Digital isn’t new anymore, it’s everywhere: PwC

According to the PwC Global Entertainment and Media Outlook 2012-2016, companies looking to realise the benefits of a digital environment will need to tackle challenges around rights, royalties and piracy, areas where many entertainment and media (E&M) companies are burdened by rigid, complex, bespoke legacy systems.

These regulation issues and talent are the two biggest challenges going forward for the E&M industry, Cecilia Yau, entertainment and media practice partner for PwC Hong Kong, told Campaign Asia-Pacific. “There are a lot of regulation issues surrounding privacy and data issues. So the impact is on how agencies can use the data.”

It’s important for E&M companies to make this transition, she continued, because customers have new levels of normality in terms of their exposure to the world of digital. “Owning several devices, having a multiscreen experience, this is now the norm," she said. "Companies need to recognise this.”

Globally, mobile internet access subscriber numbers will more than double over the next five years to 2.9 billion in 2016, of which almost 1 billion will be in China. In India, mobile internet subscribers will increase from a low base at a compound annual rate of 50.8 per cent to 2016, making India the world's fastest growth market for mobile internet.

By 2016, global mobile internet advertising revenues of US$24.5 billion will grow at 36.5 per cent compounded annually, to almost match the size of the classified internet advertising market. However, paid search, at US$78.1 billion and banner/display at US$46.6 billion, will retain the lion’s share of the market in 2016. China’s mobile internet advertising market will grow at a compound rate of 68.4 per cent to reach US$6.2 billion in 2016, making it the second largest market in the world behind the United States at US$9.4 billion.

Asia Pacific has the largest mobile advertising market of any region, at $2.6 billion in 2011, up 27.3 per cent from 2010. Mobile advertising in the PRC more than doubled to US$457 million in 2011. Japan and South Korea remain the leading countries, at US$1.6 billion and US$484 million, respectively, reflecting their high mobile Internet penetration rates. In Japan, 88.1 per cent of the population were mobile Internet subscribers, and in South Korea, the figure was 96.0 per cent.

In total, digital advertising took up 23 per cent of the global advertising pie in 2011 and is projected to grow to 34 per cent. Agencies can no longer afford to think of digital as an add-on to traditional media, said PWC during their presentation in Hong Kong yesterday. “To succeed in this new digital world, agencies need to adopt a fully integrated approach with digital a central part of their overall media strategy,” Yau said.

This approach will redefine the roles E&M companies play along the value chain, said the report. New roles for agencies and media owners include being the device developer, acting as the consumer’s trusted content companion across devices, aggregating and filtering consumers’ content requirements, or being the third-party specialist supporting experimentation, innovation and execution.

To succeed in these roles, E&M companies need more than ever to understand consumer behaviours and motivations to engage with and immerse consumers in their connected, multi-screen environment. Data analytics tools are required to mine the mass of customer data, however the development of such tools may trigger consumer fears over risks to their privacy and data security. To overcome this, PwC recommends shifting the industry mindset from ‘customer ownership’ toward a position where the customer is in control of how personal data is used in return for increased benefits.

Beyond data, E&M companies desperately require the right talent to survive in the new norm, but have a genuine problem with retention and recruitment. Furthermore, these companies face competition from ‘pure’ technology companies, which tend to pay higher salaries. E&M companies need to overcome this barrier by being better employers and leveraging non-financial attraction, PwC recommends.

“We (PwC) have found that young talent truly value innovation in an organisation,” Yau said. “So to retain and attract talent, innovation must be encouraged within the organisation—not just in technical terms but the way people collaborate and approach problems.”

“We've reached the point at which talking specifically about 'digital' increasingly misses the point,” commented Marcel Fenez, global leader, Entertainment & Media, PwC, in a statement. “As digital becomes the standard, its rising penetration ceases to be a topic for discussion in itself. What matters now is how companies capitalise on it and operate within it.”