Paolo Sidoti, ANZ CMT Client Group Lead, Accenture
Media and entertainment companies face a rapidly evolving environment, influenced heavily by the digital revolution and the rapid rise of social media platforms. Traditional media companies in Australia are seeing a transformation in consumer preferences, particularly towards content that is more personal, relatable, and immediately accessible. As a result, Big Tech companies are expected to grow more than two times faster in operating cash flow than legacy media during 2023-25.
It is time for traditional media companies to embrace radical strategic moves, meaning they must reinvent themselves from the ground up– this means finding new sources of revenue and taking on new roles in the entertainment value chain. While it is an enormous mandate, it presents a tremendous opportunity for legacy media companies to evolve along with the consumers they serve.
Changing consumer preferences
For the past few years, industries across the board have been shaped by the rise of social media, and consumer behaviour has changed as a result. According to Accenture’s new research – Reinvent for Growth – a staggering 60% of Australians now view user-generated content on platforms such as YouTube and TikTok as equally entertaining as traditional media. This highlights an undeniable trend: traditional media consumption is no longer the default choice for entertainment. Clearly the implications of this are profound, and media companies must face the prospect of radically overhauling their approach to content creation, distribution, and monetisation.
Content discovery frustration
The challenge of content discovery for consumers is becoming increasingly apparent. Our research shows that a third (32%) of Australians struggle to find something entertaining to watch, and over half (55%), are frustrated with receiving content recommendations that do not align with their interests. This dissatisfaction underscores the need for media companies to enhance their recommendation algorithms and user interfaces to offer more tailored and engaging content experiences.
The rise of serial churners
In this context, the emergence of “serial churners” – consumers who subscribe and unsubscribe from streaming services based on content availability – is notable. Our research indicates that the majority (63%) of Australians are comfortable with this practice, reflecting a shift towards a more dynamic and flexible consumption model. In 2023 alone, 46% of consumers cancelled more subscriptions than the previous year, a trend that speaks volumes about the volatile nature of consumer loyalty in the digital age.
The path to radical reinvention
The pathway forward for media companies involves more than incremental adjustments. It requires a bold rethinking of how they operate and engage with their audiences. Here are five key actions media companies must take to jump-start radical reinvention:
● Review your audience against consumer migrations: While consumer preferences have always varied, the subtleties of these differences have deepened recently. It is crucial for businesses to understand these nuances and how they influence consumer engagement with digital media services.
● Map your portfolio against the changing landscape: Examine consumer data to pinpoint variations and identify potential areas of growth. By comparing modern and diverse media portfolios with traditional ones, companies can detect emerging opportunities for expansion.
● Embrace the archetypes: There are three primary archetypes that can guide companies towards success: content merchant, audience cultivator, and audience aggregator. Notable examples of radical moves towards these archetypes include merging with a gaming studio, which aligns with the audience cultivator archetype, and acquiring a Connected TV OS provider, which fits the audience aggregator archetype.
● Take a hard look at your financials: Scrutinise the investments required to modernise and expand your offerings. Explore opportunities to reallocate resources or generate capital to fund these strategic changes. Consider the future viability of your business segments in terms of growth and cash flow, and strategise whether reshaping your portfolio or preparing for acquisition is the best course of action.
● Rethink everything: To unlock true value, transformation across all levels of the organisation is necessary. This means altering the company's mindset, operational methods, organisational structure, technology infrastructure, and talent management strategies.
As we navigate these challenging times, the imperative for media companies is clear: radical reinvention is not optional, but necessary for survival. Embracing this challenge will enable legacy players to both survive and to thrive in a digital-dominated future, where consumer preferences and technologies evolve at an unprecedented pace. By proactively redefining their strategies and operational models, media companies can seize the opportunities presented by this new era of entertainment.
Paolo Sidoti, ANZ CMT Client Group Lead, Accenture