accenture’s global media and entertainment high...
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Accenture’s Global Media and Entertainment High Performance Study 2011
Reshaping the business for sustainable digital growthWhy a new operating model is needed for high performance in tomorrow’s digital Media and Entertainment industry
All rights reserved © Accenture 2011 1
Fueled by rapidly rising consumption and rebounding capital markets, the past year has seen Media and Entertainment companies worldwide accelerate their change programs across several dimensions, in response to the pervasive impact of digital disruption. At the same time, they have gained renewed confidence as their focus shifts from survival to competition and growth.
However, M&E companies know their industry remains
in a state of flux that will continue for the foreseeable
future. To keep pace amid this ongoing and
sweeping change, while also building sustainable and
profitable businesses for the future, companies need
unprecedented operational agility. Yet many are still
less than halfway along their transformation journey.
2 Accenture’s Global Media and Entertainment High Performance Study 2011
All rights reserved © Accenture 2011 3
Adapting to the “new normal”
As companies press ahead with their
digital transformation initiatives, there
are strong signs that a fully-fledged
“new normal” is now emerging. It is a
world where the formerly distinct roles
of content, services and applications in
the overall consumer experience are
increasingly indivisible. A world driven
by new devices and mass technology.
These dynamics are increasingly
apparent across all segments. But,
given the sharp variations between
different geographies and industry
sectors, it is clear that the overall
industry migration to the new world
will take some time. “Classic media”
will live on while the world of “broad-
band media” fully establishes itself.
For companies, this is not simply a
one-off transition from analog to
digital; it’s a new business model.
The move to delivering personalized
digital services to each consumer
does not mean M&E will stop being a
mass-driven industry. The change in
focus from the mass-market audience
to the audience of one actually
involves a shift from mass media to
mass technology—with the source of
companies’ economies of scale moving
to technology platforms, as a way to
manage the costs and impacts of frag-
mentation and operational complexity.
Harnessing the “3D’s”
On their transformational journeys,
M&E companies need to cross the
frontier from early-stage industry
responses to more sustainable and
profitable business operations in
the new digital ecosystem. To take
this step, companies must consider
harnessing three fundamental drivers
that we have termed the “3D’s”: the
Digital Consumer, Digital Monetization,
and Digital Supply Chain.
Today’s consumers expect to choose
and consume the content they want,
in the way they want, wherever and
whenever they want. This means that
each individual is no longer an
aggregation of a separate reader,
viewer and listener, but a single entity
choosing and consuming content
experiences across multiple platforms.
This individual’s behaviors add up to
the “DNA” of the digital consumer.
The second “D”—Digital Monetiza-
tion—remains a major challenge,
and an area of uncertainty for many
players. What is clear is that M&E
companies will run a diverse portfolio
of revenue models, thereby capturing
multiple revenue streams, but also
obliging themselves to face further
operational complexity.
Maximizing returns
The third “D”—Digital Supply Chain—
underpins and empowers the other
two, thus enabling the M&E company
to achieve its ultimate imperative:
maximizing the return on investment
in content and operations. By support-
ing and enabling multiplatform
Those that fail to reach the ultimate destination of
sustainable profitability are likely to face extinction.
But for those that win this race, the prize is bigger
than ever before.
distribution, the supply chain opens up
new areas of growth, at a time when
consumers are increasingly prepared to
pay for content experiences, and when
online advertising represents a huge
global opportunity.
However, the complexities are equally
unprecedented. Multiplatform opera-
tion is no longer an option, but an
imperative: mobile is seen as having
the biggest growth potential by the
industry as a whole, TV is second,
and tablets are lagging a little way
behind—but are already leading the
way in publishing. Companies must
find an economically viable trade-off
between multiplatform services and
interoperability across devices, while
simultaneously customizing content
for every platform and consumer
experience. This is a tough call.
The collaboration imperative
A function of the increased complexity
is that as each multiplatform content
provider’s supply chain can no longer
operate in isolation, high performers
are rapidly evolving their traditional
positioning—and new collaborative
ecosystems will continue to emerge,
driven by the need to achieve
economies of scale, leverage skills
and compete against new players.
As companies adapt and reshape for
the new reality, implementing a series
of point solutions aimed at specific
operational issues will not be enough
to deliver sustainable high perfor-
mance. What is required is an holistic
approach supported by mastery over
the effective execution of strategy.
The route to sustainable high performance: the 3D Operating Model
Accenture has developed a solution
that will help enable the M&E
company of the future to achieve
sustained success in the digital
“new normal”. The Accenture High
Performance “3D Operating Model”
rethinks the traditional vertical
orientation around channels, and shifts
the polarities to a horizontal focus on
key capabilities in the digital value
chain. This means that each horizontal
layer becomes a competitive asset and
a potential focus for differentiation,
innovation and collaboration.
In our view, this model unleashes
the full commercial potential of a
company’s content assets, while also
providing improved governance over
its value drivers, and supporting the
innovation, operational excellence and
organizational agility needed to adapt
quickly to changes in the competitive
landscape. And—taking account of the
continuing resilience of non-digital
content—it also provides a pragmatic
structure for maximizing digital
revenues while leveraging classic
media even more effectively.
We believe that this model will
characterize the industry’s future
high performers. Please read on to
find out why.
4 Accenture’s Global Media and Entertainment High Performance Study 2011
For the fifth successive year, the
Accenture Global Media and Entertain-
ment High Performance Study has
researched the views of 130 leaders
and decision-makers in the Media and
Entertainment industry worldwide,
spanning broadcasting, publishing,
filmed entertainment, portals,
interactive gaming and music.
The industry breakdown of the
respondents is shown below.
As with previous studies, we have
refined and expanded the research
program in the light of knowledge
built up in previous years, with a
view to deepening the insights gained
across all segments of the industry.
The qualitative study on which this
report is based includes interviews
with 130 C-Level executives—increased
from 102 in the previous year in
order to improve our coverage of
all segments, particularly portals and
publishers.
The respondents are all executive
leaders in six M&E industry sectors.
They are based in 18 countries, with 42
(or 32.3%) of the interviewees located
in Asia Pacific, 50 (38.5%) in the
Americas, and 38 (29.2%) in Europe/
Middle East.
