With media and entertainment sectors continuing to be whipped by winds of digital disruption, many industry execs believe they need to change the ways they’ve done business — or see their companies perish.
About 50% of M&E executives said their company cannot rely on traditional business models to survive the shifting landscapes, according to a new survey by consulting and professional services firm EY. Indeed, 34% of those surveyed indicated that their company will no longer exist in five years unless their business undergoes reinvention.
The survey identified three key factors driving change across M&E industry subsectors: responding to a new competitive landscape; struggling to keep pace with technology as businesses evaluate digital innovations, such as artificial intelligence and 5G; and dealing with challenges associated with changing customer expectations. Nearly two-thirds (63%) of execs embarking on change say optimizing the operating model will be truly transformational – but at the same time, 28% said they don’t know what steps to prioritize in pursuing such a strategy, according to the EY survey.
But the leadership for business change doesn’t necessarily come from the top: Only 20% of the execs EY surveyed cited current corporate strategy and their CEO’s vision as a leading driver of innovation
The survey results show that there’s no single path for M&E businesses to change for the future and that “media and entertainment companies remain upbeat about change,” said John Harrison, EY’s global media and entertainment sector leader. However, he added, “with such diversity of business models and revenue streams, the starting point is often unclear.”
To compile the results, EY polled more than 350 global industry executives. It released the findings this week at the 2020 CES trade show.
Of the execs surveyed, 41% cited business-model changes and 39% identified operational delivery and execution as their top transformation priorities – with 62% agreeing that the increasing availability of data is an opportunity for transformation. Notably, 56% of execs indicate that they have prioritized building first-party data, compared with just 13% who prioritize third-party data sources. In addition, 46% said automation is the single most important tactic for achieving cost savings.
Meanwhile, talent development – as it relates to business transformation – remains a key strategic priority among media and entertainment companies. One-third of executives surveyed identify the need to close the talent gap and build skills as a driver of change, and nearly a quarter (24%) see the talent gap as a threat. About half of respondents (49%) prioritize upskilling their existing workforce as the best way to develop talent.
Interestingly, the need to tap into the “gig economy” varies depending on the size of the enterprise, the EY survey found. About 61% of execs at companies with $250 million-$500 million in annual revenue see the gig economy as relevant to their talent strategy – compared with 20% among those at companies with revenue over $5 billion.
EY’s study is based on a survey of more than 350 media and entertainment executives, taking a representative view of companies by scale, geography and industry subsector. For each question, respondents were asked to select their top three responses from a predefined list of options; for example, a response of 50% means it was selected as one of the top three answers by half of respondents.
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