Bundling and forming alliances are two strategies media and entertainment executives say they are pursuing to find profitable growth in a changing industry, according to a survey by EY.
A new Evolution of M&E report notes the industry is looking for new models now that spending big on content to attract subscribers is no longer acceptable to investors.
In an increasingly direct-to-consumer industry, 90% of executives surveyed said their business transformation efforts were being designed and implemented with the customer in mind.
Data is the key to understanding customers and their behavior. In the survey, 65% of respondents say that accessing data and improving the visibility of data is a top opportunity in the next 12 months. Somehow, just 58% of M&E companies say they fully use available data to inform decision-making. About half of respondents said building or enhancing customer data capabilities is not a critical priority for their organization, the report said.
In terms of making moves, executives see bundling as a way to improve engagement and retention.
“In a DTC world where consumers have the power to sign up and churn off streaming services at will, M&E companies are highly focused on increasing engagement with their content and platforms to strengthen the customer relationship,” the report said. “According to our research, 52% of M&E executives are prioritizing the launch of bundled offerings. In streaming, this includes consolidating distinct streaming services into a single app populated with a more robust content offering and delivered at an attractive relative price. The trade-off of building a supersized streaming app, with associated savings in technology and marketing spend, is the potential cannibalization of distinct, overlapping subscriber bases that exist today.”
And in an environment where interest rates are rising — depressing earnings and making mergers and acquisitions activity more expensive — companies are turning to alliances.
Over 50% of the executives EY talked to said forming partnerships is necessary to realize their long-term goals.
“We are seeing a proliferation of commercial agreements, joint ventures and alliances across both large and small M&E companies looking to build capabilities or enter new markets on a quick and capital-efficient basis,” the report said.
EY concluded by saying disruption is fueling the media and entertainment industry.
“By embracing reinvention, focusing on the customer, prioritizing disciplined business execution and remaining strategically nimble, M&E companies will be well-positioned to achieve sustainable and profitable growth,” the report said. ■