Research methodology and sample
All rights reserved © Accenture 2011 5
Key areas of focus in this year’s inter-
view program included companies’
approach to the three key industry
drivers of the digital consumer, digital
monetization models, and digital supply
chain—together with the impacts of
these factors on digital operating
models. This report presents some of
the key findings from our 2011
study, and goes on to draw out the
principal implications for Media and
Entertainment companies seeking to
achieve high performance in an
increasingly digital environment.
For further information about this
report, please register at
www.accenture.com/MandE_High_
Performance_Study_2011
North America 40 South America 10Europe 38APAC 42
Figure 2: Accenture's Global Media and Entertainment High Performance Study 2011 respondents by industry.
Figure 1: Accenture's Global Media and Entertainment High Performance Study 2011 respondents by country
Publishing BroadcastingEntertainmentMusic, Gaming, Film
PortalsPortals, Social Networking,
Internet Companies,
Advertising
18%22%30%30%
Pervasive digital disruption— and growing market opportunity
In recent years, all segments of Media and
Entertainment have experienced accelerating change
across several dimensions, all rooted in the pervasive
impact of “digital disruption”. This change has seen
consumers migrate rapidly to new modes of digitally-
enabled, multichannel consumption behaviors.
The result is a world in which 35 hours of content
is added to YouTube every minute,1 nearly half of
televisions shipped with screens of 40 inches or larger
have integrated networking,2 and Facebook is used
by 1 in every 13 people on earth.3 Video is the
fastest growing mobile application; by 2015 video
is predicted to account for two thirds of all global
mobile data traffic.4
6 Accenture’s Global Media and Entertainment High Performance Study 2011
Figure 3: Do you see more challenges or more opportunities for your business in the next 12 to 24 months?
1 Morgan Stanley: Ten Questions Internet Execs Should Ask & Answer — November 16, 2010 — Web 2.0 Summit, San Francisco, CA
2 IDC, Worldwide and U.S. Consumer 2011 Top 10 Predictions, January 2011, IDC #226734
3 http://www.digitalbuzzblog.com/facebook-statistics-stats-facts-2011/
4 Cisco Visual Networking Index (VNI) Global Mobile Data Traffic Forecast Update 2011
5 Morgan Stanley: Ten Questions Internet Execs Should Ask & Answer — November 16, 2010 — Web 2.0 Summit, San Francisco, CA
No area of the industry has been
immune from the digital transforma-
tion driven by these new consumer
behaviors. This change encompasses
every aspect of the industry value
chain—content technologies, delivery
channels, access devices, revenue
models, marketing techniques, adver-
tising paradigms, rights acquisitions
and management, cross-sector
competition, market fragmentation,
talent and skills.
Insatiable consumption of content
Media and Entertainment companies
have embraced this multidimensional
change, racing to redesign their
strategies for the digital ecosystem
and deliver the content experiences
that consumers want and will pay for.
These strategies are fueled by rapidly-
expanding global consumption for
media and entertainment content in its
many forms. While the growth curves
and dynamics vary by segment and
geography, this market is not going
to go away any time soon. In our
research, this insatiable consumer
consumption of content is reflected in
confidence voiced by respondents that
they foresee more opportunities than
challenges in the next 12 to 24 months
(see Figure 3).
The positive impact of rising demand
is increased still further by continuing
growth in the traditional drivers
of global spending on media and
entertainment—GDP, population and
disposable wealth. These forces are
seeing content consumption grow as
never before in an expanding array
of markets, and the momentum is
building all the time. The capital
markets appreciate this potential:
in 2004, the top 15 publicly traded
internet companies were worth a
collective US$262 billion; in 2011
the figure was US$667 billion.5
All rights reserved © Accenture 2011 7
Far more
challenges
than
opportunities
More challenges26%
More opportunities48%
Far more
opportunities
than
challenges
More challenges
than opportunities
More opportunities
than challengesAbout the same
4% 22% 40% 8%26%
8 Accenture’s Global Media and Entertainment High Performance Study 2011
Embracing change—amid increasing confidence
Consumers’ continuing voracious
appetite for content experiences
has seen Media and Entertainment
companies reach a level of confidence
higher than in several years—certainly
since before the global economic and
financial crisis.
Showing courage and determination,
companies have worked hard and
kept investing even in the downturn,
pressing ahead with their customer-
centric initiatives, while also improving
their ability to operate more commer-
cial models concurrently and manage
a more complex and sophisticated
supply chain.
Global economic recovery and the
revival in advertising have sustained
the industry’s momentum, and the
future looks significantly brighter than
it did two years ago, encouraging com-
panies to invest in digital capabilities.
As our research shows, 84% of respon-
dent companies increased their levels
of investment in the digital supply
chain in 2010—with almost a third
(31%) increasing it by more than 25%.
As a result of this committed invest-
ment, companies across the industry
have taken some significant steps on
their digital transformation journey,
and believe they are now well-posi-
tioned to compete—although they
accept there is much more change
to come. As Figure 4 shows, 73% of
respondents in our research study think
their operating models are primed for
success to a “large” or “very large”
extent. The minority who are less
confident are dominated by publishers
and broadcasters.
These findings suggest that the indus-
try as a whole is no longer afraid of
the digital future, and that the game
is moving from survival to competition
and growth. Last year, cross-sector
competition was regarded as the top
challenge facing companies in the
coming 12 to 24 months; this year, it is
identifying the monetization models
needed to harness new revenues.
Again, this suggests the mood is shift-
ing from caution to optimism, as the
industry’s growth potential becomes
visible again, and appears higher than
ever before.
“[The key will be] strong content backed by a very
strong customer insight.” Head of Digital Marketing, music company, India
Figure 4: To what extent do you believe your operating model is primed to enable your business to compete successfully?
Do not
know
To a very large extent
To a very
limited
extent
To a limited
extent To a large extent
3%2
Portals 17% Entertainment 21% Broadcasting 26% Publishing 33%
22% 55% 18%
Will be relatively stable
for the next 12–24
monthsContinue to change significantly for the forseeable future
85% 15%
Publishing 97%Entertainment 93%Portals 87% Broadcasting 64%
All rights reserved © Accenture 2011 9
Figure 6: Given your view of future industry change, do you believe that your business will continue to change significantly?
