Digital Killed The Media Star
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Advancements in digital technologies are already transforming many aspects of the media industry. They are impacting the way we consume media, support clients, gather sales and marketing information, and reach out to new and existing consumers.
The media industry is changing rapidly, and advancements in the digital technologies are disrupting and readjusting the media industry. This wave of innovation will wipe out the companies in the media industry who don’t adopt new technologies. Below are the 4 trends redefining how business is done in the media industry.
Trend 1: Quality content, please!
High quality content is always in demand around the world. The biggest challenge media companies are facing is to maintain the quality of their content (or even to increase the quality of their content), while finding ways to maximize the value for that content.
In the past, the business model of media companies was to create content for their clients, due to the lack of content in the market. The content was available on specific channels at specific times, such as TV advertising, cinema, theater, and newspaper. This business model is disappearing and the technology is shifting the business models of the media companies. Technology is enabling content accessibility across multiple channels simultaneously — and without a specific time frame. The outcome is that content is becoming more difficult to monetize. The solution could be higher quality of content and premium channels to view that content (digital advertising, broadband, video games, audio entertainment, and in-home video entertainment). Below is a good example of the shift that global media spending has undergone over the last few years, from traditional channels to the digital advertising channels.
According to a McKinsey report, digital advertising (video games and broadband) will continue to grow rapidly, taking market share from traditional advertising (cinema and newspaper). The report predicts that, by 2019, digital will account for more than 50% of the overall global total media spending.
Trend 2: Customize your relationship with your consumer
Consumer behavior and expectations are changing rapidly in the media industry. Companies are changing their approach to the way they are reaching out to new and existing consumers. By using customized content on digital advertising channels, companies target specific groups within the population. In the past, media companies targeted customers by identifying age, location, gender, income level, education level, family status, and occupation. With the advancement of technologies such as data analytics, machine learning, and deep leaching, media companies can identify personal characteristics of consumers, such as values, personality, lifestyles, behaviors and attitudes.
These characteristics help media companies deliver more targeted content through superior channels to a specific target group. It should be no surprise then that social media is becoming the main channel for the media companies through which they deliver their content. According to Statista, social media users more than doubled between 2010 and 2017, from 0.97 billion users to 2.46 billion users.
Trend 3: Science fiction is reality ahead of schedule (Syd Mead, Blade Runner)
According to Axios, in 2015, spending on artificial intelligence (AI) was $5.3 billion which increased to $12.5 billion by 2017. AI is changing the media world by pushing the industry to become more creative, more efficient as well as to automate workflows and to reduce customer churn. For example, Netflix is using AI to automate workflows, suggest better content depending on viewer preferences, optimize video compression and delivery, and reduce customer churn. Netflix is claiming to save around $1 billion annually, thanks to its usage of AI technology. The following words from Chris Witmayer, Director of Broadcast at Nascar Productions, a company that owns 500,000 hours of content, underscore the huge potential that AI has to offer:
“Although we have an entire archive that goes back to the 1930s, we can’t actually find anything efficiently. If you can’t find anything, you can’t sell it, and you can’t make money. So this [AI] is big for us.”
The big players in the social media landscape (Google and Facebook) are investing huge amounts in AI technologies. Children who are growing up with AI systems such as Google Intelligence System, Google Home (Google I/O), and Facebook AI will have a vastly different childhood as compared to their parents who chatted with friends on the playground. These systems can understand human level intelligence and react to it. For example, pattern recognition algorithms help someone tag a friend (deepface), and deep neural networks offer targeted advertising by deciding which adverts to show to which users by analyzing and processing around 2.2 billion users digital data. The young generation that is growing up today with these technologies will have immensely different behavior in the future.
Image source: shutterstock.com
However, AI can also create problems. For example, in March 2016, the launch of Tay by Twitter was shut down after 16 hours due to the offensive tweet it sent through its Twitter account: “Hitler was right, I hate the Jews”.
Trend 4: Technology is not the only silver bullet
Media companies will have to innovate new business models if they want to stay relevant in the coming years. One example of a company that failed to react on-time to the shift in the media industry (i.e. innovation and new business models) was Blockbuster Video. Blockbuster employed 85,000 people worldwide during its peak years, but filed for chapter 11 bankruptcy in September 2010. They did not see the shift from video to streaming subscription service, which is cheaper and more convenient.
The same goes to Shazam and Soundcloud, who did not foresee the shift to music streaming services the way Spotify (IPO on April 4, 2018 with a valuation of $30 billion), Apple Music, and Pandora did. Shazam was acquired by Apple in 2017 for $400 million, a big discount from Shazam’s last funding round, when they valued the company at around $1 billion.
Summary: What to do
The transformation of the media industry was enormous in the recent years, and it is accelerating every year. Companies in the industry should have a positive attitude towards new technologies such as deep learning, AI, and blockchain. They will have to improve their product offerings, by using new technologies and business models. Therefore, companies that don’t adapt to the rapidly changing environment will be left behind.
I see a faster consolidation in the market, due to the fact that media companies will have to find better technology solutions to bring to the rapidly evolving market.
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