By Magda Hercheui
The digitalisation of the media industry is here to stay. Organisations now need to figure out how they are going to succeed in this environment, one in which the context is constantly changing and competition is fiercer than ever. All around the world, media companies are struggling to deliver value to their audiences on digital platforms. And many are not succeeding. There is a clear conflict between the traditional and the new business models in the media industry, and many companies are in danger of being left behind if they do not adapt quickly.
Exploring this complexity, Accenture’s 2013 Communications, Media and High-Tech Predictions explain the main challenges media companies will face next year. I interviewed Charlie Marshall, strategy lead for the Media and Entertainment industries at Accenture, on three main areas that media companies need to prioritise now in order to survive and succeed in a very competitive market. Firstly, companies need to define new business models, which are coherent with the new environment. Secondly, companies should redesign their operations to support the new business models. Thirdly, companies must learn how to make the most of their customers’ content (user-generated content) and – critically – empower their customers with the tools to create – and curate – content.
These phases are not sequential though: executives in the media industry should cultivate a culture of change, with continuous iterative processes which adapt their companies to the market. “It’s important to design organisational structures which are very flexible and agile. If a project or idea is going to fail, it should fail fast, allowing the organisation to move on to a better idea. However it is a challenge for organisations to innovate internally”, says Marshall.
Operational processes should enable business models
External factors are the main trigger for new business models. At the strategic level, organisations should design these models considering their capabilities and markets. However, if the operating models do not support the business models, it will not be possible to get the best out of the corporate strategy.
“A common mistake is to try to support new business models with traditional operating models. There are some changes that the traditional operating models may support; however, deep transformation demands new operating models, which should be lean and flexible, bringing agility to media organisations”, explains Marshall. Changing operations should involve people, processes and technology, which should be integrated to deliver better decision making, better use of data and analytics, more transparency and more efficient governance. “Innovation processes are easier in organisations which have good governance, in which professionals understand the rules and can better contribute to decision making”, continues Marshall.
A new perspective on the audience
A major challenge for media companies is the fact that the audience has become a relevant generator of content. Indeed, people have moved from a position of receiving content from media companies to a position of participating in the conversation and generating their own content. ”The idea of having audiences suggests a passive scenario, in which people receive the content from media companies. This does not happen anymore”, says Charlie Marshall. The question then is how media companies can harvest the content generated by their audiences.
Indeed, people today generate and share content with friends and interest groups, and they are active in their interaction with media organisations, as they wish to have a say in the content produced, influencing or at least commenting on it. It is an audience that has moved from a passive attitude to a very active one. “Media companies need to incorporate the concept of ‘prosumer’, enabling the audiences to have greater participation through technological platforms. Media companies should cultivate these relationships with their audiences, providing a space for innovation through the interaction of media professionals and the audiences”, suggests Marshall.
Integrating business models and audiences
At the end of the day, companies need to generate profits to survive. A major issue for media companies thus is finding a business model which properly rewards shareholders. If information and content is taken for granted as a free asset, through legal or illegal means, media companies need to go the extra mile to provide value to customers.
Although there is not a fixed formula for building business models, companies may start from the perspective of generating value, to be able to protect and increase their revenue streams. “Media products should deliver value to customers. People may resist paying for basic information, but they will accept paying for products which deliver value. For instance, there is value in offering a customer information or entertainment which fits exactly his or her expectations, via the platform he or she chooses to access, either paper-based or electronic. The winners in the media industry will focus on combining differentiated, high quality and personalised content with electronic platforms”, concludes Marshall.
You can find more information about these topics in Accenture’s 2013 Communications, Media and High-Tech Predictions via the link below. The predictions explore six fundamental topics for the media industry in 2013, and suggest how media companies can improve their strategies: http://bit.ly/10sxWER.
You can also find more information via Accenture’s 2013 Predictions site: www.accenture.com/tmtinnovation.
About the author
Dr. Magda Hercheui is a senior lecturer at Westminster Business School. She lectures on information management, project management and digital innovation. She is a researcher on social media, virtual communities and collaboration, and a consultant in her area of expertise. Magda has also been the editor of New Media Knowledge since 2009.