Much more change to come
At the same time, Media and
Entertainment companies fully
recognize that their industry is a
long way from reaching a stabilized
situation. As Figure 5 shows, four out
of five believe that the industry is
still in a state of flux, with significant
further redistribution of revenues yet
to take place across the value chain
over the next two years.
Companies also know from experience
that the pace of change creates major
pitfalls, which have impacted successful
global leaders and newer digital
entrants alike. As reported in the global
news media, UK broadcaster ITV sold
Friends Reunited in 2009 for £25m,
having agreed to pay a total of £175m
for it four years earlier.6 And in
February 2011, News Corp revealed a
US$275 million write-down on its
MySpace acquisition and the related
Web businesses.
Given the continuing pace of change,
companies know they must balance
their growing confidence in their digital
capabilities with rigorous management
of ongoing change and the resulting
risks. The vast majority—including over
90% in publishing and entertainment—
expect that significant change will
continue for the foreseeable future,
meaning they will have to continue
changing and adapting (see Figure 6).
Reshaping for the new environment
So Media and Entertainment companies
are on an ongoing journey as the digital
ecosystem expands. To reach their des-
tination, they will need unprecedented
operational agility that enables rapid
ongoing reshaping of their business in
response to continuing change, the
sheer pace of which means an approach
of “wait and see” is not an option.
Instead, with much of the current
digital industry built on wooden
foundations rather than rock, companies
move now to identify and build a new
basis for sustainable success in the
future.
6 http://news.bbc.co.uk/1/hi/8186840.stm
It will be stable
in 12–24 months
with some revenue
redistribution
across value chain
It is already
fairly stable
It will be stable
in 12–24 months
with current
business models
It is still changing rapidly with significant revenue redistribution across value chain
80% 14% 4% 2
Figure 5: Do you believe the Media and Entertainment Industry is becoming more stable or is continuing to change?
Execution of digital strategies demands a new operating model
To adapt to the new environment, companies across
all Media and Entertainment segments have identified
and launched new strategic programs and ramped up
their investment in digital initiatives and digitally-
enabled services and capabilities.
10 Accenture’s Global Media and Entertainment High Performance Study 2011
All rights reserved © Accenture 2011 11
Some incumbents have implemented
highly successful strategies in the
digital space. High-profile examples
include Disney, whose CEO Bob Iger
was quoted in October 2010 as saying:
“I have tried to keep two obvious
philosophies…First, that our current
business not get in the way of adopt-
ing new technologies. And, second,
that our business belongs on these
new platforms.7” At the same time,
other players have come in as new
digital entrants with successful strate-
gies—witness Netflix’s drive to make its
movie streaming service available on
as wide an array of set-top boxes and
handheld devices as possible.
Only halfway along the journey
However, as we have already highlight-
ed, our research shows that companies
know the industry is still a long way
from reaching a stable state. Digitally-
driven change—and the need for
companies to adapt to it—will continue
for the foreseeable future. In this
context, most companies know they are
still less than halfway along their jour-
ney to a digitally integrated file-based
enterprise. As Figure 7 shows, only 43%
believe they are already over 50% of the
way to full digitization, while 32% are
less than a quarter of the way there.
That said, some companies have already
built end-to-end digital supply chains,
as illustrated in the accompanying
information panel about Warner Bros.
Such pioneers aside, most companies
face a need to execute the rest of this
journey while continuing to respond
to ongoing profound change in the
Figure 7: How far along are you in terms of the migration from an analog, offline company, to an integrated file-based digital enterprise
(e.g. from production to distribution to access management)?
Figure 8: What is the top challenge(s) that your company faces, or expects to face, in the next 12 to 24 months?
7 http://kara.allthingsd.com/20101009/when-you-wish-upon-two-web-stars-ceo-bob-iger-talks-about-the-next-digital-direction-for-disney-2/
Not
started
Analog, offline company Digitization Process Integrated, file-based digital enterprise
<10% 10–25% 26–50% 51–70% >70%
4% 12% 16% 25% 22% 21%
Identifying new
monetization models
39%
Speed and ability to
transform your digital
operating model
23%
Providing a better
digital consumer
experience
22%
Competition from
new players
20%
Cross-sector
competition
15%
Declining
demand
7%
Other
8%
Warner Bros.: digital end-to-end
A good example of digital
supply chains in action is
Accenture’s collaboration
with Warner Bros. to help
transform its core media
production and distribution
capabilities into a single,
totally integrated digital
operation. This project made
Warner Bros. one of the
first studios in the world to
move its entire film and
television production, post-
production and distribution
to an entirely digital end-
to-end-process.
environment, and in the face of a
number of severe challenges that have
yet to be addressed. As Figure 8 shows,
the most pressing of these challenges
in the next 12 to 24 months are
identifying new monetization models
and generating the speed and ability
to transform their operating models to
capitalize on future opportunities.
There is as yet no clear or agreed view
of precisely what these opportunities
will look like or how they will best be
leveraged. What is clear is that the
industry’s world changed dramatically
as a result of digitization, accelerating
the rate of change during the down-
turn, with several factors underpinning
rising demand into the future.
The “new normal” is coming—but will not arrive overnight
Signs of this new world emerging
are all around us. Broadband and
interconnected devices are spreading
exponentially, with global media tablet
shipments alone expected to exceed
44.6 million in 2011, a leap of over
160% from 2010's 16.9 million.8 And
an Accenture survey9 published in
January 2011 projected that consumer
purchase rates for personal computers
and mobile phones (excluding smart-
phones) will decline by 39 percent and
56 percent respectively in 2011 com-
pared with 2010, as consumers switch
their spending to newer alternatives
offering a better content experience.
These alternative devices include not
just tablets but also 3D TVs (sales of
which are expected to rise by 500% in
2011), eBook readers (up 133%) and
12 Accenture’s Global Media and Entertainment High Performance Study 2011
smartphones (increasingly saturated,
but still up 26%). At the same time,
the advent of the multipolar world—
where spending power and talent are
distributed more evenly around the
world—is seeing a billion new and
more mobile consumers hungrily
accessing content via ever more devices.
These advances are early signs that a
fully-established “new normal” is now
emerging: a world driven by new
devices and mass technology, where
the agility to adapt to constant change
while delivering personalized content
experiences will be a prerequisite for
sustained high performance in any
segment of Media and Entertainment.
