Entertainment & Media Industry in Crisis

Minister Eamon Ryan announces formation of Digital Futures Forum

Yesterday saw the launch of PricewaterhouseCoopers 11th annual Global Entertainment and Media Outlook 2010-2014. This report addresses the current state of the entertainment and media industry globally and offers predictions for future growth/retraction.

Bartley O'Connor (PwC), Minister Eamon Ryan, Susan Kilty (PwC) launching the Entertainment & Media report.
Bartley O'Connor (PwC), Minister Eamon Ryan, Susan Kilty (PwC) launching the Entertainment & Media report.

Globally, 2009 saw a 3% dip in revenues generated by the entertainment and media industry. This was actually healthier than the -4% predicted as there was larger than expected growth in Internet access and advertising. Between now and 2014, the PwC report predicts that there will be growth but that the levels of growth will remain behind GDP. While growth in digital revenues will probably exceed GDP, the spend in digital is traditionally lower than non-digital spend.

The migration to digital is the big story in this report. Internet advertising will probably overtake newspaper ad revenue by 2012, the latter remaining flat till 2014. This year in Ireland we will see a 12.2% growth in Internet advertising, while radio advertising will be down 11%. Within the next three years, PwC predict that 1.4 billion people globally will be using smart phones. Mobile consumption of digital content and services represents a step-change in how we will be using the Internet.

For those businesses operating in the entertainment and media space this migration to digital and mobility represents an enormous challenge. Existing business models are simply not working any more. The majority of consumers are still unwilling to pay for entertainment services online. The widespread acceptance of piracy coupled with the tsunami of user-generated content is satiating our appetites for now.

Eamon Ryan TD, Ireland’s government minister with responsibility for this sector, attended the launch of this report in PwC’s Dublin office last night. He highlighted the court case between UPC and the various recording companies which attempted to find a resolution to the issue of piracy. He suggested that “legal approach results in us missing opportunities” which could be realised by gathering the music industry, ISP’s and other stakeholders together to think collaboratively about the impacts the Internet is having on their businesses.

In highlighting this case, Minister Ryan drew attention to the bigger question of how to tap into and benefit as a country from the global digital economic revolution? In order to address this bigger challenge he is proposing to establish a Digital Futures Forum this autumn which would be comprised of a mix of representatives from all the various sectors and ordinary citizens. The remit of such a forum would be help inform government policies around:

  1. Improving digital skills
  2. Improving networks
  3. Protecting privacy and promoting security
  4. Addressing public service issues around digital (RTÉ etc)
  5. The need for a European market for digital content and services

While such a forum, if it could be prevented from spiraling into yet another government-backed talking shop, would have merit in fostering greater understanding  between industry players and government; those players will still be faced with the day-to-day challenges of a rapidly changing marketplace.

Those in the business of entertainment and media are rooted in a paradigm where originators of content are entitled to be paid. While this paradigm is not incorrect, there are now greater numbers of content originators (me for example writing on this blog) who have no expectation of receiving payment for content.

Therefore those in the paid-for sector now need to find differentiators that people will be prepared to pay for. Quality, trust, reliability and predictability are perhaps no longer enough. New monetisation opportunities do exist as more of us are consuming more media than ever before. Apple has pioneered a paid-for model for music. Sky has championed the premium TV subscription model. In Ireland last Saturday evening, Tv3’s website received over 120,000 visits per minute as people searched for premium telephone numbers to vote for xFactor contestants; thus highlighting a definite appetite to pay for engagement with traditional media.

The entertainment and media industry is facing a period of unprecedented change. In the shake-down that will happen, those existing businesses which can identify sustainable new revenue streams will survive. Meanwhile, such a period of change creates massive opportunities for new entrants with offerings and business models which are responsive to shifting consumer expectations and behaviours.

3 thoughts on “Entertainment & Media Industry in Crisis

  1. Didn’t know about PWC’s annual report so nice summary for me Brendan. This country needs a lot to happen in terms of broadband firstly, and improving digital skills secondly. All the rest is important but I think comes as a natural consequence of improving the first 2…


  2. There’s a virtuous circle here Facundo. If you create enough capacity, you increase interaction with services, improving awareness and skills, create demand for services, which in turn drives supply and the demand for skills. Maybe its not quite a circle, but there’s an ecosystem of components which combine together.


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