Information and its delivery—whether through verbal or written communication—have undergone dramatic shifts over the ages, from the invention of Gutenberg's printing press to the telephone. But within a shorter timeframe, the evolution from print media to digital formats has accelerated the way people acquire news, entertainment, and knowledge.
Today, we've become dependent on digital tools to communicate and accelerate our access to information and entertainment.
A PwC Global Entertainment and Media Outlook report finds that mobile remains the primary way people access content, with a projected increase in mobile app use and video streaming accounting for 52% of all US digital revenue by 2022. Significantly, OTT (over-the-top models) will grow at a CAGR (compound annual growth rate) of 8.8% with a value of $30.6 billion during this time.
A saturation of digitized media formats and the emergence of tech trends mean media strategies need to remain agile and democratized. The remainder of this article discusses how digital media has been able to surpass print media, and what business models can help to keep digital media successful now and in the future.
From Print to Pixels: The Digital Disruption
In recent years, digital media formats have upended traditional print mediums, such as newspapers. Traditional print media allowed journalists to act as gatekeepers by reporting fact-based, reader-friendly stories. Yet, limitations of accessibility and flexibility have sidelined print with the increasing adoption of mobile and streaming devices.
According to this year's Zenith Media Consumption Forecast, from 2011 to 2018 time spent reading printed newspapers and magazines declined 45% and 56%, respectively.
In the past several years, a confluence of changing reading habits, declining print ad revenue and ad targeting flexibility, less investing support, and tech innovations like automation have continuously diverted sustainable models of print media. Advances in video, mobile, and other wireless technologies have spearheaded the meteoric rise of streaming services. Now, with a host of new delivery mediums, specifically the value shift to platforms and technologies—including mobile—many digital media outlets run on variable cost, with the opportunity to run free or affordable access to consumers.
With content like videos and podcasts, consumers can acquire news and media efficiently, building live community feedback. And content creators and journalists are afforded flexibility and more accountability, worldwide reach, and lower cost, while the content remains highly targeted for ROI.
Digital media offers its consumers a range of choices and autonomy. The beauty of online media is that it also provides the personalization, OTT targeting, measurement, and engagement that are nonexistent in print media.
As far back as 2016, nearly half of US households subscribed to streaming services. Trends like cord-cutting are driving viewers to cancel their multichannel subscription television services in favor of a combination of broadband Internet and services like IPTV, terrestrial TV broadcasts, and digital free-to-air satellite TV. In 2017, one million US viewers canceled their multichannel subscriptions.
As a result, media companies are changing their operations to direct-to-consumer models with digital streaming services.
The Healthy Content Ecosystem
Can a healthy content ecosystem help sustain digital media and OTT models? The Deloitte University study on Digital Media: Rise of On-Demand Content showcases examples of healthy content ecosystems that help support the need for and access to news, music, and video streaming services.
On-demand content, led by audio and video, lies at the center of a supply-side ecosystem that can have multiple players supporting its functions. In India, for example, an evolving ecosystem is helping to create varied content offerings ranging from OTT to on-demand content channels.
A framework for an interconnected and evolving content ecosystem includes multiple tools and networks:
- Content providers: Creators, aggregators, labels, and publishers
- Tech platforms: App developers, hardware providers (ISPs), bandwidth providers, analytics, content management, tech outsourcing
- Marketing channels: Company partnerships with similar customer segments, ATL (above the line) partnerships, BTL (below the line) partners, search engine marketing
- Payment partners/gateways: Credit and debit cards, mobile wallets, online banking, net banking, retail charge, OTT payment gateways
- Advertisers and advertising platforms: Sponsors for specific content, direct advertisers, ad mediation agencies
- Distribution channels: App stores, telecom partners, OEM partners, online and e-commerce retail, data providers
Innovative Business Models in Digital Media's Future
Although digital media companies and advancements offer promising and evolutionary content ecosystems, business strategies across the globe need to reinvent themselves because of shifting advertising models and widespread growth. But healthy content ecosystems thrive only if digital content leaders continue to pave the way for change using high-quality content while delivering on scalable and relevant capabilities that create a sense of community and identity and address fan interests.