Personalization of the consumer
experience for millions of individuals
requires companies to become more
agile and efficient in serving the new,
mobile, digital consumer and his or
“[The] most important competitive edge for us must
be the creativity of our products. Gathering customer
intelligence as much as possible is another key to
help define a better strategy.” General Manager, Product Operations Centre, gaming company, China
8 IDC, Worldwide and U.S. Consumer 2011 Top 10 Predictions, January 2011, IDC #226734
9 Accenture’s Consumer Electronics Products and Services Usage Report 2011, available at https://microsite.accenture.
com/landing_pages/EHT/Documents/Accenture_GlobalConsumerTech_2011.pdf
All rights reserved © Accenture 2011 13
Figure 9: What is your company’s share of digital revenue today, and what proportion of your revenue do you expect to achieve from digital
income two years from now?
her social network. This intensifies the
need for a new digital operating model
based on an end-to-end digital value
chain, to enable completely new busi-
ness and monetization models with the
required level of integration between
content, applications, services, devices,
and connecting channels.
However, while the dynamics of this
new world are increasingly apparent,
and while there is no doubt the
momentum behind digitization is
both unstoppable and growing, the
industry’s complete migration to this
new world will take time. As Figure 9
shows, only 22% of companies say
that they currently get more than a
quarter of their revenues from digital
sources. Even in two years’ time, less
than half expect to be in this position.
Not a transition—but a new business model
The implications are clear. As digital
revenues gain momentum over a
period of several years, they will
account for a progressively rising
proportion of companies’ revenues. But
in the meantime, “classic media” will
live on, while the new normal—the
reality of ubiquitous, always-connected
“broadband media”—establishes itself.
This means that what companies are
facing is not simply a transition from
analog to digital, but an imperative
for a new business model.
Until recently, the industry’s concerns
over the difficulty of monetizing digital
content were often summed up as
switching “analog dollars for digital
pennies”, a phrase originally coined—
and later updated—by NBC CEO Jeff
Zucker. Given the fact that “classic”
and “broadband media” will co-exist
<10%
Today
10–25% 26–50%
51–70%
>70%
47% 31% 11% 8%3%
22%
<10%
Two Years From Now
10–25% 26–50% 51–70% >70%
17% 36% 28% 6% 13%
47%
for the foreseeable future, it is now
increasingly clear that this concern
is a distraction. So companies need
to press ahead with an operating
model equipped to serve both classic
media consumption and personalized
broadband consumption at high levels
of efficiency.
This model will require new ways to
achieve economies of scale, as “media”
increasingly equates to “technology”,
and “mass media” comes to equal
“mass technology”. The move to
personalized services does not mean
Media and Entertainment will stop
being a mass-driven industry. Instead,
the reorientation around the audience
of one actually involves a shift “from
mass media to mass technology,”
with the source of economies of scale
moving to technology platforms—
rapidly adopting new themes such as
mobility, cloud or analytics to manage
the costs and impacts of fragmentation
and increased operational complexity.
14 Accenture’s Global Media and Entertainment High Performance Study 2011
Towards a high performance digital operating model
To do this, the high performance Media
and Entertainment business of the
future will remove embedded barriers,
enabling it to do more with less, and
to redefine itself as a leaner, more
agile and more innovative organiza-
tion, ready and equipped to exploit
digital opportunities in an integrated
way across channels. To build such an
operating model, companies need to
challenge the basis for the existing
channel-focused silos within their
business. Legacy structures based
around separate content delivery
channels can hinder key capabilities
for the digital world such as digital
customer centricity, cross-channel
content monetization, and integrated
rights acquisition and management.
Companies are already under pressure
to define clearly how they will trans-
form themselves to harness digital
opportunities. The capital markets are
reducing the future growth premium
allocated to those Media and
Entertainment companies that are
failing to set out a compelling vision
for their own digital transformation.
Successful execution of digital strate-
gies in Media and Entertainment—
and winning over skeptical investors
to believe in those strategies—requires
companies to adopt a new and
different performance anatomy.
Not piecemeal—but holistic
Some Media and Entertainment com-
panies are trying to implement their
digital strategies though a series of
point solutions aimed at specific
operational issues—such as repurposing
selected pieces of print content for
Internet and mobile formats. It is
increasingly clear that this type of
piecemeal approach will not deliver
sustainable high performance in the
long term. Confidence in the viability
of the current operating model does
nothing to ensure its sustainability.
Instead, what is required is a combina-
tion of an holistic approach to set the
context for all actions, with mastery
over effective execution of overall
strategy to sustain momentum and
competitive advantage over time.
So, what factors will shape the design
of the new, sustainable high perfor-
mance operating model? We will now
examine the drivers behind the model—
and go on to show what it will
look like.
“Constant innovation and digital distribution will be
most essential.” Executive Director News, broadcasting company, Malaysia
The drivers behind a new high performance Media and Entertainment operating model
To cross the frontier from early-stage industry responses
to more sustainable and profitable business operations
in the digital ecosystem, M&E companies need to
consider creating an operating model specifically
designed and oriented to achieve two things. First, it
must maximize the key “broadband media” revenue
drivers in the digital era efficiently and effectively.
Simultaneously, it must also support traditional
“classic media” for as long as necessary.
16 Accenture’s Global Media and Entertainment High Performance Study 2011
All rights reserved © Accenture 2011 17
As Figure 10 illustrates, we believe that
these imperatives can only be achieved
by an agile enterprise that successfully
harnesses three drivers, which we
have termed the “3D’s”: the Digital
Consumer; Digital Monetization;
and—underpinning them both—
the Digital Supply Chain.
Figure 10: The agile enterprise and 3D drivers
1The Digital Consumer Transformational change in consumers’
behavior and expectations around con-
tent consumption have been gathering
pace for several years. Consumers expect
to choose and consume the content they
want in the way they want, wherever
and whenever they want. As a result,
each individual is no longer an aggrega-
tion of a separate reader, viewer and
listener, but a single entity choosing and
consuming content experiences across
multiple platforms.
In expressing this individuality through
their behavior, digital consumers exhibit
a number of shared characteristics—
which together add up to the “DNA”
of the digital customer. These include
amplified social engagement and inter-
activity, multichannel and multiplatform
usage (including rising mobility), and
demand for real-time interaction and
information.
