GENEVA — As the growth in media companies’ spending on content continues to far outstrip growth in those same companies’ revenues, it’s time to consider a new way to think about the value of media, says the World Economic Forum (WEF) and Accenture in a new report published last week.
According to the WEF, in a post on its website September 4, the worldwide value of new media content could quite easily run into the hundreds of billions of dollars every year. For context, traditional Canadian TV companies spent C$4.2 billion on content, according to the latest CRTC figures, or less than Discovery Communications does by itself, according to the graph WEF used here.
“While investment in content has grown substantially, it has far outpaced growth in revenue from TV advertising, movie ticket sales and over-the-top video subscriptions. If direct monetization is so difficult, why do many media companies keep investing in new content? To understand this seeming contradiction, a new framework for understanding the value of media is needed,” reads the WEF post.
As the monetization model for media changes, content is increasingly being used as a vehicle for media companies to find new ways to connect with consumers, says the WEF.
“Ultimately, it’s clear that the value of media to many of the biggest businesses is in its ability to underpin, reinforce and grow other parts of their companies,” writes the WEF. “This is one reason behind the shrinking life span of TV series on streaming services: these providers just need to do enough to attract and retain subscribers; locking them in to their ecosystems is the bigger strategic goal.”
The WEF/Accenture report (available here) provides a “value map” as an alternative framework for considering how the future of the industry will develop. The value map represents the major roles and dynamics involved in content creation and distribution.
The report also highlights six implications for the media and entertainment industry, each with a value map to illustrate major impacts for industry players.
“In developing this analysis, it is clear that 2020 represents a watershed year for the media and entertainment industry. Consumers and advertisers are shifting to digital channels, expecting greater value for their time and money, and raising the bar for customer experience. Competition is intensifying and access to granular user data will be key for success. Business models are evolving to accommodate a new class of consumer creators and hybrid monetization opportunities. Platform companies are drawing increasing scrutiny from regulators. As these dynamics play out, a new framework is needed to understand how media companies will create value in the future,” reads the WEF/Accenture report.
To learn more about each of the six implications for the media ecosystem, please click here.
