The past few years have seen an unprecedented revolution in the media and entertainment sector. The emergence of over-the-top (OTT) platforms has been the most prominent development in this space, which has also encouraged traditional players to revamp their business strategies. As part of this new approach, companies are adopting advanced technology solutions such as Artificial intelligence (AI), cloud and blockchain to enhance user experience and monetise their content to remain competitive in an omnichannel environment.
Covid-19 seems to have brought mixed results for the larger media and entertainment sector. Movie theatres have been worst hit by the nationwide lockdown announced by the government. However, OTT players and the television segment stand to gain enormously from the current situation.
A look at technology uptake in the media and entertainment sector, the impact of Covid-19 on industry sub-segments and the way forward…
Technology uptake in the sector
AI is seeing widespread adoption in the media and entertainment sector as companies are deploying the technology to offer personalised content recommendations to their viewers. In fact, recent market reports suggest that many players in the media and entertainment space are using AI not just to offer personalised content recommendations, but also to create content as per the taste and choices of viewers. This can in fact potentially emerge as a successful business strategy as reports suggest 40 per cent of millennials and Gen-Z viewers are willing to pay for personalisation.
Meanwhile, AI has been adopted by media players to ease and facilitate the content generation process for their contributors. AI is able to streamline all the pre- and post-production exercises for content creators, thereby helping them enhance their business. For instance, Forbes has deployed an AI-based chatbot called Bertie, which recommends article topics to contributors on the basis of their previous output. The chatbot also suggests headlines and images for these articles to the authors.
In addition, companies in the media and entertainment sector are using AI to conduct targeted advertisement campaigns. AI can help companies collect user-specific data and analyse it to better understand user behaviour so as to show only those ads that best suit the users’ needs and requirements.
Cloud is yet another technology that is seeing rapid uptake in the media and entertainment industry. The pay-as-you-go cloud storage model comes with better storage and computing capabilities, enabling content producers to scale up their storage and save unnecessary expenses. Further, cloud provides the flexibility to devise new business and revenue models that can help media players cater to fragmented audiences. It also helps media organisations to reduce the number of roll-out cycles, thereby minimising the time to market of new productions and content catalogues, thus helping them swiftly and efficiently expand their existing content library. Moreover, the cost of launching new productions across various channels through the cloud is significantly lower as compared to production for traditional mediums. The shift towards a cloud-based model also allows media enterprises to collaborate more securely and efficiently with various organisations across regions, thus enabling them to build a more robust and collaborative ecosystem. According to Coughlin Consultancy, cloud storage for the media and entertainment industry is expected to grow by 13 times between 2017 and 2023.
The technology can help businesses in this space streamline processes such as royalty distribution, payment management, digital advertising, content licence and rights management. The biggest use case of blockchain technology in media and entertainment is monitoring and control of data and content piracy issues. The use of blockchain will allow each transaction in the value chain to be recorded and updated instantly, thereby reducing the scope for piracy. Further, blockchain-based smart contracts could be used to enforce licence terms and dispense payments. It can allow certain digital content to be published and downloaded at a defined time and price, and then split the payout among content creators. For instance, when a consumer downloads a song, the smart contract will automatically be enforced, charging the buyer and distributing the revenue in pre-negotiated proportions to the specified stakeholders. In addition, the time-stamping feature of blockchain technology allows creators of digital artworks to quickly register a proof so that they can protect their creations from unauthorised use on the internet. While the feature does not track ownership changes, it does confirm that the creator owned the asset at a specific point in time. The content ledger feature enabled by blockchain technology can be used to record additional information about digital content. In the case of music, this information may include songwriters, performing artists, publishers and labels. As the data is decentralised (not controlled by any single party) and irreversible (once entered and accepted, items cannot be changed unilaterally), it is highly secure.
Though still at a nascent stage, blockchain is expected to revolutionise the media and entertainment sector in the coming years. According to Accenture, 55 per cent of media and platform executives consider blockchain among the top five priorities for their company. Around 83 per cent of leaders are currently planning to increase blockchain investments over the coming years.
While on one end of the spectrum there are segments such as cinema halls, advertising and production houses, which have taken a heavy beating due to the ongoing pandemic, on the other end, there is digital media and television, which has gained substantially as far as viewership numbers are concerned.
As per recent media reports, cinema halls have been losing around Rs 1.5 billion per week since the lockdown was announced. Likewise, advertising spends across all media are expected to reduce by over Rs 100 billion over the next couple of months. Meanwhile, digital streaming platforms reported a 20 per cent increase in viewership. TV viewership was also up by 37 per cent, clocking 1.2 trillion minutes in the first week of the lockdown.
As can be inferred from the above-mentioned statistics, the sudden gigantic boom in digital media consumption can potentially alter the growth dynamics of the media and entertainment sector. Prior to the lockdown, digital media accounted for only 12.13 per cent of its revenues, however, this number is expected to take a multifold jump in the near term. With the majority of people working from home, the consumption of content on OTT platforms has increased exponentially. Recent market reports suggest that the number of Netflix subscribers increased by 16 million in the quarter ended March 2020. As per the company, this number is projected to increase by an additional 7.5 million by the end of June 2020. That said, Netflix is not the only company benefiting from the worldwide lockdown. Amazon Prime Video too has taken key measures to extract the maximum benefits from the current situation. The OTT player has made some of its family- and children-specific content free to keep people entertained during the lockdown.
The way forward
The Indian media and entertainment industry is one of the fastest growing sectors in the economy and is growing at an exponential rate. As per a recent IBEF report, the industry size is expected to reach around Rs 3.07 trillion by 2024, growing at a CAGR of 13.5 per cent between 2019 and 2024. Of this, television, print and films are expected to constitute the majority share. As per the report, the market size of television, print and films is predicted to increase from Rs 713 billion, Rs 333 billion and Rs 185 billion in 2018-19 to Rs 1,025 billion, Rs 375 billion and Rs 228 billion in 2021-22 respectively.
This growth is expected to be primarily driven by the rising consumer demand for more content. Apart from this, consumers are demanding much diversified content in terms of genres, language, themes, etc., which has added another layer to the whole content creation exercise. The second growth driver of the media and entertainment industry is advertisements. Seeing a huge number of consumers getting drawn to this sector, advertisers are also rapidly increasing their share of capex in the entertainment platforms. As such, advertising revenues of these platforms are expected to witness a multifold increase over the coming years.
While the rising consumer demand and improved advertising revenues are expected to drive the growth of the media and entertainment industry, technology is going to help enterprises in this sector sustain this growth. The rapid adoption of AI, cloud, blockchain and data analytics will help OTT platforms and other players in the sector streamline their business and improve the customer satisfaction rate, thereby enabling them to refocus their efforts and concentrate on more revenue generating segments.
By Diksha Sharma