Providing intersecting business strategies can create more sustainable business models within video, music streaming, and other digital media formats. The focus on restructuring digital media will help increase their distribution towards targeted audiences and refine user experiences:
Invest in new technologies
Emerging tools are helping to shape consumer experiences for efficiency, personalization, and relevancy.
Video and music streaming platforms can continue to incorporate AI to build data around audiences for more information, products, and experiences. Video streaming, in particular, can use new tools like VR/AR to offer unique and immersive experiences that help build communities around fan bases and facilitate livestreaming and high-quality content.
As more mobile devices connect to the Internet of Things (IoT), it will also prove to be a helpful resource for collecting user data and demographics while offering consumers the freedom to connect to audio and video services whenever and wherever they choose.
Implement payment mechanisms
Multiple newer payment mechanisms can offer opportunities to track ROI and ad revenue. Blockchain is a major investment that media companies should utilize as it helps track assets, avoid contract disputes, and establishes trust and accountability between business partners and customers. With diverse functions, it can keep track of royalties and collection, piracy protection, or digital advertising impact measurement. Building partnerships with FinTech companies could prove beneficial for a myriad of revenue aspects.
Develop new streams of revenue
Memberships allow media companies to sell premium experiences with related benefits, products, and services. For instance, The New York Times created an engaging, monetized subscriber base with features for travel (New York Times Journeys) and product recommendations with the acquirement of sites like Wirecutter in 2016 along with special events that provide guest talks, conferences, and subscriber events. From 2014 to 2017, NYT nearly tripled its subscription rate from 910,000 to 2.64 million people.
Use targeted and experiential advertising
Digital media outlets that use ad-supported models will need advanced options to increase revenue, especially as digital advertising struggles against the revenue-grabbing duopoly of Amazon and Google. Targeted advertising, for instance, will need to develop new ad products. For example, Sky's AdSmart platform uses data like demographics, location, shopping habits, and behavior attitudes to define and target audiences in different households during the same TV program. PwC reports that it has created over 1,200 audience segments, such as "luxury travelers," that it can target.
In addition, experiential advertising can help distinguish media platforms. Sponsored experiences like HBO's Westworld event at SXSW helped to expand reach, creating connections to the show and, ultimately, the service. With the promise of events that can attract audiences through destination appeal and one-time opportunities not found anywhere else, experiential events can generate social media buzz and offer branded products that activate recognition.
Restructure video content
By 2021, video streaming will account for 24% of all Internet video traffic. Content needs to be restructured from TV's traditional timeframes to ones that are more accessible for viewers. Exploring alternative formats like short-form content (6-10 minutes long) that operate independently or in tandem with longer formats (30 minutes to 1 hour) can cater to audience members with limited time when it's optimized for smaller screens, on tablets and other mobile devices. As a result, that content can reach wider audiences.
Mirroring those advancements, the 2018 Digital News Project found that 58% of publishers were seeking to establish more audio through the focus of podcasts. Moreover, nearly 72% planned to actively experiment with AI to produce better content recommendations for consumers and increase productivity—essentially, with "robo-journalism."
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As tech and telecommunication companies converge, evolving media and entertainment ecosystems of the future will likely form into "supercompetitors." But those "supercompetitors" will still be able to fund startups and buy content from smaller companies.
In fact, smaller companies can succeed by forging strong commercial bonds with fans, using data to define more intimate and personalized user experiences while also creating more niche, quality products, leveraging and engaging audiences. Small businesses may even be more successful when creating user streams that are distinct within a world of "supercompetitor" media corporations.
Innovative digital formats like OTT will continue to capitalize on the emerging technologies that are disrupting and informing our world in positive ways. What matters now is that digital media sources will continue to develop content, cutting through the static of the mundane and offering channels for consumers to connect, become inspired, and remain informed.