According to Ernst & Young’s latest CEO study Opportunity and optimism: How CEOs are embracing digital growth released today, global media and entertainment CEOs expect digital revenue will be a rapidly increasing percentage of overall revenue for companies, The report reveals that approximately half of all CEOs surveyed believe digital will increase their overall revenues and margins by at least 10% within the next three years.
Global media and entertainment CEOs see digital media as a significant driver of future growth:
Surveys with CEOs from global media and entertainment companies with combined annual revenues exceeding US$300 billion found that 84% feel that the role social media plays within their companies allows them to connect with customers, while 69% said social was a tool to build audiences. Additionally, 63% highlighted how social helped with brand building and 50% said it served as a distribution platform or channel, and also as a source of revenue.
Role of Social Media According to Media & Entertainment CEOs (% of Respondents) | |
Role of Social Media | % of Respondents |
Connecting with customers | 84% |
Build audiences | 69 |
Brand building | 63 |
Distribution platform/source of revenue | 50 |
Source: Ernst & Young, September 2012 |
While social media helps businesses connect with customers and audiences, it is the mobile-based technologies that CEOs think will have the greatest effect on the media and entertainment industry in the next three years, says the report. 79% of CEOs said tablets would have the greatest impact, while 62% said smartphones would also be influential. Social media came in at the bottom of the list.
Impact on Media and Entertainment in Next Three Years (% of Respondents) | |
Mobile Based Technology | % Saying Greatest Impact |
Tablets | 79% |
Smartphones | 62 |
Cloud hosting | 59 |
Apps | 56 |
High bandwidth mobile networks | 53 |
Social Media | 44 |
Source: Ernst & Young, September 2012 |
John Nendick, Global Media and Entertainment Leader at Ernst & Young, says “... CEOs are undeterred about the role digital will play in their futures... a heightened optimism from a few years ago... All of the CEOs... understand that digital is the single most important factor... impacting ability to grow both revenues and margins... ”
Ranking the three biggest drivers of growth in content consumption during the next three years, CEOs were unanimous in their response. All of them believe mobile devices (including tablets) are the key to spurring demand for content. CEOs are especially bullish about emerging markets, where growing mobile device availability coupled with an improving wireless broadband infrastructure are creating significant opportunities for media companies to grow.
Biggest Drivers of Growth in Content Consumption (% of Respondents) | |
Driver | % of Respondents |
Mobile devices (smartphones, tablets, etc) | 100% |
Improving broadband and mobile network infrastructure | 53 |
Social and other online networks | 41 |
Increase in people connected to the internet in emerging markets | 29 |
Increase in web video | 24 |
Source: Ernst & Young, September 2012 |
Queried about the greatest challenges facing the media and entertainment industry during the next three years, CEOs overwhelmingly agreed that global economic uncertainty and an inability to persuade consumers to pay fair value for digital content were the top two concerns. Also, the elimination of intermediaries between their companies and the end-user, resulting in increased direct business-to-consumer relationships; structural and regulatory ambiguity; and reduction and/or reallocation of marketing budgets.
Interesting insights from the report:
For additional information from Ernst & Young, including access to the complete PDF file including charts and graphs, please visit here.
But of course! Good insights especially the point about the evolution of digital and online distribution. This is only the beginning.