Consumers are also super-global
and hyper-local in their content
consumption habits—both hungry for
world news and global applications,
and also strongly focused on their local
environment. Yet, despite these shared
characteristics, every digital consumer
remains a unique individual with unique
DNA, creating a far more diverse and
varied consumer landscape than in
the past.
An early stage of the customer-centric journey
The companies interviewed in our study
are fully aware of the need to deliver
the new personalized digital experienc-
es that consumers want—but most are
some way from building the integrated
view of the digital customer needed to
execute this objective. Over half of our
respondents (52%) say the transition
from “mass audiences” to “individual
Digital Consumer
Agile Enterprise
Digital Supply Chain
Digital Monetization
18 Accenture’s Global Media and Entertainment High Performance Study 2011
customers” remains a challenge for
their businesses. And, as Figure 11
shows, only 9% of executives feel their
company has a fully integrated view of
their digital customer—with the vast
majority believing there is room for
improvement in the integration and
consistency of the view of digital
customers across the business.
Asked to name the most complex
issues their business faces in managing
to shift from “mass audiences” to
“individual consumers”, executives cite
a wide range of concerns. Culture and
skills are seen as the most difficult
issue (cited by 22%), closely followed
by operational (21%), technical (21%),
commercial (18%) and organizational
(16%) barriers. The fact that so many
issues are perceived as presenting
relatively equal challenges underlines
the need for a new operating model
to tackle all of them holistically.
Seeking immersive experiences
These findings indicate a pressing
need to improve customer centricity
and understanding to keep up with
changing consumption behaviors. In
particular, the combination of social
networking and mobility—enabled by
better broadband connectivity and
lower cost/higher performance
devices—is fundamentally transforming
the landscape of the consumer experi-
ence. Crucially, consumers no longer
see communications technology as a
tool for one-to-one transactional
conversations with a specific purpose.
Instead they want to immerse them-
selves in an ecosystem of content,
applications and services with a myriad
of uses—including networking, making
friends, gaming, buying goods, and
accessing information and home
entertainment such as video and
music.
For the first time, the digitally-enabled
Media and Entertainment industry
has the capabilities and technologies
required to fulfill these needs, support-
ed by consumers’ own readiness to
buy the devices that make it possible.
Global smartphone shipments are
expected to overtake desktop and
notebook PCs combined in 2012.10 And
between 2000 and 2008, the average
consumer increased his or her spending
on electronics devices by 7 percent a
year—while companies reduced their
IT hardware spending per employee
by 3 percent.11 This increase reflects
consumers’ ongoing appetite for new
consumption experiences, as illustrated
by surging take-up of tablets, eBook
readers and smartphones worldwide.
Figure 11: To what extent do you believe your company has an integrated view of your digital customer?
“[It’s about] innovative customer relationship management. We need to invent something new for our customers, in order to be ahead of the competition.”
Chairman, film company, Germany
Increasing Integrated View
Insufficientfor our needs Fragmented
Consistent but by businessunit only
Somewhat integrated
Fullyintegrated
8% 31% 14% 38% 9%
10 Morgan Stanley: Ten Questions Internet Execs Should Ask & Answer — November 16, 2010 — Web 2.0 Summit,
San Francisco, CA
11 Accenture Institute for High Performance: Can Enterprise IT Survive the Meteor of Consumer Technology? By Robin
Murdoch, Jeanne G. Harris and Glenn Devore, September 2010. Drawn from: Employment Status of the Civilian Non-
Institutional Population, 1940 to date, 2009 edition, Bureau of Labor Statistics, US Department of Labor; Historical
Sales Data Details, Consumer Electronics Association, 2010; and Worldwide IT Spending Historical Databook, IDC, 2010.
All rights reserved © Accenture 2011 19
2Digital Monetization
Asked to identify their most important
sources of revenue growth in the next
12 to 24 months, our respondents
point to new platforms or distribution
channels, followed by new products
and services (see Figure 12). These
sources will form the core focus of
the new sustainable operating model’s
digital monetization strategy.
However, while this focus may be com-
mon across companies, it is important
to stress that there is no single right
answer to business and monetization
models. As Figure 13 shows, M&E
companies in the future will operate a
combination of several monetization
models and revenue streams—“a port-
folio of revenue models”. These will
often include the classic ones, but
the new models will need to be more
than just a re-platforming of existing
models. This diverse blend of concur-
rent revenue streams will add further
complexity to their operations, by
cutting across the traditional focus on
channels.
Figure 12: In terms of opportunities, what is the most important source of revenue growth for your company in the next 12 to 24 months?
Figure 13: Which of the following are the most prevalent business models for your business today, and which will be the emerging ones in
the next two years? (Ranked and top 3 selected)
Maximizing returns on content investment
The ultimate imperative is to maximize
the return on investment in content
and operations—a need made all the
more urgent by the high and often
rising costs of content creation and
acquisition. Key attributes for achieving
this include a strong, focused and
integrated capability in content rights
management, and the ability to target
and repurpose this content in differing
ways and contexts to deliver a compel-
ling experience across platforms. The
complexity is further increased by the
evolution of the concept of content
itself to encompass a combination of
applications, services and content.
New Platforms or Distribution Channels65%
1st Choice 2nd Choice
New Productsand Services42%
New MonetizationModels34%
New Content27%
New Geographies21%
New ConsumerSegments8%
Other5%
49% 17%16% 25% 25%9% 10% 17% 7% 14% 4 4 5%
46%42%
Ad Supported Subscription On Demand Merchandising/
Physical Sales
Licensing Freemium Affiliate Other Brokerage
16%
21%
15% 14%
7% 6% 6%5% 5%4% 4%3% 2% 2% 1% 1%
Today
Nex
t 2 Y
ears
ApproachTraditional Digital Multimedia
None and not planning to launch in next 12 months 20–50% digital/multimedia
with no plans to increase
in next 12 monthsNone but planning to launch in next 12 months
<20% digital/multimedia with no plans
to increase in next 12 months
<20% digital/multimedia with plans
to increase in next 12 months
20–50% digital/multimedia with plans
to increase in next 12 months >50% digital/multimedia
2 4% 9% 34% 30% 17%4%
20 Accenture’s Global Media and Entertainment High Performance Study 2011
Again, most companies have some
way to go to achieve the required
capabilities. Take integrated rights
management, which is a critical
enabler for effective monetization of
digital content. As Figure 14 shows,
only 7% of the companies in our
research think an integrated view of
rights management is not a strategic
imperative. But most of the remaining
93% are still in the early stages of a
deep transformation journey to achieve
this: only 23% of companies say they
already have an integrated view of
rights management across business
units, while 70% acknowledge
that what they do have requires
improvement.
