Traditional media and entertainment companies must undergo “radical levels of reinvention,” John Peters, Accenture’s lead for media and entertainment clients, told Business Insider.
The media industry, according to Accenture, is at an inflection point with “dwindling financial returns, encroaching tech giants and an increasingly fragmented digital market,” the company wrote in a recent report.
Accenture, a global professional services firm, surveyed over 6,000 consumers in 10 countries across North America, Europe, Asia, and Latin America for its recent report, “Reinvent for Growth in the Media Industry.”
Traditional media companies, like live broadcasting or linear channels, are “seeing viewership migrate away from their platforms,” Peters said. But viewers aren’t flocking to streaming-video subscriptions, like Netflix or Hulu, the way they once were.
“They’re increasingly moving to social media and social video platforms and video games,” Peters said.
Ad spending on social video is expected to outpace linear TV spend by 2025, according to forecasts by Emarketer. And according to recent data from WARC Media, ad spending on Meta alone is on track to surpass linear TV within a few years.
Social-media companies are at an advantage now because they “don’t have this legacy baggage of the way in which they need to make money,” Peters said, even if advertising is still crucial to their growth. “They’re disrupting the rules of economics of those traditional businesses.”
Here are three things that traditional media companies can learn from social media giants, per the Accenture report.
Media companies should embrace user-generated content
According to Accenture’s survey, 59% of respondents said that user-generated content, UGC for short, is equally as entertaining as traditional media.
UGC is more or less the basis of the entire creator economy — content created by social media users has now grown into what Goldman Sachs estimates to be a $250 billion industry.
Instead of fearing UGC over concerns around intellectual property, Peters said media and entertainment companies should tap into this space.
“There’s something you can unlock by being less cautious about that,” Peters said. “There’s a massive enthusiasm online for fan fiction around these incredible franchises all happening on someone else’s platform. And so they’re losing out on this.”
Peters also pointed to events like the annual Academy Awards or live sports as opportunities for media companies to use UGC. “Where do you go to talk about it? Not on traditional media,” he said. “You leave that, and you go grab your phone and talk about it on these other platforms.”
Subscription bundles offer opportunities for partnerships
Nikki Mendonca, Accenture’s managing director of the software and platforms industry, said she expects more media companies to move into areas like travel and health.
“I do think we are going to see legacy media and platform companies coming together so that they can almost perform better under a sort of balance of trade,” Mendonca said. “Having a partner ecosystem for a lot of these legacy companies is becoming critical to their reinvention because there’s no way that they can just do it all.”
Accenture envisions these partnerships as “lifestyle bundles,” a multi-service subscription model, where consumers pay to unlock resources across several categories, from entertainment to groceries.
“It’s not simply media bundles,” Peters said. Survey respondents also expressed interest in accessing tools that help them manage travel, financial services, health and wellness, cyber security, home, and personal services.
And who would consumers want to operate these subscriptions? The “usual suspects,” Peters said: Amazon, Netflix, Apple, Google, and Spotify. (Disney was high up, but not in the top five, Peters added.)
“It’s a huge opportunity,” explained Mendonca, pointing to Amazon as an example and Elon Musk’s growing interest in multi-service subscriptions. “This market is getting very hot, very competitive,” she said.
Accenture projects consumer spending through these bundles to reach $3.5 trillion by 2030.
Media brands should license content like gaming studios do
Nearly 50% of respondents said they had increased their video-game playing time, according to Accenture’s survey of consumers.
Another “radical reinvention” play that Accenture analyzed is for more media brands to merge with gaming studios. Netflix, for example, has bought up several game studios.
This strategy could allow media brands to use video-game IP to develop movies and other content, sell merchandise, offer bundles including games, and access gaming audiences for marketing.
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