internet of things (IoT) is still at the early stages of adoption in many sectors, the media and entertainment industry already has many of the digital building blocks in place to make it a reality. According to Tata Consultancy Services, the average global IoT spending by media and entertainment organisations is expected to increase by nearly 54 per cent from $47.2 million in 2015 to $72.6 million in 2018.
The bulk of IoT activity in this industry involves the use of mobile applications on smartphones, tablets or other digital devices to monitor customer data. To a lesser extent, IoT is used in production and distribution operations to track product flow, devices in business locations and customer wearables.
While IoT has started gaining traction amongst almost all types of media and entertainment enterprises, publishers and broadcasters are ahead of the curve. Large publishers and broadcasters have switched to digital business models and have put in place the requisite network and IT infrastructure to support high speed transmission, new formats (for example, 3D, 4D, 4K ultra HD, high dynamic range, virtual reality) and multichannel delivery. They are also leveraging various forms of data – location, behavioural, consumer preference, and demographics from a variety of devices and systems to construct detailed consumer profiles and then use them to create and instantly deliver personalised content across multiple mediums.
Other segments that are benefiting from the proliferation of IoT applications in the media and entertainment industry include telecom and cable service providers, advertising and marketing agencies, information technology firms, consumer electronics manufacturers, TV and movie studios, sports organisations, event promoters, gaming companies and casinos.
Issues and challenges
Rapidly changing technologies are a major challenge for companies in this sector. While companies sometimes hold back investments till a new technology gains significant acceptance, often it becomes imperative to invest in current technologies to cope with the growing competition. Further, the integration of multiple technologies, timely upgradation of systems, increasing cost of technology and redundant legacy infrastructure are cited as key concerns by media and entertainment companies.
Further, media companies accustomed to having on-premises systems are still wary of embracing the cloud in a large way. Concerns surrounding the security of content on the cloud and the lack of reliable high bandwidth connectivity are also preventing the market from reaching its full potential. The vendors, on their part, are responding to these challenges by creating more awareness on the benefits of cloud solutions and allaying fears regarding the security of content on the cloud. They are also rolling out solutions that can be easily integrated with the client’s existing on-premises infrastructure.
The way forward
The Indian entertainment and media sector is expected to grow at a compound annual growth rate of 10.3 per cent over the next four years to reach $40 billion by 2020. The domestic industry is likely to follow the global trend of digital media leading growth while traditional media struggles to remain relevant, thus bringing in continuous disruption in the market. This, however, will depend on how quickly the Indian digital/broadband ecosystem matures and how Indian players adapt and design new business models to sustain these changes.
Moreover, the move towards greater IT adoption by the media and entertainment industry will also be driven by the mandatory digitisation of the content and delivery platforms. The government is implementing the ambitious digital addressable system (DAS) programme, which is set to change the face of the cable TV and broadcasting industry. Media companies have been proactive in offering services on the new platform. Even though the progress on the DAS programme remains slow, the government is keen on meeting its revised deadline to digitise cable TV networks by December 31, 2016.
Thus, going forward, as the trend towards digitisation becomes more pronounced, enterprises in the media and entertainment business are likely to significantly step up their IT investments. The need for better content delivery across multiple channels and operational efficiency within enterprises will drive the adoption of new IT solutions in this space.