For those companies that get this
right, the prize on offer is increasingly
clear. The advent of the smartphone
and tablet-enabled world means
“paying” for content experiences is no
longer a dirty word. For example,
mobile app revenues are expected to
reach a global total of US$12.3 billion
in 2011, up by 149% on 2010. More
generally, consumers’ hunger for
content experiences is turning the
consumer marketplace into a
“demand-pull” environment (see
information panel), with offerings and
charging models advancing apace:
witness the New York Times’ recent
launch of a paywall for its website,
allowing users to view a maximum of
up to 20 items for free per month, but
charging for more extensive online,
smartphone and iPad content access.
Optimizing advertising models
While content charging models are
increasing, advertising remains key—
with some 46% of respondents believ-
ing that this will continue to be their
most prevalent revenue model. While
advertisers in the digital world need
to be sold to more proactively (see
information panel), analysis by Morgan
Stanley suggests that media time spent
on the Internet is still undervalued
in terms of ad spend, creating a
US$50 billion global opportunity.12
However, harnessing this opportunity
will require companies to understand
and leverage the implications of new
digital advertising models—and the
related performance marketing logics
and techniques that underpin them.
Our findings underline once again that
most companies have a long way to go
to implement the required capabilities.
Taking multimedia advertising as an
example, Figure 15 shows that less
than one in five of our respondents
(17%) say their business now gains
more than 50% of its advertising reve-
nues from digital/multimedia sources.
Almost half of the interviewees say
digital accounts for less than 20% of
their advertising business. However,
companies are keenly aware of the
need for progress, voicing a strong
commitment to increasing the
proportion of their ad revenues
derived from digital.
Figure 14: To what extent do you believe that your company has an integrated view of the Rights Management processes and capabilities
serving all your Business Units?
Figure 15: In your organization, how far advanced is your transition from traditional advertising to digital or multimedia (bundle of off-line
and on-line) advertising?
Not a
strategic
imperativeStrong and established
Rights management processes and capabilities
in place but requiring improvement
No fully consistent model but moving
in the right direction
23% 41% 29% 7%
Publishing 9%Entertainment 24%Portals 16% Broadcasting 34%
12 Morgan Stanley: Ten Questions Internet Execs Should Ask & Answer — November 16, 2010 — Web 2.0 Summit,
San Francisco, CA
All rights reserved © Accenture 2011 21
3The Digital Supply ChainIn the years to come, even the most
traditionally-minded Media and
Entertainment business will have no
choice but to operate via Internet and
mobile as well as physical channels —
and high performers will operate via
a far wider range of platforms.
As a result, every participant in the
industry has an absolute need for an
efficient, integrated and rigorously
managed end-to-end supply chain for
acquiring, managing, repurposing and
delivering personalized digital content
experiences to consumers across
multiple platforms.
Crucially, changing industry and
consumer dynamics mean these
supply chains can no longer operate in
isolation. Our research shows that 70%
of companies believe the digitalization
of the supply chain is significantly
impacting the way they operate—both
internally and with business partners
and collaborators. Given this rising
degree of integration with third
parties, it is very difficult for any single
organization to fulfill the entire need
for specialized capabilities all along the
value chain.
New integrated ecosystems
This imperative means that entire
collaborative value chains and ecosys-
tems will emerge in and across all
segments of M&E. As Figure 16 shows,
most companies are planning to
step up their collaboration with
competitors, driven by a range of
potential benefits including the ability
to achieve economies of scale, leverage
skills more effectively, and compete
against new players. In essence,
fragmentation of markets and demand
is transforming the economies of
scale required to remain profitable and
competitive—creating a need for new
alliances, capabilities, skills and talent.
Consumers and advertisers swap rolesIn the digital world, the traditional
commercial dynamics of consumers
and advertisers have been reversed,
intensifying the need for new
monetization models.
In the analog world, customers
had to be won over to agree to
participate in content experiences
(whether sold or provided free), and
advertisers would readily pay to be
a part of those experiences. But in
the digital world, consumers are
hungry for content experiences,
and have become demand-pull
participants and buyers.
In contrast, advertisers now
demand much greater accountabil-
ity and measurability of outcomes
than in the analog world. As a
result, advertisers are much harder
to win over, and advertising
opportunities need to be sold to
them proactively through an
advertiser-centric approach.
Figure 16: Is collaborating with competitors something you might do, or might do more of, in the next 12 to 24 months?
“For me I feel it has got to be mobile and tablet.
Monetization is key, it is about charging for something
that used to be free.” Sales Operations Director, broadcasting company, US
Publishing 77%Entertainment 48%Portals 65% Broadcasting 64%
Percent that collaborate
Why collaborate?
For all the reasons displayed here To achieve economy of scale To leverage skills
To compete against
new players
Other
37% 30% 17% 15% 1
22 Accenture’s Global Media and Entertainment High Performance Study 2011
As the momentum behind collaboration
grows, new alliances are now emerging
almost every week: recent initiatives
include the "broad strategic partner-
ship" announced between Nokia and
Microsoft; Warner Bros.’ decision to
stream The Dark Knight on Facebook;
and retailer JC Penney’s use of
Facebook as an online sales platform.
Seizing the mobile revenue opportunity…
As new collaborative digital supply
chains emerge, they share a number
of critical success factors. Access to
content is clearly vital, together with
linkage on one side with customer
interactivity, and on the other side
with the understanding, control and
ownership of the customer as a unique
individual consuming content across
different channels and devices.
This requirement is growing with the
escalating penetration of new devices.
As Figure 17 shows, the rapid rise of
smartphones means executives believe
that mobile devices will be their
customers’ preferred platform for
digital content consumption in the
next two years. TV is also expected to
maintain strong relevance thanks to
the spread of Connected TV. Tablets—
still in their early stages of adoption—
will have less relevance in the short
term across M&E as a whole. But
drilling down into the segmental
responses, we find that publishing
companies believe tablets will be their
consumers’ favorite consumption
device within the next 12 to 24
months, cited by 36% of publishing
respondents.
