Market saturation challenges any business as industry leaders look for innovative ways to continue growth and expansion. This has become evident within the media industry as companies deal with a highly saturated North American market. Media companies executing international expansion strategies must carefully navigate the challenges.
Why Now?
Rising Middle Class: The growing middleclass population, particularly in emerging countries, has significant implications for media companies. As an increasing number of households can afford cable subscriptions, content companies can capitalize on continuous revenue per subscriber and strategically bundle content by region.
Leveraged Investment: With global expansion, time and money have already been invested to create the content and assets. New investment is required to establish affiliate and advertising agreements and to enable a global business structure. The ability to leverage existing content and production facilities eliminates some potentially high startup costs.
Regionalized Advertising: This opportunity is more significant outside of North America where it’s more common to use a single broadcast facility to distribute content and ads across countries. Companies can use available technology to target traditional and non-traditional advertising.
The Risks
Risks range from cross-border logistics to specific content protections.
Government Regulations: In some countries, the government may regulate content distribution, which can limit revenue opportunities. Regulations governing employment, taxes and cash management laws also differ. Invest in ensuring the proper precautions are in place per each country’s regulations.
Politics: War, changes in government and massive economic slowdown can all impact both operations and revenue potential. Corruption is common and may delay production equipment transport.
Rights and Royalties: These agreements may limit distribution of content and data into new regions. Before expanding, review all of these contracts and possible conflicts to ensure your desired programming and distribution approach is possible.
Regionalized Content: Content consumption patterns differ across regions. Development and distribution of content with the right language, context and cultural considerations will aid international expansion. Companies should ensure regional leadership remains to provide content expertise where needed.
The risk of “not” growing is far worse than a thoughtful venture into uncharted territory. If done carefully, the companies that take this leap will see increased growth and will continue to evolve with the world economy.
Lori Bistis is advisory manager of PwC’s Entertainment, Media and Communications practice. Jennie Blumenthal is a director in its Technology, InfoComm, Entertainment and Media practice.
