From its earliest days, the media and entertainment (M&E) industry has charted new frontiers of disruption. This continues to be the case today. The evolving nature of revenue generation, combined with pressure to release trapped capital and other resources needed to power growth, is leading companies to re-evaluate their strategic and operational goals. But in an age of accelerating change, many companies believe that the pressure to adapt could be existential.
A recently launched EY study, How are media and entertainment businesses reinventing in an age of transformation?, revealed that slightly more than a third (34%) of the 350 global M&E executives surveyed believe their company will no longer exist in five years – unless their business undergoes reinvention. While M&E companies remain upbeat about the future overall, 50% of executives stated that they can no longer rely on traditional business models as they strive to reinvigorate their business.
So, what is propelling such a sense of urgency? According to the study, the three biggest drivers of transformation across the industry are:
- Responses to a dynamic competitive landscape, which could lead to pressure on profitability.
- Challenges associated with shifting customer expectations, which impact the uptake of products and services.
- Struggles to keep pace with technology as businesses evaluate digital innovations such as artificial intelligence (AI) and 5G.
If businesses are to respond to these forces, they must first decide where to begin. This is easier said than done, with more than one in four (28%) survey respondents admitting that they don’t know what to prioritize.
Meeting inertia head-on
While there is consensus that an industry reboot is inevitable, survey respondents indicate that there is no single path to reinvention. However, looking holistically at the survey responses across all sub-sectors, M&E businesses can position themselves for success by prioritizing three key levers: operational excellence, innovation and talent.
The following is quick look at the barriers and paths to success for each.
Realizing operational excellence: As they evaluate the enterprise, survey respondents identified operational excellence as their top ambition, with operating model change and operational delivery/execution cited as their biggest priorities. In addition, 63% of those embarking on change perceive optimizing the operating model as truly transformational. To succeed here, it is important for M&E companies to strike the right balance between efficiency and effectiveness if they want to compete in this fast-changing ecosystem.
Fostering innovation: One of the biggest pressures M&E executives face when it comes to innovation is the ability to deliver today while planning for tomorrow – achieving both sustained performance and long-term innovation. The key to reaching this balance is to pursue a variety of complementary strategies and initiatives, ranging from appointing chief innovation officers, to establishing in-house incubators, funding external venture capital investments or sourcing disruptive capabilities through acquisitions. Overall, innovation should be approached proactively, supported by clear structures, leadership and processes.
Upskilling talent: People are the foundation of the enterprise, and media executives acknowledge the need to meaningfully nurture and develop talent. Yet, nearly one-third (30%) of survey respondents identified inadequate skills and training among the biggest barriers to innovation. In addition, one-third of executives (33%) recognized the need to close the talent gap and build skills as central to their future success, while nearly half (49%) identified upskilling the existing workforce as the best way to build talent. In the long-term, this approach will help workers migrate up the value chain, empowering themselves by continually improving their capabilities.
There is no question that M&E executives understand that the competitive landscape is evolving. Determining what to prioritize is less clear, but embracing all three of the above ambitions can help them address their most urgent short-term challenges, as well as unlocking long-term value creation.
The views reflected in this article are the views of the author and don’t necessarily reflect the views of the global EY organization or its member firms.