Furthermore, as Figure 18 shows,
mobile is regarded as the digital supply
chain distribution channel with the
greatest potential to drive growth,
again followed by TV. As these findings
show, while mobile is undoubtedly the
main driving force, TV/connected TV
are resilient and will remain relevant,
and tablets are a promise not yet at
scale (except in publishing). The
technology platform suffering the
most is the PC.
Figure 17: Please rank the content consumption “device” you believe your customer will prefer in the next 12 to 24 months.
“The [key will be the] ability to reach our audience
unimpeded by other people's gateways. We want to
ensure that there are no barriers to a unified content
approach.” Managing Editor, TV Platforms, broadcasting company, UK
Mobile/smartphone
35%
TV/connected TV
32%
PC
19%
Tablet/netbook
13%
All rights reserved © Accenture 2011 23
…by managing additional multiplatform complexity
As the dynamics of the multiplatform
environment continue to evolve, the
ability to deliver content experience to
consumers across multiple platforms
remains key. This brings additional
complexities for the content supply
chain, which is critical for creating the
end-to-end visibility on revenue and
costs needed to gauge profitability.
This visibility is needed across all
platforms, and throughout all stages
of the supply chain, including creating
content, buying rights, and reformat-
ting it for different platforms.
When we asked our respondents to
name the most important supply chain
capability for success in a multiplat-
form environment, interoperability
across platforms and devices came top,
narrowly ahead of customized content
for each platform in second place.
Achieving these two conflicting
objectives in a profitable and sustain-
able way demands a trade-off that
further increases the complexity of
multiplatform delivery models. It
also demands multiple new skill sets,
boosting the need for collaboration
and lending greater urgency to the
search for economies of scale.
Figure 19: Which of the above do you believe are the most important supply chain capabilities required to succeed in a multiplatform context?
Figure 18: Which of the above distribution channels offer the highest growth opportunities for your company over the next three years?
Mobile/Wireless54%
1stChoice
2ndChoice
3rdChoice 1%
2%
Traditional TV41%
Online:Social Media37%
Online:Streaming35%
Video over IP,IPTV, OTTV33%
Online:eCommerce29%
Online:Portals22%
Online:Search16%
Print16%
Bricks &MortarRetail10%
Radio8%
2%
2%
25% 23% 6 8% 8% 9% 9% 9%3 3 4410%11% 11% 12% 11%510% 16% 16%14% 13%17% 12% 6 66 5
Interoperability across platforms and devices
36% 32% 17% 13%
Customized content for each platform
Control of
end-user access
Industry standards
and regulations
Other
1%
24 Accenture’s Global Media and Entertainment High Performance Study 2011
The new high performance Media and Entertainment operating model: shifting the polarities from vertical to horizontal
“Innovation really is key, all across the business sectors:
services, marketing, strategies, distribution, channels,
action models. Innovation is essential for success.” Head of Strategic Marketing, broadcasting company, Italy
All rights reserved © Accenture 2011 25
The three drivers we have described—
the digital consumer, digital monetiza-
tion and digital supply chain—require
Media and Entertainment companies to
adopt an entirely new operating model
to enable and sustain high performance
in the industry. The new model will
need to re-think the traditional vertical
orientation around channels, and shift
the polarities to a horizontal focus on
key capabilities in the digital value
chain serving multiple channels.
We have applied our insights into
industry dynamics, operating models
and technology to design a model that
meets these requirements. We have
called it the “3D Operating Model,“ and
its key elements are illustrated above.
In our view, adopting such a model will
become a prerequisite for industry high
performance in the coming years.
Media and Entertainment companies’
traditional vertical focus on delivery
channels and platforms hinders the free
flow of digital content through and
across the organization, and hampers
the optimization of revenues and profits
though multichannel exploitation. In
our view, the shift from vertical silos
to horizontal layers represents the best
option for enabling and empowering
new revenue models without complete
organizational re-platforming, while
still leveraging the best of the tradi-
tional channels.
In the horizontally integrated 3D
Operating Model, each layer plays a
specific role in the digital value chain,
and represents a critical capability and
key value driver in achieving multi-
channel digital consumer-centricity.
While the exact make-up and
requirements for each capability will
vary depending on company-specific
factors—such as the target consumers,
legacy product range, and the nature
and latency of the content moving
through the digital value chain—there
are principles that will help shape
each layer.
Pervasive benefits—supporting strategic execution…
The 3D Operating Model will enable
improved governance over the organi-
zation’s key capabilities and value
drivers—by exposing them more clearly
in the operational layers—and support
a greater focus on innovation in each
layer. It will also provide added flexibili-
ty in seeking out potential economies
of scale and alliances for each distinct
layer, and not necessarily across all of
them at the same time, thus reducing
execution time and complexity.
In fact, if implemented and integrated
effectively, this model has the potential
to increase overall effectiveness and
agility, supported by greater simplifica-
tion and standardization throughout
the business. This in turn will enhance
scale synergies, boost operational
efficiency, and enable smarter and
more joined-up resource allocation
and sharing of assets and knowledge.
Also, by becoming a distinct center of
expertise in its specific capability, each
of the layers will be able to highlight
Figure 20: The High Performance "3D Operating Model" for the Media & Entertainment company of the future
Consumer
Delivery
Channel 1
Consumer
Delivery
Channel 2
Digital
Consumer
Digital
Monetization
Agile
Enterprise
3Ds
Digital
Supply Chain
Consumer
Delivery
Channel 3
Consumer
Delivery
Channel 4
Business Model and Brand Management
Marketing and Customer Interaction
Advertising and Sales
Devices
Platforms
Channels
Content Planning, Production and Control
Content Distribution
Rights Management
Enterprise Management
Inte
rnati
onaliza
tion
Innova
tion
Consumer
26 Accenture’s Global Media and Entertainment High Performance Study 2011
challenges and opportunities in skills
development and exploitation, both
within its own focus area and shared
across the organization.
…to achieve agility…
In turn, this combination of improved
strategic governance and flexibility with
operational efficiency and effectiveness
improves the company’s ability to adapt
quickly and accurately to changes
in the value chain, the competitive
environment, consumer demands or
the company’s positioning. Given the
industry’s expectation of continued and
accelerated change, this agility will be
vital in executing digital strategies
quickly and effectively within a shifting
and evolving digital ecosystem.
