As streaming video, social media, and social gaming blend together into a richer, more interactive media and entertainment landscape, industry leaders must throw out their old playbooks and create a flexible environment fueled by modern cloud-based technology. An agile platform can drive companies’ ability to create a new digital entertainment reality while still realizing profits.
Major entertainment providers will increasingly link up with gaming companies to capitalize on gaming’s immersive technologies and create new ways to interact with consumers. Media and entertainment leaders will look for innovative ways to combine streaming video, social media, user-generated content, and gaming to enable new business models and fundamentally reshape our definition of entertainment.
While the lines separating these categories will grow blurrier, one reality is crystal clear: This era of combining and redefining will require agility and resilience. Driven by evolving content creation, distribution channels, and monetization strategies, partnerships and mergers and acquisitions (M&A) will remain always in play—so media and entertainment companies need flexible systems and immediate access to data for faster, better decision-making.
Here are five truths that media and entertainment organizations must acknowledge to thrive in the face of constant disruption.
1. Innovation Matters More Than Ever
Streaming video, social media, and social gaming are reshaping the media and entertainment landscape, enabling new business models and fueling greater interdependencies between them.
The impetus for combining these channels comes from younger consumers, who have never known a world without digital content platforms and expect to be able to engage across them as seamlessly—or actually, more seamlessly—than they engage “IRL.” According to research from Bain & Co., nearly half of people between the ages of 13 and 34 would rather socialize with their peers in a video-game setting than in the real world. This will drive up gaming’s revenue, helping it to grow to almost 11% of overall media and entertainment spending by 2026, nearly double where it stands today. And by 2030, McKinsey estimates that more than 50% of live events could be held in the metaverse.
As consumers spend more time engaging with content via nontraditional entertainment channels, they will demand a curated, streamlined experience. In fact, according to Accenture, 6 in 7 consumers globally want an all-in-one platform to simplify their entertainment experiences with video streaming, fantasy sports, social media, e-commerce, and more.
To be able to deliver these consumer expectations, organizations must consistently innovate and drive their digital strategy to become more agile as enterprises. However, a Workday survey found that only 23% of media executives categorized their businesses as leaders in digital growth and organizational agility.
Successful innovation requires sustained rigor—which is why more than half of organizations fail to meet their original transformation objectives, according to a report from Workday and MGI Research. “Firms that lack transformational excellence tend to underestimate the cost and complexity of transformational events, and rely on older, calcified systems that are hard to integrate and evolve,” the report notes. Meanwhile, companies that succeed use modern, cloud-based tools that allow them to “react to change with agility and execute transformations to achieve above-average outcomes at below-average cost.”
2. Profitability—Not Revenue—Takes Top Priority
Even as the streaming video revolution has created a golden era of content, a hard reality remains: On-demand streaming is fundamentally less profitable than traditional television. Some reasons for this: Many streaming services are predominantly ad-free; many consumers selectively subscribe to only a small number of services; and a slew of new entrants to the “streaming wars” have been willing to operate without profits for years to gain customers.
But as streaming cancellations have increased and operational costs remain high, media and entertainment companies feel increased pressure to stay firmly in the black. To grow profitably, they’re prioritizing existing customers—with 63% of media firms anticipating a renewed focus on revenue retention, according to research from the Alexander Group.
Personalization is the name of the retention game with organizations vying to deliver relevant content and advertising via machine learning (ML) techniques that dig deep into customer behavior and demographics. New digital delivery and rapidly evolving subscription models will also continue to define the futures of media and entertainment companies.
“Organizations will rely on multiple revenue streams to drive profitability,” says Justin Joseph, Workday’s senior director of product strategy for communications, tech, and media. As a result, “they’re going to have to support and understand the pricing and automate [everything] to make sure they have the right touchpoints for each customer.”
To increase offerings in a way that meaningfully improves revenue growth, profitability, and customer satisfaction, media and entertainment companies need a platform that allows data to flow seamlessly from end to end. They need to go beyond billing and revenue management to understand the broader landscape that includes customer service and other elements—and they need to forecast continuously. Systems with artificial intelligence (AI) and ML functions can provide the key insights these companies need to make faster, data-driven decisions.
Increasing profitability in the streaming era requires a holistic approach that looks at every aspect of the business and uses real-time data to make better, more financially viable choices.