…and High Performance
As the 3D Operating Model illustrates,
two overarching capabilities are
also needed to achieve superior
execution and high performance:
firstly continuous innovation, and
secondly internationalization.
1| Continuous innovation
As the transformation to digital gathers
pace, nobody can afford to stand still or
rest on their laurels. So innovation must
become a “managed business process”
in the same way as order processing or
accounts payable. The 3D Operating
Model helps to support and drive inno-
vation because it is designed from first
principles to be agile and continually
results-oriented. Each layer supports
and focuses on innovation that can be
leveraged across the entire company
and throughout the ecosystem.
The horizontal structure means the
model also supports double-sided
innovation—focused on product and
services on one side, and on cost and
efficiency of operations on the other
one. The two are closely linked: ongoing
innovation to reduce operational costs is
vital to support organizational agility
and free up funds for investment in
content and services. Cost innovation
is likely to include outsourcing of
non-core activities to enable a sharper
focus on branding, content services and
consumer experiences.
2 | Internationalization
Digital content distribution enables
global reach and revenues at marginal
incremental costs—so internationaliza-
tion is a route to increased cashflow
and margins. This may involve local
revenue-sharing partnerships, leveraging
the strength of established local brands
and distribution.
As such partnerships underline,
internationalization does not imply
losing local connections. People—
consumers—are local, and emotions
are localized. While exploiting mass
technology enables and requires scale,
the benefits can be leveraged at the
local level. Again, the 3D Operating
Model provides added agility and
competitive advantage by enabling
each layer to be internationalized
independently from the others, thus
enhancing and speeding the execution
of alliances and in-fill acquisitions.
28 Accenture’s Global Media and Entertainment High Performance Study 2011
Some key strategic and operational questions
In Accenture’s view, the 3D Operating Model—
planned, designed and implemented from an holistic
perspective—represents the appropriate approach for
pragmatic and successful execution of strategy in M&E.
It is inspired by the concept of harnessing the maximum
driving force from the key industry drivers (the “3Ds”),
and aligning and integrating the fundamental
performance capabilities.
All rights reserved © Accenture 2011 29
Figure 21: In the next 12 months, which of the above capabilities do you consider a priority to enable your company to compete successfully
in the digital world?
In this way, the 3D Operating Model
enables concurrent operation of
“classic” and “broadband media”,
thereby reaping the optimal benefits
in terms of future revenues, sustain-
able business models, and increased
innovation and execution agility.
When asked, our respondents confirm
that while there is a clear vision of
which capabilities they need to evolve
to compete successfully in the new
digital world—an innovative business
model, multiplatform distribution, and
efficient content planning, production
and control, to name but a few (see
Figure 21)—there is also awareness
that all of these are required to com-
pete effectively in the new ecosystem.
In Accenture’s view, the 3D Operating
Model that we have outlined will
characterize Media and Entertainment
high performers in the years to come.
But the journey toward this model
raises many strategic and operational
uncertainties and challenges. Here
are some key questions for M&E
executives to consider:
Which capabilities will be most
critical for acquiring a rising share of
revenues in the multiplatform world?
To what extent is your organization
evolving to reflect the huge transfor-
mations that are taking place in the
marketing, advertising and rights
management areas, just to mention
a few?
How is your company preparing
itself operationally and financially
to manage continuous innovation
in products and services?
How will your company reduce
operating costs while improving
decision-making and boosting speed
of response to achieve increased
agility?
Do you believe we are moving
towards a future dominated by
global M&E conglomerates, or will
niche/local players still have a role?
Where will your business fit in?
Call to ActionOur research and industry experience
both indicate clearly that high
performing Media and Entertainment
companies will shift from legacy
vertical, channel-oriented structures
toward the type of horizontally-
layered operating model we have
described in this study.
However, it is equally clear that the
precise implications and challenges
of executing such a model will
vary between different segments
of the industry; between different
geographies, due to variations
in local behaviors, legislation and
infrastructures; and even between
different businesses in the same
market segment.
Effective Payment Models
Not a priority 19%Low priority 30%An important priority 27%Top priority 23%
Optimizing Enterprise Management (shared services, cloud)
13%25%42%20%
Dynamic Brand Management
10%25%42%24%
Maximizing Rights Exploitation
17%17%33%33%
Multimedia Advertising
28% 43% 23% 6%
Ownership of the Consumer and Superior Interaction
38% 41% 12% 8%
Digital Performance Marketing
25% 54% 15% 6%
Efficient Content Planning, Production and Control
45% 39% 10% 5%
Mastering Multiplatform Digital Distribution
52% 35% 8% 5%
Innovative Business Model
48% 42% 9% 2
32 | 2010 Mobile World Congress Next Page
Copyright © 2011 Accenture
All rights reserved.
Accenture, its logo, and
High Performance Delivered
are trademarks of Accenture.
This document is an informed point
of view based on research, opinion
and experience, and should not be
considered as professional advice
with respect to your business.
About AccentureAccenture is a global management
consulting, technology services and
outsourcing company, with more
than 215,000 people serving clients in
more than 120 countries. Combining
unparalleled experience, comprehen-
sive capabilities across all industries
and business functions, and extensive
research on the world’s most success-
ful companies, Accenture collaborates
with clients to help them become
high-performance businesses and
governments. The company generated
net revenues of US$21.6 billion for
the fiscal year ended Aug. 31, 2010.
Its home page is www.accenture.com.
About the Media & Entertainment GroupAchieving excellence in engaging and
interacting with consumers is the
content industry's new battleground.
While Media and Entertainment
companies have made significant steps
to reinvent themselves from a technical
perspective, they are facing new
challenges around their operating
models. Our M&E practice helps clients
determine the right digital business
model and optimize future revenue
growth through a multiplatform
approach. Its home page is
www.accenture.com/mediaandenter-
tainment.
For more information on this study
and what Accenture can do to help
you reach high performance in your
business, please contact the authors
and contributors:
Marco Vernocchi Global Managing Director
Accenture Media & Entertainment
Robert E. Sell Managing Director
Accenture Communications & High Tech
North America
Alwin Magimay Managing Director
Accenture Media & Entertainment
APAC
Carlo Iacoboni Senior Manager
Accenture Media & Entertainment